Annual Report • Feb 3, 2023
Annual Report
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ALK's (ALKB:DC / OMX: ALK B / AKBLF) bestyrelse har i dag godkendt selskabets årsrapport for 2022 (ESEF-version ALK-2022-12-31-en vedhæftet). Årets resultat overgik de oprindelige forventninger og var efter et solidt fjerde kvartal i overensstemmelse med de senest udmeldte forventninger. ALK forventer fortsat vækst og forbedret indtjening i 2023.
(Omsætningsvækst er angivet i lokale valutaer. Sammenligningstal for 2021 er vist i parentes)
ALK forventer salgsvækst i alle salgsregioner og forbedret indtjening. Fra 2023 vil ALK guide på EBIT-margin i stedet for EBITDA for at tilpasse rapporteringen til selskabets langsigtede finansielle ambitioner.
ALK's adm. direktør Carsten Hellmann siger: "2022 var endnu et år med tocifret vækst i omsætning og indtjening, og vi gjorde solide fremskridt på vores strategi. Vi forventer fortsat vækst og højere indtjening i 2023 på trods af udfordrende markedsvilkår, herunder en engangsforhøjelse af rabatten i Tyskland og den nuværende inflation. Vi er godt rustet til at håndtere disse udfordringer. Vores forretningsmodel og markedspositioner er robuste, og udviklingen i markedet er til vores fordel. Vi vil fortsætte med at eksekvere på vores strategi og presse på for forbedrede resultater i de kommende år."
Investor Relations: Per Plotnikof, tlf. 4574 7527, mobil 2261 2525 Presse: Maiken Riise Andersen, tlf. 5054 1434
Disse oplysninger er oplysninger, som ALK-Abelló A/S er forpligtet til at offentliggøre i henhold til EU's markedsmisbrugsforordning.
ALK afholder i dag kl. 14.00 (CET) en telekonference for investorer og analytikere, hvor ledelsen fremlægger resultater og forventninger. Telekonferencen audiocastes på https://ir.alk.net, hvor den tilhørende præsentation vil være tilgængelig kort før start. Deltagere i telefonkonferencen bedes ringe ind senest kl. 13.55 (CET). Danske deltagere skal ringe på tlf. 7877 4197, mens internationale deltagere skal ringe på +44 0 808 101 1183 eller +1 785 424 1739. Benyt venligst følgende deltager-pinkode: 91630#
ALK er en global, specialiseret medicinalvirksomhed med fokus på allergi og allergisk astma. Virksomheden markedsfører allergi-immunterapi og andre produkter og serviceydelser til mennesker med allergi og allergilæger. Virksomheden har hovedkvarter i Hørsholm, beskæftiger omkring 2.700 mennesker over hele verden og er noteret på Nasdaq Copenhagen. Find mere information på www.alk.net.
Annual report 2022
ALK-Abelló A/S Bøge Allé 6-8, DK-2970 Hørsholm, Denmark, CVR no. 63 71 79 16
Find more information about ALK at www.alk.net
ALK delivered high growth in 2022 and remains on course to deliver long-term, sustainable sales growth with significantly improving profitability.
2022 was yet another year of strong growth in revenue and earnings for ALK, with sales up 13% in local currencies – equivalent to 15% in reported currency – on broad-based sales growth in all regions. Earnings (EBITDA) increased by 33% to DKK 708 million, driven by top-line growth, margin expansion and efficiencies. Results exceeded our initial expectations and were in line with our most recent outlook.
Throughout the year, we also made strong progress with the items on our strategic agenda: the build-up in China to launch the ACARIZAX® tablet, the execution of R&D programmes – ranging from new discovery activities, to our entry into food allergy and large-scale clinical trials in
respiratory allergies – as well as efforts to build prescriber bases and the digital mobilisation of people with allergy via our klarify universe, which allows us to further connect with and support the millions of untreated people with allergy who could benefit from ALK's products.
Around the world, the tablet portfolio is now a well-established and fast-growing treatment concept that is transforming the way allergy is treated, and it continues to have outstanding future growth prospects. Alongside our work to enter new markets, such as China, and to cover additional patient populations and prepare the launch for children, a key remaining opportunity for tablets is to convince prescribers in the USA, where financial disincentives for allergists continue to block their wider adoption. We remain fully committed to succeeding in the USA, and to overcome these barriers, we will increasingly deploy resources to build new commercial channels that will give us access to millions more allergy immunotherapy (AIT)-eligible patients.
We expect ALK's revenue growth to remain strong and earnings to further improve in 2023, despite inarguably tougher conditions. These include a one-year temporary rebate increase in Germany and high inflation putting pressure on the cost base.
We remain confident, and we are wellprepared to deal with these challenges. Plans have been made to further drive sales growth, our business platform and market positions are robust, and the transition within the allergy market is in our favour. So, we will continue to execute our current strategy and push for improved results. Revenue is expected to grow by 7-11% (8-12%, disregarding the German rebate increase), while earnings margin (EBIT) is expected to grow by 25-45% in 2023. This translates into an earnings margin (EBIT) of 13-15%, up from 10% in 2022.
"In recent years, we have raised the bar and embarked on a journey to rigorously capture a greater share of the global allergy market."
Anders Hedegaard, Chair of the Board
"While we remain committed to delivering on our shortterm promises, we are equally focused on sustaining high growth and profitability, now and beyond 2025."
While we remain committed to delivering on our short-term promises, we are equally focused on sustaining high growth and profitability, now and beyond 2025. We will continue to invest significantly in 2023, and expect to make progress on each of our high-potential growth initiatives to safeguard, and potentially accelerate, ALK's growth long-term.
The first of these opportunities is children. Many children in our society suffer from allergy-related sleep and cognitive function impairments, reduced academic performance, and restricted ability to participate in sport and other activities. Children deserve the right to live a life free from severe allergy symptoms, disease progression and stigma, and we at ALK are the only company that comes close to providing a long-term solution that is particularly suitable for children with allergies: our effective and convenient, once-daily tablets.
2023 will see data from our two pivotal, Phase III paediatric trials in house dust mite and tree pollen tablets. Their subsequent filings, approvals and launches – hopefully
in 2024/25 in Europe and North America – would be milestone events in our efforts to secure approvals for all respiratory tablets covering paediatric, adolescent, and adult use.
The commercial potential is compelling and full paediatric coverage would potentially expand our addressable markets significantly. Parents, who suffer in silence when it comes to their own allergies, are much more proactive when it comes to seeking treatment for their children. And children have a shorter and faster path to AIT-treatment, because healthcare professionals acknowledge the need to treat their underlying allergic disease, rather than allowing it to mature and progress to allergic asthma, or other serious comorbidities.
The second opportunity is China, well on its way to becoming the world's largest market for house dust mite (HDM) AIT. We recently submitted a registration application for our HDM tablet in China and, subject to approval, a launch is targeted for 2024/25. To prepare the ground, we just made the HDM tablet available in a special Medical Pilot Zone in China. We are
also expanding our nationwide presence significantly, and sales of our current registered SCIT product are growing strongly. Meanwhile, we continue to support our partner for Jext® in China and believe in the long-term potential of this initiative as well.
Thirdly, on our 'new horizons' agenda, we remain committed to entering the attractive US market for adrenaline auto-injectors with an affordable, competitive, nextgeneration product, as soon as possible.
Finally, we have initiated a Phase I trial with our new tablet treatment for peanut allergy – an important step in our quest to develop new, mainstream treatments for potentially life-threatening food allergies. The trial will assess the tolerability and safety of a once-daily tablet and we will see initial data from the first part of the trial during 2023.
We are pursuing each of these potential accelerators at full speed and with funding in place. If we can repeat our recent successes, they will help to establish a much larger and stronger ALK – a company capable of generating attractive shareholder returns for many years to come.
In 2023, we are celebrating ALK's 100th anniversary. ALK was founded on innovation and has stayed true to its heritage with a long history of 'firsts' in our industry: new treatment formulations, new disease areas, unprecedented large-scale clinical trials, a commitment to leading the transition towards evidence-based allergy care, and new ways of engaging with patients and healthcare professionals.
Our purpose has always been – and always will be – to provide allergy solutions for life. In recent years, we have raised the bar and embarked on a journey to rigorously capture a greater share of the global allergy market. We would like to thank our employees for their relentless commitment to this journey as well as their continuing efforts. Their endeavours allow us to deliver on our ambitious targets.
On that note, the most recent employee engagement survey was very encouraging. This saw us improve our overall engagement score further, and placed ALK among the top 5% of international benchmark companies, well above the healthcare benchmark. Our great employees all over the world
are an essential part of what makes ALK successful, and they deserve huge credit for helping to steer ALK though its recent transformation and the turbulence of COVID, while still managing to generate impressive results for the company.
Special thanks are also due to our partners, without whom we could not succeed, and to the patients and prescribers who place their trust in us – a trust we never take for granted and work hard to maintain.
Last, but not least, we would like to thank our shareholders. As ALK's performance continues to improve towards our targets, we look forward to rewarding them through continued, long-term value creation.
Anders Hedegaard Carsten Hellmann Chair of the Board
President & CEO
2022 business highlights
Registration application submitted for HDM tablet in China
Phase I clinical development of tablet for treatment of peanut allergy
Agreement with
contract manufacturer to secure its tablet capacity towards 2030
ALK committed to setting new, sciencebased target for CO2 reduction
~2.4 million people on treatment with ALK products, a net increase of 300,000 CO2 emissions down
41% from 2019 baseline
Exclusive licensing agreement on launch of ALK's house dust mite tablet in India
Share split completed to support liquidity in ALK's share
Two upgrades to the full-year growth outlook
59% of waste was recycled or reused, exceeding 2022 targets
2022 targets for energy and water consumption were met
Share of women in VP and senior director positions increased to 34%
(Revenue growth rates are stated as organic growth in local currencies, unless otherwise indicated)
ALK expects broad-based growth in all sales regions – Europe, North America and International markets – in 2023. Total revenue is expected to grow by 7-11% organically, equalling 8-12% growth when disregarding the one-year temporary mandatory rebate increase of 5 percentage points for all prescription drugs in ALK's largest market, Germany, in 2023.
Tablets will remain key to growth, and are expected to grow by up to 15%, which equals up to 17% growth when
disregarding the one-year temporary rebate increase in Germany. Growth is anticipated for all tablet brands and all sales regions, with Central Europe, Northern Europe, Japan and North America expected to lead the way through additional market share gains, further expansion of prescriber and patient bases as well as progress from the ongoing market transition in favour of evidencebased allergy medicines. As in previous years, some fluctuations in the quarterly tablet sales are anticipated, reflecting current market dynamics and phasing of product supply to partners.
In addition, ALK expects sales growth from the remaining non-tablet portfolio, mainly driven by SCIT and life science products, whereas Jext® sales are expected to decline somewhat following the extraordinary sales growth of 2022, fuelled by supply issues in the wider market.
ALK expects operating profit to improve in 2023, fuelled by revenue growth, and benefits and efficiencies from increased scale. The EBIT margin is expected at 13-15%, versus 10% in 2022, corresponding to an improvement of 25-45%, which is in line with ALK's long-term earnings ambition of an EBIT margin of around 25% in 2025.
The gross margin is expected to further benefit from higher tablet and SCIT sales volumes as well as efficiencies in product supply. However, this impact will be somewhat offset by different factors, including the increased rebate in Germany, higher tablet shipments to Torii in Japan at lower gross margins, changes to the product mix, and modest cost inflation. Consequently, the gross margin is expected to increase by up to 1% percentage point on the 62% seen in 2022.
Revenue growth 7-11%
Higher EBIT margin 13-15%
(up from 10% in 2022) 13-15% EBIT margin corresponds to a 19-21% EBITDA margin
ALK will use EBIT – Earnings Before Interest and Taxes – as the prime indicator of the company's profitability aspirations going forward. Hence, ALK's short-term financial indications for operating profit are now aligned with its long-term indications, rather than the previously applied EBITDA. The change reflects an increasing focus on the underlying earnings generation of the company and the fact that the next phase of the strategy is one of stable capital expenditure.
The overall capacity cost to revenue is expected to improve as ALK further leverages its existing platforms to drive efficiencies, and normalises R&D spend. Higher sales and marketing costs are planned to support preparations for paediatric tablet launches, the build-up in China, and digital engagement projects, but the overall sales, marketing and administrative expenses ratio to revenue is expected to decrease. R&D expenses
are planned to decline to around DKK 600 million, reflecting the start of a normalisation after a number of years with extraordinarily high R&D costs to complete the clinical Phase III programme for the respiratory tablet portfolio.
This report contains forward-looking statements, including forecasts of future revenue, operating profit, and cash flows as well as expected business-related events. Such statements are, by their very nature, subject to risks and uncertainties, as various factors, some of which are beyond the control of ALK, may cause actual results and performance to differ materially from the forecasts made. Without being exhaustive, such factors include e.g., consequences of the COVID pandemic, general economic and business-related conditions including: legal issues, uncertainty relating to demand, pricing, reimbursement rules, partners' plans and forecasts, fluctuations in exchange rates, competitive factors and reliance on suppliers. Additional factors include the risks associated with the sourcing and manufacturing of ALK's products, as well as the potential for side effects from the use of ALK's products, as allergy immunotherapy may be associated with allergic reactions of differing extents, durations, and severities.
Pricing and reimbursement schemes are generally expected to be stable, except for the one-year temporary rebate increase in Germany in 2023, which is expected to lower ALK's revenue by around DKK 50 million, and minor adjustments in certain markets in Southern Europe.
ALK's exposure to the ongoing inflationary pressure on its cost base is expected to remain modest.
ALK is a global allergy solutions company with a wide range of diagnostics, allergy immunotherapy (AIT) treatments, and services to meet the unique needs of allergy sufferers, their families, and doctors around the world.
ALK is a world leader in respiratory allergies and holds emerging positions in food allergies and anaphylaxis. Its business model is centred around strong R&D skills, insight into immunology, unique manufacturing processes, and a desire to bring the best of modern science to the allergy field. Based on the industry's most comprehensive clinical data set and insights into patient behaviour, ALK wants to transform the clinical landscape from experience-based to evidence-based medicine for patients, practitioners and payers.
| Amounts in DKKm/EURm** | DKK 2022 |
DKK 2021 |
DKK 2020 |
DKK 2019 |
DKK 2018 |
EUR 2022 |
EUR 2021 |
|---|---|---|---|---|---|---|---|
| Income statement | |||||||
| Revenue | 4,511 | 3,916 | 3,491 | 3,274 | 2,915 | 607 | 527 |
| EBITDA | 708 | 534 | 395 | 241 | 136 | 95 | 72 |
| Operating profit (EBIT) | 470 | 292 | 150 | (14) | (96) | 63 | 39 |
| Net financial items | (23) | (13) | (49) | (17) | (7) | (3) | (2) |
| Profit before tax (EBT) | 447 | 279 | 101 | (31) | (103) | 60 | 38 |
| Net profit | 335 | 219 | 25 | (50) | (170) | 45 | 29 |
| Average number of employees (FTE) | 2,609 | 2,492 | 2,419 | 2,385 | 2,341 | 2,609 | 2,492 |
| Balance sheet | |||||||
| Total assets | 6,308 | 5,830 | 5,563 | 5,495 | 4,865 | 848 | 784 |
| Invested capital | 3,400 | 2,931 | 2,807 | 2,759 | 2,968 | 457 | 394 |
| Equity | 3,988 | 3,480 | 3,153 | 3,176 | 3,179 | 536 | 468 |
| Cash flow and investments | |||||||
| Depreciation, amortisation and impairment | 238 | 242 | 245 | 255 | 232 | 32 | 33 |
| Cash flow from operating activities | 416 | 468 | 301 | 132 | (95) | 56 | 63 |
| Cash flow from investing activities | (351) | (266) | (245) | (157) | (199) | (47) | (36) |
| – of which investment in intangible assets | (55) | (45) | (26) | (20) | (52) | (7) | (6) |
| – of which investment in tangible assetss | (298) | (218) | (196) | (147) | (126) | (40) | (29) |
| – of which acquisitions of companies and operations |
- | - | - | (20) | (21) | - | - |
| Free cash flow | 65 | 202 | 56 | (25) | (294) | 9 | 27 |
* Management's review comprises pages 1-48 as well as 'Financial highlights and key ratios by quarter for the ALK Group' on page 108
** Financial highlights and key ratios stated in EUR constitute supplementary information to the Management's review. The exchange rate used in translating from DKK to EUR is the exchange rate prevailing on 31 December 2022 (EUR 100 = DKK 744) (31 December 2021: EUR 100 = DKK 744)
For definitions and reconciliation of alternative performance measures, see page 94
| Amounts in DKKm/EURm** | DKK 2022 |
DKK 2021 |
DKK 2020 |
DKK 2019 |
DKK 2018 |
EUR 2022 |
EUR 2021 |
|---|---|---|---|---|---|---|---|
| Information on shares | |||||||
| Proposed dividend | - | - | - | - | - | - | - |
| Share capital | 111 | 111 | 111 | 111 | 111 | 14.9 | 14.9 |
| Shares in thousands of DKK 0.5 each | 222,824 | 222,824 | 222,824 | 222,824 | 222,824 | 222,824 | 222,824 |
| Share price, at year end | 96 | 172 | 125 | 82 | 48 | 12.9 | 23.1 |
| Net asset value per share | 18 | 16 | 14 | 14 | 14 | 2.4 | 2.1 |
| Key figures | |||||||
| Gross margin – % | 61.9 | 61.2 | 58.1 | 57.8 | 56.0 | 61.9 | 61.2 |
| EBITDA margin – % | 15.7 | 13.6 | 11.3 | 7.4 | 4.7 | 15.7 | 13.6 |
| EBIT margin – % | 10.4 | 7.5 | 4.3 | (0.4) | (3.3) | 10.4 | 7.5 |
| Return on equity (ROE) – % | 9.0 | 6.6 | 0.8 | (1.6) | (5.3) | 9.0 | 6.6 |
| ROIC incl. goodwill – % | 14.8 | 10.2 | 5.5 | (0.5) | (3.3) | 14.8 | 10.2 |
| Pay-out ratio – % | - | - | - | - | - | - | - |
| Earnings per share (EPS) | 1.5 | 1.0 | 0.1 | (0.2) | (0.8) | 0.2 | 0.1 |
| Earnings per share (DEPS), diluted | 1.5 | 1.0 | 0.1 | (0.2) | (0.8) | 0.2 | 0.1 |
| Cash flow per share (CFPS) | 1.9 | 2.1 | 1.4 | 0.6 | (0.4) | 0.3 | 0.3 |
| Price earnings ratio (PE) | 63 | 172 | 1,092 | (356) | (61) | 63 | 172 |
| Share price/Net asset value | 5.4 | 11.0 | 8.8 | 5.7 | 3.4 | 5.4 | 11.0 |
| Revenue growth – % | |||||||
| Organic growth | 13 | 12 | 8 | 11 | 1 | 13 | 12 |
| Exchange rate differences | 2 | - | (1) | 1 | (1) | 2 | - |
| Acquisitions/divestments | - | - | - | - | - | - | - |
| Total growth revenue | 15 | 12 | 7 | 12 | - | 15 | 12 |
In March 2022, ALK-Abelló A/S completed a share split at a ratio of 1:20, each existing share of a nominal value of DKK 10 was split into 20 new shares of a nominal value of DKK 0.50 each. The company's share capital remains DKK 111,411,960. As a result of the share split, comparison figures for EPS, DEPS, share price, share number, net asset value per share and share price/net asset ratio have been restated accordingly.
ALK's full-year revenue for 2022 ended at DKK 4,511 million (3,916) with organic growth of 13%. This was in line with the most recent outlook, issued on 10 November 2022, and reflected growth across all sales regions. Currencies had a positive effect, resulting in reported growth of 15%.
(Comparative figures for 2021 are shown in brackets. Revenue growth rates are organic and stated in local currencies, unless otherwise indicated)
Sales growth was driven by tablets which increased by 18%, while sales of ALK's non-tablet product portfolio were up 8%, boosted by strong growth in International markets and North America as well as by the adrenaline auto-injector (AAI) Jext® in Europe, which benefitted from strong
market growth and competitor market supply issues.
European revenue was up 9% at DKK 3,058 million (2,809), with growth fuelled by tablets – which increased by 13% – and strong Jext® sales.
ALK continued to expand its market position for tablets, as tablets remained a preferred treatment option for people with moderate-to-severe respiratory allergies. Sales grew in double digits in the important northern European markets of the Nordics and Germany on market expansion and market-share gains. Double-digit sales growth was also seen in several other important markets, including the Benelux countries and Eastern Europe, while in France tablet sales grew by high single digits.
In the second half of the year, tablet sales growth was temporarily impacted mainly
| Revenue by geography Revenue by product line |
|||||||
|---|---|---|---|---|---|---|---|
| Amounts in DKKm | 2022 | Growth (l.c.) |
2021 | Amounts in DKKm | 2022 | Growth (l.c.) |
2021 |
| Europe | 3,058 | 9% | 2,809 | SCIT/SLIT-drops | 1,748 | 3% | 1,655 |
| North America | 857 | 12% | 683 | SLIT-tablets | 2,102 | 18% | 1,774 |
| Int'l markets | 596 | 39% | 424 | Other products | 661 | 27% | 487 |
| Overall revenue | 4,511 | 13% | 3,916 | Overall revenue | 4,511 | 13% | 3,916 |
| Europe | North America |
|---|---|
| International markets |
SCIT/SLIT-drops SLIT-tablets Other
by a weakening of the overall AIT market in Germany. This was attributable to a wave of respiratory infections which crowded out AIT patients from the clinics. This, together with a weak tree pollen season, resulted in fewer patient initiations. In addition, some prescribers responded slowly to the phasing out of reimbursement for non-registered products. As a result, overall AIT industry sales in Germany are estimated to have declined in Q4. Despite this, ALK's market position remained strong, allowing the company to further expand its leadership in the country and contributing to the strong overall results.
Combined sales of SCIT and SLIT-drops were unchanged in light of increased sales of SCIT venom products towards the end of the year as they recovered from the earlier unavailability of specific products and benefitted from supply issues affecting other manufacturers. Sales of other products increased 39% overall, as Jext® sales surged 51% in response to market growth and supply issues affecting other manufacturers of AAIs.
Overall sales in France were slightly down on the combined effects of COVID in the first half of the year and the ongoing
local market transition from SLIT-drops to tablets. ALK retained its market leadership in terms of the number of patients treated.
General market conditions were largely stable across Europe in 2022, and there were no notable changes affecting the pricing and reimbursement of AIT products, although Germany did announce a one-year temporary mandatory rebate increase for 2023 of 5 percentage points for all prescription products.
Revenue in North America grew by 12% in local currencies to DKK 857 million (683). Tablet sales increased 14%, supported by strong growth in Canada, whereas the USA still saw an ongoing weak market development. ALK continued its efforts towards building new channels, e.g,the paediatric channel, cf. strategy section on page 23.
Sales of bulk allergen extracts increased 3%, while revenue from other products improved 22%, helped by strong sales growth from non-allergy-related life science products.
Revenue from International markets increased 39% in local currencies to DKK 596 million (424), largely due to strong performances from the region's two largest markets – China and Japan. In-market sales growth remained resilient despite quarterly fluctuations due to the phasing of product shipments, and despite the strong impact of COVID, in both Japan and China.
Although small in scale, tablet sales through Abbott, ALK's partner for southeast Asia, also grew encouragingly.
DKKm
SCIT/SLIT-drops SLIT-tablets Other
0 1,000 2,000 3,000 4,000 5,000 2018 2019 2020 2021 2022
Germany, ALK's single largest market, is a pioneer in transforming the allergy immunotherapy (AIT) market.
For years, the local allergy market was typified by individually-produced, so-called 'named-patient products' (NPPs) which is an allergen product, prepared for an individual patient following a prescription by their doctor. But a shift – led by pressure from regulators and payers – towards clinically tested and registered treatments that are documented to pharmaceutical industry standards, has resulted in major changes.
As regulations have tightened, undocumented or unviable products have been squeezed out of the market. Before 2008, there were more than 6,500 individual AIT products available in Germany, for most of which no, or limited data, on quality, safety or efficacy were available or independently assessed. Of those, 123 sought marketing
authorisations. To date, just two of these have been approved, and a further 17 were forced to exit the market in 2022. Meanwhile just 44 more of the original 6,500 products remain on the market under transitional arrangements that are expected to end in 2026.
In parallel, further pressure from allergy experts and national and regional payers has seen Germany update its reimbursement and prescription guidelines in favour of evidence-based, authorised AIT products.
As the market further consolidates around authorised products, and those unable to meet the higher documentation thresholds continue to disappear, the market is being fundamentally reshaped. This process has led to some disruption among both traditional AIT manufacturers and the more than 10,000 physicians who traditionally have been involved in AIT.
In 2019, ALK became the first company in Germany to offer a complete product range for major allergens featuring only authorised tablets and SCIT products. Since then, ALK
has increased its market share significantly and Germany has become ALK's single largest market, with market share in 2022 estimated at around 35%, up from 23% in 2018.
On an EU level, the importance of the transition from a landscape of undocumented legacy products towards documented and authorised products is underpinned by the 2020 adoption of a new European guideline, which aims to further support the availability of evidence-based, safe and efficacious allergen treatments and diagnostics across Europe.
ALK's full-year operating profit (EBITDA) increased 33% in reported currency to DKK 708 million (534), which was in line with the updated outlook issued on 10 November 2022, and reflected higher sales and improved gross margin. The corresponding EBIT margin was 10% (7%).
(Comparative figures for 2021 are shown in brackets. Revenue growth rates are stated in local currencies, unless otherwise indicated)
2022 revenue increased by 13% in local currencies to DKK 4,511 million (3,916). Exchange rate fluctuations had a positive effect, resulting in reported growth of 15%.
Cost of sales increased 9% in local currencies to DKK 1,720 million (1,520). The gross profit of DKK 2,791 million (2,396)
yielded a 1 percentage point improvement in the gross margin to 62% (61%), mainly reflecting increasing tablet sales and production efficiencies – although the gross margin was reduced somewhat by increased shipments to Torii in Japan, which yield lower gross margins. ALK continued to implement its product and site strategy, covering investments for the upgrade of legacy products and associated manufacturing facilities, and to secure quality and robustness in product supply. In the second half of 2022, cost of sales included one-time, extraordinary costs of approximately DKK 30 million related to the discontinuation of a non-strategic product and unplanned facility maintenance.
Capacity costs increased 8% in local currencies to DKK 2,322 million (2,105). As planned, R&D expenses were slightly above the level of 2021, reflecting ongoing Phase III clinical trial activities. Sales and marketing expenses increased by 8% in local currencies, and included investments
| Amounts in DKKm | 2022E 8 Feb outlook |
2022E 4 Aug outlook |
2022E 10 Nov outlook |
2022 actual |
|---|---|---|---|---|
| Revenue | 8-12% (l.c.) | 10-13% (l.c.) | 11-13% (l.c.) | 13% (l.c.) |
| EBITDA | DKK 625-725m | DKK 675-750m | DKK 675-750m | DKK 708m |
in market expansion in China, digital activities, the paediatric expansion, a generally high activity level including medical events and congresses, as well as costs associated with optimising ALK's commercial footprint, including the closing down of activities in Turkey. Administrative expenses increased, mainly due to IT and organisational development activities.
increased 33% in reported currency to
DKK 708 million (534), driven by higher sales and an improved gross margin. Exchange rates had only a minor effect on operating profit. EBIT (operating profit before interest and tax) increased 61% in reported currency to DKK 470 million (292), which was equivalent to an EBIT margin of 10% (7%).
Net financials were a loss of DKK 23 million (a loss of 13). Tax on the profit totalled DKK 112 million (60), and net profit increased 53% in reported currency to DKK 335 million (219).
was DKK 416 million (468), driven by higher earnings which were offset by changes in working capital due to the timing of payments. Cash flow from investment activities was DKK minus 351 million (minus 266), on the build-up of additional capacity for SLIT-tablet production, upgrades to legacy production, and investments for the in-house next generation adrenaline auto-injector, which is currently in development. Free cash flow was positive at DKK 65 million (202).
DKK minus 42 million (minus 311), mainly relating to the repayment of borrowings. Currently ALK has DKK 1,292 million in unused credit facilities, running until the end of 2025.
At the end of 2022, ALK held 1,824,975 of its own shares, or 0.8% of the share capital, versus 1.3% at the end of 2021.
Equity totalled DKK 3,988 million (3,480) at the end of 2022, and the equity ratio was 63% (60%).
DKKm %
EBITDA EBITDA margin
EBIT
EBIT margin
Q4 2021
(Comparative figures for Q4 2021 are shown in brackets. Revenue growth rates are stated in local currencies, unless otherwise indicated)
ALK delivered 2022 full-year results in line with the most recent financial outlook, following a Q4 which saw revenue grow in all regions and across all product groups. Q4 revenue increased 12% to DKK 1,249 million – the highest quarterly revenue to date. Growth was positively impacted by exchange rate fluctuations, so that reported growth in DKK was 14%.
Revenue in Europe was up 10% on doubledigit growth in SCIT sales and strong tripledigit growth in Jext® sales. SCIT sales benefitted from the ongoing recovery in the venom AIT segment that previously suffered from the temporary unavailability of some venom initiation products, but also from improved pricing and rebate adjustments. Sales of Jext® continued to be fuelled by high demand in the wider market, which was impacted by supply issues.
Tablet sales in Europe were up 5%, mainly reflecting the slower start to the initiation season in ALK's main market Germany cf. the sales and market section on pages
| Revenue by geography | Revenue by product line | |||||||
|---|---|---|---|---|---|---|---|---|
| Amounts in DKKm | Q4 2022 |
Growth (l.c.) |
Q4 2021 |
Amounts in DKKm | Q4 2022 |
Growth (l.c.) |
Q4 2021 |
|
| Europe | 871 | 10% | 795 | SCIT/SLIT-drops | 512 | 4% | 483 | |
| North America | 226 | 6% | 193 | SLIT-tablets | 581 | 14% | 509 | |
| Int'l markets | 152 | 36% | 111 | Other products | 156 | 37% | 107 | |
| Overall revenue | 1,249 | 12% | 1,099 | Overall revenue | 1,249 | 12% | 1,099 |
| Europe | North America |
|---|---|
| International markets |
SCIT/SLIT-drops SLIT-tablets Other
13-14. Overall AIT industry sales in the German market were estimated to have declined in Q4, however, ALK's sales remained resilient, allowing the company to further expand its leadership in both the overall AIT market and the tablet market segment. The Nordic region, Benelux, and a number of smaller markets continued to grow their tablet sales in double digits.
Revenue in North America increased 6%, mainly driven by sales growth from life science products. Sales growth in the largest category, bulk allergen extracts (SCIT) was negative and held back by temporary backorders which are expected to be fulfilled in the coming quarters, while growth rates were 4% for tablets and 17% for other products and services, respectively.
Revenue from International markets
grew by 36%, powered by strong growth in tablet shipments to Torii in Japan, while revenue from China was down on the timing of SCIT product shipments. In Japan, in-market growth was maintained for both MITICURE™ and CEDARCURE™, although new patient initiations were impacted by the ongoing effects of COVID, with fewer than usual patient visits to clinics.
In-market sales growth in China was also strong, despite intermittent regional outbreaks of COVID.
The gross margin was 62% (64%). The margin development reflected large shipments to Torii at lower margins, and continued investments in the implementation of the product and site strategy, as well as extraordinary costs for unplanned facility maintenance.
Capacity costs amounted to DKK 633 million (622). R&D expenses were slightly above those for Q4 2021 due to ongoing clinical trial activity. Sales and marketing expenses increased, when adjusted for one-off restructuring costs in Q4 2021. The development reflected investments in market expansion in China and a generally high activity level in markets with positive momentum. The capacity costs to revenue ratio was down at 51% (57%).
EBITDA of 201 million (136) was in line with the most recent outlook, mirroring higher sales and efficiencies across the business.
EBIT increased 75% in reported currency to DKK 138 million (79).
| Amounts in DKKm | Q4 2022 | Q4 2021 |
|---|---|---|
| Revenue | 1,249 | 1,099 |
| Cost of sales | 478 | 398 |
| Gross profit | 771 | 701 |
| Gross margin | 62% | 64% |
| Research and development expenses | 185 | 179 |
| Sales and marketing expenses | 372 | 372 |
| Administrative expenses | 76 | 71 |
| Operating profit (EBIT) | 138 | 79 |
| Net financials | (34) | (5) |
| Profit before tax (EBT) | 104 | 74 |
| Tax on profit | 26 | (2) |
| Net profit | 78 | 76 |
| Operating profit before depreciation and amortisation (EBITDA) |
201 | 136 |
The number of people with respiratory allergies has increased continuously over the past 60 years and allergy is now one of the most common diseases globally, affecting as many as 30% of adults and up to 40% of children in certain parts of the world. ALK estimates that, today, approximately 500 million people suffer from respiratory allergies worldwide.
All of this is already placing a substantial burden on societies around the world – both in terms of direct healthcare costs, but also through lost productivity. In fact, estimates show that around 75% of the cost of allergic rhinitis – commonly known as hay fever – is largely hidden.
The burden of respiratory allergy is expected to increase due to climate change resulting in longer and more severe allergy seasons
Children with allergic rhinitis are more likely to develop allergic asthma
There is also evidence to show that it can have a detrimental effect on academic performance.
The burden of respiratory allergy is expected to increase even further due to climate change, as extended warm spells result in more airborne allergens, resulting in longer and more severe allergy seasons. In addition, climate change is allowing many plant species to migrate beyond their traditional locations, bringing new allergens to previously unaffected regions.
Disease progression is another factor that is increasing the burden on society. For example, studies show that people with allergic rhinitis are significantly more likely to go on to develop allergic asthma. Again, children are particularly at risk, and genetic factors mean the risk is still higher if children have a parent with asthma.
Despite these challenges, the situation can be improved. Allergy immunotherapy (AIT) has been extensively documented as being effective in reducing the symptoms of allergic rhinitis and asthma, and in improving quality of life for allergy sufferers.
However, ALK estimates that just 1% of people suffering from allergic rhinitis actually receive AIT treatment today, even though the European Academy of Allergy and Clinical Immunology (EAACI) has declared AIT can achieve substantial results for patients, improving their quality of life and changing the course of their disease, while also reducing the long-term costs and disease burden for society.
ALK is working harder than ever to spread this knowledge – and to educate, promote and facilitate earlier access to allergy diagnoses and treatment with AIT. It is also raising awareness of the dangers of disease progression – also known as 'allergic march' – where a child's allergies and symptoms multiply as they grow older, potentially to include allergic asthma.
With its strategic investments over recent years, ALK has become a leader in digital engagement with people with allergy, building a suite of apps, websites and tools under the 'klarify' banner that provides information, education and guidance on managing allergies.
The effectiveness of allergy immunotherapy has been documented in multiple clinical trials over decades
ALK believes that early diagnoses and effective treatment interventions are essential, not just for the potential healthcare benefits, but also as a means of reducing the wider costs of allergy to society.
The message is clear: we cannot continue to underestimate the burden respiratory allergies place on either patients or healthcare systems. But unless we adjust our approach, as the prevalence of allergies increases, so will the burden on people with allergies, and the cost to economies through absenteeism, loss of productivity, cost of care, and reduced quality of life.
ALK continued the execution of its strategy in 2022, making progress with its focus areas.
ALK's priority for the immediate future is to target continuous growth and improving profitability, as it seeks to become ever more relevant to more people with allergy, and to extend its global leadership in respiratory allergy. The steps towards fulfilling these ambitions fall into four key strategic focus areas: succeed in North America, complete and commercialise the tablet portfolio, consumer engagement and new horizons, and optimise for excellence. All of this is underpinned by a company-wide ambition to lead the way on sustainability, through ALK's 'people and planet' commitments.
The four strategic priorities map a path towards ALK's financial ambitions for 2025 and beyond. The strategy targets sustainable organic growth of 10% or more annually, with strong earnings improvements, to ramp up ALK's EBIT margin to around 25% in 2025, driven by sales growth, gross margin improvements and cost efficiencies. The strategy is further supported by selected longerterm initiatives, designed to safeguard, and potentially accelerate, ALK's growth trajectory towards 2030 and beyond. These 'new horizons' initiatives include developing mainstream food allergy treatments for peanut and tree nut, developing a nextgeneration anaphylaxis treatment, and pursuing other new innovations through research.
ALK made broad-based progress on all four of its focus areas in 2022, except for the USA, where the tablets' sales progress is still impeded by slow adoption by allergists due to financial disincentives. 2022 progress and 2023 priorities are described on the following pages.
"ALK's priority for the immediate future is to target continuous growth and improving profitability." ALK's strategic focus areas
In 2023, ALK will also step up its sustainability efforts, strengthening reporting and committing to a new sciencebased target for CO2 emissions (cf. section on pages 34-37).
The business model for ALK's US tablets organisation is being adjusted to create a platform to succeed through new prescribers and new sales channels.
Since 2017, ALK's promotional efforts for tablets in the USA have predominantly been centred on allergists. Despite various strategies and tactics, the vast majority of allergists have been unwilling to adopt the FDA-approved tablet portfolio, because
reimbursement of SCIT treatments (allergy shots) that are compounded for individual patients is critical to their income, and multi-allergen treatments remain standard practice.
Accordingly, ALK is adapting its business model for tablets in the USA to unlock the market via new channels. Initial focus will be on paediatricians and new commercial partnerships, while the existing allergist tablets business will be focused on allergists who are supportive of tablets as a treatment concept in selected areas of the USA.
"A key remaining opportunity for tablets is to convince prescribers in the USA, where financial disincentives for allergists continue to block their wider adoption. ALK remains fully committed to succeeding in the USA, and to overcoming these barriers."
Paediatricians, who are estimated to treat 4 million AIT-eligible patients each year, have a high flow of patients with uncontrolled allergies and a high understanding of immunology and allergy, which is similar in its dynamics to that for allergists. But – in contrast to allergists – paediatricians are not equally financially disincentivised to prescribe tablets, and they would potentially welcome additional treatment options.
With the forthcoming paediatric and adolescent indications for the house dust mite tablet, ACARIZAX®/ODACTRA®, and the existing paediatric and adolescent indications for its pollen tablets, ALK is well positioned to capitalise on the need for better treatment options. To prove the business model, ALK will initially target around 2,000 paediatricians who frequently perform allergy tests and regularly issue prescriptions for symptomatic products.
It is estimated that more than 20 million of the AIT-eligible allergy patients in the USA look for help outside of the traditional healthcare system, primarily via retail pharmacies, urgent care clinics or on-demand virtual care providers. To make tablets more widely available, in 2023, ALK will focus on establishing commercial partnerships with selected innovators offering convenient, high-quality care.
The existing allergist business will be refocused to target region-specific opportunities, mainly in east coast and west coast territories. The business will have the opportunity to grow with higher efficiency, supported by Medicaid, paediatric and adolescent indications, and digital consumer engagement programmes.
As a result of these changes in focus, ALK's North America organisation has been structured around three business areas under a new leadership:
• The US tablets business is responsible for tablet sales and marketing in the USA and will be deployed to engage with paediatricians, build new partnerships
and expand current prescriber and allergist groups.
Efforts to strengthen ALK's position in North America therefore continue, as the company targets additional future growth opportunities at pace, via the initiatives in food allergy, adrenaline, and paediatric and adolescent indications for the tablet portfolio.
Overall, 2022 sales in North America were up 12%, while tablet sales were up 14%. ALK continues to target doubledigit growth in 2023 across the portfolio, including for tablets.
Build new prescription and sales channels for tablets in the USA with a special focus on paediatricians
Continue to grow tablet sales in North America
Maximise value of legacy business in the USA
Efforts to complete and commercialise the tablet portfolio advanced in 2022, with the aim of securing their use in additional patient groups and new geographies.
Clinical development of the tablet portfolio continued with particular focus on children and adolescents, and ALK's two largescale, pivotal Phase III trials in children remained on course for completion in 2023. The trials represent some of the final steps towards gaining full paediatric coverage for the tablet portfolio in Europe and North America, which will be an important driver of continued growth for ALK.
The paediatric Phase III trial in allergic rhinitis for the house dust mite tablet in Europe and North America (MT-12) stayed on track and, despite including participants from Ukraine and Russia, the number of patient dropouts was minimal. The paediatric Phase III trial of the tree pollen tablet in Europe and Canada (TT-06) also includes some participants in Russia, but this trial too, saw minimal dropouts.
Recently, ALK received approval in Canada and the USA for the use of the house dust mite tablet ACARIZAX®/ODACTRA® for the treatment of allergic rhinitis in adolescents.
"Gaining full paediatric coverage for the tablet portfolio in Europe and North America will be an important driver of continued growth for ALK."
Following dialogue with the European authorities, in 2022, ALK decided to end the paediatric Phase III trial of the house dust mite tablet (MT-11) in allergic asthma. The trial was initiated before the outbreak of COVID, but pandemic-related containment measures impaired the trial, as face masks, social distancing, and other factors, significantly reduced the frequency of asthma exacerbations. Since house dust mite-induced allergic asthma is a comorbidity of allergic rhinitis, ALK nevertheless expects to gain full paediatric coverage via the previously mentioned Phase III trial (MT-12).
ALK has recently submitted a registration application in China for its house dust mite tablet in adult and adolescent allergic rhinitis. A waiver from the authorities allowed ALK to file its application without finalising the local Phase III registration trial, which was paused because of COVID. The waiver permits relevant data on Chinese patients to be obtained as
a follow-up activity, after the tablet's potential approval and launch.
Ahead of the planned launch, ALK recently made the house dust mite tablet ACARIZAX® available in China's Boao Lecheng Medical Pilot Zone, where the first prescriptions were issued in early 2023. ALK expects to gain valuable input from prescribers and patients in the pilot area ahead of a planned nationwide launch of the tablet, which, subject to approval, could take place in 2024/25.
In addition to China, geographic expansion continued in 2022 with the launch of the house dust mite tablet in the United Arab Emirates. ALK also entered into an agreement with Dr. Reddy's Laboratories, which will lead to the future introduction of the house dust mite tablet in India's fast-developing allergy market. ALK will be responsible for product supply, while the partner will be in charge of registration and commercialisation.
In 2023, ALK's goal is to further grow global tablet sales by up to 15%. This equals growth of up to 17%, when disregarding the impact of the one-year temporary rebate increase in Germany, and implies maintained underlying momentum.
Market expansions will continue and, across markets, ALK will continue efforts to build the tablet prescriber and patient bases for the tablets through targeted activities such as channel expansion, digital engagement, disease awareness programmes, advocacy for evidencebased medicines, and new business models. The organisational build-up in China will continue (cf. to text on next page) while, in Europe and North America, sales and marketing resources will be allocated to preparations for the paediatric launches of the house dust mite and tree tablets which, subject to approval, could take place in 2024/25.
Complete clinical development and prepare for paediatric launches of house dust mite and tree tablets
Continue build-up ahead of tablet launch in China
Secure commercial momentum globally
ALK continues to ramp up its presence in China according to plan. In 2022, this saw the local organisation grow 64% to 133 employees after expansions of both the sales force and back-office staff. The number of hospital-based clinics using ALK's products grew by 50% to above 500, and ALK accelerated its efforts to train and educate allergy specialists.
The increase in staff aims to speed up the adoption of ALK's existing allergy immunotherapy (AIT) offering and to build the market ahead of the planned introduction of the house dust mite (HDM) tablet ACARIZAX®. As a result, ALK's revenue in China in 2022 grew in double-digits and revenue is expected to further increase in 2023.
Subject to regulatory approval, ACARIZAX® could be on the market in China from 2024/25 onwards. This would offer an important new treatment option in a country where roughly 100 million people are affected by HDM allergy, while just 500,000 at present receive treatment with AIT. China is already a global top market for HDM AIT and has the potential to become the world's largest market. Annual HDM AIT sales are already estimated at more than DKK 1 billion.
There are just three players in the HDM AIT market. A competitor's SLIT-drops product currently has the highest sales, but ALK's market share is growing and currently exceeds 15%. ALK's current range includes the SCIT product line Alutard SQ® and diagnostic products which are prescribed via hospital-based clinics in key locations.
Alongside the build-up in the HDM AIT-market, ALK has teamed up with Grandpharma, China's leading supplier of adrenaline, in an exclusive licensing agreement to launch Jext® as the first adrenaline auto-injector in mainland China. Grandpharma is currently in the process of preparing a regulatory submission.
Obtaining full approval for the tablet portfolio for young patients is a key strategic priority for ALK and is expected to be an important growth driver for the future.
The planned paediatric indications for ALK's house dust mite and tree tablets will complete the respiratory tablet portfolio for all relevant ages. Large-scale paediatric clinical trials with the two tablets are expected to complete in 2023 and, subject to regulatory approval, both could be available with paediatric indications in Europe and North America in 2024/25.
Globally, it is estimated that more than 10 million children, aged fiveto-11, have uncontrolled respiratory allergies and the number is growing, as is the acknowledgement by healthcare professionals that early intervention and adequate control of allergy is crucial to halt the disease's progression to asthma and other comorbidities. By completing its current development activities, ALK will be able to offer a new and potentially important treatment option for these patients.
To build the market ahead of these launches, ALK will organise digital awareness campaigns, webinars, conferences,
e-learning activities and will cooperate with medical associations and others to raise awareness of childhood allergies among existing and potential new prescribers. Once potential new prescribers are identified, ALK will further assist them by organising training on how to use AIT and organising peer-topeer education programmes.
ALK will also increasingly engage with parents and guardians on childhood allergies and their consequences via klarify, other consumer outreach platforms, and patient associations. These efforts aim to help caregivers to recognise the symptoms of allergy, understand the disease's potentially dramatic consequences on quality of life for children, and when they should take a child to see a doctor. Data clearly shows that parents and guardians are much more likely to seek help for children than they would be for themselves.
Respiratory allergy symptoms include itchy or watery eyes, a blocked nose, sneezing, headaches, sore throat, coughing, a tight, wheezy chest, and difficulty in breathing. Without proper treatment, these symptoms can worsen and lead to other conditions, including conjunctivitis, dermatitis, and asthma. Furthermore, researchers have demonstrated that childhood allergic rhinitis is associated with a several-fold increase in the risk of asthma in later life.
In addition to the direct health consequences, children also suffer in other ways. For example, trying to avoid allergen exposure often restricts their lives and can have psychological and social consequences. Allergies can also impact their studies – even if they are still able to go to school, their academic performance is often impaired as symptoms drain their mental and physical energy.
Over recent years, ALK has conducted 15 clinical trials involving more than 4,100 children, in order to secure paediatric and adolescent indications for its tablet portfolio. It is also the only AIT-company with a dedicated development programme for children covering all the major respiratory allergies.
Children are more likely to stay on treatment once AIT has been prescribed. Children's adherence rate exceeds that of adults in core EU markets - in part, due to the active role parents or guardians take in their treatment.
Adults' journey to AIT can take up to seven-to-10 years, while children typically have a much shorter journey. Children also typically need fewer visits to their doctors before being referred to specialists. Their waiting time at specialists is also shorter.
A tablet portfolio with full paediatric and adolescent coverage for the house dust mite and tree tablets would allow ALK to target new prescribers effectively. This would also likely create a halo effect for the other tablets in the portfolio (GRAZAX®/ GRASTEK®, RAGWIZAX®/RAGWITEK®).
| Product Age groups and indication |
Phase I | Phase II Phase III Filing | Marketed | |
|---|---|---|---|---|
| ACARIZAX® China | Adults – Allergic rhinitis (HDM) | |||
| ACARIZAX® / ODACTRA® Europe & North America | Children – Allergic rhinitis (HDM) | |||
| ITULAZAX®/ITULATEK™ Europe & Canada | Children – Allergic rhinitis (tree: birch family) | |||
| Peanut SLIT-tablet North America & Europe |
Adults, adolescents and children – Food allergy (accidential peanut exposure) |
| Product | Age groups and indication | Marketed |
|---|---|---|
| GRAZAX® / GRASTEK® Europe, North America & International markets |
Adults and children – Allergic rhinitis (grass) | 2007-17 |
| RAGWIZAX® / RAGWITEK® Europe, North America & International markets |
Adults and children – Allergic rhinitis (ragweed) | 2014-21 |
| ACARIZAX® Europe & International markets | Adults – Allergic rhinitis and allergic asthma (HDM) Adolescents – Allergic rhinitis (HDM) |
2016-21 |
| ACARIZAX® / ODACTRA® North America | Adults – Allergic rhinitis (HDM) | 2017-18 |
| MITICURE™ Japan* | Adults and children – Allergic rhinitis (HDM) | 2015-18 |
| ODACTRA® North America | Adolescents – Allergic rhinitis (HDM) | 2023 |
| CEDARCURE™ Japan* | Adults and children – Allergic rhinitis (Japanese cedar) |
2018 |
| ITULAZAX®/ITULATEK™ Europe & Canada | Adults – Allergic rhinitis (tree: birch family) | 2019-20 |
* Licensed to Torii for Japan
Over the past 20 years, ALK has pioneered the development of purified and standardised natural allergen extracts, formulated as rapidly dissolving SLIT-tablets.
This has resulted in the launch of five tablets which address the most common respiratory allergies worldwide. ALK is now expanding its respiratory allergy leadership by targeting new geographies and patient groups, where growth opportunities are significant. ALK is also leveraging its existing SLIT-tablet technology with the ambition of becoming the leading player in the treatment of severe food allergies – a major commercial opportunity in an area with significant unmet medical need – and Phase I development of a tablet for peanut allergy has already begun.
Digital mobilisation of and partnering with people who are living with allergy remains a key priority and saw further advances in 2022. This strategy allows ALK to increase its relevance to people with allergy and to better connect with and support the millions who could benefit from treatment with allergy immunotherapy (AIT), which is particularly important since, for many consumers, allergy is a self-managed disease, and they use up to 10 years before taking action on their disease. In addition, ALK's 'new horizons' priorities cover strategic innovations with the ability to accelerate the company's long-term growth.
With its strategic digital investments over recent years, ALK has become a leader in digital engagement with people who have allergy, building a suite of apps, websites and tools under the 'klarify' banner that provides information, education and guidance on managing allergies, while providing ALK with deeper insights into the challenges, behaviours and priorities of people who live with allergic disease. In 2022, new launches in Switzerland, Austria, Czechia, Slovakia and Netherlands brought the total number of countries covered by this initiative to 11, with Norway being added in early 2023.
Tools and services that are already available include a personalised app that tracks pollen counts and has a symptomtracking diary, a test to determine suitability for AIT treatment, details of local doctors or specialists with the knowledge to treat their condition, and information on allergy symptoms, the path to diagnosis and treatment, and how to prepare for a medical consultation. Historically, the path to AIT treatment has been lengthy and complex, often taking up to 10 years. ALK continues to work towards shortening and simplifying this journey and, in 2022, more than 700,000 unique users found a doctor using these tools, versus around 400,000 in 2021. Furthermore, more than a million symptom diary entries have now been logged by users. Progress was also made on profiling which types of users were most likely to actually book a medical consultation after using one of ALK's digital tools.
All of this is made possible by the investments ALK has made in back-end technologies such as intelligent modelling - including machine learning and lead scoring - which allow the aggregation of large-scale anonymised data, to create tailored, personalised experiences for the benefit of individual consumers. This digital closeness to people with allergy gives ALK access to a continuous stream of realworld evidence that offers valuable insights that allow ALK to continually improve its
resources, tools and discussions with healthcare professionals (HCPs), and to better understand the triggers that ultimately prompt people to finally take action on their allergy. ALK also has plans to publish insights from its digital platforms at medical congresses in 2023.
Also in 2023, ALK will further expand access to its digital engagement tools in countries with a well-developed infrastructure for allergy treatment. Prerequisites include reimbursement systems favouring evidence-based medicines, and broad coverage by allergists and other medical professionals treating allergies. 2023 will also see further moves towards multichannel marketing through increased digital communication with HCPs using insights from a new customer relationship management (CRM) system that will be rolled out globally after a successful test phase in the Nordic countries.
ALK is also using its digital capabilities to deliver education and training to HCPs. In 2022, ALK trained 4,250 HCPs in allergy and AIT, while 25,200 HCPs were trained in allergic disease innovations. This training will continue in 2023.
The 'new horizons' priority covers initiatives designed to accelerate long-term growth for ALK.
On the first of these, two parallel adrenaline auto-injector (AAI) development projects – the in-house Genesis project, and a project in partnership with Windgap – continued to progress. Development will continue in 2023 towards a planned submission to the US FDA, with the exact timing subject to FDA feedback which is expected in 2023.
Meanwhile, the China-based pharmaceutical company Grandpharma continued its preparatory work ahead of a planned registration and launch of ALK's existing AAI, Jext®, which would become the first AAI in mainland China. Work will continue into 2023. In addition, Grandpharma has recently received approval under a special import license to make Jext® available in China's Greater Bay area.
2023 will also see ALK advancing its earlystage R&D discovery activities with the potential to transform respiratory allergy care.
"ALK continues to work towards shortening and simplifying this journey and, in 2022, more than 700,000 unique users found a doctor using ALK's tools."
Expand digital ecosystem for patients and prescribers
Execute on clinical development of tablet for peanut allergy
Advance AAI projects towards FDA filing
The priority 'optimise for excellence' covers the product and site strategy (PASS) programme and other initiatives aimed at safeguarding ALK's core portfolio of legacy products while, at the same time, building capacity for tablets, adrenaline auto-injectors (AAIs), and other products.
Continued upscaling of capacity for tablet production was in focus in 2022 and will remain a priority in 2023. To secure longterm capacity for the tablet portfolio, in 2022, ALK signed an expanded agreement with the contract manufacturer Catalent, which will accommodate ALK's growth ambitions towards 2030.
To further support tablet volumes build-up, in 2023, ALK will increase its capacity in the USA for the production of house dust mite source materials, and in Denmark for the production of active pharmaceutical ingredients (APIs) for the house dust mite and pollen tablets. Furthermore, ALK will work with Catalent to cross-validate tablet production on additional production lines at Catalent's site.
Under the PASS programme, in 2022, ALK continued to safeguard its core portfolio of legacy products to ensure it remains viable in the long term, which, in part, means upgrading legacy production processes and associated manufacturing facilities so that they continue to meet the very latest regulatory standards. As part of
"A key element in the PASS programme is to simplify ALK's production set-up by reducing the number of different active pharmaceutical ingredients used across its product portfolio."
this work, in 2022, ALK submitted a total of 1,977 regulatory variations covering 107 products to 44 authorities around the world. Additional documentation efforts will be undertaken in 2023.
A key element in the PASS programme is to simplify ALK's production set-up by reducing the number of different APIs used across its product portfolio, allowing ALK to eventually consolidate production on fewer production lines. Based on an EU regulatory approval from 2021, ALK is particularly focused on driving the necessary changes for the largest EU SCIT product line, Alutard SQ®, which is expected to lead to a streamlined portfolio and increased efficiency, ultimately leading to improvements in the gross margin.
In 2023, ALK will continue its 'Fit for Growth' and Manufacturing Excellence programmes to drive efficiencies across Product Supply with the aim of mitigating inflationary effects on input costs and wages.
The PASS programme will continue with particular focus on robustness, efficiency, and profitability, as well as ensuring there are no quality-related major interruptions to product supply.
Finally, in 2023, ALK will prepare Product Supply for the commercial supply of its forthcoming adrenaline auto-injector product.
Continue upscaling capacity for tablet production
Deliver on PASS and Fit for Growth programmes to drive efficiencies
Prepare Product Supply for commercial supply of new AAI product
Building on its progress in 2022, ALK is committing to helping even more people with allergies, setting a new science-based target for CO2 reductions, and strengthening sustainability efforts even further.
In 2022, ALK progressed on its sustainability focus areas: access to allergy care, people, environment and responsible business practices. Overall, all targets were met, and the route to meeting its long-term targets was confirmed. In addition, governance was updated so that the Board of Directors' Audit Committee now oversees all sustainability disclosures, processes, controls and assurance, when applied/implemented.
In 2022, ALK implemented several initiatives towards decreasing Scope 1, 2 and 3 emissions by reducing total energy consumption and promoting renewable energy use. As a result, energy intensity relative to net revenue decreased, despite increased medicines production. CO2 emission intensity also decreased, and total emissions were reduced by 41% compared to a 2019 baseline. Initiatives to reduce water use and improve waste management were also implemented, resulting in both areas exceeding 2022 targets.
A key priority for 2023 will be to set a new CO2 reduction target according to the science-based targets' methodology,
in ALK's sustainability report, https://www.alk.net/ sustainability
| Amounts in DKKm | Unit | 2022 | 2021 | 2020 |
|---|---|---|---|---|
| Environmental data | ||||
| Scope 1 emissions | Tonnes CO2eq | 4,857 | 5,801 | 5,521 |
| Scope 2 emissions2 | Tonnes CO2eq | 372 | 2,833 | 3,020 |
| Scope 3 emissions | ||||
| (1st leg distribution and travel flights) | Tonnes CO2eq | 5,800 | 3,180 | 2,848 |
| Total emissions | Tonnes CO2eq | 11,029 | 11,814 | 11,389 |
| GHG intensity per net revenue | Tonnes CO2eq/ DKKm |
2.68 | 3.02 | 3.26 |
| Energy consumption | MWh | 46,766 | 44,923 | 46,811 |
| Energy intensity per net revenue | (MWh/DKKm) | 11.3 | 11.5 | 13.4 |
| Renewable energy consumption | % | 53 | 45 | 38 |
| Water consumption | m3 | 116,642 | 127,823 | 110,530 |
| Water intensity | m3/DKKm | 28.3 | 32.6 | 31.7 |
| Total waste generated | Tonnes | 1,1353 | 809 | 851 |
| Total waste recycled | % | 59 | 45 | 38 |
| Social data | ||||
| Workforce | Headcount | 2,731 | 2,593 | 2,486 |
| Gender diversity (total workforce) | % female | 63 | 62 | 64 |
| Women in all management levels | % | 49 | 49 | 46 |
| Gender pay ratio | Times | 1.14 | 1.18 | 1.14 |
| Employee turnover | % | 13 | 13 | 10 |
| Lost time injury frequency | LTIF | 1.7 | 0.3 | 2.9 |
| Absence due to sickness | % | 3.2 | 3.1 | 3.1 |
| Governance data | ||||
| Gender diversity, Board | % | 29 | 33 | 20 |
| Board meeting attandance rate | % | 97 | 94 | 98 |
| CEO pay ratio | Times | 33 | 34 | 34 |
1 See Definitions of ESG calculations on page 37
2 Calculated using a market-based methodology which considers emissions from specific energy purchase contracts
3 Increase is related to improved and expanded documentation of waste fractions
to align ALK with the goals of the Paris Agreement to limit global warming to 1.5°C above pre-industrial levels. Prior to that, ALK will complete an analysis of current Scope 1, 2 and 3 emissions and map the transition needed to reduce emissions across the value chain. To further address environmental impacts, ALK will also be stepping up efforts to make a positive impact on biodiversity through further integration of certain sustainable farming practices at the sites where allergenic source materials are cultivated.
'Access to allergy care' aims to make ALK products and solutions accessible in new geographies and to new patient groups such as children and adolescents. In 2022, allergy diagnosis, allergy immunotherapy (AIT) treatments and adrenaline products
Please see further information on ALK's sustainability report, https://www.alk.net/ sustainability
Read the financial highlights and key figures overview here
were made available to more than 300,000 additional patients, bringing ALK's total number of patients to around 2.4 million.
ALK introduced tablet-based AIT to the United Arab Emirates and the Boao Lecheng Pilot Zone in China - the first step towards making the house dust mite (HDM) tablet available across China, subject to regulatory approval. ALK also continued large-scale clinical trials to secure registrations for the HDM and tree pollen tablets for children in North America and Europe.
ALK's digital channels helped more than 700,000 people to find a doctor, and the klarify digital engagement platform was launched in five new countries to empower people to take action on their allergies. ALK also tested concepts to eliminate friction points on the path to prescriptions for the many untreated patients who are eligible for AIT treatment.
To help overcome the lack of access to specialist doctors, ALK trained 4,250 healthcare professionals on how to diagnose and treat allergies, while 25,000 healthcare professionals were educated in allergic disease innovations.
The 2022 engagement survey had a participation rate of 95% and resulted in an overall engagement score of 8.3 – an improvement of 0.1 from 2021 and 0.7 above the benchmark for the healthcare industry.
ALK invests significantly to ensure all employees have equal opportunities to realise their full potential and development opportunities continue to be one of the major drivers of engagement and are key to ALK's success. As a part of this commitment, 150 senior-level leaders were trained in leading in an agile and inclusive way and 205 leaders were trained in handling health & well-being issues. Annual development agreements were made for all employees and 159 talents took part in the ASPIRE talent programme. In addition, an average of 300 participants attended quarterly ALK Learn events, which are part of an international learning platform for all employees.
Employee turnover was unchanged at 13%, reflecting a very high demand for skilled labour in key locations, particularly in the first half of the year, both in healthcare and other sectors.
ALK took further steps towards increasing gender diversity among senior leaders. In 2022, 34% of vice president and senior director positions were held by women, up from 29% in 2021, and the number is expected to increase further in 2023, supported by talent, mentoring and sponsorship programmes. The talent management programme was also strengthened to ensure a good pipeline of talents globally, and individual development plans were established and supported by Board of Management.
The gender balance at manager and director levels in 2022 remained on track for the target of approximately 50%, at 53% women.
At the end of 2022, ALK's Board of Directors consisted of 10 members. Of the seven shareholder-elected members, two were women. Furthermore, women accounted for 67% of employee-elected Board members.
ALK remains a signatory of the UN Global Compact and supports the UN Sustainable Development Goals. ALK's sustainability efforts are governed by a wide range of policies and guidelines including
specific policies on sustainability, as well as the environment, health and safety, access to medicine, diversity & inclusion, remuneration, data ethics, tax, stakeholder communications, investor relations, anticorruption and bribery, whistleblowing, and a third-party code of conduct. Additionally, ALK's own code of conduct details the company's expectations on professionalism, honesty and integrity. In 2022, 95% of employees completed and signed off on the annual online code of conduct training.
ALK's statutory annual report on sustainability, data ethics and gender diversity (as required by §99a, §99b, §99d and §107d of the Danish Financial Statements Act as well as Article 8 of the EU Taxonomy) is available at https://www.alk. net/sustainability
All environmental data is reported for main production sites (Hørsholm, Madrid, Oklahoma, Post Falls, Port Washington, Vandeuil and Varennes). Some figures have been corrected from previous years due to improved reporting and documentation of data.
ALK adheres to the principles of the Green House Gas (GHG) Protocol when reporting on emissions. Emissions are measured in metric tonnes of CO2 equivalents according to Global Warming Potential values published by the IPCC based on a 100-year time horizon.
Scope 1 emissions include direct energy consumption (natural gas, gas oil, diesel and petrol), where emission conversion factors are calculated using the UK's Department for Environment, Food and Rural Affairs (DEFRA) calculation methodology, supported by the GHG Protocol. Scope 1 also includes company car emissions, which are estimated based on fuel type and either fuel consumption or mileage of company cars. Fuel consumption or mileage in December, and in some cases November, were estimated based on average monthly consumption or mileage over the year. Emission conversion factors are calculated using the DEFRA calculation methodology. Scope 1 also includes emissions of ozone-depleting substances, which are defined as those listed in the Montreal Protocol on Substances that Deplete the Ozone Layer, including CFCs, Halons, Halogenated CFCs, methyl tetrachloride, methyl chloroform, HCFCs, HBFCs, methyl bromide, bromochloromethane, hydrofluorocarbons.
Scope 2 emissions include energy consumed for electricity and district heating, where emission conversion factors are calculated using the United States Environmental Protection Agency (US EPA) eGRID emission values, or for facilities outside the USA, emission values from the International Energy Agency (IEA). Scope 2 location-based emissions are calculated based on average energy generation emission factors for defined locations, while scope 2 market-based emissions are calculated based on emissions calculated from specific energy
Definitions of ESG calculations purchase contracts, and therefore consider renewable energy purchase certificates.
Scope 3 emissions include 1st leg distribution emissions, which are emissions arising from intra-company shipments and shipments from ALK product supply sites to ALK commercial fulfilment centres/warehouses. These emissions are calculated using the GHG Protocol scope 3 screening tool, which uses a spend-based methodology, with the values for December estimated based on average monthly spend over the year. Emission conversion factors are calculated using IEA tank-to-wheel emission (TTW) values. The wheel-to-tank (WTT) emissions in % compared to the TTW emissions for various liquid fuels are calculated based on the DEFRA 2022 emissions factors. Since the third-party transportation and business travel represent a diverse mix of transportation modes and fuel types, the average calculated is considered to be representative. Scope 3 also includes travel flight emissions which are reported using a WTT CO2 report provided by AMEX for all ALK business travel flights in 2022, except in China where flight emissions are estimated using a spend-based method and the GHG Protocol scope 3 screening tool for January-October, and actual emission values for November-December. TTW flight emission values are calculated using IEA values. Travel flight emissions for 2019-2021 do not include flights from China.
GHG intensity and CO2 reduction are calculated using scope 1, scope 2 market-based and scope 3 emissions. CO2 reduction is compared to a 2019 baseline considering scope 1, scope 2 location-based and scope 3 emissions.
Energy consumption is calculated based on meter readings and/or invoices of all energy types at production sites.
Water consumption is measured by meter readings and/or invoices at all production sites.
Waste is estimated in some sites where waste cannot be directly weighed. The types of materials present in the waste include paper, electronics, medical waste, wood, metal, general solid bio-waste, oil, and chemical waste.
Work-related incidents are defined as occurrences arising out of or in the course of work that result in injury or fatality. Injuries that occur when working from home are work related if the injury occurs while the worker is performing work from home, and the injury is directly related to the performance of work rather than the general home environment or setting. Incident cases are reported to our EHS department and include the number of incidents as well as important background details related to the incidents.
Work related accidents are defined as work-related incidents resulting in an individual being physically or mentally unable to work, as diagnosed by a competent medical professional. The rate of work-related accidents, expressed as lost time injury frequency (LTIF) is determined by dividing the number of accidents by the total hours worked, multiplied by 1,000,000 to give number of cases per one million hours worked.
Absence due to illness is calculated as number of total working days with absence due to any illness, work related or otherwise, divided by total working days.
Participation rate and engagement score are collected from a survey conducted by a third party.
All employee-related data is downloaded from our internal HR-system, Workday, and is relevant as of 31 December 2022. All figures consider active (permanent and temporary) employees. Non-guaranteed hour employees, and employees outside our own workforce are not included. Temporary employment is defined as employment with a pre-agreed end-date.
Workforce headcount is broken down for countries with more than 50 employees. The employee turnover ratio is calculated by dividing the number of employees who left the company by the average number of employees in the reporting year.
The gender diversity figures from 2021 and earlier do not include Germany, as job grades were not yet approved by the works council in that region.
The CEO annual compensation ratio is determined by the annual total compensation of the CEO against the median annual total compensation for all active (permanent and temporary) employees, excluding the CEO. Annual total compensation includes salary, bonus, allowances, pension and all one-time payments over the course of a year.
Alertline cases are taken from our external system, Ethics Point. Cases related to discrimination are defined as ´discrimination on the grounds of an individual's uniqueness such as perspectives, work and life experiences, age, gender, race, ethnicity, religion, sexual orientation, ability, or any other characteristics´. Discrimination concerns can be raised through several channels such as our whistle-blower hotline, alertline, or through Employee Representative Groups, HR, EHS and Legal.
When reporting on bribery, bribes can take the form of money, gifts, loans, fees, hospitality, services, discounts, the award of a contract or any other advantage or benefit, and it comprises any financial or other inducement or reward for an action which is illegal, unethical, a breach of trust or improper in any way. When reporting on corruption, this is defined as ´abuse of entrusted power by someone for personal gain´.
Board diversity is measured by the percentage of female non-executive members.
Board independence is measured by the percent of independent, non-executive members.
The Board Meeting Attendance rate is calculated as (number of meetings*number of members)-meetings not attended/ (number of meetings*number of members)*100.
Code of Conduct training is calculated by the percentage of employees completing the training based on internal registrations.
ALK's Board of Management is responsible for the ongoing management of risks throughout the value chain, including risk identification, the assessment of probabilities and potential consequences, and the introduction of risk-reducing measures.
The Board of Management has a risk committee to assist it in meeting its overall responsibility for risk management. The Risk Committee comprises representatives from each functional area relevant to ALK's risk profile. The Risk Committee
meets twice a year or more, as required, to perform its tasks. Risks are systematically assessed according to a two-dimensional matrix, rating the potential impact and probability of each risk. A risk management report with key enterprise risks and recommended mitigation plans is presented to Board of Management before it is submitted to the Board of Directors on an annual basis for their review and approval as part of ALK's long-term strategic planning process.
The following is a description of ALK's key enterprise risks, and the main initiatives taken to mitigate these risks. The risk movements compared to the previous year are indicated.
Commercial risks impacting revenue growth
The degree of market acceptance for a new product or drug candidate depends on several factors, including the demonstration of clinical efficacy and safety, cost-effectiveness, reimbursement/market access, convenience and ease of administration, potential advantages over alternative treatment methods, competition, and marketing and distribution support. If ALK's new products, primarily tablets, fail to achieve market acceptance, this could have a significant influence on the company's ability to generate revenue.
Price pressures mandated by authorities can have a significant impact on the company's earnings capacity. In most of the countries in which ALK operates, prescription drugs are subject to reimbursement from, and price controls by, national authorities and healthcare providers. This often results in significant price differences between individual markets. Exceptionally, governments and national authorities may introduce economic measures that also affect the pricing and reimbursement of medicines, for example, because of a major economic downturn.
ALK closely monitors economic, market and regulatory developments as they relate to product pricing, along with the competitive situation and initiatives in all important markets.
ALK regularly conducts surveys of market conditions and commits significant resources to providing information on allergy treatment to doctors and patients. ALK continues its focus on market access strategies, especially in the USA and China.
ALK actively engages in dialogue with authorities with the aim of securing fair pricing and reimbursement agreements and maintains a strong focus on its market access strategy. ALK is strongly committed to evidenced-based medicine, based on strong clinical and health economic evidence as the basis for pricing and reimbursement.
2022 movement:
The threat of cyberattacks continues to intensify globally and thus also for ALK. Disruption to IT systems, such as severe breaches of data security, may occur across the global value chain, where well-functioning IT systems and infrastructure are critical for the company's ability to operate effectively.
ALK has a security strategy in place to prevent intruders from causing damage to systems or gaining access to critical data and systems. ALK continuously invests in upgrading IT security. Awareness campaigns, access controls, intrusion detection and prevention systems have all been implemented. Further initiatives are planned, and systems are regularly upgraded to increase network security.
Production and quality issues impacting product supply and patient safety
Breaches of legal or ethical standards
ALK's products are subject to many statutory and regulatory requirements with respect to issues such as safety, efficacy, and quality. The products may be associated with side-effects such as allergic reactions of varying extents, durations, and severities. Meeting pharmaceutical quality standards is a prerequisite for the company's ability to supply products and hence its competitive strength, and for the company's earnings and sales.
As ALK continues to rationalise its product portfolio, there may be risks associated with the discontinuation of its products. Among others, these may include potential production interruptions at manufacturing sites during decommissioning and change-over work, the loss of sales from products for which no suitable ALK substitute product exists, or the inability to meet sudden spikes in demand for other products due to patients switching from discontinued products.
As part of its supply chain, ALK is dependent on selected key third parties for key production processes and supplies which entails a risk for ALK's ability to deliver products, especially tablets, to the markets.
ALK stringently monitors product and manufacturing quality compliance and safety via quality assurance, pharmacovigilance, and sales and marketing activities. If, despite the high levels of quality and safety, a situation should occur in which it is necessary to recall a product, ALK has procedures in place to ensure that this can be managed swiftly and effectively and in accordance with regulatory requirements. Production and manufacturing processes are subject to periodic and routine inspections by regulatory authorities as a regular part of their monitoring processes to ensure that ALK observes the prescribed requirements and standards.
ALK has invested significantly to increase the robustness and compliance of the legacy business by reducing manufacturing complexity, and all possible steps are taken during portfolio rationalisation work to mitigate any potential impact on other areas of manufacturing or the wider business. ALK conducts risk planning including for the prevention of unwanted events, and preventative inventory management.
ALK manages key third-party dependency risks through long-term contracts, diligent production forecasting, monitoring, and joint steering committees.
The employment market is more competitive than ever. ALK is dependent on being able to attract and retain employees across all key functions and markets to deliver on its strategy. Failure to attract, develop and retain the right talents may have a material impact on the company's market and research efforts.
ALK manages this risk, among other things, by continuously monitoring and improving employee engagement, offering its staff opportunities to develop their professional competencies, and by continuously monitoring the total rewards packages against the market. Further, ALK focuses increasingly on how to position ALK as an attractive employer, and how to best identify, attract, and recruit future global and local talents with the competencies and capabilities that will be required in the future.
Non-compliance with applicable regulations, legislation, or ALK's Code of Conduct could negatively impact the company's good reputation which is essential for operating within the pharmaceutical industry. Patents and other intellectual property rights are important for developing and retaining ALK's competitive strength.
ALK strives to act professionally, honestly, and with high integrity throughout the company in relation to stakeholders. ALK's Code of Conduct defines ALK's high standard of ethical behaviour in relation to customers, employees, shareholders, society, suppliers, and partners. Annually, all employees are asked to sign and confirm their knowledge of the Code of Conduct and to take an online test. ALK has established a whistleblower scheme which allows for the confidential and anonymous internal and external reporting of potential or suspected wrongdoings. Immediate action is taken on substantiated non-compliance.
Internal controls and policies are in place to safeguard ALK's intellectual property rights. The risk that ALK might infringe patents or trademark rights held by other companies, as well as the risk that other companies may attempt to infringe the patents and/or trademark rights of ALK are monitored and, if necessary, suitable measures are taken.
The future success of ALK depends on the company's ability to maintain current products and to successfully identify, develop and market new, innovative drugs.
A pharmaceutical product must be subjected to extensive and lengthy clinical trials to document qualities such as safety and efficacy before it can be approved for marketing. During the development process, the outcomes of these trials are subject to significant risks. Even though substantial resources are invested in the development process, the trials may produce negative results. Geopolitical situations may also impact the recruiting and maintaining of patients in the trials.
Failures or delays in the development process, or in obtaining regulatory approvals, may have a major impact for the patients not able to benefit from the products, and on the ability of ALK to achieve its long-term goals.
ALK and its collaborative partners perform thorough risk assessments of their research and development programmes throughout the development and registration processes, with the objective of risk mitigation to optimise the likelihood of the products reaching the market.
ALK's Scientific Committee is responsible for other patient-/product-related innovation activities. The committee advises on matters relating to R&D activities and other patient-/product-related innovation activities, including reviewing R&D programmes and the overall R&D pipeline.
2022 movement:
ALK's statutory corporate governance statement for 2022, pursuant to section 107b of the Danish Financial Statements Act, is available at https://ir.alk.net/ financial-reporting/risk-management
The statement provides an account of ALK's two-tier management structure, including the Board of Directors' composition, competencies, activities, self-assessment, and remuneration. The statement also describes key elements of ALK's internal control and risk management systems related to financial reporting processes.
At the Annual General Meeting (AGM) in 2022, Anders Hedegaard (Chair), Lene Skole (Vice Chair), Gitte Aabo, Lars Holmqvist, Bertil Lindmark and Jakob Riis were all re-elected to the Board of Directors, while Alan Main was elected as a new, independent member of the Board.
Following the election of Alan Main, four out of the seven shareholder-elected members are independent, according to the definitions set by the Danish Committee on Corporate Governance. This reflects the Board's efforts to achieve an overweight of independent members on the Board and its committees. The Board is considered
| Name (male/female) | Board meetings |
Audit Commitee meetings |
Remuneration & Nomination Committee meetings |
Scientific Committee meetings |
Competencies | |
|---|---|---|---|---|---|---|
| Anders Hedegaard (m) | ||||||
| Lene Skole (f) | ||||||
| Gitte Aabo (f) | ||||||
| Lars Holmqvist (m) | ||||||
| Bertil Lindmark (m) | ||||||
| Alan Main (m)1 | ||||||
| Jakob Riis (m) | ||||||
| Katja Barnkob (f)2 | ||||||
| Nanna Rassov Carlson (f)2 | ||||||
| Johan Smedsrud (m)2 |
1 elected at the AGM on 16 March 2022
2 employee-elected
Attended Absent
to have the right competencies to support ALK's long-term value creation and strategic process.
All shareholder-elected Board members are elected for a term of one year. In addition, the Board includes three employee-elected members, all elected for a term of four years. The employee-elected members are up for election in March 2023. All Board members are presented on pages 45-47 of this annual report, while the Board of Management is presented on page 48. There were no changes to the Board of Management in 2022 but, in 2023, Henrik Jacobi and Søren Jelert will be leaving ALK. Henriette Mersebach will replace Henrik Jacobi as Executive Vice President, Research & Development on 1 March 2023, while the search for Søren Jelert's successor as CFO is ongoing. Søren Jelert will leave ALK no later than 31 May 2023.
Based on its long-term strategy, ALK has identified the core competencies which must be represented in the Board of Directors for the Board to be able to support the strategy. To assess whether all core competencies are adequately
represented, each shareholder-elected member of the Board has been asked to identify a maximum of four primary competencies they bring to the Board, considering ALK's long-term strategy. They may also have knowledge or experience in areas other than the four primary competencies. The matrix shows the responses to the self-assessment process. Employee-elected members are not part of the competency self-assessment. For the Chair and Vice Chair, two additional competencies, specific to these roles, have been identified.
The Danish Committee on Corporate Governance has set out a series of recommendations on corporate governance which has been adopted by Nasdaq Copenhagen. ALK complies with all recommendations and the Board of Directors uses these recommendations as inspiration for setting up structures, tasks and procedures. ALK accounts for its compliance with the recommendations in an annual 'comply-or-explain' review.
Remuneration for the Board of Directors and the Board of Management is
| Amounts in DKKt | 2022 | 2021 |
|---|---|---|
| Board of Directors | ||
| Base fee | 4,477 | 3,650 |
| Committee fees | 1,117 | 998 |
| Total | 5,593 | 4,648 |
| Total | 38,712 | 37,670 |
|---|---|---|
| Long-term incentives (grant value) |
6,692 | 6,371 |
| Other benefits | 711 | 703 |
| security | 1,493 | 1,396 |
| Pension incl. social | ||
| Short-term incentives (cash bonus) |
11,652 | 11,924 |
| Base salary | 18,164 | 17,276 |
determined in accordance with ALK's remuneration policy as adopted by the AGM in March 2021. The policy is prepared in accordance with sections 139 and 139a of the Danish Companies Act as well as items 4.1.1-4.1.6 of the latest Danish Corporate Governance Recommendations.
Remuneration for the Board of Directors and Board of Management is reported
On 1 March 2023, Henriette Mersebach will replace Henrik Jacobi as EVP for Research & Development in ALK. Henrik Jacobi has had a leading role in the transformation of global allergy and allergic asthma care. Under his R&D leadership, ALK has become the undisputed leader within allergy immunotherapy, and tablet-based allergy immunotherapies developed by ALK are now available in many parts of the world. On behalf of ALK, the Board of Directors would like to offer its sincere gratitude to Henrik Jacobi for his dedication and contribution during the past 23 years.
ALK's statutory corporate governance statement: https://ir.alk.net/financial-reporting/riskmanagement
The Board of Directors' comply-or-explain review: https://ir.alk.net/corporate-governance
ALK's remuneration policy: https://ir.alk.net/ corporate-governance
separately in ALK's remuneration report. The report is prepared in accordance with section 139b of the Danish Companies Act.
The report provides an overview of remuneration components, actual remuneration in 2022, its development over the past five years, as well as the shareholdings of Board of Directors and Board of Management members.
All remuneration for the Board of Directors and Board of Management in 2022 followed the principles and framework outlined in ALK's remuneration policy.
Members of the Board of Directors each received a fixed annual fee, with the Vice Chair and Chair receiving double and triple the annual fee, respectively. In addition, members received an additional fee for serving on the Board's committees.
To align fees for serving on the Board of Directors and the Audit Committee more to the market, the fees were adjusted with effect from 2022 following approval at the AGM in March 2022. However, the base
fee for serving on the Remuneration & Nomination Committee, and the Scientific Committee, remained unchanged for both the members and chairmen of the committees.
The remuneration for the Board of Management consisted of both fixed pay elements (base-pay and benefits) and variable pay elements in the form of shortterm incentive (STI) and long-term incentive (LTI) plans. The variable pay elements reflected a year with solid performance with STI and LTI plans settled above target. The base salary for members of the Board of Management was increased by 3%, in line with the general increase for ALK employees in Denmark, except for the CFO and EVP, Commercial Operations, who received an increase above the general level to bring their base salaries closer to the market level.
The remuneration report for 2022 will be presented for an advisory vote at the AGM on 23 March 2023. The remuneration report is available at https://ir.alk.net/corporategovernance
It is ALK's objective to have a diversified shareholder base in terms of geography, investment profile and time horizon that shares the company's vision and supports its long-term strategy.
In order to enable both a fair valuation and regular trading of its shares, ALK provides relevant, accurate, and timely information on its strategy, operations, performance, expectations, goals, pipeline, market development, and other matters of importance to the assessment of the share. ALK furthermore works to strengthen its dialogue with all financial stakeholders.
2022 saw further growth in ALK's investor base. On 31 December 2022, ALK had 27,960 registered shareholders versus 20,434 at the end of 2021. The registered shareholders owned 97.2% of the share capital (98%).
To support the liquidity of the share, in 2022 ALK completed a share split at a ratio of 1:20, whereby each share, with a nominal
| Shareholder | Registered office |
No of shares | Interest | Votes |
|---|---|---|---|---|
| Lundbeck Foundation | Copenhagen, Denmark |
18,414,400 A shares 1,841,440 AA shares 69,496,540 B shares |
40.3% | 67.2% |
| ATP | Hillerød, Denmark |
11,461,329 B shares | 5.1% | 2.8% |
| ALK (treasury shares) |
Hørsholm, Denmark |
1,824,975 B shares | 0.8% | - |
| Other | 800 A shares 80 AA shares 119,784,356 B shares |
53.8% | 29.5% |
value of DKK 10, was split into 20 new shares with a nominal value of DKK 0.50.
Following the share split, the share capital of DKK 111,411,960 was divided into 18,415,200 A shares, 1,841,520 AA shares and 202,567,200 B shares. All B shares are listed on Nasdaq Copenhagen and freely negotiable. The A and AA shares are not listed and are predominantly held by the Lundbeck Foundation, an enterprise foundation whose purpose is to strengthen brain health and develop the Danish business sector.
Two shareholders have reported to ALK that they held 5% or more of the shares on 31 December 2022:
Of the largest registered shareholders, the vast majority were institutional investors, and largely from Europe and North America. The international registered ownership was estimated at approximately 33% (31%), representing 55% of the free float of the B shares, excluding the
Lundbeck Foundation's holding and treasury shares.
To meet obligations to deliver shares under management incentive programmes, ALK held 1,824,975 of its own shares, or 0.8% of the share capital, versus 1.3% at the end of 2021. The holding was reduced following the settlement of share option and performance share programmes.
The Board of Directors and Board of Management held a total of 275,312 shares at year-end, corresponding to 0.1% of the share capital (0.1%).
| Share capital | DKK 111,411,960 |
|---|---|
| Nominal value | DKK 0.50 per share |
| No of A shares | 18,415,200 units with 10 votes per share |
| No of AA shares | 1,841,520 units with 10 votes per share |
| No of B shares | 202,567,200 units with 1 vote per share |
| Stock exchange | Nasdaq Copenhagen |
| Ticker symbol | ALK B |
| Indices | X4500 (healthcare), OMXCLCPI (LargeCap) and OMXCPI (all) |
| ISIN | DK0060027142 |
| Blomberg code | ALKB.DC |
| Reuters code | ALKB_CO |
| LEI code | 529900SGCREUZCZ7P020 |
Trading information and core data on ALK's share: https://ir.alk.net/shareinformation
| Lundbeck Foundation | ATP |
|---|---|
| ALK | Other |
At year-end, the closing price of ALK B shares was DKK 96 compared to DKK 171 at the end of 2021.
The total market value of ALK's B shares, excluding treasury shares, was DKK 19.3 billion at year-end, versus DKK 34 billion at the end of 2021. Since end of 2017, when ALK's new strategy was announced, share price increases have yielded an average, annual return of 21% to shareholders.
The Board of Directors considers that ALK's financial resources, including credit facilities, continue to form a sufficient basis for executing ALK's strategy and to fund investments. At the end of 2022, net interest-bearing debt amounted to DKK 475 million and leverage stood at 0.7 EBITDA (1.0).
In support of ALK's growth strategy, the Board of Directors is extending its recommendation that dividend payments be suspended until ALK's profitability further improves. Accordingly, the Board of Directors will propose to the AGM, that no dividends are declared for 2022. The Board of Directors revisits the dividend policy
and ALK's capital structure on an ongoing basis.
Up to and including 15 March 2027, the Board of Directors is authorised to increase the share capital by up to DKK 11,141,196, with or without pre-emption rights for existing shareholders.
The Board of Directors is authorised for the period until 12 March 2024 to let the company acquire its own B shares for a nominal value of up to DKK 11,141,196. The consideration for such shares may not deviate by more than 10% from the official quoted price of the B shares on the date of acquisition.
During 2022, besides hosting regular telephone conferences, ALK representatives participated in many individual meetings and briefing calls with analysts and investors as well as conferences and seminars targeting various audiences.
A total of 24 announcements were published in 2022 (2021: 26), including investor news and reports on transactions by managerial staff. All announcements are available on ALK's main corporate website, together with reports, presentations, recordings of telephone conferences, share price information, analysts' estimates, and related information. Registered shareholders are encouraged to sign up at the InvestorPortal.
| Annual General Meeting | 23 March |
|---|---|
| Three-month interim report (Q1) | 9 May |
| Six-month interim report (Q2) | 24 August |
| Nine-month interim report (Q3) | 15 November |
Per Plotnikof, Head of IR Tel. +45 45747527
Find out more
Visit Investor Relations: https://ir.alk.net/investors
The Lundbeck Foundation, one of Denmark's largest enterprise foundations, is the controlling shareholder of ALK, owning 67% of the votes and 40% of the capital. The Foundation grants a minimum of DKK 500 million each year to public biomedical and health science research with a particular focus on neuroscience. Its business activities encompass majority shareholdings in two other healthcare companies, H. Lundbeck and Falck, a significant shareholding in Ferrosan Medical Devices, an international portfolio of early-stage biotech companies, as well as management of a DKK 22 billion portfolio of financial investments which are primarily invested in listed securities.
Anders Hedegaard (1960, Danish)
Professional board member Chair
Board member since 20202
Member of the Audit Committee Chair of the Remuneration & Nomination Committee Member of the Scientific Committee
Specific expertise within management and sales & marketing in international life science and consumer care companies.
Rodenstock Group, Germany: Board member and adviser to Management
The Lundbeck Foundation, CEO and directorships at two other subsidiaries Vice Chair
Board member since 20142 Member of the Remuneration & Nomination Committee Member of the Scientific Committee
Lene Skole1 (1959, Danish)
Experience in management, financial and economic expertise, experience in strategy and communication in international companies.
Falck A/S: Vice Chair, member of the Audit and the Remuneration Committees H. Lundbeck A/S: Vice Chair and member of the Nomination, Remuneration, and Scientific Committees Nordea Bank Abp, Finland: Board member and member of the Audit Committee Ørsted A/S: Vice Chair and member of the Nomination and Remuneration Committees
GN Hearing, CEO
Board member since 20212 Member of the Audit Committee
Extensive global leadership experience and deep understanding of international management, finance, IT, and sales & marketing, as well as considerable insights into building digital communities.
Danmarks Nationalbank: Member of the Committee of Directors HIMPP A/S (Hearing Instrument Manufacturers Patent Partnership): Board member Union therapeutics A/S: Board member The Danish Chamber of Commerce: Board member and member of the Executive Committee
Professional board member
Lars Holmqvist1 (1959, Swedish)
Board member since 20152
Experience in management, finance, and sales & marketing in international life science companies, including med-tech and pharmaceutical companies.
Biovica International AB: Chair and member of the Audit Committee H. Lundbeck A/S: Board member and member of the Audit Committee The Lundbeck Foundation: Board member and Chair of the Investment Committee Vitrolife AB, Sweden: Board member and member of the Audit Committee Life Healthcare Group Holdings Ltd, South Africa: Board member and member of the Audit and Investment Committees
1 These board members are not regarded as independent in the sense of the definition contained in the Danish recommendations on corporate governance due to being affiliated with the Lundbeck Foundation, which owns 40.3% of ALK's shares.
2 All members elected by the annual general meeting are up for re-election each year.
3 Directorships do not include those for companies that are privately owned, in whole or in part, by members of the Board of Directors.
Bertil Lindmark (1955, Swedish)
Galecto A/S, Chief Medical Officer
Board member since 20212 Chair of the Scientific Committee
More than 30 years of experience of global R&D leadership in pharmaceuticals and biotech. Brings board-level experience from Almirall and Medicon Valley Alliance, and served on the Research Board of AstraZeneca. Has also participated in a range of IPOs, acquisitions and debt-financing activities.
Aqilion AB, Sweden: Chair of the Board Cellevate, Sweden: Director of the Board
Sanofi, Bayer and Roche.
Senior Adviser, Bamboo Capital Partners
Board member since 20222 Member of the Remuneration & Nomination Committee
Jakob Riis1 (1966, Danish)
Falck A/S, President & CEO
Board member since 20132 Chair of the Audit Committee
Experience in management and sales & marketing in the international healthcare industry.
Directorships3
The Danish Chamber of Commerce: Board member and member of the Executive Committee
1 These board members are not regarded as independent in the sense of the definition contained in the Danish recommendations on corporate governance due to being affiliated with the Lundbeck Foundation, which owns 40.3% of ALK's shares.
2 All members elected by the annual general meeting are up for re-election each year.
3 Directorships do not include those for companies that are privately owned, in whole or in part, by members of the Board of Directors.
Katja Barnkob (1969, Danish)
Project Director, Global CMC Development, ALK-Abello A/S
Board member since 2011 Employee-elected
Experience in project management of global drug development projects in the pharmaceutical industry.
The Lundbeck Foundation: Employee-elected board member
Senior Manager, QA Release, ALK-Abelló A/S
Nanna Rassov Carlson (1976, Danish)
Board member since 2019 Employee-elected
active pharmaceutical ingredients for sublingual immunotherapy products.
Johan Smedsrud (1972, Danish)
Maintenance Supporter, Process & Production Support, ALK-Abelló A/S
Board member since 2019 Employee-elected
Competencies Experience in HVAC systems, cleanroom testing, utensil washing and sterilisation for the pharmaceutical industry.
3 Directorships do not include those for companies that are privately owned, in whole or in part, by members of the Board of Directors.
Carsten Hellmann (1964, Danish)
Competencies
Executive management experience in global healthcare and biopharmaceutical companies.
President & CEO Executive Vice President, Research & Development
Competencies
(1965, Danish)
Experience in management, innovation, and research & development in the pharmaceutical industry.
Henrik Jacobi holds a degree in Medicine from 1993.
Executive Vice President & CFO Executive Vice President,
Experience in management, financial and economic expertise in the pharmaceutical industry and other sectors.
Commercial Operations
Experience in management, as well as global production and sales & marketing within the pharmaceutical industry.
Coloplast A/S Copenhagen Capacity The Danish Chamber of Commerce
1 Directorships do not include those for companies that are privately owned, in whole or in part, by members of the Board of Directors.
2 Henrik Jacobi, Executive Vice President, Research & Development will leave ALK on 28 February 2023.
3 Søren Jelert, Executive Vice President & CFO will leave ALK no later than 31 May 2023.
The Board of Directors and the Board of Management have today considered and adopted the annual report of ALK-Abelló A/S for the financial year 1 January to 31 December 2022.
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act. The parent company financial statements have been prepared in accordance with the Danish Financial Statements Act. Management's review has been prepared in accordance with the Danish Financial Statements Act.
In our opinion, the consolidated financial statements and the parent company financial statements give a true and fair view of the financial position at 31 December 2022 of the group and the parent company and of the results of the group and parent company's operations and consolidated cash flows for the
financial year 1 January to 31 December 2022.
In our opinion, Management's review includes a true and fair account of the development in the operations and financial circumstances of the group and the parent company, of the results for the year, and of the financial position of the group and the parent company, as well as a description of the most significant risks and elements of uncertainty facing the group and the parent company.
In our opinion, the annual report of ALK-Abelló A/S for the financial year 1 January to 31 December 2022 identified as "ALK-2022-12-31.zip" is prepared, in all material respects, in compliance with the European Single Electronic Format (ESEF) Regulation.
We recommend that the annual report be adopted at the annual general meeting.
Hørsholm, 3 February 2023
| Board of Management | ||
|---|---|---|
| Carsten Hellmann President & CEO |
||
| Henrik Jacobi Executive Vice President, Research & Development |
Søren Jelert Executive Vice President & CFO |
Søren Daniel Niegel Executive Vice President, Commercial Operations |
| Board of Directors | ||
| Anders Hedegaard Chair |
Lene Skole Vice Chair |
Gitte Aabo |
| Katja Barnkob | Nanna Rassov Carlson | Lars Holmqvist |
| Bertil Lindmark | Alan Main | Jakob Riis |
| Johan Smedsrud |
Report on the audit of the Financial Statements
In our opinion, the Consolidated Financial Statements give a true and fair view of the Group's financial position at 31 December 2022 and of the results of the Group's operations and cash flows for the financial year 1 January to 31 December 2022 in accordance with International Financial Reporting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act.
Moreover, in our opinion, the Parent Company Financial Statements give a true and fair view of the Parent Company's financial position at 31 December 2022 and of the results of the Parent Company's operations for the financial year 1 January to 31 December 2022 in accordance with the Danish Financial Statements Act.
Our opinion is consistent with our Auditor's Long-form Report to the Audit Committee and the Board of Directors.
The Consolidated Financial Statements (pp 55-94) and the Parent Company Financial Statements (pp 95-107) of ALK-Abelló A/S for the financial year 1 January to 31 December 2022 comprise income statement, balance sheet, statement of changes in equity and notes, including summary of significant accounting policies for the Group as well as for the Parent Company, and statement of comprehensive income and cash flow statement for the Group.
Collectively referred to as the "Financial Statements".
We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in Denmark. Our responsibilities under those standards and requirements are further described in the Auditor's responsibilities for the audit of the Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Group in accordance with the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (IESBA Code) and the additional ethical requirements applicable in Denmark. We have also fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.
To the best of our knowledge and belief, prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No 537/2014 were not provided.
We were first appointed auditors of ALK-Abelló A/S on 11 March 2020 for the financial year 2020. We have been reappointed annually by shareholder resolution for a total period of uninterrupted engagement of 3 years including the financial year 2022.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Statements for 2022. These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
The Group sells products in certain markets subject to various rebate and discount arrangements and mandated price adjustments schemes. These arrangements and schemes result in deductions to gross revenue in arriving at net revenue and in accruals for estimated sales deductions.
We focused on these areas as accounting for rebates, discounts and mandated price adjustments is complex and requires a high degree of estimation by Management. This includes the estimation uncertainty regarding accruals for estimated sales deductions.
We refer to note 2.1 in the consolidated financial statements.
We discussed the principles for accounting for rebates, discounts and mandated price adjustments with Management.
We performed risk assessment procedures to obtain an understanding of the IT systems, business processes and relevant controls for revenue recognition and related sales deductions. We assessed whether the controls were designed and implemented to effectively address the risk of material misstatement.
We evaluated and challenged the assumptions and estimates, including models and data used for calculating rebates, discounts and mandated price adjustments and accruals for sales deductions.
We assessed the appropriateness of the related disclosure provided in the consolidated financial statements.
Management is responsible for Management's Review (pp 1-48 and 108).
Our opinion on the Financial Statements does not cover Management's Review, and we do not express any form of assurance conclusion thereon.
In connection with our audit of the Financial Statements, our responsibility is to read Management's Review and, in doing so, consider whether Management's Review is materially inconsistent with the Financial Statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
Moreover, we considered whether Management's Review includes the disclosures required by the Danish Financial Statements Act.
Based on the work we have performed, in our view, Management's Review is in accordance with the Consolidated Financial Statements and the Parent Company Financial Statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any
material misstatement in Management's Review.
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 further requirements in the Danish Financial Statements Act and for the preparation of parent company financial statements 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 financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the Financial Statements, Management is responsible for assessing the Group's and the Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Management either intends to liquidate the Group or the Parent Company or to cease operations, or has no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements.
As part of an audit in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
events or conditions that may cast significant doubt on the Group's and the Parent Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group or the Parent Company to cease to continue as a going concern.
direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and, where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter.
As part of our audit of the Financial Statements we performed procedures to express an opinion on whether the annual report of ALK-Abelló A/S for the financial year 1 January to 31 December 2022 with the filename alk-2022-12-31-en.zip is prepared, in all material respects, in compliance with the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) which includes requirements related to the preparation of the annual report in XHTML format and iXBRL tagging of the Consolidated Financial Statements including notes.
Management is responsible for preparing an annual report that complies with the ESEF Regulation. This responsibility includes:
required to be tagged using judgement where necessary;
Our responsibility is to obtain reasonable assurance on whether the annual report is prepared, in all material respects, in compliance with the ESEF Regulation based on the evidence we have obtained, and to issue a report that includes our opinion. The nature, timing and extent of procedures selected depend on the auditor's judgement, including the assessment of the risks of material departures from the requirements set out in the ESEF Regulation, whether due to fraud or error. The procedures include:
• Testing whether the annual report is prepared in XHTML format;
In our opinion, the annual report of ALK-Abelló A/S for the financial year 1 January to 31 December 2022 with the file name alk-2022-12-31-en.zip is prepared, in all material respects, in compliance with the ESEF Regulation.
Hellerup, 3 February 2023
Statsautoriseret Revisionspartnerselskab CVR No 33 77 12 31
State Authorised Public Accountant mne23331
State Authorised Public Accountant mne33251
| Income statement | 56 |
|---|---|
| Statement of comprehensive income | 56 |
| Cash flow statement | 57 |
| Balance sheet | 58 |
| Statement of changes in equity | 59 |
| Notes | 60 |
| Definitions | 94 |
| 3.1 | Intangible assets | 70 |
|---|---|---|
| 3.2 | Property, plant and equipment | 72 |
| 3.3 | Leases | 74 |
| 3.4 | Inventories | 76 |
| 3.5 | Trade receivables | 77 |
| 3.6 | Prepayments | 77 |
| 3.7 | Pensions and similar liabilities | 78 |
| 3.8 | Provisions | 80 |
| 3.9 | Other payables | 80 |
3.10 Contingent liabilities and commitments 81
| 4.1 | Share capital and earnings per share |
82 |
|---|---|---|
| 4.2 | Financial risks and financial instruments |
83 |
| 5.1 | Share-based payments | 88 |
|---|---|---|
| 5.2 | Cash flow | 91 |
| 5.3 | Related parties | 92 |
| 5.4 | Events after the reporting period | 92 |
| 5.5 | Approval of financial statements | 92 |
| 5.6 | List of companies in the ALK Group | 93 |
| Amounts in DKKm | Note | 2022 | 2021 |
|---|---|---|---|
| Revenue | 2.1 | 4,511 | 3,916 |
| Cost of sales | 2.2-2.4, 3.4, 5.1 | 1,720 | 1,520 |
| Gross profit | 2,791 | 2,396 | |
| Research and development expenses | 2.2-2.4, 5.1 | 665 | 631 |
| Sales and marketing expenses | 2.2-2.4, 5.1 | 1,381 | 1,234 |
| Administrative expenses | 2.2-2.4, 5.1 | 276 | 240 |
| Other operating income | 1 | 1 | |
| Operating profit (EBIT) | 470 | 292 | |
| Financial income | 2.6 | 4 | 10 |
| Financial expenses | 2.6 | 27 | 23 |
| Profit before tax (EBT) | 447 | 279 | |
| Tax on profit | 2.7 | 112 | 60 |
| Net profit | 335 | 219 | |
| Earnings per share (EPS) | 4.1 | ||
| Earnings per share (EPS) | 1.52 | 1.00 | |
| Earnings per share (DEPS), diluted | 1.51 | 0.99 | |
| Amounts in DKKm | Note | 2022 | 2021 |
|---|---|---|---|
| Net profit | 335 | 219 | |
| that subsequently be reclassified Items will not the income to statement: |
|||
| Actuarial gains on pension plans | 3.7 | 96 | 16 |
| Tax related to actuarial gains/(losses) on pension plans | 2.7 | (30) | (5) |
| Items that will subsequently be reclassified to the when specific conditions income statement, are met: |
66 | 11 | |
| Foreign currency translation adjustment of foreign affiliates | 61 | 84 | |
| Tax related to other comprehensive income, that will subsequently be reclassified to the income statement |
2.7 | 4 | (4) |
| 65 | 80 | ||
| Other comprehensive income | 131 | 91 | |
| Total comprehensive income | 466 | 310 |
| Amounts in DKKm | Note | 2022 | 2021 |
|---|---|---|---|
| Net profit | 335 | 219 | |
| Adjustments | |||
| Adjustments for non-cash items | 5.2 | 406 | 400 |
| Changes in working capital | 5.2 | (235) | (28) |
| Financial income, received | 2 | - | |
| Financial expenses, paid | (14) | (23) | |
| Income tax, paid (net) | (78) | (100) | |
| Cash flow from operating activities | 416 | 468 | |
| Investments in intangible assets | 3.1 | (55) | (45) |
| Investments in tangible assets | 3.2-3.3 | (298) | (218) |
| Investments in other financial assets | 2 | (3) | |
| Cash flow from investing activities | (351) | (266) | |
| Free cash flow | 65 | 202 | |
| Sale of treasury shares | 42 | 31 | |
| Exercised share options, paid | (11) | (72) | |
| Proceeds from borrowings | 5.2 | 60 | 226 |
| Repayment of borrowings | 5.2 | (94) | (464) |
| Repayment of lease liabilities | 5.2 | (39) | (32) |
| Cash flow from financing activities | (42) | (311) | |
| Net cash flow | 23 | (109) | |
| Cash beginning of year | 194 | 298 | |
| Unrealised gain/(loss) on cash held in foreign currency and | |||
| financial assets carried as cash | 4 | 5 | |
| Net cash flow | 23 | (109) | |
| Cash year end | 221 | 194 |
The consolidated statement of cash flow is compiled using the indirect method. As a result, the individual figures in the cash flow statement cannot be reconciled directly to the income statement and the balance sheet.
| Note Amounts in DKKm |
31 Dec. 2022 |
31 Dec. 2021 |
|---|---|---|
| Non-current assets | ||
| Intangible assets | ||
| Goodwill 3.1 |
460 | 457 |
| Other intangible assets 3.1 |
182 | 165 |
| 642 | 622 | |
| Tangible assets | ||
| Land and buildings 3.2-3.3 |
991 | 958 |
| Plant and machinery 3.2 |
440 | 451 |
| Other fixtures and equipment 3.2-3.3 |
76 | 80 |
| Property, plant and equipment in progress 3.2 |
511 | 325 |
| 2,018 | 1,814 | |
| Other non-current assets | ||
| Prepayments | 94 | 29 |
| Deferred tax assets 2.7 |
716 | 790 |
| Income tax receivables | 193 | 172 |
| 1,003 | 991 | |
| Total non-current assets | 3,663 | 3,427 |
| Current assets | ||
| Inventories 3.4 |
1,297 | 1,204 |
| Trade receivables 3.5 |
764 | 583 |
| Receivables from group companies 5.3 |
18 | 12 |
| Income tax receivables | 24 | 14 |
| Other receivables | 82 | 82 |
| Prepayments 3.6 |
239 | 314 |
| Cash | 221 | 194 |
| Total current assets | 2,645 | 2,403 |
Total assets 6,308 5,830
| Amounts in DKKm | Note | 31 Dec. 2022 |
31 Dec. 2021 |
|---|---|---|---|
| Equity | |||
| Share capital | 4.1 | 111 | 111 |
| Currency translation adjustment | 20 | (41) | |
| Retained earnings | 3,857 | 3,410 | |
| Total equity | 3,988 | 3,480 | |
| Liabilities | |||
| Non-current liabilities | |||
| Mortgage debt | 4.2 | 203 | 222 |
| Pensions and similar liabilities | 3.7 | 236 | 324 |
| Lease liabilities | 4.2 | 226 | 207 |
| Deferred income | 49 | 42 | |
| Deferred tax liabilities | 2.7 | 4 | 1 |
| Income tax payables | 203 | 169 | |
| 921 | 965 | ||
| Current liabilities | |||
| Mortgage debt | 4.2 | 18 | 18 |
| Bank loans | 4.2 | 208 | 226 |
| Trade payables | 131 | 115 | |
| Lease liabilities | 4.2 | 41 | 37 |
| Deferred income | 4 | 4 | |
| Provisions | 3.8 | 3 | 12 |
| Income tax payables | 16 | 23 | |
| Other payables | 3.9 | 978 | 950 |
| 1,399 | 1,385 | ||
| Total liabilities | 2,320 | 2,350 | |
| Total equity and liabilities | 6,308 | 5,830 |
| Amounts in DKKm | Share capital |
Currency translation adjust ment |
Retained earnings |
Total equity |
|---|---|---|---|---|
| 2022 | ||||
| Equity at 1 January | 111 | (41) | 3,410 | 3,480 |
| Net profit | - | - | 335 | 335 |
| Other comprehensive income | - | 61 | 70 | 131 |
| Total comprehensive income | - | 61 | 405 | 466 |
| Share-based payments | - | - | 27 | 27 |
| Share options settled | - | - | (11) | (11) |
| Sale of treasury shares | - | - | 42 | 42 |
| Tax related to items recognised directly in equity | - | - | (16) | (16) |
| Other transactions | - | - | 42 | 42 |
| Equity at 31 December | 111 | 20 | 3,857 | 3,988 |
| Amounts in DKKm | Share capital |
Currency translation adjust ment |
Retained earnings |
Total equity |
|---|---|---|---|---|
| 2021 | ||||
| Equity at 1 January | 111 | (125) | 3,167 | 3,153 |
| Net profit | - | - | 219 | 219 |
| Other comprehensive income | - | 84 | 7 | 91 |
| Total comprehensive income | - | 84 | 226 | 310 |
| Share-based payments | - | - | 36 | 36 |
| Share options settled | - | - | (72) | (72) |
| Sale of treasury shares | - | - | 31 | 31 |
| Tax related to items recognised directly in equity | - | - | 10 | 10 |
| Other adjustments | - | - | 12 | 12 |
| Other transactions | - | - | 17 | 17 |
| Equity at 31 December | 111 | (41) | 3,410 | 3,480 |
The consolidated financial statements for the period 1 January to 31 December 2022 have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU and in accordance with Danish disclosure requirements for listed companies. Additional Danish disclosure requirements for annual reports are imposed by the Statutory Order on Adoption of IFRS issued under the Danish Financial Statements Act.
The consolidated financial statements are presented in Danish kroner (DKK), which is considered the primary currency of the ALK Group's activities and the functional currency of the parent company.
The consolidated financial statements are presented on a historical cost basis, apart from certain financial instruments, which are measured at fair value.
The general accounting policies described below apply to the consolidated financial statements as a whole. To enhance understanding, specific accounting policies are described in the notes to which they relate. The description of accounting policies in the notes form part of the overall description of accounting policies.
The accounting policies are unchanged from last year except for the below mentioned impacts of new standards.
The ALK Group has implemented all new and amended standards and IFRIC interpretations which are effective for the financial year 2022. This has not resulted in any changes to the accounting policies of the ALK Group.
A number of IFRS standards, amended standards and IFRIC interpretations, which are effective on or after 1 January 2023, have not been implemented. Based on a preliminary assessment it is estimated that these standards and interpretations will have no material impact on the consolidated financial statements.
The consolidated financial statements comprise the financial statements of ALK-Abelló A/S (the parent company) and companies (subsidiaries) controlled by the parent company.
The consolidated financial statements are prepared as a consolidation of items of a uniform nature. The financial statements used for consolidation are prepared in accordance with the ALK Group's accounting policies.
On consolidation, intra-group income and expenses, intra-group balances and dividends, and gains and losses arising on intra-group transactions are eliminated.
On initial recognition, transactions denominated in currencies other than DKK are translated at average exchange rates, which are an approximation of the exchange rates at the transaction date. Receivables and debt and other monetary items not settled at the balance sheet date are translated at the closing rate.
Exchange rate differences between the exchange rate at the date of the transaction and the exchange rate at the date of payment or the balance sheet date, respectively, are recognised in the income statement under financial items. Tangible assets and intangible assets, inventories and other nonmonetary assets acquired in foreign currency and measured based on historical cost are translated at the exchange rates at the transaction date. On recognition in the consolidated financial statements of subsidiaries whose financial statements are presented in a functional currency other than DKK, the income statements are translated at average exchange rates for the respective months, unless these deviate materially from the actual exchange rates at the transaction dates. In that case, the actual exchange rates are used. Balance sheet items are translated at the exchange rates at the balance sheet date. Goodwill is considered to belong to the acquired company in question and is translated at the exchange rate at the balance sheet date.
Exchange rate differences arising on the translation of foreign subsidiaries' opening balance sheet items to the exchange rates at the balance sheet date and on the translation of the income statements from average exchange rates to exchange rates at the balance sheet date are recognised in other comprehensive income.
Foreign exchange rate adjustment of receivables or debt to subsidiaries which are considered part of the parent company's overall investment in the subsidiary in question are also recognised in other comprehensive
income in the consolidated financial statements.
The key ratios have been calculated in accordance with generally accepted financial ratios applied by financial analysts. Definitions are shown on page 94.
The Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF) (ESEF Regulation) has introduced a single electronic reporting format for the annual financial reports of issuers with securities listed on the EU regulated markets.
The ESEF Regulation sets out the following main requirements: (1) Issuers shall draw up and disclose their annual financial reports using the XHTML format; and (2) issuers that draw-up their primary consolidated financial statements in accordance with IFRS as endorsed by the EU shall tag those consolidated financial statements using inline eXtensible Business Reporting Language (iXBRL) including block-tag of the notes to the consolidated financial statements.
The combination of the XHTML format with the iXBRL tags makes the annual financial reports both humanreadable and machine-readable, thus enhancing accessibility, analysis and comparability of the information included in the annual financial reports.
iXBRL tags shall comply with the ESEF taxonomy, which is included in the ESEF Regulation and developed based on the IFRS taxonomy published by the IFRS Foundation.
As part of the tagging process financial statement line items are marked up to elements in the ESEF taxonomy. If a financial statement line item is not defined in the ESEF taxonomy, an extension to the taxonomy is created. Extensions have to be anchored to elements in the ESEF taxonomy, except for elements corresponding to subtotals.
The annual report 2022 for the ALK Group submitted to the Danish Financial Supervisory Authority and Nasdaq consists of the XHTML document together with some technical files all included in a ZIP file named "ALK-2022- 12-31-en.zip".
XHTML (eXtensible HyperText Markup Language) is a text-based markup language used to structure and mark up content such as text, images, and hyperlinks in documents that are displayed as Web pages in an updated standard Web browser like Chrome or Edge.
iXBRL tags (or Inline XBRL tags) are hidden meta-information embedded in the source code of an XHTML document in accordance with the Inline XBRL 1.1 specification, which enables the conversion of XHTML-formatted information into a machine-readable XBRL data record by appropriate software.
The tagging process is a process where iXBRL tags are applied to financial statement line items, notes etc.
Taxonomy is an electronic dictionary of business reporting elements used to report business data. A taxonomy element is an element defined in a taxonomy that is used for the machinereadable labeling of information in an XBRL data record.
Name of reporting entity or other means of identification ALK-Abelló A/S
Domicile of entity Denmark
A/S
Address of entity's registered office Bøge Allé 6-8, DK-2970 Hørsholm
Description of nature of entity's operations and principal activities ALK is a global allergy solutions company
Name of parent entity
Lundbeckfond Invest A/S
Name of ultimate parent of group Lundbeck Foundation
In the preparation of the consolidated financial statements according to IFRS, Management is required to make certain estimates as many financial statement items cannot be reliably measured, but must be estimated. Such estimates comprise judgements made on the basis of the most recent information available at the reporting date.
It may be necessary to change previous estimates as a result of changes to the assumptions on which the estimates were based or due to supplementary
information, additional experience or subsequent events. Similarly, the value of assets and liabilities often depends on future events that are somewhat uncertain. In that connection, it is necessary to set out e.g. a course of events that reflects Management's assessment of the most probable course of events.
A description of significant accounting estimates and judgements as well as assumptions applied is included in the relevant notes.
Management considers those listed below as the key accounting estimates and related judgements used in the preparation of the consolidated financial statements.
| Note | Key accounting estimates and judgements | Estimate/ judgement |
|---|---|---|
| 2.1 Revenue and segment information |
Sales deductions comprising rebates, discounts, and mandated price adjustments |
Estimate |
| 2.2 Expenses |
Recognition of costs for outsourced clinical trials | Estimate |
| 2.7 Income tax and deferred tax |
Provision for uncertain tax positions and measurement of deferred tax assets |
Estimate/ judgement |
| 3.1 Intangible assets |
Recoverable amount of goodwill | Estimate |
| 3.4 Inventories |
Valuation of inventories and capitalisation of indirect production costs |
Estimate |
| Europe | North America | International markets | Total | |||||
|---|---|---|---|---|---|---|---|---|
| Amounts in DKKm | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
| SCIT/SLIT-drops | 1,266 | 1,273 | 349 | 302 | 133 | 80 | 1,748 | 1,655 |
| SLIT-tablets | 1,519 | 1,340 | 151 | 120 | 432 | 314 | 2,102 | 1,774 |
| Other products and services | 273 | 196 | 357 | 261 | 31 | 30 | 661 | 487 |
| Total revenue | 3,058 | 2,809 | 857 | 683 | 596 | 424 | 4,511 | 3,916 |
| Sale of goods | 4,411 | 3,835 | ||||||
| Royalties | 93 | 81 | ||||||
| Services | 7 | - | ||||||
| Total revenue | 4,511 | 3,916 |
Of total revenue, DKK 119 million (2021: DKK 101 million) is derived from Denmark.
The ALK Group's non-current tangible and intangible assets are distributed among the following geographical markets:
| Europe North America |
International markets | Total | ||||||
|---|---|---|---|---|---|---|---|---|
| Amounts in DKKm | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
| Non-current tangible and | ||||||||
| intangible assets | 1,754 | 1,671 | 899 | 763 | 7 | 2 | 2,660 | 2,436 |
Of total non-current tangible and intangible assets, DKK 1,356 million relates to assets in Denmark (2021: DKK 1,283 million).
Based on the internal reporting used by the Board of Management to assess the results of operations and allocation of resources, the ALK Group has identified one operating segment 'Allergy treatment', which is in accordance with the way the activities are organised and managed. Even though revenue within the operating segment "Allergy treatment" can be divided by product lines and market, the main part of the activities within production, research and development, sales and marketing and administration are shared by the ALK Group as a whole. The disclosures in the financial statements include a breakdown of revenue by product line and a geographical breakdown of revenue and non-current assets. The geographical information on markets is based on customer and asset location.
The primary performance obligation of the ALK Group is the sale and delivery of own-manufactured goods and goods for resale for allergy treatment. Revenue from the sale of goods is recognised in the income statement upon the control of the goods being transferred to the customer, i.e. when goods are delivered. Revenue is recognised by the ALK Group at a point in time.
The ALK Group's customers have payment terms that reflect the customer type and the market in which sales take place, which typically varies from 0 to 180 days.
Revenue is measured as the fair value of the consideration received or receivable.
Revenue is measured exclusive of VAT, taxes etc. charged on behalf of third parties and less any commissions and discounts in connection with sales.
Furthermore, revenue includes licence income and royalties from outlicensed products as well as up-front payments, milestone payments and services in connection with partnerships. These revenues are recognised in the income statement in accordance with the agreements and when the ALK Group obtains the right to the payments, which is when services have been delivered to the customer or at the point in time the subsequent sales occur.
When combined contracts are entered, the elements of the contracts are identified and assessed separately for accounting purposes.
Sales deductions comprising rebates, discounts, and mandated price adjustments are estimated and accrued for at the time when the related sales are recorded. Management is required to make significant estimates in the revenue recognition relating to the accruals for sales deductions as not all conditions are known at the time of sale and as revenue can only be recognised to the extent that it is probable that a significant reversal of the recognised revenue will not occur.
Management's estimate of accruals for sales deductions is based on a calculation taking into consideration among other factors, existing contractual obligations, the extent of predictability, historical experience with similar transactions and whether the consideration is highly susceptible to factors outside ALK's influence.
ALK considers the accruals established for sales deductions to be reasonable and appropriate based on currently available information. The accruals for sales deductions are adjusted regularly as new or more detailed information becomes available and when actual amounts are processed.
The item comprises cost of sales and production costs incurred in generating the revenue for the year. Costs for raw materials, consumables, goods for resale, production staff and a proportion of production overheads, including maintenance and depreciation, amortisation and impairment of tangible assets and intangible assets used in production as well as operation, administration and management of factories are recognised in cost of sales and production costs. In addition, the costs and write-down to net realisable value of obsolete and slow-moving goods are recognised.
The item comprises research and development expenses, including expenses incurred for wages and salaries, amortisation, impairment of capitalised development projects in progress, and other overheads as well as costs relating to research partnerships. Research expenses are recognised in the income statement when incurred. Due to the long development periods and significant uncertainties in relation to the development of new products, including risks regarding clinical trials and regulatory approvals, it is the assessment that most of the ALK Group's development expenses do not meet the capitalisation criteria in IAS 38, Intangible Assets. Consequently, development expenses are generally recognised in the income statement when incurred. Development expenses relating to individual minor development projects running for short-term periods and subject to limited risk are capitalised under other intangible assets.
The item comprises selling and marketing expenses, including salaries and expenses relating to sales staff, advertising and exhibitions, depreciation, amortisation and impairment losses on tangible assets and intangible assets used in the sales and marketing process as well as other indirect costs.
The item comprises expenses incurred for management and administration, including expenses for administrative staff and management, office expenses and depreciation, amortisation and impairment losses on tangible assets and intangible assets used in administration.
Clinical trials, which are outsourced to Clinical Research Organisations ("CROs"), take several years to complete. As such, Management is required to make estimates based on the progress and costs incurred to-date for the ongoing trials. Estimates are made in determining the amount of costs to be expensed during the period or recognised as prepayments or accruals on the balance sheet.
At 31 December 2022, DKK 114 million is recognised as accrued expenses (2021: DKK 179 million) and DKK 130 million as prepayments in the balance sheet (2021: DKK 240 million). In 2022, clinical trials expenses of DKK 240 million have been recognised in the income statement (2021: DKK 242 million).
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Depreciation, amortisation and impairment allocation: | ||
| Cost of sales | 163 | 158 |
| Research and development expenses | 9 | 8 |
| Sales and marketing expenses | 23 | 36 |
| Administrative expenses | 43 | 40 |
| Total | 238 | 242 |
Impairment amounts to DKK 2 million (2021: DKK 20 million), of which DKK 1 million relates to impairment of tangible assets (2021: DKK 8 million) and DKK 1 million relates to intangible assets (2021: DKK 12 million).
The impairment of tangible assets is related to impairment of production equipment of DKK 1 million with no recoverable amount after impairment. The impairment is recognised as cost of sales.
The impairment of intangible assets is related to impairment of goodwill of DKK 1 million with no recoverable amount after impairment. The impairment is associated with closing down activities in Turkey and is recognised as sales and marketing expenses.
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Wages and salaries | 1,584 | 1,425 |
| Pensions, cf. note 3.7 | 131 | 115 |
| Other social security costs, etc. | 207 | 193 |
| Share-based payments, cf. note 5.1 | 27 | 35 |
| Total | 1,949 | 1,768 |
| Staff costs are allocated as follows: | ||
| Cost of sales | 747 | 682 |
| Research and development expenses | 279 | 254 |
| Sales and marketing expenses | 673 | 604 |
| Administrative expenses | 187 | 170 |
| Included in the cost of assets | 63 | 58 |
| Total | 1,949 | 1,768 |
| Remuneration to Management: | ||
| Remuneration to Board of Management:* | ||
| Salaries | 19 | 18 |
| Short-term incentive (cash bonus) | 12 | 12 |
| Pensions | 1 | 1 |
| Long-term incentives (share-based) based on expensed accounting value | 7 | 11 |
| Total remuneration to Board of Management | 39 | 42 |
| Remuneration to Board of Directors | 6 | 5 |
| Total remuneration to Board of Management and Board of Directors | 45 | 47 |
| Employees | ||
| Average number (FTE) | 2,609 | 2,492 |
| Number year end (FTE) | 2,680 | 2,537 |
* The expensed costs include DKK 0 (2021: DKK 5 million) related to adjustment in the share options and performance share units expected to vest.
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Fees to the auditors appointed at the annual general meeting: | ||
| Audit services | 3 | 3 |
| Other opinions | - | - |
| Tax advisory services | - | 1 |
| Other services | 1 | - |
| Total | 4 | 4 |
The fee for non-audit services provided by PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab (Denmark) of DKK 1 million (2021: DKK 1 million) relates to HR consulting and other general financial accounting matters.
For information on ALK entities intended to be exempt from local audits of the 2022 accounts, see note 5.6.
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Interest income | 4 | 1 |
| Financial income from financial assets measured at amortised cost | 4 | 1 |
| Currency gains, net | - | 9 |
| Total financial income | 4 | 10 |
| Interest expenses* | 22 | 23 |
| Financial expenses from financial liabilities measured at amortised cost | 22 | 23 |
| Interest expenses on uncertain tax positions, net | 2 | - |
| Currency losses, net | 3 | - |
| Total financial expenses | 27 | 23 |
* Includes interest expenses related to leasing of DKK 6 million (2021: DKK 7 million).
Financial items comprise interest receivable and interest payable, the interest element of lease payments, realised and unrealised gains and losses on securities, cash, liabilities and foreign currency transactions, mortgage amortisation premium/allowance etc. and provisions for uncertain tax position.
Interest expenses and income related to uncertain tax position are recognised on the balance sheet as tax liabilities and tax assets respectively upon the receipt of ruling from the tax authorities and correspondingly reflected in the income statement as financial items net.
Interest income and expenses are accrued based on the principal and the effective rate of interest. The effective rate of interest is the discount rate to be used on discounting expected future payments in relation to the financial asset or the financial liability so that their present value corresponds to the carrying amount of the asset or liability, respectively.
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Tax on profit | ||
| Current income tax | 91 | 154 |
| Adjustment of deferred tax | 20 | (97) |
| Prior years adjustments, income tax | 3 | 3 |
| Prior years adjustments, deferred tax | (2) | - |
| Tax on profit for the year | 112 | 60 |
| Profit before tax | 447 | 279 |
| Income tax, tax rate of 22% (2021: 22%) | 98 | 61 |
| Effect of deviation of foreign subsidiaries' tax rate | ||
| relative to Danish tax rate | 14 | 11 |
| Permanent differences | (10) | (14) |
| Other taxes and adjustments | 11 | 1 |
| Change in valuation of net tax assets | (2) | (2) |
| Prior years adjustments, income tax | 3 | 3 |
| Prior years adjustments, deferred tax | (2) | - |
| Tax on profit for the year | 112 | 60 |
Tax related to equity comprises an expense of DKK 16 million (2021: income of DKK 10 million) and other comprehensive income comprises an expense of DKK 26 million (2021: expense of DKK 9 million).
| Amounts in DKKm | Intangible assets |
Tangible assets |
Current and other assets |
Liabilities | Tax losses carried forward |
Total |
|---|---|---|---|---|---|---|
| 2022 | ||||||
| Deferred tax | ||||||
| Carrying amount beginning of year | (20) | (98) | 438 | 129 | 340 | 789 |
| Adjustment to prior years' deferred tax | - | (3) | 1 | 2 | 2 | 2 |
| Adjustment of receivables from group companies | - | - | - | - | (17) | (17) |
| Currency adjustments | - | (3) | - | 2 | 1 | - |
| Adjustment of deferred tax due to coming year change of tax rates | - | (1) | - | 1 | - | - |
| Recognised in the income statement, net | (4) | (2) | (37) | - | 21 | (22) |
| Change in valuation of net tax assets | - | - | - | 2 | - | 2 |
| Recognised in other comprehensive income, net | - | - | - | (30) | 4 | (26) |
| Recognised in equity, net (share-based payments) | - | - | (32) | - | 16 | (16) |
| Carrying amount year end | (24) | (107) | 370 | 106 | 367 | 712 |
| 2021 | ||||||
| Deferred tax | ||||||
| Carrying amount beginning of year | (7) | (103) | 340 | 135 | 332 | 697 |
| Adjustment to prior years' deferred tax | 3 | 1 | (4) | - | - | - |
| Adjustment of receivables from group companies | - | - | - | - | (6) | (6) |
| Currency adjustments | - | (2) | - | 1 | 1 | - |
| Recognised in the income statement, net | (16) | 6 | 125 | (4) | (16) | 95 |
| Change in valuation of net tax assets | - | - | - | 2 | - | 2 |
| Recognised in other comprehensive income, net | - | - | - | (5) | (4) | (9) |
| Recognised in equity, net (share-based payments) | - | - | (23) | - | 33 | 10 |
| Carrying amount year end | (20) | (98) | 438 | 129 | 340 | 789 |
Deferred tax consists of deferred tax assets of DKK 716 million (2021: DKK 790 million) and deferred tax liabilities of DKK 4 million (2021: DKK 1 million).
Unrecognised deferred tax assets comprising tax losses carried forward amount to DKK 11 million and relate to US entities (2021: DKK 14 million). The tax losses have no expiry date.
Tax on the profit for the year comprises the year's current tax and changes in deferred tax. The tax expense relating to the profit/loss for the year is recognised in the income statement, and the tax expense relating to items recognised in other comprehensive income and directly in equity, respectively, is recognised in other comprehensive income or directly in equity. Exchange rate adjustments of deferred tax are recognised as part of the adjustment of deferred tax for the year.
Current tax payable and receivable is recognised in the balance sheet as the expected tax on the taxable income for the year, adjusted for tax paid on account.
The current tax charge for the year is calculated based on the tax rates and rules enacted at the balance sheet date.
Uncertain tax position is recognised for those matters for which the tax determination is uncertain but it is considered probable that there will be a future outflow of funds to a tax authority (and a future inflow of funds from a tax authority). The uncertain tax position is measured at the best estimate of the amount expected to become payable (and receivable).
Deferred tax is measured using the balance sheet liability method on all temporary differences between the carrying amount and the tax base of assets and liabilities. However, deferred tax is not recognised on temporary differences relating to the initial recognition of goodwill or the initial recognition of a transaction, apart from business combinations, and where the temporary difference existing at the date of initial recognition affects neither profit/loss for the year nor taxable income.
Deferred tax is calculated based on the planned use of each asset and settlement of each liability, respectively. Deferred tax is measured using the tax rates and tax rules that, based on legislation enacted or in reality enacted at the balance sheet date, are expected to apply in the respective countries when the deferred tax is expected to crystallise as current tax. Changes in deferred tax as a result of changed tax rates or rules are recognised in the income statement, in other comprehensive income or in equity, depending on where the deferred tax was originally recognised. Deferred tax related to equity transactions is recognised in equity.
Deferred tax assets, including the tax value of tax loss carry-forwards, are recognised in the balance sheet at the value at which the asset is expected to be realised, either through a set-off against deferred tax liabilities or as net assets to be offset against future positive taxable income. Deferred tax assets including the tax value of tax losses are recognised if it is probable that it can be utilised against future taxable income within a foreseeable future. This includes an assessment of the possibilities to utilise tax losses in the joint Danish taxation scheme with the Lundbeck Foundation (Lundbeckfond Invest A/S).
At each balance sheet date, it is reassessed whether it is likely that there will be sufficient future taxable income for the deferred tax asset to be utilised.
The parent company is included in a joint Danish taxation scheme with the Lundbeck Foundation (Lundbeckfond Invest A/S) and its Danish subsidiaries. The tax charge for the year is allocated among the jointly taxed companies in proportion to the taxable incomes of individual companies, taking into account taxes paid.
Management is required to make an estimate in the recognition of deferred tax assets. This assessment includes estimates of future taxable income in ALK and other members of the joint Danish taxation scheme with the Lundbeck Foundation. The forecasts for ALK-Abelló A/S with increased positive results (EBT) is based on growth in revenue and earnings driven by SLIT-tablets.
At 31 December 2022, the value of the total net deferred tax asset is DKK 712 million (2021: DKK 789 million). It includes a net deferred tax asset in Denmark related to tax losses carried forward of DKK 343 million (2021: DKK 328 million).
Complying with tax rules, when conducting business globally, can be complex as the interpretation of legislation and case law may change over time or may not always be clear. Management's judgements are applied to assess the possible effect of exposures and the possible outcome of disputes or interpretational uncertainties when transfer pricing disputes with local tax authorities may occur. Dialogue with local tax authorities, tax advisors, business plans and knowledge of the business are key parameters for Management to estimate the tax assets and liabilities.
At 31 December 2022, the ALK Group recognises uncertain tax position as part of non-current tax. The actual outcome may deviate and depends on the result of litigation and settlements with the relevant local tax authorities.
| Amounts in DKKm | Goodwill | Software | Patents, trademarks and rights |
Other intangible assets* |
Total |
|---|---|---|---|---|---|
| 2022 | |||||
| Cost beginning of year | 479 | 420 | 236 | 249 | 1,384 |
| Currency adjustments | 4 | - | 3 | 2 | 9 |
| Additions | - | 8 | - | 47 | 55 |
| Disposals | (1) | (4) | (32) | - | (37) |
| Transfer to/from other groups | - | 35 | - | (35) | - |
| Cost year end | 482 | 459 | 207 | 263 | 1,411 |
| Amortisation and impairment | |||||
| beginning of year | 22 | 332 | 225 | 183 | 762 |
| Currency adjustments | - | 1 | 3 | 1 | 5 |
| Amortisation for the year | - | 28 | 6 | 4 | 38 |
| Disposals during the year | (1) | (4) | (32) | - | (37) |
| Impairment during the year, cf. note 2.3 |
1 | - | - | - | 1 |
| Amortisation and impairment year end |
22 | 357 | 202 | 188 | 769 |
| Carrying amount year end | 460 | 102 | 5 | 75 | 642 |
* Other intangible assets includes individual minor development projects running for short-term periods.
| Amounts in DKKm | Goodwill | Software | Patents, trademarks and rights |
Other intangible assets* |
Total |
|---|---|---|---|---|---|
| 2021 | |||||
| Cost beginning of year | 475 | 396 | 231 | 245 | 1,347 |
| Currency adjustments | 4 | 1 | 5 | 1 | 11 |
| Additions | - | 8 | 1 | 36 | 45 |
| Disposals | - | (17) | (1) | (1) | (19) |
| Transfer to/from other groups | - | 32 | - | (32) | - |
| Cost year end | 479 | 420 | 236 | 249 | 1,384 |
| Amortisation and impairment | |||||
| beginning of year | 23 | 313 | 214 | 173 | 723 |
| Currency adjustments | (1) | - | 4 | 1 | 4 |
| Amortisation for the year | - | 25 | 7 | 9 | 41 |
| Disposals during the year | - | (17) | (1) | - | (18) |
| Impairment during the year, | |||||
| cf. note 2.3 |
- | 11 | 1 | - | 12 |
| Amortisation and | |||||
| impairment year end | 22 | 332 | 225 | 183 | 762 |
| Carrying amount year end | 457 | 88 | 11 | 66 | 622 |
Goodwill is related to acquisition of companies in previous years and has been subject to an impairment test, which has been submitted to the Audit Committee for subsequent approval by the Board of Directors. The impairment test performed in 2022 revealed no need for impairment of goodwill.
Impairment of goodwill in 2022 of DKK 1 million is associated with closing down activities in Turkey.
Goodwill has been tested at an aggregated level for ALK as one cash-generating unit. In the calculation of the value in use of the cash-generating unit, future free net cash flow is estimated based on Board of Directors-approved budget (2023) and financial forecasts (2024-2025) in line with the ALK Group's strategy.
The budget and the forecast plans are based on specific future business initiatives for which the risks relating to key parameters have been assessed and recognised in estimated future free cash flows. The key parameters in the calculation of the value in use are revenue, earnings, working capital, capital expenditure, discount rate and the preconditions for the terminal value. Estimates are based on historical data and expectations on future changes in the markets and products. These expectations are based on a number of assumptions including expected product launches, volume forecasts, price information and profitability of both the ALK Group's business as well as geographical expansions.
For financial years after the three year forecast period (2023-2025), the cash flows in the most recent period have been extrapolated adjusted for a growth factor of 1.5% (2021: 1.5%) during the terminal period. The discount rate used is 9.6% pre-tax and 7.5% after tax (2021: 9% pre-tax and 7% after tax).
The calculated value in use shows that future earnings and cash flows fully support the carrying amount of total net assets, including goodwill.
On initial recognition, goodwill is measured and recognised as the excess of the cost of the acquired company over the fair value of the acquired assets, liabilities and contingent liabilities.
On recognition of goodwill, the goodwill amount is allocated to the ALK Group's cash-generating unit. The ALK Group is considered as one cash-generating unit as the individual companies and business units in the ALK Group cannot be evaluated separately due to the value-adding processes are generated across corporations and entities.
Goodwill is not amortised, but is tested for impairment at least once a year. To the extent that the carrying amount of goodwill exceeds the recoverable amount, goodwill is written down to this lower amount. Impairment of goodwill is not reversed.
Acquired intellectual property rights in the form of software, patents, trademarks, licenses, customer base, and similar rights are measured at cost less accumulated amortisation and impairment.
The cost of software includes costs of installation and direct salaries.
Intangible assets with determinable useful lives are amortised on a straight-line basis over the expected useful lives of the assets, typically not exceeding 10 years. If the actual useful life is shorter than either the remaining life or the contract period, the asset is amortised over this shorter useful life. The carrying amounts are reviewed at the balance sheet date to determine whether there are any indications of impairment. If such indications are identified, the recoverable amount of the asset is calculated to determine any need for an impairment write-down and, if so, the amount of the write-down.
Intangible assets with indeterminable useful lives are not amortised, but are tested for impairment at least once a year. To the extent that the carrying amount of the assets exceeds the recoverable amount, the assets are written down to this lower amount.
See note 3.2 for more information on assessment, recognition and reversal of impairment.
Other intangible assets includes individual minor development projects running for short-term periods, including software development projects, which fulfil the requirements in IFRS. The measurement and impairment follow the same rules as described above for software, patents, trademarks, and rights.
The assessment of whether goodwill is impaired requires a determination of the value in use of the cashgenerating unit. The determination of the value in use requires estimates of the expected future cash flow of the cash-generating unit and a reasonable discount rate.
At 31 December 2022, the carrying amount of goodwill is DKK 460 million (2021: DKK 457 million).
and the estimated lease terms are 15 years. See also note 3.3.
| Amounts in DKKm | Land and buildings* |
Plant and machinery |
Other fixtures and equipment |
Property, plant and equipment in progress |
Total |
|---|---|---|---|---|---|
| 2022 | |||||
| Cost beginning of year | 1,623 | 1,028 | 272 | 325 | 3,248 |
| Currency adjustments | 35 | 19 | 2 | 5 | 61 |
| Additions | 83 | 23 | 11 | 260 | 377 |
| Lease contract modifications | (17) | - | - | - | (17) |
| Disposals | (11) | (67) | (11) | - | (89) |
| Transfer to/from other groups | 30 | 45 | 4 | (79) | - |
| Cost year end | 1,743 | 1,048 | 278 | 511 | 3,580 |
| Depreciation and impairment beginning of year |
665 | 577 | 192 | - | 1,434 |
| Currency adjustments | 7 | 9 | 1 | - | 17 |
| Depreciation for the year | 91 | 87 | 20 | - | 198 |
| Disposals during the year | (11) | (66) | (11) | - | (88) |
| Impairment during the year, cf. note 2.3 |
- | 1 | - | - | 1 |
| Depreciation and | |||||
| impairment year end | 752 | 608 | 202 | - | 1,562 |
| Carrying amount year end | 991 | 440 | 76 | 511 | 2,018 |
| of which financing costs | - | ||||
| Value of land and buildings subject to mortgages |
176 | ||||
| * Land and buildings include buildings on land leased from Scion DTU A/S, Hørsholm in Denmark. The leases are open-ended |
| Land and buildings* |
Plant and machinery |
Other fixtures and equipment |
Property, plant and equipment in progress |
Total |
|---|---|---|---|---|
| 2,965 | ||||
| 71 | ||||
| 252 | ||||
| (40) | ||||
| - | ||||
| 1,623 | 1,028 | 272 | 325 | 3,248 |
| 572 | 505 | 184 | - | 1,261 |
| 9 | 12 | 2 | - | 23 |
| 85 | 77 | 19 | - | 181 |
| (1) | (13) | (1) | (39) | |
| - | 7 | - | 1 | 8 |
| 665 | 577 | 192 | - | 1,434 |
| 958 | 451 | 80 | 325 | 1,814 |
| - | ||||
| 186 | ||||
| 1,493 41 46 (1) 44 |
947 21 18 67 |
256 2 12 (25) (13) 15 (24) |
269 7 176 (1) (126) |
* Land and buildings include buildings on land leased from Scion DTU A/S, Hørsholm in Denmark. The leases are open-ended and the estimated lease terms are 15 years. See also note 3.3.
Land and buildings, plant and machinery, and other fixtures and equipment are measured at cost less accumulated depreciation and impairment. Land is not depreciated.
Cost comprises the purchase price and any costs directly attributable to the acquisition and any preparation costs incurred until the date when the asset is available for use.
The depreciation base is cost less the estimated residual value at the end of the useful life. The residual value is determined as the amount the company expects to obtain for the asset less costs of disposal.
The cost of an asset is divided into smaller components that are depreciated separately if such components have different useful lives.
Tangible assets are depreciated on a straight-line basis over their estimated useful lives as follows:
| Buildings | 25-50 years |
|---|---|
| Plant and machinery | 5-10 years |
| Other fixtures and equipment | 5-10 years |
Depreciation methods, useful lives and residual values are reassessed once a year.
The carrying amounts of tangible assets are reviewed at the balance sheet date to determine whether there are any indications of impairment. If such indications are found, the recoverable amount of the asset is calculated to determine any need for an impairment write-down and, if so, the amount of the write-down.
If the asset does not generate any cash flows independently of other assets, the recoverable amount is calculated for the smallest cash-generating unit that includes the asset.
The recoverable amount is calculated as the higher of the fair value less costs to sell and the value in use of the asset or the cash-generating unit, respectively. In determining the value in use, the estimated future cash flows are discounted to their present value, using a discount rate reflecting current market assessments of the time value of money as well as risks that are specific to the asset or the cashgenerating unit and which have not been taken into account in the estimated future cash flows.
If the recoverable amount of the asset or the cash-generating unit is lower than the carrying amount, the carrying amount is written down to the recoverable amount. For the cash-generating unit, the writedown is allocated in such a way that goodwill amounts are written down first, and any remaining need for write-down is allocated to other assets in the unit, although no individual assets are written down to a value lower than their fair value less costs to sell.
Impairment write-downs are recognised in the income statement. If write-downs are subsequently reversed as a result of changes in the assumptions on which the calculation of the recoverable amount is based, the carrying amount of the asset or the cash-generating unit is increased to the adjusted recoverable amount, not, however, exceeding the carrying amount that the asset or cash-generating unit would have had, had the write-down not been made.
| Amounts in DKKm | Land and buildings* |
Other fixtures and equipment |
Total |
|---|---|---|---|
| 2022 | |||
| Cost beginning of year | 335 | 2 | 337 |
| Currency adjustments | 5 | - | 5 |
| Additions | 78 | 1 | 79 |
| Lease contract modifications** | (17) | - | (17) |
| Disposals | (6) | - | (6) |
| Cost year end | 395 | 3 | 398 |
| Depreciation beginning of year | 109 | 1 | 110 |
| Currency adjustments | 1 | - | 1 |
| Depreciation for the year | 43 | - | 43 |
| Disposals | (6) | - | (6) |
| Depreciation year end | 147 | 1 | 148 |
| Carrying amount year end | 248 | 2 | 250 |
* Land and buildings include buildings on land leased from Scion DTU A/S, Hørsholm in Denmark. The leases are open-ended and the estimated lease terms are 15 years.
** Lease contract modifications include changes to existing lease contracts different from lease extensions or new lease contracts that are included as additions.
Specification of right-of-use assets:
| equipment | Total | |
|---|---|---|
| 295 | 2 | 297 |
| 6 | - | 6 |
| 34 | - | 34 |
| 335 | 2 | 337 |
| 70 | ||
| 2 | ||
| 38 | ||
| 109 | 1 | 110 |
| 226 | 1 | 227 |
| 69 2 38 |
1 - - |
* Land and buildings include buildings on land leased from Scion DTU A/S, Hørsholm in Denmark. The leases are open-ended and the estimated lease terms are 15 years.
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Expenses from short-term leases | 2 | 1 |
| Expenses from low-value assets (including cars) | 18 | 19 |
| Depreciation of right-of-use assets | 43 | 38 |
| Interest expenses on lease liabilities | 6 | 7 |
| Total | 69 | 65 |
Cash outflow related to lease agreements was DKK 45 million (2021: DKK 39 million).
Lease liabilities are disclosed in note 4.2 Financial risks and financial instruments.
Lease assets are recognised at the commencement date of the contract if it is or contains a lease. Lease assets are recognised at cost less accumulated depreciation and impairment. Cost is defined as the lease liability adjusted for any lease payments made at or before the commencement date. Lease assets are depreciated on a straight-line basis over the lease term.
On initial recognition, lease liabilities are measured as the present value of future payments. The lease payments contain fixed payments less any lease incentives receivable and variable lease payments that depend on an index or a rate.
On subsequent recognition, lease liabilities are measured at amortised cost. The difference between the present value and the nominal value of lease payments is recognised in the income statement over the term of the lease as a finance charge.
If the interest rate cannot be determined in the agreement, the lease payments are discounted using the ALK Group's incremental borrowing rate adjusted for the functional currency and length of the lease term. The lease liability is remeasured if or when the future payment or lease term changes.
Short term lease expenses and low value assets are not recognised as part of lease liabilities. They are recognised in the income statement when incurred as an operating expense.
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Raw materials | 265 | 245 |
| Work in progress | 507 | 432 |
| Manufactured goods and goods for resale | 525 | 527 |
| Total | 1,297 | 1,204 |
| Amount of write-down of inventories during the year | 50 | 40 |
| Amount of reversal of write-down of inventories during the year* | 19 | 15 |
| Total cost of materials included in cost of sales | 490 | 396 |
| Net carrying amount of inventory not expected to be sold in following year | 333 | 209 |
* Reversal of provision for slow moving items, sold in 2022.
Inventories are measured at cost determined under the FIFO method or net realisable value where this is lower.
Cost comprises raw materials, goods for resale, and direct payroll costs as well as fixed and variable production overheads. Variable production overheads comprise indirect materials and payroll costs and are allocated based on predetermined costs of the goods actually produced. Fixed production overheads comprise maintenance of and depreciation on the machines, factory buildings and equipment used in the manufacturing process as well as the cost of factory management and administration. Fixed production overheads are allocated based on the normal capacity of the production plant.
The net realisable value of inventories is calculated as the expected selling price less completion costs and costs incurred in making the sale.
A minor part of ALK's raw materials inventory contains biological assets from agricultural activities. Due to missing market on which a fair value can be established these products are not valuated.
The valuation of inventories includes Management's assessment of the saleability of the finished goods, and the quality of raw materials to be used in the production process. If the expected sales price less any completion costs and costs to execute sales (net realisable value) of inventories is lower than the carrying amount, the inventories are written down to net realisable value. When assessing salability and net realisable value, Management uses estimates for future sales and related costs.
End of 2022, the write-down of inventories to net realisable value amounted to DKK 85 million (2021: DKK 97 million).
Further, work in progress and manufactured goods and goods for resale are measured at cost including indirect production costs. The indirect production costs are measured using a standard cost method. This is reviewed regularly to ensure reliable measurement of employee costs, capacity utilisation, cost drivers and other relevant factors. When including the indirect productions costs for capitalisation, Management makes estimates about cost of production, standard cost variances, cost drivers and capacity utilisation. Changes in these parameters may have a significant impact on the gross margin and the overall valuation of work in progress and manufactured goods and goods for resale.
End of 2022, the indirect production costs capitalised under inventories amounted to DKK 442 million (2021: DKK 406 million).
| Days past due | |||||
|---|---|---|---|---|---|
| Amounts in DKKm | Not due | <180 days | 180-360 | >360 days | Total |
| 2022 | |||||
| Average expected credit loss rate | 1% | 2% | 8% | 50% | |
| Trade receivables (gross) | 671 | 86 | 13 | 2 | 772 |
| Loss allowance | 4 | 2 | 1 | 1 | 8 |
| Trade receivables (net) | 667 | 84 | 12 | 1 | 764 |
| Loss allowance: | |||||
| Balance beginning of year | 11 | ||||
| Change in allowances during the year | 2 | ||||
| Realised losses during the year | (5) | ||||
| Loss allowance, year end | 8 |
| 514 | 64 | 4 | 1 | 583 |
|---|---|---|---|---|
| 5 | 4 | 1 | 1 | 11 |
| 519 | 68 | 5 | 2 | 594 |
| 1% | 6% | 20% | 50% | |
| Change in allowances during the year | (1) |
|---|---|
| Realised losses during the year | (3) |
| Loss allowance, year end | 11 |
On initial recognition, receivables are measured at fair value, subsequently at amortised cost.
Expected credit losses are measured based on historical data adjusted by forward-looking information. Forward-looking information includes assessment of the probability of default as well as consideration of various external sources of actual and economic information that is reasonable and supportable without undue cost or effort.
ALK recognises expected credit losses that result from default events possible within the whole asset life. Risk related to trade receivables is managed in ALK locally by entities, based on an individual assessment. Loss allowance for doubtful trade receivables is also based on an individual assessment of the receivables. ALK has not implemented a global provision matrix due to different characteristics related to receivables across the ALK Group. Loss allowance are calculated based on variables, e.g. probability-weighted amount (based on historical realised losses), the time value of money, additional supportable information, including an individual assessment of each customer/customer group.
An impairment loss or reversal of prior impairment loss is recognised in the income statement.
Receivables are written down when information indicates severe financial difficulties and that there is no reasonable expectation of recovery. Financial assets written off may still be subject to enforcement activities. Any recoveries made are recognised in the income statement.
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Clinical trials, cf. note 2.2 | 130 | 240 |
| Royalties | 39 | - |
| Other | 70 | 74 |
| Total | 239 | 314 |
Prepayments are recognised as an asset and comprise incurred costs relating to subsequent financial years. Prepayments are measured at cost.
The ALK Group has entered into defined contribution plans as well as defined benefit plans.
In defined contribution plans, the ALK Group is obliged to pay a certain contribution to a pension fund or the like but bears no risks regarding the future development in interest, inflation, mortality, disability rates etc. regarding the amount to be paid to the employee.
The ALK Group sponsors defined benefit plans for qualifying employees of its subsidiaries in Germany, France and Switzerland. The defined benefit plans guarantee employees a certain level of pension benefits for life. The pension is based on seniority and salary at the time of retirement. The ALK Group bears the risks regarding the future development in interest, inflation, mortality, disability rates etc. regarding the amount to be paid to the employee.
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Costs related to defined contribution plans | 107 | 91 |
| Costs related to defined benefit plans | 24 | 24 |
| Total | 131 | 115 |
| Present value of funded pension obligations | 24 | 25 |
| Fair value of plan assets (100% insurance contract) | (21) | (17) |
| Funded pension obligations, net | 3 | 8 |
| Present value of unfunded pension obligations | 161 | 246 |
| Pension obligations | 164 | 254 |
| Anniversary liabilities | 10 | 11 |
| Other liabilities* | 62 | 59 |
| Pension obligations and similar liabilities, year end | 236 | 324 |
* Other liabilities include liability related to the transition period for the Danish Holiday Act of DKK 60 million (2021: DKK 59 million).
Plan assets consist of assets placed in pension companies. Assets are placed in investments classified as other assets than shares, bonds and property by the pension companies, and are not measured at quoted prices.
The weighted average duration of the pension obligations is 16.58 years (2021: 19.24 years).
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| The principal assumptions used for the actuarial valuations | ||
| Discount rate range of 2% - 3.9% (weighted average rate) Expected future rate of salary increase range of 1% - 2.5% |
3.8% | 1.0% |
| (weighted average rate) | 2.4% | 2.4% |
| Assumed life expectations on retirement age for current pensioners (years based on weighted average)*: |
||
| Males | 21.1 | 21.1 |
| Females | 24.3 | 24.4 |
| Assumed life expectations on retirement age for current employees (future pensioners) (years based on weighted average)*: |
||
| Males | 22.4 | 22.4 |
| Females | 26.3 | 26.3 |
| Sensitivity analysis: Significant actuarial assumptions for determining the defined benefit obligation |
||
| Discount rate, effect in case of increase in range of 0.25% - 1%** | (21) | (42) |
| Discount rate, effect in case of decrease in range of 0.25% - 1%** | 27 | 50 |
| Salary, effect in case of 0.25% - 0.5% increase** | 2 | 4 |
| Salary, effect in case of 0.25% - 0.5% decrease** | (2) | (4) |
| Life expectancy, effect in case of increase by 1 year* | 6 | 11 |
| Life expectancy, effect in case of decrease by 1 year* | (6) | (11) |
| Movements in the present value of the funded defined benefit obligation in the current year |
||
| Opening funded defined benefit obligation | 25 | 20 |
| Current service costs | 2 | 2 |
| Actuarial (gains)/losses arising from changes in financial assumptions | (5) | - |
| Benefits paid | 1 | 2 |
| Currency translation adjustment | 1 | 1 |
| Closing funded defined benefit obligation | 24 | 25 |
* Based on national statistics for mortality.
** Based on actuarial reports with different rates.
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Movements in the fair value of the plan assets in the current year | ||
| Opening fair value of plan assets | 17 | 13 |
| Contribution from plan participants | 2 | 2 |
| Benefits paid | 1 | 2 |
| Currency translation adjustment | 1 | - |
| Closing fair value of plan assets (fully invested in insurance contracts) | 21 | 17 |
| Opening present value of unfunded pension obligations | 246 | 268 |
|---|---|---|
| Other adjustments | - | (12) |
| Current service costs | 7 | 7 |
| Interest costs | 3 | 2 |
| Actuarial (gains)/losses from changes in financial assumptions | (87) | (15) |
| Actuarial (gains)/losses arising from experience adjustments | (4) | (1) |
| Benefits paid | (4) | (3) |
| Closing present value of unfunded pension obligations | 161 | 246 |
| Current service costs | 9 | 10 |
|---|---|---|
| Net interest expense | 3 | 2 |
| Total | 12 | 12 |
| Total | (96) | (16) |
|---|---|---|
| Actuarial (gains)/losses | (96) | (16) |
The expected contribution for 2023 for the defined benefit plans is DKK 13 million (2022: DKK 12 million).
The most recent actuarial valuations of the defined benefit liability were carried out by external independent actuary agents at 31 December 2022.
The ALK Group has entered into pension agreements and similar agreements with some of the ALK Group's employees.
In respect of defined contribution plans, the ALK Group pays in fixed contributions to independent pension funds etc. The contributions are recognised in the income statement during the period in which the employee renders the related service. Payments due are recognised as a liability in the balance sheet.
In respect of defined benefit plans, the ALK Group is required to pay an agreed benefit in connection with the retirement of the employees covered by the plan, e.g. in the form of a fixed amount or a percentage of the salary at retirement.
For defined benefit plans, an annual actuarial assessment is made of the net present value of future benefits to which the employees have earned the right through their past service for the ALK Group and which will have to be paid under the plan. The Projected Unit Credit Method is applied to determine net present value.
The net present value is calculated based on assumptions of the future development of salary, interest, inflation, mortality and disability rates.
The net present value of pension liabilities is recognised in the balance sheet, after deduction of the fair value of any assets attached to the plan, as either plan assets or pension liabilities, depending on whether the net amount is an asset or a liability, as described below.
If the assumptions made with respect to discount factor, inflation, mortality and disability are changed, or if there is a discrepancy between the expected and realised return on plan assets, actuarial gains or losses occur. These gains and losses concerning previous financial years are recognised in other comprehensive income.
| Amounts in DKKm | Restructuring programs* |
Other provisions** |
Total |
|---|---|---|---|
| 2022 | |||
| Provisions beginning of year | 10 | 2 | 12 |
| Provisions made during the year | - | 1 | 1 |
| Used during the year | (10) | - | (10) |
| Provisions, year end | - | 3 | 3 |
| Provisions are recognised as follows: | |||
| Current liabilities | - | 3 | 3 |
| Provisions, year end | - | 3 | 3 |
| 2021 | |||
| Provisions beginning of year | - | 3 | 3 |
| Provisions made during the year | 10 | - | 10 |
| Used during the year | - | (1) | (1) |
| Provisions, year end | 10 | 2 | 12 |
| Provisions are recognised as follows: | |||
| Current liabilities | 10 | 2 | 12 |
| Provisions, year end | 10 | 2 | 12 |
* Provision used in 2022 for restructuring programs of DKK 10 million relates to restructuring of ALK's Spanish entity ALK-Abelló S.A.
** Other provisions include a provision for sales in Italy of DKK 3 million (2021: DKK 2 million).
Provisions are recognised when, as a consequence of a past event during the financial year or previous years, the ALK Group has a legal or constructive obligation, and it is likely that settlement of the obligation will require an outflow of the ALK Group's financial resources. Provisions are measured as the best estimate of the costs required to settle the obligations at the balance sheet date. Provisions with an expected term of more than a year after the balance sheet date are measured at present value.
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Rebates and commissions, cf. note 2.1 | 274 | 294 |
| Salaries, holiday payments etc. | 270 | 239 |
| Clinical trials, cf. note 2.2 | 114 | 179 |
| VAT and other taxes | 81 | 85 |
| Other | 239 | 153 |
| Total | 978 | 950 |
Other payables are recognised as a current liability and comprise costs due in the subsequent financial year. Other payables are measured at amortised cost.
In the ordinary course of business, the ALK Group is involved in certain claims, disputes etc. In the opinion of Management, settlement or continuation of pending claims and other disputes will have no material impact on the ALK Group's financial position.
The ALK Group operates in a wide variety of jurisdictions, in some of which the tax law is subject to varying interpretations and potentially inconsistent enforcement. As a result, there can be practical uncertainties in applying tax legislation to the ALK Group's activities. Whilst the ALK Group considers that it operates in accordance with applicable tax law, there are potential tax exposures in respect of its operations, the impact of which cannot be reliably estimated, but could be material.
ALK-Abelló A/S is included in a joint Danish taxation scheme with the Lundbeck Foundation (Lundbeckfond Invest A/S) and its Danish subsidiaries. The Danish companies are joint and several liable for the joint taxation liability. The joint taxation liability covers income taxes and withholding taxes on dividends, royalties and interest. The joint taxation liability is capped at an amount equal to the share of the capital of the company directly or indirectly owned by the ultimate parent company. The total tax obligation under the joint Danish taxation scheme is shown in the financial statements of the Lundbeck Foundation (Lundbeckfond Invest A/S).
The ALK Group's credit facilities and drawn loans are subject to standard change of control clauses according to which the lender has the right to cancel the commitment and demand repayment of outstandings.
Land and buildings provided as security vis-à-vis for mortgage debt amount to DKK 176 million (2021: DKK 186 million) out of mortgage debt of DKK 221 million (2021: DKK 240 million).
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Bank guarantees* | 76 | 2 |
| Other guarantees | 11 | 6 |
| Total | 87 | 8 |
* Bank guarantees include DKK 75 million related to ongoing tax audits (2021: DKK 0)
| 2022 | 2021 | |||
|---|---|---|---|---|
| Units | Nominal value (DKKm) |
Units | Nominal value (DKKm) |
|
| Share capital | ||||
| The share capital consists of: | ||||
| A shares (nominal value of DKK 0.5) | 18,415,200 | 9 | 18,415,200 | 9 |
| AA shares (nominal value of DKK 0.5) | 1,841,520 | 1 | 1,841,520 | 1 |
| B shares (nominal value of DKK 0.5) | 202,567,200 | 101 | 202,567,200 | 101 |
| Total | 222,823,920 | 111 | 222,823,920 | 111 |
In March 2022, ALK-Abelló A/S completed a share split at a ratio of 1:20, each existing share of a nominal value of DKK 10 was split into 20 new shares of a nominal value of DKK 0.50 each. The company's share capital remains DKK 111,411,960. As a result of the share split, comparison figures for number of shares, EPS, and DEPS have been restated accordingly.
Each A and AA share carries 10 votes, whereas each B share carries 1 vote. AA shares no longer held by individuals or legal entities other than the Lundbeck Foundation or companies which are group affiliated with the Lundbeck Foundation, cf. the definition of groups in section 6 of the Danish Companies Act, or in the event that a company which holds AA shares is no longer group affiliated with the Lundbeck Foundation, such AA shares shall be transferred to the B share capital.
According to a resolution passed by the parent company at the annual general meeting, the parent company is allowed to purchase treasury shares, up to 10% of the share capital. The parent company has purchased treasury shares in connection with the issuance of share-based incentive plans. All shares are paid in.
| 2022 | 2021 | |
|---|---|---|
| Treasury shares | ||
| Treasury shares beginning of year (B-shares), units | 2,970,560 | 4,257,460 |
| Sale of treasury shares, units | (1,145,585) | (1,286,900) |
| Treasury shares year end (B-shares), units | 1,824,975 | 2,970,560 |
| Proportion of share capital year end | 0.8% | 1.3% |
| Nominal value year end | 0.9 | 1.5 |
| Market value year end | 175 | 509 |
| Earnings per share | ||
| The calculation of earnings per share is based on the following: | ||
| Net profit (DKKm) | 335 | 219 |
| Number in units: | ||
| Average number of issued shares | 222,823,920 | 222,823,920 |
| Average number of treasury shares | (2,321,447) | (3,430,180) |
| Average number of shares used for calculation | ||
| of earnings per share | 220,502,473 | 219,393,740 |
| Average dilutive effect of outstanding share options | 870,206 | 1,596,200 |
| Average number of shares used for calculation of diluted earnings per share |
221,372,679 | 220,989,940 |
| Earnings per share (EPS) (DKK) | 1.52 | 1.00 |
| Earnings per share, diluted (DEPS) (DKK) | 1.51 | 0.99 |
Acquisition and sales sums arising on the purchase and sale of treasury shares and dividends on treasury shares are recognised directly in retained earnings under equity.
As a result of operations, investments and financing, the ALK Group is exposed to exchange and interest rate changes. ALK-Abelló A/S manages the ALK Group's financial risks centrally and coordinates the ALK Group's cash management, including the raising of capital and investment of excess cash. The ALK Group complies with a policy, approved by the Board of Directors, to maintain a low risk profile, ensuring that the ALK Group is only exposed to foreign exchange rate risk, liquidity risk, interest rate risk, and credit risk in connection with its commercial activities.
The ALK Group manages its capital to ensure that all entities will be able to continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balances. The capital structure of the ALK Group consists of net debt and equity. The dividend policy of the ALK Group is to distribute maximum possible dividend to ALK-Abelló A/S.
The ALK Group's Risk Committee reviews the capital structure annually. As a part of this review, the committee considers the cost of capital and the risks associated with each class of capital.
Foreign exchange rate risk arises due to imbalances between revenue and expenses in each individual currency. Foreign exchange rate exposure relating to future transactions and assets and liabilities is evaluated and hedged through matching of payments received and paid in the same currency. This serves to limit the impact on the financial results of any exchange rate fluctuations. The exchange rate exposure relating to net investments in foreign subsidiaries is not hedged by forward exchange contracts. In case it is evaluated to be relevant, the ALK Group hedges significant exchange rate exposures regarding future sales and purchase of goods in the coming six months in accordance with the ALK Group's policy.
The general objective of the ALK Group's foreign exchange risk management is to limit and delay any adverse impact of exchange rate fluctuations on earnings and cash flows and thus increase the predictability of the financial results. The most significant financial risk relates to exchange
rate fluctuations. The greatest exposure is to USD and in 2022, 17% (2021: 15%) of the revenue was denominated in USD. The sales are not deemed to be exposed to EUR due to Denmark's participation in the European Exchange Rate Mechanism.
The ALK Group is exposed to exchange rate risks when intercompany balances and net assets of foreign subsidiaries are translated into DKK. In accordance with the ALK Group's accounting policies, such currency translation adjustments are recognised in the income statement and in other comprehensive income, respectively.
No exchange rate hedge contracts were open at 31 December 2022 or 31 December 2021.
The table below shows the estimated effect of a 10% increase in the USD exchange rate on revenue, EBIT and equity levels, respectively. A decrease in the exchange rates will have a corresponding adverse effect. In the sensitivity analysis, data for revenue and EBIT are based on current short-term expectations and data for equity are based on actual equity at 31 December 2022.
| Amounts in DKKm | Revenue | EBIT | Equity |
|---|---|---|---|
| 31 December 2022 |
|||
| USD | approx. +80 | approx. +5 | approx. +15 |
| 31 December 2021 |
|||
| USD | approx. +65 | approx. -10 | approx. 0 |
| Amounts in DKKm | Cash | Receivables | Liabilities | Amount hedged |
Net position |
|---|---|---|---|---|---|
| 31 December 2022 |
|||||
| DKK | (12) | 89 | (909) | - | (832) |
| USD | 111 | 228 | (328) | - | 11 |
| EUR | 48 | 433 | (956) | - | (475) |
| GBP | 2 | 18 | (21) | - | (1) |
| SEK | 2 | 34 | (16) | - | 20 |
| Other | 70 | 180 | (90) | - | 160 |
| Total | 221 | 982 | (2,320) | - | (1,117) |
| 31 December 2021 |
|||||
| DKK | (9) | 69 | (957) | - | (897) |
| USD | 67 | 123 | (176) | - | 14 |
| EUR | 75 | 342 | (1,093) | - | (676) |
| GBP | 4 | 12 | (21) | - | (5) |
| SEK | 3 | 39 | (19) | - | 23 |
| Other | 54 | 135 | (84) | - | 105 |
| Total | 194 | 720 | (2,350) | - | (1,436) |
In connection with the ALK Group's ongoing financing of operations, including refinancing, efforts are made to ensure adequate and flexible liquidity. This is guaranteed by placing free funds in creditworthy, liquid, interest bearing instruments of relatively short durations in accordance with the ALK Group's policy.
The liquidity risk is considered to be minimal due to the ALK Group's current capital structure.
| Revaluation/payment date | ||||||
|---|---|---|---|---|---|---|
| Amounts in DKKm | Carrying amount |
Total cash flow* |
Within 1 year |
From 1-5 years |
After 5 years |
|
| 31 December 2022 |
||||||
| Mortgage debt and bank loans | 429 | 432 | 229 | 73 | 130 | |
| Trade payables | 131 | 131 | 131 | - | - | |
| Lease liabilities | 267 | 292 | 46 | 167 | 79 | |
| Other financial liabilities | 994 | 994 | 994 | - | - | |
| Financial liabilities | 1,821 | 1,849 | 1,400 | 240 | 209 | |
| 31 December 2021 |
||||||
| Mortgage debt and bank loans | 466 | 472 | 245 | 76 | 151 | |
| Trade payables | 115 | 115 | 115 | - | - | |
| Lease liabilities | 244 | 269 | 43 | 134 | 92 | |
| Other financial liabilities | 973 | 973 | 973 | - | - | |
| Financial liabilities | 1,798 | 1,829 | 1,376 | 210 | 243 |
* Total cash flow includes interest.
The ALK Group does not hedge its interest rate exposure, as this is not considered to be financially viable.
Concerning the ALK Group's financial assets and financial liabilities, the earlier of the contractual revaluation and redemption date is applied. Effective interest rates are stated on the basis of the current level of interest rates on the balance sheet date.
| Amounts in DKKm | Carrying amount |
Currency | Expiry date | Fixed/ floating |
Effective interest rate |
|---|---|---|---|---|---|
| 31 December 2022 |
|||||
| Cash | 221 | Various | Floating | (0.6)-4.75 | |
| Interestbearing assets | 221 | ||||
| Mortgage debt | 221 | DKK | 2035 | Floating | 0.2 |
| Lease liabilities | 267 | Various | 2023-2036 | Fixed | 2.0 |
| Bank loans | 208 | Various | 2023 | Fixed | 2.8-3.3 |
| Interestbearing liabilities | 696 |
| Cash | 194 | Various | Floating | (1.09)-(0.10) | |
|---|---|---|---|---|---|
| Interestbearing assets | 194 | ||||
| Mortgage debt | 240 | DKK | 2035 | Floating | 0.2 |
| Lease liabilities | 244 | Various | 2022-2033 | Fixed | 2.0 |
| Bank loans | 226 | EUR | 2022 | Fixed | 0.4-0.5 |
| Interestbearing liabilities | 710 |
An increase in the interest rate of 1 percentage point on mortgage debt and bank loans would decrease net profit and equity by approximately DKK 4 million (2021: decrease of DKK 4 million). An increase in the interest of 1 percentage point on cash would increase net profit and equity by approximately DKK 2 million (2021: increase of DKK 2 million).
The ALK Group's primary credit exposure is related to trade receivables and cash. The ALK Group has no major exposure relating to one single customer or business partner. According to the ALK Group's policy for assuming credit exposure, all customers and business partners are credit rated regularly. Trade receivables are monitored at the local level and are distributed across a number of markets and customers. Therefore, the credit risk is considered to be low. For more information, see note 3.5.
The ALK Group has made a systematic review of contracts that might contain terms that would make the contract or parts thereof a derivative financial instrument. The review did not lead to recognition of derivative financial instruments relating to the contracts.
| Amounts in DKKm | 2022 | 2021 | |
|---|---|---|---|
| Financial assets | |||
| Financial assets measured at | |||
| amortised cost | Impairment method | ||
| Receivables from group companies | 12m ECL | 18 | 12 |
| Prepayments | 12m ECL | 94 | 29 |
| Trade receivables | Lifetime ECL (simplified approach) | 764 | 583 |
| Other receivables | 12m ECL | 82 | 82 |
| Cash | 221 | 194 | |
| Total | 1,179 | 900 | |
| Financial liabilities | |||
| Financial liabilities measured at amortised cost |
|||
| Mortgage debt | 221 | 240 | |
| Bank loans | 208 | 226 | |
| Lease liabilities | 267 | 244 | |
| Trade payables | 131 | 115 | |
| Other payables | 978 | 950 | |
| Total | 1,805 | 1,775 |
| Revaluation/payment date | |||||
|---|---|---|---|---|---|
| Amounts in DKKm | Fair value |
Within 1 year |
From 1-5 years |
After 5 years |
|
| 31 December 2022 |
|||||
| Mortgage debt | 225 | 18 | 74 | 133 | |
| Bank loans | 208 | 208 | - | - | |
| Total | 433 | 226 | 74 | 133 | |
| 31 December 2021 |
|||||
| Mortgage debt | 243 | 18 | 73 | 152 | |
| Bank loans | 226 | 226 | - | - | |
| Total | 469 | 244 | 73 | 152 |
All financial assets and liabilities are measured at cost or amortised cost. The carrying amounts for these approximate fair value.
Fair value for mortgage debt is measured by level 1 input (quoted prices in active markets) from the fair value hierarchy and fair value for bank loans is measured by level 2 input (inputs other than quoted markets that are observable) from the fair value hierarchy.
No financial derivatives were used in 2022 or 2021.
The ALK Group has a DKK 1,500 million credit facility which runs until the end of 2025. By the end of 2022, DKK 208 million was drawn.
On initial recognition, investments and other financial assets are measured at cost, corresponding to fair value. They are subsequently measured at fair value either through the income statement or through comprehensive income.
Other financial liabilities, including bank loans, lease liabilities, trade payables, and other payables, are on initial recognition measured at fair value. The liabilities are subsequently measured at amortised cost.
Trade payables, other payables, including sales discounts and rebates as well as debt to public authorities etc., are measured at amortised cost.
Mortgage debt is recognised on the raising of a loan at cost, equalling fair value of the proceeds received, and net of transaction costs incurred. Subsequently, mortgage debt is measured at amortised cost.
The ALK Group has established long-term equity-based incentive plans linked to the creation of shareholder value and the fulfilment of strategic goals. The plans are established for the members of Board of Management and other key employees, reward long-term value creation and align to interests of the shareholders.
The incentive plans consist of share options and performance share units that are considered sufficiently covered by treasury shares.
The share options entitle the holder to acquire one existing B share of DKK 0.5 nominal value in the company per share option and the performance share units entitle the holder to receive one existing B share per performance share unit free of charge.
The vesting period for both share options and performance share units is three years after grant. Vesting is conditional upon certain targets being met and upon the participant not having resigned. Target achievement is met upon fulfilment of strategic key performance indicators. In case performance is below the threshold there will be no units vesting, and if above target, a multiplier is applied that can increase the vesting by up to 100%.
The exercise of share options is possible in the trading windows following the release of annual and interim reports conditional upon the share option holder not having resigned at the time of exercise. For performance share units, the final transfer of ownership takes place at vesting three years after the grant.
ALK's special incentive plan was a one-time scheme designed to implement ALK's growth strategy and consisted of both share options and performance share units with a vesting period of three years.
The special incentive plan was adopted at the annual general meeting in March 2018 and vested in March 2021. The grant value of the plan did not exceed 50% of the Executive's 2018 annual base salary on the grant date. The plan was conditional upon strategic key performance indicators being attained. Based on the financial results for 2020, the KPI achievements exceeded their targets increasing the granted number of performance shares and share options by 100%. However, the overall payout of the plan on the vesting date for the performance shares and on the exercise date for the share options can never exceed a total value of 300% of the recipient's 2018 annual base salary.
In March 2022, ALK-Abelló A/S completed a share split at a ratio of 1:20, each existing share of a nominal value of DKK 10 was split into 20 new shares of a nominal value of DKK 0.50 each. As a result of the share split, comparison figures for number of share options and performance share units, share prices, exercise prices, and calculated fair value of granted share options have been adjusted accordingly.
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Cost for the year regarding share-based payments is recognised as follows: | ||
| Cost of sales | 4 | 5 |
| Research and development expenses | 7 | 7 |
| Sales and marketing expenses | 8 | 11 |
| Administrative expenses | 8 | 12 |
| Financial expenses | - | 1 |
| Total | 27 | 36 |
In 2022, the total cost of share-based payments did not include a financial expense due to the exercise and cash settlement of share options (2021: DKK 1 million). The total cost included DKK 3 million related to adjustment in the share options and performance share units expected to vest (2021: DKK 11 million).
Specification of outstanding share options and performance share units:
| Share options | Performance share units | ||||||
|---|---|---|---|---|---|---|---|
| Board of Management units |
Other key employees units |
Total units |
Weighted average exercise price DKK |
Board of Management units |
Other key employees units |
Total units |
|
| 2022 | |||||||
| Outstanding at 1 January | 1,285,800 | 768,180 | 2,053,980 | 59 | 130,220 | 518,180 | 648,400 |
| Additions | 261,420 | 227,420 | 488,840 | 108 | 58,860 | 244,980 | 303,840 |
| Exercised/settled | (851,200) | (356,860) | (1,208,060) | 48 | (92,720) | (328,540) | (421,260) |
| Cancellations | (105,900) | - | (105,900) | 90 | (17,340) | (10,700) | (28,040) |
| Outstanding at 31 December | 590,120 | 638,740 | 1,228,860 | 82 | 79,020 | 423,920 | 502,940 |
| Total number of vested share options | 507,180 | ||||||
| Average remaining life at year end (years) | 2.0 | ||||||
| Exercise prices at year end (DKK) | 41-141 | ||||||
| 2021 | |||||||
| Outstanding at 1 January | 1,795,160 | 1,186,760 | 2,981,920 | 49 | 268,880 | 708,520 | 977,400 |
| Additions | 596,220 | 509,880 | 1,106,100 | 56 | 125,000 | 215,980 | 340,980 |
| Exercised/settled | (1,105,580) | (926,460) | (2,032,040) | 42 | (263,660) | (406,320) | (669,980) |
| Expired | - | (2,000) | (2,000) | 40 | - | - | - |
| Outstanding at 31 December | 1,285,800 | 768,180 | 2,053,980 | 59 | 130,220 | 518,180 | 648,400 |
| Total number of vested share options | 984,940 | ||||||
| Average remaining life at year end (years) | 2.1 | ||||||
| Exercise prices at year end (DKK) | 40-116 |
The Board of Directors decided for four trading windows in 2022 to settle share options by shares and a total of 1,208,060 share options were exercised.
The Board of Directors decided for one trading window in 2021 to settle share options by cash and a total of 1,339,720 share options were exercised and total cash payments amounted to DKK 62 million. For three trading windows the Board of Directors decided to settle share options by shares and a total of 692,320 share options were exercised.
Outstanding share options and performance share units have the following characteristics:
| Share options | Performance share units | |||||
|---|---|---|---|---|---|---|
| Plan | Units | Average exercise price DKK |
Vested as per |
Exercise periode (years) |
Units | Vested as per |
| 2016 Plan | 14,000 | 56 | 1 Mar 2019 | 4 | ||
| 2018 Plan | 22,660 | 40 | 1 Mar 2021 | 2 | ||
| 2018 Plan – special plan* | 238,920 | 40 | 1 Mar 2021 | 2 | ||
| 2019 Plan | 231,600 | 57 | 1 Mar 2022 | 2 | ||
| 2020 Plan | 340,520 | 73 | 1 Mar 2023 | 2 | 213,140 | 1 Mar 2023 |
| 2021 Plan | 200,500 | 122 | 1 Mar 2024 | 2 | 150,120 | 1 Mar 2024 |
| 2022 Plan | 180,660 | 148 | 1 Mar 2025 | 2 | 139,680 | 1 Mar 2025 |
| Outstanding at 31 December |
1,228,860 | 502,940 |
* The payout upon exercise of the outstanding options cannot exceed DKK 5 million according to the conditions of the plan.
Fair value at grant date is measured in accordance with the Black & Scholes model for valuation of share options, using the following assumptions:
| 2022 Plan |
2021 Plan |
|
|---|---|---|
| Average share price (DKK) | 141 | 116 |
| Expected exercise price (DKK) | 152 | 125 |
| Expected volatility rate, based on the historical volatility | 35% p.a. | 36% p.a. |
| Expected option life | 4 years | 4 years |
| Expected dividend per share | - | - |
| Risk-free interest rate | 0.14% p.a. | -0.49% p.a. |
| Calculated fair value of granted share options (DKK) | 33 | 29 |
Performance share units have been granted at DKK 141 per share (2021: DKK 116 per share).
Share-based incentive plans (equity-settled share-based payments), which comprise share options and performance share units, are measured at the grant date at fair value and recognised in the income statement under the respective functions over the vesting period and offset in equity.
The fair value of share options is determined using the Black & Scholes model. The exercise price is equivalent to the average market price of the share for the five trading days immediately preceeding the date of grant and is increased by 2.5% p.a. and reduced by dividends paid. The fair value of performance share units is determined using the average share price (closing) five days after annual general meeting.
The ALK Group settles the equity-settled share-based incentive plans in shares. However, the share option agreement entitles the ALK Group to demand cash settlement of the options. The ALK Group recognises share options, in case of cash settlement, as other liabilities and adjusts to fair value as from the time when the ALK Group has an obligation to settle in cash. The ALK Group recognises subsequent adjustment to fair value in the income statement under financial income or financial expenses.
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Tax on profit | 112 | 60 |
| Financial income and expenses | 23 | 13 |
| Share-based payments | 27 | 36 |
| Depreciation, amortisation and impairment | 238 | 242 |
| Other adjustments* | 6 | 49 |
| Total | 406 | 400 |
* In 2021, other adjustments included non-cash transactions related to the divestment of ALK's part-share of a formulation production line for tablets to production partner Catalent of DKK 33 million.
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Change in inventories | (74) | (84) |
| Change in receivables and prepayments | (172) | (5) |
| Change in short-term payables | 11 | 61 |
| Total | (235) | (28) |
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Liabilities from financing activities at 1 January | 710 | 943 |
| Proceeds from borrowings | 60 | 226 |
| Repayment of borrowings | (94) | (464) |
| Lease additions, modifications and, disposals | 56 | 34 |
| Instalments of lease liabilities | (39) | (32) |
| Exchange rate adjustments | 3 | 3 |
| Liabilities from financing activities at 31 December | 696 | 710 |
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Cash | 221 | 194 |
| Undrawn facilities | 1,292 | 1,277 |
| Total | 1,513 | 1,471 |
ALK has a DKK 1,500 million credit facility which runs until the end of 2025. By the end of 2022, DKK 208 million was drawn.
The cash flow statement of the ALK Group is presented using the indirect method and shows cash flows from operating, investing and financing activities as well as cash at the beginning and at the end of the financial year.
The cash effect of acquisitions and divestments is shown separately under cash flows from investing activities. In the cash flow statement, cash flows concerning acquired companies are recognised from the date of acquisition, while cash flows concerning divested companies are recognised until the date of divestment.
Cash flows from operating activities are stated as net profit, adjusted for non-cash operating items and changes in working capital, less the income tax paid and plus net financial items.
Cash flows from investing activities comprise payments in connection with acquisition and divestment of companies and financial assets as well as purchase, development, improvement and sale of intangible and tangible assets.
Cash flows from financing activities comprise changes to the parent company's share capital and related costs as well as the raising and repayment of loans, instalments on interest-bearing debt, lease liabilities, purchase of treasury shares, and settlement of share options and payment of dividends.
Cash flows in currencies other than the functional currency are recognised in the cash flow statement using average exchange rates for the individual months if these are a reasonable approximation of the actual exchange rates at the transaction dates. If this is not the case, the actual exchange rates for the specific days in questions are used.
Cash comprise cash subject to an insignificant risk of changes in value less any overdraft facilities that are an integral part of the ALK Group's cash management.
ALK-Abelló A/S is controlled by the Lundbeck Foundation (Lundbeckfond Invest A/S) domiciled in Copenhagen, Denmark, which holds 67.2% of the total number of votes in ALK Abelló A/S. The remaining shares are widely held. ALK-Abelló A/S is parent company, and ultimate parent for the ALK Group is the Lundbeck Foundation (Lundbeckfond Invest A/S, incorporated in Denmark).
Other related parties comprise ALK's Board of Management and Board of Directors, companies in which the majority shareholder exercises control, and such companies' subsidiaries, in this case e.g, H. Lundbeck A/S and Falck A/S and their subsidiaries.
Transactions and balances with the parent company's majority shareholder:
Transactions with key management personnel consist of remuneration and exercise of share options, see notes 2.4 and 5.1 of the consolidated financial statements.
No other transactions have taken place during the year with Board of Directors, Board of Management, major shareholders or other related parties.
No events have occured after the reporting period, that influence the evaluation of the consolidated financial statements.
The financial statements were approved by the Board of Directors and authorised for issue on 3 February 2023.
| Entity | Country | Percentage of shares owned |
Activity |
|---|---|---|---|
| Parent company | |||
| ALK-Abelló A/S | Denmark | ||
| Subsidiaries by geographical area Europe |
|||
| ALK-Abelló Allergie-Service GmbH | Austria | 100% | |
| ALK-Abelló Nordic A/S | Denmark | 100% | |
| ALK-Abelló Nordic A/S (branch) | Finland | 100% | |
| ALK-Abelló Nordic A/S (branch) | Norway | 100% | |
| ALK-Abelló Nordic A/S (branch) | Sweden | 100% | |
| ALK-Abelló S.A.S. | France | 100% | |
| ALK-Abelló Arzneimittel GmbH | Germany | 100% | |
| ALK-Abelló B.V.* | Netherlands | 100% | |
| ALK-Abelló Sp. z o.o. | Poland | 100% | |
| ALK Slovakia s.r.o. | Slovakia | 100% | |
| ALK Slovakia s.r.o. – odšteˇ pny´ závod (branch) |
Czech Republic | 100% | |
| ALK-Abelló S.A. | Spain | 100% | |
| ALK-Abelló S.p.A. | Italy | 100% | |
| ALK AG (in liquidation) | Switzerland | 100% | |
| ALK-Abelló AG | Switzerland | 100% | |
| ALK-Abelló Ltd. | United Kingdom | 100% |
* Exemption for local audit of the 2022 accounts under the ruling of the Article 2:403 of the Dutch Civil Code is intended – Btw-nr. NL005302766B01
| Entity | Country | Percentage of shares owned |
Activity |
|---|---|---|---|
| North America | |||
| ALK-Abelló Pharmaceuticals, Inc. | Canada | 100% | |
| ALK-Abelló, Inc. | USA | 100% | |
| OKC Allergy Supplies, Inc. | USA | 100% | |
| ALK-Abelló Source Materials, Inc. | USA | 100% | |
| OKC Crystal Laboratory, Inc. | USA | 100% | |
| International markets | |||
| ALK-Abelló A/S (branch) | China | 100% | |
| ALK (Shanghai) Medical Technology Co., Ltd. | China | 100% | |
| ALK (Shanghai) Medical Technology Co., Ltd. Beijing (branch) | China | 100% | |
| ALK (Shanghai) Medical Technology Co., Ltd. Guangzhou (branch) | China | 100% | |
| ALK (Guangzhou) Medical Technology Co., Ltd. | China | 100% | |
| Tasfiye Halinde ALK Ilac ve Alerji Ürünleri Ticaret Anonim Sirketi (in liquidation) |
Turkey | 100% |
| Term | Definitions |
|---|---|
| Gross margin – % | Gross profit x 100 / Revenue |
| EBITDA margin – % | EBITDA x 100 / Revenue |
| EBIT margin – % | EBIT x 100 / Revenue |
| Net asset value per share | Net asset value / Number of shares end of period |
| Invested capital | Intangible assets, tangible assets, inventories and current receivables reduced by liabilities except for mortgage debt and bank loans |
| Return on equity (ROE) – % | Net profit/(loss) for the period x 100 / Average equity |
| Pay-out ratio – % | Proposed dividend x 100 / Net profit/(loss) for the year |
| Earnings/(loss) per share (EPS) |
Net profit/(loss) for the period / Average number of outstanding shares |
| Earnings/(loss) per share diluted (DEPS) |
Net profit/(loss) for the period / Average number of outstanding shares diluted |
| Cash flow per share (CFPS) | Cash flow from operating activities / Average number of outstanding shares |
| ROIC incl. goodwill – % | Operating profit x 100 / Average invested capital incl. goodwill |
| Price earnings ratio (PE) | Share price / Earnings per share |
| Markets | Geographical markets (based on customer location): |
| • Europe comprises the EU, UK, Norway and Switzerland • North America comprises the USA and Canada • International markets comprise Japan, China and all other countries |
The definitions are aligned with generally accepted financial ratios applied by financial analysts. The definitions are part of the Management's review.
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| EBITDA reconciliation to net profit | ||
| Net profit | 335 | 219 |
| Tax on profit | 112 | 60 |
| Financial income | (4) | (10) |
| Financial expenses | 27 | 23 |
| Depreciation, amortisation and impairment | 238 | 242 |
| EBITDA | 708 | 534 |
| Net asset value | ||
| Equity | 3,988 | 3,480 |
| Net asset value | 3,988 | 3,480 |
| Invested capital reconciliation | ||
| Intangible assets | 642 | 622 |
| Tangible assets | 2,018 | 1,814 |
| Inventories | 1,297 | 1,204 |
| Trade receivables | 764 | 583 |
| Receivables from group companies | 18 | 12 |
| Income tax receivables | 24 | 14 |
| Other receivables | 82 | 82 |
| Prepayments | 239 | 314 |
| Pensions and similar liabilities | (236) | (324) |
| Lease liabilities (non-current) | (226) | (207) |
| Deferred income (non-current) | (49) | (42) |
| Trade payables | (131) | (115) |
| Lease liabilities (current) | (41) | (37) |
| Deferred income (current) | (4) | (4) |
| Provisions (current) | (3) | (12) |
| Income tax payables (current) | (16) | (23) |
| Other payables | (978) | (950) |
| Invested capital | 3,400 | 2,931 |
| Income statement | 96 |
|---|---|
| Balance sheet | 97 |
| Statement of changes in equity | 98 |
| Notes | 99 |
| 1 | Accounting policies | 99 |
|---|---|---|
| 2 | Revenue and segment | |
| information | 100 | |
| 3 | Staff costs | 100 |
| 4 | Special items | 101 |
| 5 | Financial income and expenses | 101 |
| 6 | Income tax | 101 |
| 7 | Intangible assets | 102 |
| 8 | Property, plant and equipment | 103 |
| 9 | Deferred tax | 104 |
| 10 | Investments in subsidiaries | 105 |
| 11 | Inventories | 105 |
| 12 | Mortgage debt and bank loans | 105 |
|---|---|---|
| 13 | Pensions and similar liabilities | 106 |
| 14 | Lease liabilities | 106 |
| 15 | Income tax payables to group companies |
106 |
| 16 | Contingent liabilities and commitments |
106 |
| 17 | Related parties | 106 |
| 18 | Fees to ALK-Abelló A/S' auditors | 107 |
| 19 | Proposed appropriation of net profit |
107 |
| 20 | Events after the reporting period | 107 |
| Amounts in DKKm | Note | 2022 | 2021 |
|---|---|---|---|
| Revenue | 2 | 2,114 | 2,299 |
| Cost of sales | 3,4 | 1,044 | 1,030 |
| Gross profit | 1,070 | 1,269 | |
| Research and development expenses | 3,4 | 622 | 577 |
| Sales and marketing expenses | 3,4 | 341 | 263 |
| Administrative expenses | 3,18 | 124 | 114 |
| Operating profit/(loss) (EBIT) | (17) | 315 | |
| Income from investments in subsidiaries | 10 | 427 | 15 |
| Financial income | 5 | 24 | 21 |
| Financial expenses | 5 | 20 | 23 |
| Profit before tax (EBT) | 414 | 328 | |
| Tax on profit/(loss) | 6 | (40) | 27 |
| Net profit | 19 | 454 | 301 |
| Amounts in DKKm | 31 Dec. Note 2022 |
31 Dec. 2021 |
|---|---|---|
| Non-current assets | ||
| Intangible assets | ||
| Intangible assets 7 |
146 | 127 |
| 146 | 127 | |
| Tangible assets | ||
| Land and buildings 8 |
273 | 312 |
| Plant and machinery 8 |
233 | 244 |
| Other fixtures and equipment 8 |
47 | 47 |
| Property, plant and equipment in progress 8 |
303 | 194 |
| 856 | 797 | |
| Other non-current assets | ||
| Investments in subsidiaries 10 |
1,058 | 1,057 |
| Receivables from group companies | 1,780 | 1,840 |
| Prepayments | 88 | 23 |
| Deferred tax assets 9 |
282 | 311 |
| Income tax receivables | 146 | 122 |
| 3,354 | 3,353 | |
| Total non-current assets | 4,356 | 4,277 |
| Current assets | ||
| Inventories 11 |
526 | 420 |
| Trade receivables | 79 | 53 |
| Receivables from group companies | 451 | 372 |
| Other receivables | 60 | 56 |
| Prepayments | 205 | 275 |
| 1,321 | 1,176 | |
| Cash | 31 | 51 |
| Total current assets | 1,352 | 1,227 |
| Total assets | 5,708 | 5,504 |
| Amounts in DKKm | Note | 31 Dec. 2022 |
31 Dec. 2021 |
|---|---|---|---|
| Equity | |||
| Share capital | 111 | 111 | |
| Retained earnings | 3,490 | 2,993 | |
| Capitalised development costs | 2 | 3 | |
| Total equity | 3,603 | 3,107 | |
| Liabilities | |||
| Non-current liabilities | |||
| Mortgage debt | 12 | 203 | 222 |
| Pensions and similar liabilities | 13 | 60 | 58 |
| Lease liabilities | 14 | 93 | 120 |
| Deferred income | 49 | 42 | |
| Income tax payables to group companies | 15 | 120 | 115 |
| 525 | 557 | ||
| Current liabilities | |||
| Mortgage debt | 12 | 18 | 18 |
| Bank loans | 12 | 208 | 223 |
| Trade payables | 48 | 58 | |
| Payables to group companies | 974 | 1,156 | |
| Lease liabilities | 14 | 11 | 10 |
| Deferred income | 3 | 2 | |
| Other payables | 318 | 373 | |
| 1,580 | 1,840 | ||
| Total liabilities | 2,105 | 2,397 | |
| Total equity and liabilities | 5,708 | 5,504 |
| Amounts in DKKm | Share capital |
Retained earnings |
Reserve for capitalised development costs |
Proposed dividend |
Total equity |
|---|---|---|---|---|---|
| 2022 | |||||
| Equity at 1 January | 111 | 2,993 | 3 | - | 3,107 |
| Appropriated from net profit | - | 454 | - | - | 454 |
| Share-based payments | - | 27 | - | - | 27 |
| Share options settled | - | (11) | - | - | (11) |
| Sale of treasury shares | - | 42 | - | - | 42 |
| Transfer to/(from) legal reserves | - | 1 | (1) | - | - |
| Tax related to items recognised directly in equity | - | (16) | - | - | (16) |
| Other transactions | - | 497 | (1) | - | 496 |
| Equity at 31 December | 111 | 3,490 | 2 | - | 3,603 |
See note 4.1 in the consolidated financial statements for information on treasury shares.
The financial statements of the parent company ALK-Abelló A/S for the period 1 January to 31 December 2022 have been prepared in accordance with the Danish Financial Statements Act for large reporting class D enterprises.
From 1 January 2022, ALK-Abelló A/S was merged with its wholly owned subsidiary ALK e-com A/S (CVR number 39266881). Intragroup business combinations are accounted for under the aggregation method. Under this method, the two enterprises are combined at carrying amounts, and no differences are identified. Any considerations which exceed the carrying amount of the acquired enterprise are recognised directly in equity. The aggregation method is applied as if the two enterprises had always been combined by restating comparative figures.
The financial statements are presented in Danish kroner (DKK), which is also the functional currency of the company.
The accounting policies are unchanged from last year.
The parent company's accounting policies for recognition and measurement are in accordance with the ALK Group's accounting policies with the following exceptions:
Dividends from investments in subsidiaries are recognised in the parent company's financial statements when the right to the dividend finally vests, typically at the date of the company's approval in general meeting of the dividend of the company in question less any write-downs at the investments.
Acquisition of activities from subsidiaries is accounted for using the purchase method. On initial recognition, goodwill is measured and recognised as the excess of the consideration transferred exceeding the fair value of the net assets acquired at the acquisition date.
Goodwill is measured at cost less accumulated amortisation and impairment. Amortisation is calculated using the straight-line method over the expected useful life, estimated at 10 years. This estimate was made based on estimated useful lives of the assets acquired.
Investments in subsidiaries are measured at cost.
Where the recoverable amount of the investments is lower than cost, the investments are written down to this lower value.
In addition, cost is written down to the extent that dividends distributed exceed the accumulated earnings in the company since the acquisition date. In the event of indications of impairment, an impairment test is performed of investments in subsidiaries.
A reserve for capitalisation of development costs less deferred tax is recognised in the statement of equity. The reserve contains development costs, less amortisation/impairment losses, and less deferred tax, capitalised since 1 January 2016.
As allowed under section 86 (4) of the Danish Financial Statements Act, no cash flow statement is presented, as this is included in the consolidated cash flow statement.
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Sale of goods | 2,014 | 2,218 |
| Royalties | 93 | 81 |
| Services | 7 | - |
| Total revenue | 2,114 | 2,299 |
| Europe | 1,682 | 1,972 |
| International markets | 432 | 327 |
| Total revenue | 2,114 | 2,299 |
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Wages and salaries | 667 | 654 |
| Pensions | 63 | 59 |
| Other social security costs, etc. | 13 | 12 |
| Share-based payments | 18 | 24 |
| Total | 761 | 749 |
| Staff costs are allocated as follows: | ||
| Cost of sales | 307 | 295 |
| Research and development expenses | 240 | 219 |
| Sales and marketing expenses | 66 | 94 |
| Administrative expenses | 99 | 96 |
| Included in the cost of assets | 49 | 45 |
| Total | 761 | 749 |
See note 2.4 and 5.1 in the consolidated financial statements
| Average number (FTE) | 928 | 913 |
|---|---|---|
| Number year end (FTE) | 901 | 954 |
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Impairment of intangible assets | - | 11 |
| Impairment of tangible assets | - | 7 |
| Impairment of investments in subsidiaries | - | 4 |
| Total | - | 22 |
In 2021, the impairment of intangible assets included DKK 11 million relating to impairment of software. In the income statement, the impairment of intangible assets was recognised as sales and marketing expenses. The impairment of tangible assets included DKK 7 million related to impairment of plant and machinery. In the income statement, the impairment of tangible assets was recognised with DKK 6 million as cost of sales and DKK 1 million as research and development expenses. The impairment of investments in subsidiaries included DKK 4 million impairment of ALK-Abelló A/S' investment in its subsidiary in Turkey.
For the assets where ALK estimates that there is a recoverable amount, such amount was determined based on the fair value less cost to sell or the value in use of the respective asset.
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Interest on receivables from group companies | 17 | 11 |
| Other interest income | 6 | 4 |
| Currency gain, net | 1 | 6 |
| Total financial income | 24 | 21 |
| Other interest expenses* | 20 | 23 |
| Total financial expenses | 20 | 23 |
* In 2022, other interest expenses include net interest related to uncertain tax position of DKK 0 (2021: DKK 3 million) and IFRS 16 interest expenses of DKK 2 million (2021: DKK 3 million).
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Current income tax | (36) | (11) |
| Adjustment of deferred tax | 2 | 38 |
| Prior years adjustments, income tax | - | 3 |
| Prior years adjustments, deferred tax | (6) | (3) |
| Total | (40) | 27 |
| Profit before tax | 414 | 328 |
| Income tax, tax rate of 22% | 91 | 72 |
| Permanent differences | (108) | (13) |
| Prior years adjustments, income tax | - | 3 |
| Prior years adjustments, deferred tax | (6) | (3) |
| Other taxes and adjustments | (17) | (32) |
| Tax on profit for the year | (40) | 27 |
| Amounts in DKKm | Goodwill | Patents, trademarks and rights |
Development cost* |
Software | Assets in progress |
2022 | 2021 |
|---|---|---|---|---|---|---|---|
| Cost beginning of year | 867 | 69 | 23 | 308 | 35 | 1,302 | 1,284 |
| Additions | - | - | 19 | 7 | 28 | 54 | 43 |
| Disposals | - | - | - | (4) | (8) | (12) | (25) |
| Transfer to/from other groups | - | - | - | 27 | (27) | - | - |
| Cost year end | 867 | 69 | 42 | 338 | 28 | 1,344 | 1,302 |
| Amortisation and impairment beginning of year | 867 | 68 | 9 | 231 | - | 1,175 | 1,155 |
| Amortisation for the year | - | - | 1 | 26 | - | 27 | 25 |
| Disposals during the year | - | - | - | (4) | - | (4) | (16) |
| Impairment during the year | - | - | - | - | - | - | 11 |
| Amortisation and impairment year end | 867 | 68 | 10 | 253 | - | 1,198 | 1,175 |
| Carrying amount year end | - | 1 | 32 | 85 | 28 | 146 | 127 |
* The capitalised development cost relates to development of medical device products where the individual minor development projects are running for short-term periods and are subject to limited risk. The development projects are generating economic benefits in the form of sale of goods. At 31 December 2022, the capitalised development cost relates to the development of the adrenaline auto-injector for the European and US markets.
| Property, plant | ||||||
|---|---|---|---|---|---|---|
| Amounts in DKKm | Land and buildings |
Plant and machinery |
Other fixtures and equipment |
and equipment in progress |
2022 | 2021 |
| Cost beginning of year | 622 | 536 | 62 | 194 | 1,414 | 1,330 |
| Additions | 6 | 9 | 8 | 133 | 156 | 103 |
| Lease contract modifications | (18) | - | - | - | (18) | - |
| Disposals | (6) | (51) | (7) | - | (64) | (19) |
| Transfer to/from other groups | 1 | 21 | 2 | (24) | - | - |
| Cost year end | 605 | 515 | 65 | 303 | 1,488 | 1,414 |
| Depreciation and impairment beginning of year | 310 | 292 | 15 | - | 617 | 557 |
| Depreciation for the year | 24 | 41 | 10 | - | 75 | 72 |
| Disposals during the year | (2) | (51) | (7) | - | (60) | (19) |
| Impairment during the year | - | - | - | - | - | 7 |
| Depreciation and impairment year end | 332 | 282 | 18 | - | 632 | 617 |
| Carrying amount year end | 273 | 233 | 47 | 303 | 856 | 797 |
| of which assets held under leases* | 97 | - | 1 | - | 98 | 125 |
| Value of land and buildings subject to mortgages | 176 | 186 |
* Land and buildings in Denmark include buildings on land leased from Scion DTU A/S, Hørsholm. The leases are open-ended and the estimated lease terms are 15 years.
| Amounts in DKKm | Intangible assets |
Tangible assets |
Current and other assets |
Liabilities | Tax losses carried forward |
Total |
|---|---|---|---|---|---|---|
| 2022 | ||||||
| Carrying amount beginning of year | (17) | (64) | 24 | 40 | 328 | 311 |
| Adjustment to prior years | - | (1) | - | 1 | 6 | 6 |
| Adjustment of receivables from group companies | - | - | - | - | (17) | (17) |
| Recognised in the income statement, net | (2) | 4 | (11) | (5) | 12 | (2) |
| Recognised in equity, net (share-based payments) | - | - | (32) | - | 16 | (16) |
| Carrying amount year end | (19) | (61) | (19) | 36 | 345 | 282 |
| 2021 | ||||||
| Carrying amount beginning of year | (5) | (65) | 60 | 30 | 321 | 341 |
| Adjustment to prior years | 3 | - | - | - | - | 3 |
| Adjustment of receivables from group companies | - | - | - | - | (5) | (5) |
| Recognised in the income statement, net | (15) | 1 | (13) | 10 | (21) | (38) |
| Recognised in equity, net (share-based payments) | - | - | (23) | - | 33 | 10 |
| Carrying amount year end | (17) | (64) | 24 | 40 | 328 | 311 |
ALK-Abelló A/S is included in a joint Danish taxation scheme with the Lundbeck Foundation (Lundbeckfond Invest A/S) and its Danish subsidiaries.
ALK-Abelló A/S recognises deferred tax assets including the tax value of tax losses if it is probable that it can be utilised against future taxable income within a foreseeable future. This includes an assessment of the possibilities to utilise tax losses in the joint Danish taxation scheme with the Lundbeck Foundation (Lundbeckfond Invest A/S).
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Cost beginning of year | 1,469 | 1,469 |
| Capital contribution in subsidiaries during the year | 1 | - |
| Cost year end | 1,470 | 1,469 |
| Write-down beginning of year | 412 | 408 |
| Write-down during the year, cf. note 4 | - | 4 |
| Write-down year end | 412 | 412 |
| Carrying amount year end | 1,058 | 1,057 |
In the income statement, income from investments in subsidiaries is dividends, which amounts to DKK 427 million (2021: DKK 19 million) less write-down of investments in subsidiaries which amounts to DKK 0 (2021: DKK 4 million).
For an overview of all subsidiaries see note 5.6 in the consolidated financial statements.
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Raw materials | 115 | 102 |
| Work in progress | 372 | 284 |
| Manufactured goods and goods for resale | 39 | 34 |
| Total | 526 | 420 |
| Amount of write-down of inventories during the year | 18 | 13 |
| Amount of reversal of write-down of inventories during the year | 2 | 8 |
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Debt to mortgage credit institutions secured by buildings Mortgage debt is due as follows: |
||
| Within 1 year | 18 | 18 |
| From 1-5 years | 73 | 73 |
| After 5 years | 130 | 149 |
| Total | 221 | 240 |
| Bank loans | ||
| Bank loans are due as follows: | ||
| Within 1 year | 208 | 223 |
| From 1-5 years | - | - |
| After 5 years | - | - |
| Total | 208 | 223 |
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Pensions and similar liabilities expire as follows:* | ||
| Within 1 year | - | - |
| From 1-5 years | 3 | 3 |
| After 5 years | 57 | 55 |
| Total | 60 | 58 |
* Pensions and similiar liabilities relate to the provision for transition period for the Danish Holiday Act.
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Lease liabilities expire as follows: | ||
| Within 1 year | 11 | 10 |
| From 1-5 years | 35 | 41 |
| After 5 years | 58 | 79 |
| Total | 104 | 130 |
Non-current income tax payables to group companies of DKK 120 million (2021: DKK 115 million) is expected to expire between 1 to 5 years.
In December 2022, ALK-Abelló A/S issued a hold-harmless letter to ALK -Abelló Arzneimittel GmbH regarding costs under the ongoing tax audits in Germany (unlimited guarantee). The hold-harmless letter replaces the letter issued in December 2021.
Provisions recognised as debt to affiliates have been made to cover such exposures and the mentioned possible uncertainties are in addition to what is already provided for.
For more information on contingent liabilities and commitments, see note 3.10 in the consolidated financial statements.
ALK-Abelló A/S is included in the consolidated financial statements of the Lundbeck Foundation (Lundbeckfond Invest A/S, incorporated in Denmark).
ALK-Abelló A/S has had transactions with susidiaries during 2022. All subsidiaries are owned 100%. The transactions are eliminated in the consolidated financial statements.
Transactions with the majority shareholder are disclosed in note 5.3 in the consolidated financial statements. Apart from remuneration, no other transactions have taken place during the year with Board of Directors, Board of Management, major shareholders or other related parties.
For information on remuneration and exercise of share options for the ALK Group's Board of Directors and Board of Management, see note 2.4 and 5.1 in the consolidated financial statements.
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Fees to the auditors appointed at the annual general meeting: | ||
| Audit services | 2 | 2 |
| Tax advisory services | - | 1 |
| Other services | 1 | - |
| Total | 3 | 3 |
| Amounts in DKKm | 2022 | 2021 |
|---|---|---|
| Proposed dividend | - | - |
| Retained earnings | 454 | 301 |
| Net profit | 454 | 301 |
No events have occured after the reporting period, that influence the evaluation of the parent company financial statements.
| Amounts in DKKm | 2022 | Q4 unaudited |
unaudited | Q3 | Q2 unaudited |
unaudited | Q1 | |||
|---|---|---|---|---|---|---|---|---|---|---|
| Income statement | ||||||||||
| Revenue | 4,511 | 1,249 | 1,062 | 1,045 | 1,155 | |||||
| Cost of sales | 1,720 | 478 | 422 | 404 | 416 | |||||
| Research and development expenses | 665 | 185 | 161 | 162 | 157 | |||||
| Sales and marketing expenses | 1,381 | 372 | 345 | 358 | 306 | |||||
| Administrative expenses | 276 | 76 | 67 | 72 | 61 | |||||
| Other operating items, net | 1 | - | 1 | - | - | |||||
| Operating profit (EBIT) | 470 | 138 | 68 | 49 | 215 | |||||
| Net financial items | (23) | (34) | 2 | 7 | 2 | |||||
| Profit before tax (EBT) | 447 | 104 | 70 | 56 | 217 | |||||
| Net profit | 335 | 78 | 52 | 42 | 163 | |||||
| EBITDA | 708 | 201 | 128 | 107 | 272 | |||||
| Average number of employees (FTE) | 2,609 | 2,676 | 2,655 | 2,617 | 2,566 | |||||
| Revenue (Growth in revenue in local currency %) Europe |
3,058 | (9) | 871 | (10) | 683 | (6) | 713 | (14) | 791 | (4) |
| – SCIT/SLIT-drops | 1,266 | (-1) | 394 | (8) | 279 | (-5) | 267 | (-1) | 326 | (-6) |
| – SLIT-tablets | 1,519 | (13) | 421 | (5) | 314 | (13) | 366 | (21) | 418 | (15) |
| – Other products and services | 273 | (39) | 56 | (98) | 90 | (30) | 80 | (54) | 47 | (-1) |
| North America | 857 | (12) | 226 | (6) | 228 | (16) | 217 | (19) | 186 | (8) |
| – SCIT/SLIT-drops | 349 | (3) | 93 | (-3) | 91 | (5) | 86 | (6) | 79 | (3) |
| – SLIT-tablets | 151 | (14) | 37 | (4) | 36 | (8) | 41 | (19) | 37 | (27) |
| – Other products and services | 357 | (22) | 96 | (17) | 101 | (32) | 90 | (35) | 70 | (6) |
| International markets | 596 | (39) | 152 | (36) | 151 | (24) | 115 | (30) | 178 | (62) |
| – SCIT/SLIT-drops | 133 | (57) | 25 (-25) | 37 | (64) | 27 | (93) | 44 (179) | ||
| – SLIT-tablets | 432 | (38) | 123 | (64) | 108 | (18) | 73 | (5) | 128 | (63) |
| – Other products and services | 31 | (-3) | 4 (-20) | 6 | (-8) | 15 (206) | 6 (-61) | |||
| Total revenue | 4,511 | (13) 1,249 | (12) 1,062 | (11) 1,045 | (17) | 1,155 | (11) | |||
| – SCIT/SLIT-drops | 1,748 | (3) | 512 | (4) | 407 | (1) | 380 | (4) | 449 | (2) |
| – SLIT-tablets | 2,102 | (18) | 581 | (14) | 458 | (13) | 480 | (18) | 583 | (24) |
| – Other products and services | 661 | (27) | 156 | (37) | 197 | (29) | 185 | (50) | 123 | (-5) |
| Amounts in DKKm | 2022 | Q3 unaudited |
Q2 unaudited |
Q1 unaudited |
||
|---|---|---|---|---|---|---|
| Balance sheet | ||||||
| Total assets | 6,308 | 6,308 | 6,282 | 6,207 | 5,967 | |
| Invested capital | 3,400 | 3,400 | 3,292 | 3,155 | 3,067 | |
| Equity | 3,988 | 3,988 | 3,948 | 3,786 | 3,656 | |
| Cash flow and investments | ||||||
| Depreciation, amortisation and impairment | 238 | 63 | 60 | 58 | 57 | |
| Cash flow from operating activities | 416 | 85 | 95 | 145 | 91 | |
| Cash flow from investing activities | (351) | (118) | (90) | (90) | (53) | |
| – of which investment in intangible assets | (55) | (24) | (13) | (10) | (8) | |
| – of which investment in tangible assets | (298) | (94) | (75) | (82) | (47) | |
| Free cash flow | 65 | (33) | 5 | 55 | 38 | |
| Information on shares | ||||||
| Dividend | - | - | - | - | - | |
| Share capital | 111 | 111 | 111 | 111 | 111 | |
| Shares in thousands of DKK 0.50 each | 222,824 | 222,824 | 222,824 | 222,824 | 222,824 | |
| Share price, end period – DKK | 96 | 96 | 121 | 123 | 149 | |
| Net asset value per share – DKK | 18 | 18 | 18 | 17 | 16 | |
| Key figures | ||||||
| Gross margin – % | 62 | 62 | 60 | 61 | 64 | |
| EBITDA margin – % | 16 | 16 | 12 | 10 | 24 | |
| EBIT margin - % | 10 | 11 | 6 | 4 | 19 | |
| Earnings per share (EPS) – DKK | 1.5 | 0.4 | 0.2 | 0.2 | 0.7 | |
| Earnings per share diluted (DEPS) – DKK | 1.5 | 0.4 | 0.2 | 0.2 | 0.7 | |
| Cash flow per share (CFPS)– DKK | 1.9 | 0.4 | 0.4 | 0.7 | 0.4 | |
| Share price/Net asset value | 5.4 | 5.4 | 6.8 | 7.3 | 9.1 | |
* Management's review comprises this page as well as pages 1-48 and Financial highlights and key ratios for the ALK Group on page 12.
In March 2022, ALK-Abelló A/S completed a share split at a ratio of 1:20, each existing share of a nominal value of DKK 10 was split into 20 new shares of a nominal value of DKK 0.50 each. The company's share capital remains DKK 111,411,960. As a result of the share split, comparison figures for EPS, DEPS, share price, share number, net asset value per share, and share price/net asset ratio have been restated accordingly.
ALK-Abelló A/S Bøge Allé 6-8 DK-2970 Hørsholm Denmark CVR no. 63 71 79 16 Design and production: Noted
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