Annual Report 2006

Transcription

Annual Report 2006

CO N T E N T S
2
3
4
12
14
16
22
D E F I N I T IONS OF KEY FIGURES
A N D F I NANCIAL RATIOS
EBITDA
=
Earnings before interest, tax, depreciation
and amortisation
Adjusted EBITDA
=
EBITDA adjusted for inventory step-up
values as a result of purchase accounting,
restructuring and integration expenses
and project costs regarding abandoned
acquisition (the latter relevant for 2002) and
the effect from the warrants programme
Gross profit margin
=
Gross profit × 100/Total net turnover
EBITDA margin
=
EBITDA × 100/Total net turnover
Adjusted EBITDA margin
=
Adjusted EBITDA × 100/Total net turnover
NYCOMED S.C.A. SICAR
8-10 RUE MATTHIAS HARDT
1717
LUXEMBOURG
www.nycomed.com
Annual Report
2006
Nycomed S.C.A. SICAR
COMPANY PROFILE
LET TER FROM THE CEO
FINANCIAL SUMMARY
KEY PRODUCTS
PIPELINE
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
CO NTENTS
2
3
4
12
14
16
22
COM PA N Y PRO F I L E
I M P ORTA N T N OT I C E
• The Annual Report 2006 covers the period from
1 January 2006 to 31 December 2006. The consolidated
financial statements for 2006 cover this period.
LET T E R FRO M T H E C E O
• The acquisition of ALTANA Pharma AG on 29 December
2006 makes comparisons with previous years difficult.
FINA N C I A L S U M M A RY
With this in mind, please note that comparative figures
for 2002-2005 are pro forma figures.
• Unless otherwise stated, the number of employees stated
KEY PRO D U C T S
PIPE L I N E
FINA N C I A L S TAT E M E N T S
is on an annual basis.
FINANCIAL HIGHLIGHTS
AND KEY FIGURES
I MPORTANT NOTICE
• The Annual Report 2006 covers the period from
1 January 2006 to 31 December 2006. The consolidated
Pro forma
Consolidated figures
€ million
financial statements for 2006 cover this period.
• The acquisition of ALTANA Pharma AG on 29 December
2006 makes comparisons with previous years difficult.
With this in mind, please note that comparative figures
for 2002-2005 are pro forma figures.
• Unless otherwise stated, the number of employees stated
is on an annual basis.
Net turnover/geographical regions
North Western Europe
Finland
CIS
Big Five
Central Europe
International Sales
Other
Total net turnover
20061
20052
2005
2004
IFRS
IFRS
IFRS
IFRS
01.01.06
04.01.05
01.01.05
31.12.06
31.12.05
31.12.05
(12 months
(8 months
(12 months
of operations) of operations) of operations)
(unaudited)
289.1
127.6
189.1
69.3
47.1
70.3
221.9
105.7
150.7
60.7
66.4
98.0
107.1
85.3
125.1
98.9
60.9
89.1
22.9
14.9
25.2
869.9
507.9
747.5
2003
20023
2001
Danish GAAP4
176.7
66.3
98.8
85.3
107.1
81.6
28.8
644.6
196.1
70.0
77.3
79.1
97.7
92.2
23.1
635.5
195.2
23.0
64.2
71.1
87.8
98.4
23.2
562.9
179.0
20.8
37.8
59.5
76.3
107.1
27.8
508.3
Cost of sales
Gross profit
Operating income (EBIT)
Financial result
Net result/profit
EBITDA
Adjusted EBITDA
349.9
520.1
46.0
-156.1
-83.4
168.0
180.7
266.3
241.6
-36.8
-75
-86.5
44.6
110.7
369.3
378.2
-16.5
-88.7
-81.0
90.5
156.7
284.6
360.0
52.9
-67.4
5.6
126.3
129.3
316.3
319.2
-14.5
-63.1
-65.7
87.8
125.5
256.2
306.7
52.6
-23.2
12.1
108.2
120.8
239.7
268.6
48.9
-23.5
11.7
100.9
107.6
Balance sheet
Total assets
Change in working capital
Capital expenditures
Total equity
9,176.5
-41.1
30.3
1,232.4
2,350.7
-35.2
16.6
819.4
2,350.7
-58.1
20.7
819.4
1,486.9
-12.2
27.1
548.8
1,518.0
-9.0
16.8
562.3
1,640.6
-42.9
25.0
636.3
643.6
12.4
20.0
107.9
-44.1
-4,089.3
-53.3
4,837.9
651.2
16.8
-748.3
-29.4
807.6
46.7
20.7
-784.5
-39.9
827.3
23.6
51.0
24.0
-76.1
-14.2
-15.3
35.0
-37.6
-27.4
-18.5
-48.5
31.1
-894.6
-29.9
935.0
41.6
81.3
-40.8
-91.2
-50.7
59.8 %
19.3 %
20.8 %
47.6 %
8.8 %
21.8 %
50.6 %
12.1 %
21.0 %
55.8 %
19.6 %
20.1 %
50.2 %
13.8 %
19.7 %
54.5 %
19.2 %
21.5 %
52.8 %
19.9 %
21.2 %
3,821
3,252
3,252
3,019
2,831
2,665
2,418
Cash flow
Operating activities
Sale/purchase of business activities
Other investment activities
Financing activities
Net cash flow
Ratios
EBITDA margin
Number of employees
Number of employees including
ALTANA Pharma AG at 31 December 2006
12,741
See inside back cover for definition of key figures and financial ratios.
1) 29 December 2006 the Nycomed Group acquired ALTANA Pharma AG.
2) 9 May 2005 the Nycomed Group (Nyco Holdings ApS) was acquired by Nycomed A/S.
3) 29 November 2002 the Nycomed Group (Nycomed Holding A/S) was acquired by Nyco Holdings ApS.
4) As the ultimate parent of the Nycomed Group during the years 2001-2003 was incorporated in Denmark, the financial figures presented for those
years have been prepared in accordance with Danish GAAP. From 2004 onwards, International Financial Reporting Standards have been applied.
Published by
Concept and design
Bysted A/S
Text by
Eye for Image ApS
Print
PE Offset A/S
H I G H LIGHTS
2006
JANUARY
MAY
The European Committee for Medicinal
Products for Human Use (CHMP) recommends an extension of indication for
TachoSil® (haemostatic surgical patch).
Matrifen® (fentanyl patch) for severe
chronic opioid-sensitive pain receives
Mutual Recognition. It is subsequently
launched in Germany, Denmark and
Sweden.
MARCH
Nycomed and The Medicines Company
announce the results from the first 30
days of the global 13,819 patient ACUITY
trial, confirming that Angiox® (bivalirudin) used alone significantly reduces the
incidence of clinically relevant bleedings.
JUNE
APRIL
ImagifyTM (perflubutane polymer microspheres), an ultrasound contrast agent for
use in the evaluation of coronary artery
disease, shows positive preliminary results
in its phase III clinical trials.
Nycomed’s new common cold product
ZyComb® (xylometazoline hydrochloride
and ipratropium bromide) is approved in
Sweden.
Nycomed acquires Romanian pharmaceutical company Ruby De Tacos. The
company has 30 employees and already
markets a number of Nycomed products
in Romania.
The European Commission approves and
issues EU marketing authorisation for
Preotact®, the first full-length parathyroid hormone (PTH 1-84) for
osteoporosis.
SEPTEMBER
TOTAL NET TURNOVER
ADJUST E D E B I T D A
(€ million)
3500
Nycomed 1
ALTANA 2
3000
(€ million)
1000
Nycomed 1
ALTANA 2
800
Nycomed announces its intention to
acquire ALTANA Pharma AG from
German-based pharmaceuticals and
chemicals group, ALTANA AG. The transaction, including cash, marketable securities and working capital, has a total value
of € 4,768.6 million.
OCTOBER
The new Executive Management
Committee is finalised. Hans-Joachim
Lohrisch, ALTANA Pharma President and
CEO, will be a member of the board.
NOVEMBER
Nycomed and US-based DURECT
Corporation announce the signing of
a licence agreement for POSIDURTM
(SABERTM-bupivacaine) for the treatment
of post-surgical pain.
DECEMBER
Nycomed acquires German-based
international pharmaceuticals group
ALTANA Pharma AG.
NUMBER OF EMPLOYEES
15000
Nycomed 1
ALTANA 2
12000
2500
600
2000
1500
1000
500
0
2002
2003
2004
2005
9000
400
6000
200
3000
0
2006
2002
2003
2004
2005
2006
0
2002
2003
2004
2005
2006
NET TURNOVER BY REGION
(€ million)
2006
98.9
2005 1
22.9
89.1
25.2
Finland
289.1
Central Europe
277.7
150.6
221.9
Big Five
Russia/CIS
International Sales
69.3
60.7
107.1
43.9
92.5
68.4
Contract Production
1) The numbers for Nycomed for 2002-2005 are pro forma. The 2005 numbers are unaudited.
2) The numbers for ALTANA Pharma AG are unaudited.
A N N UA L R E P O RT 2 0 0 6
1
CO M PANY
PRO F I LE
Following the acquisition of ALTANA
Pharma AG on 29 December 2006,
Nycomed is a pharmaceutical company of
12,000 people. We provide medicines
and products for hospitals, specialists and
general practitioners, as well as over-thecounter medicines in selected markets.
Our aim is to bring medicines that make
a real difference to patients and to
healthcare providers. We are engaged
in all aspects of a product’s life, from
research and development to production,
marketing and customer relations.
We also work closely with innovative
research-based companies, always looking
for products with real promise for
patients.
2
The result is a broad portfolio of products
and a powerful pipeline. We work in a
wide range of therapeutic areas, particularly cardiology, gastroenterology,
osteoporosis, respiratory, pain and tissue
management.
We diligently test our medicines to evaluate safety and efficacy, and collaborate
with local and international authorities to
shepherd our products through approval,
registration and reimbursement programmes.
Our goal is to always keep patients in
focus. We are constantly searching for
ways to make treatments more manageable. Medicinal travel packs, easy-toadminister injections and fast-acting formulas help people administer treatments
more simply, allowing them to live fuller,
more productive lives.
A European-based company, we have a
wide geographical scope and operate
extensively throughout Europe and in
fast-growing markets in Latin America,
Russia/CIS and Asia-Pacific. No matter
where we are in the company, we know
that everything we do matters to someone and that we all contribute to making
healthcare better for patients around the
world.
Nycomed is privately owned and has
its corporate headquarters in Zurich,
Switzerland. There are production sites in
Austria, Belgium, Brazil, Denmark, Estonia,
Finland, Germany, India, Ireland, Mexico,
Norway, Poland and the US. Nycomed’s
R&D facilities are led out of Konstanz
in Germany, with additional sites in
Denmark, the US and India.
L E T T ER FROM
T H E CEO
Nycomed saw strong growth throughout
2006. Our regions and products performed well, and the year ended with the
completion of the acquisition of ALTANA
Pharma AG. The bringing together of
Nycomed and ALTANA Pharma marks
the start of a new era in which we have
the opportunity to build an even stronger
healthcare company.
Together, we are creating a Nycomed
with the ambition of making an even
bigger difference to patients and the
pharmaceutical industry. The resulting
Nycomed is strong in Europe and has a
significant presence in growing markets
such as Russia/CIS, Latin America and
Asia-Pacific.
Challenges ahead
Of course, change takes time. Building a
new company with new strategic goals
does not happen overnight and challenges
lie ahead. We must work hard to maintain
customer focus while integrating the
companies and we must ensure that we
quickly tap into the considerable potential
and expertise we have within the company.
With a staff and management made up
of highly motivated and talented people
from both companies, we can respond
quickly to the changes and build a powerful company with an exciting future.
Our products are performing well, giving
us a solid platform from which we can
grow. But over the next few years,
patents will expire on our biggest product,
Pantoprazole for acid-related gastrointestinal diseases. We need to prepare for
the change. Until then, Pantoprazole’s
revenues will help us continue to develop
Nycomed.
Bringing medicines
that matter to patients
We must always remember our commitment. We are here to bring new and
better medicines to patients. And it is
the patients who judge our success. By
listening and responding to the needs of
patients, medical professionals and payers,
Nycomed can take great strides towards
improving the quality of life of people
around the world.
I am pleased to be working with old and
new colleagues and look forward to
learning from their creativity and experience. Together, we will all continue to
bring healthcare solutions to the people
who need them.
Håkan Björklund
3
F I N A NCIAL
S U M M ARY
With year-to-date growth in net turnover of 16.4% and growth in adjusted
EBITDA of 15.4%, full year results have
been very satisfactory for the Group.
Russia/CIS and most of our established
European home markets continued to
show satisfactory growth rates. The European pharmaceutical industry is facing intensified focus on cost containment from
health authorities and increasing generic
competition. Despite this, we have increased sales in most markets and in 2006
we further expanded sales and marketing
coverage in line with our strategy. The
launches of Matrifen® (fentanyl patch) for
severe chronic opioid-sensitive pain and
Preotact®, the first full-length
parathyroid hormone (PTH 1-84) for
osteoporosis, are on track – with introductions in the key European markets
continuing into 2007. We remain
optimistic about these important products
and their contribution to Nycomed’s
continued growth.
In 2006, adjusted EBITDA increased by
15.4% compared to 2005. This is a result
of strong revenue growth, focus on costs
and development in operating expenses
according to our plans, as well as good
production performance due to a high
yield in production and cost control.
ACQUISITION OF ALTANA
PHARMA AG
On 21 September 2006, we reached an
agreement to acquire ALTANA Pharma
AG. The transaction, including cash and
marketable securities and working capital
acquired, has a total value of € 4,768.6
million. The transaction was financed by a
consortium consisting of international
banks. Closing of the transaction took
place on 29 December 2006.
4
The acquisition of ALTANA Pharma AG
and the related application of purchase
accounting adjustments and financing
transactions have affected, and will continue to affect, our results of operations
following the acquisition. In particular:
• The substantial debt we incurred to
finance the acquisition will increase the
combined Group’s interest expense
onwards significantly
• The significant adjustment to intangible assets we recorded in connection
with the acquisition in respect of
patents and other intellectual property
rights will lead to a significant increase
in amortisation expense
• The purchase accounting adjustment
relating to inventory resulted in a nonrecurring charge of € 49.4 million. This
will be reflected in our consolidated
income statement, net of the related
income tax benefit, as the inventory on
hand at the acquisition date is sold to
customers. This impact and the related
effect on gross and operating margins
will be reflected in our consolidated
income statement within the first six
months following the closing of the
acquisition
• The purchase price allocation and purchase accounting adjustments may be
subject to subsequent adjustments of
fair values. IFRS 3 Business Combinations effectively requires allocation of
the cost of an acquisition to identifiable assets, liabilities and contingent liabilities to be completed within a period
of 12 months of the acquisition date
(29 December 2006).
COMPARATIVE
FIGURES
The consolidated income statement for
2006 was not impacted by the acquisition
of ALTANA Pharma AG as closing of the
acquisition took place on 29 December
2006.
As a result of the new ownership of
Nycomed in 2005, the consolidated
financial statements for 2005 comprise
consolidated figures reflecting eight
months of operations from May to
December 2005. For comparative reasons,
we have stated a pro forma income statement and cash flow statement covering
12 months from January to December
2005. These 12-month figures are based
on consolidated figures from January to
April 2005 for Nyco Holdings ApS and
subsidiaries, and consolidated figures from
May to December 2005 for Nycomed A/S
and subsidiaries.
All figures stated below, which are compared to 2006, are the unaudited figures
from the 12-month pro forma income
statement and cash flow statement.
OVERALL
PERFORMANCE
Net turnover increased by 16.4% to
€ 869.9 million in 2006. Adjusted for the
impact from foreign currency fluctuations,
net turnover increased by approximately
17.0%.
Operating profit increased by € 62.5
million in 2006, from € -16.5 million to
€ 46.0 million. Excluding the impact from
inventory step-up of € 58.7 million in
2005, the impact from incentive programmes in both 2005 and 2006, and
adjustments for integration costs in 2006
and restructuring costs in 2005 and 2006,
operating profit increased by 18.4% from
€ 49.6 million in 2005 to € 58.8 million
in 2006. Adjusted for the impact from
foreign currency fluctuations, operating
profit adjusted for these items increased
by approximately 23.7%.
impact from foreign currency fluctuations
(mainly NOK), net turnover increased by
approximately 4.2%.
EBITDA and adjusted EBITDA are key
measures used in order to have a more
comprehensive analysis of Nycomed ’s
operating performance and of the ability
to service our debt.
Operating profit increased by € 9.3
million, 6.9%, from € 134.5 million in
2005 to € 143.8 million in 2006. Adjusted
for the impact from foreign currency
fluctuations (mainly NOK), operating
profit increased by approximately 7.1%.
Adjusted EBITDA amounted to € 180.7
million in 2006, which is a 15.4% increase
compared to 2005. Adjusted for the
negative impact from foreign currency
fluctuations, adjusted EBITDA increased
by approximately 17.1%.
DEVELOPMENT
BY SEGMENTS
Nycomed’s sales and operating profit
derive from the following geographical
segments:
• North Western Europe
• Central Europe
• Big Five
• Finland
• Russia/CIS
• International Sales (Export)
In addition, Nycomed has other business
entities comprising central functions
which are: International Product Development, International Marketing and Business Development, Operations, Contract
Production and Administration.
NORTH WESTERN EUROPE
This region, comprising Denmark,
Norway, Sweden, the Baltic States,
Belgium and the Netherlands, is
Nycomed’s largest region by turnover.
Net turnover increased by € 11.4 million,
4.1%, from € 277.7 million in 2005 to
All markets in the region, except for
Norway, had positive sales growth. In
Denmark, the sales of Pantoloc®
(pantoprazole) for gastrointestinal
diseases continued to perform very well
and Pamol® (paracetamol) for pain relief
showed significant growth. In Sweden,
sales of Matrifen® (fentanyl patch) for
severe chronic opioid-sensitive pain, the
anticoagulant Angiox® (bivalirudin) and
the anticoagulant Waran® (warfarin)
showed strong growth. The Baltic countries saw a positive development in net
turnover mainly driven by Ibumetin®
(ibuprofen) for pain relief, Xymelin®
(xylometazolin) for nose congestion,
Xefo® (lornoxicam) for the management
of acute pain, and TachoSil® (haemostatic
surgical patch). Despite the introduction
of different reimbursement modalities for
cheaper PPIs (generics) in Belgium,
Zurcale® (pantoprazole) for gastrointestinal diseases continued to perform very
well. In general, the changes to the PPI
reimbursement system introduced during
2005 have had a positive effect on our
sales. TachoSil® and the antithrombotic
Asaflow (acetylsalicyl acid) showed
strong growth in Belgium in 2006. In the
Netherlands, sales of TachoSil® increased
and sales of Pantoprazole developed well.
The negative development in Norway is
mainly related to lost distribution in pharmacy chains. Despite this, Norway slightly
improved operating profit due to strong
cost control.
CENTRAL EUROPE
Our Central Europe region comprises
Austria, Switzerland, Greece, Poland, the
Czech Republic and Romania. Net turnover increased by € 14.6 million, 15.8%,
from € 92.5 million in 2005 to € 107.1
million in 2006. Operating profit
increased by € 5.1 million, 17.2%, from
€ 29.6 million in 2005 to € 34.7 million in
2006. The increase in both net turnover
and operating profit for the region was
mainly due to: overall sales improvements in
Switzerland with TachoSil® (haemostatic
surgical patch) and the food supplement
Litozin® (rosehip extract) developing well;
a sales increase in Greece mainly driven
by TachoSil®, Xefo Rapid® (lornoxicam)
for the management of acute pain and
Calcium; and increased sales of TachoSil®
in Poland. Despite the impact on sales of
changes in the law in Austria, which
strictly regulates discounts for selfdispensing doctors, Austria had a positive
development in operating profit.
BIG FIVE
This area comprises Germany, France,
Spain, Italy and the UK. Net turnover
€ 43.9 million in 2005 to € 60.7 million
in 2006. Operating profit decreased by
€ 3.5 million.
Sales in Germany increased by 26.2%,
mainly driven by the launch of Matrifen®
(fentanyl patch) for severe chronic opioidsensitive pain in cooperation with our
partner Betapharm and increased sales of
TachoSil® (haemostatic surgical patch).
Sales growth in France was driven by
Gutron® (midodrine hydrochloride) indicated for hypotension, and the 2006
launches of TachoSil® and the anticoagulant Angiox® (bivalirudin). Sales growth in
Spain was due to the launch of TachoSil®
where the product has been very well
5
accepted. TachoSil® also developed positively in Italy, where sales of Xefo®
(lornoxicam) for the management of acute
pain also contributed to growth. 2006
sales in the UK are based on TachoSil®
and Angiox®; however sales have not
developed according to our plans.
FINLAND
€ 69.3 million in 2006. Sales development
in Finland was strongly impacted by
changes in legislation effective per 1
January 2006 within the over-the-counter
segment; reimbursed prescription products
experienced a 5% price reduction from
the same date. Despite these changes to
the market, our company in Finland
achieved a significant improvement in operating profit due to cost reductions.
RUSSIA/CIS
International Sales comprises our export
business, out-licensing agreements and
our sales in China. Net turnover increased
by € 9.8 million, 11.0%, from € 89.1 million in 2005 to € 98.9 million in 2006.
Adjusted for the impact from foreign
currency fluctuations (mainly USD and
JPY), net turnover increased by approximately 12.2%. Operating profit increased
by € 4.6 million, 7.5%, from € 61.4 million
in 2005 to € 66.0 million in 2006.
Adjusted for the impact from foreign
currency fluctuations (mainly USD, JPY
and NOK), operating profit increased by
approximately 8.9%.
CENTRAL FUNCTIONS
Our central functions comprise our Contract Production activities, Operations
comprising manufacturing and supply
chain, International Product Management,
International Product Development and
Administration.
Net turnover for Contract Production
decreased by € 2.3 million, -9.2%, from
2006. The decrease was mainly due to
lower sales of aminobisamid, partly offset
by strong demand from a partner on secondary production.
The underlying performance for Operations in 2006 was very satisfactory with a
significant increase in volumes for our
NET TU R N O V E R 2 0 0 6
(€ million)
250
200
150
100
50
0
o
pr
ct
tra s
on Sale
/c
er nal
th
O atio
rn
te
In CIS
a/
ssi
Ru d
an
nl
Fi ny
a
rm
Ge
ce
an
Fr
d
lan
Po e
c
d
ee
Gr rlan
e
itz
s
Sw
ia tate
S
str
Au altic ds
B rlan
e
e
Th eth
N
e
Th m
u
lgi
Be n
e
ed
Sw ay
w
or
N
ar
nm
De
k
impact of the US dollar, net turnover
increased by approximately 48.9%. Operating profit increased by € 29.7 million,
impact of the US dollar, operating profit
increased by 50.7%.
INTERNATIONAL SALES
(EXPORT)
d.
CHANG E 2 0 0 5 - 2 0 0 6
40%
30%
20%
10%
0%
-10%
o
pr
ct
tra s
on Sale
/c
er nal
th
O atio
rn
te
In CIS
a/
ssi
Ru d
an
nl
Fi ny
a
rm
Ge
ce
an
Fr
d
lan
Po e
c
d
ee
Gr rlan
e
itz
s
Sw
ia tate
S
str
Au altic ds
B rlan
e
e
Th eth
N
e
Th m
u
lgi
Be n
e
ed
Sw
y
a
w
k
ar
nm
or
N
De
This considerable sales growth is mainly
driven by Actovegin® (deproteinized
haemoderivative) for metabolic stimulation, as well as sales of Calcium and
Concor® (bisoprolol fumarate) for hypertension treatment from our Merck portfolio. Despite additional investments to expand our sales and marketing organisation
in Russia/CIS, operating profit grew at the
same level as sales.
d.
6
own produced products. The cost of
goods as a percentage of net turnover
continued to decrease. This positive
development is a result of continuous
cost control and an increased yield in our
plants. The main challenge in 2006 has
been to match production capacity to the
increasing demand from our markets,
especially the demand from Russia/CIS.
The start-up of the new TachoSil®
(haemostatic surgical patch) production
facility was implemented, and we have
increased the yield in the production of
TachoSil®.
2006. Excluding the amortisation of inventory step-up of € 58.7 million in 2005,
gross profit increased by € 83.4 million,
19.1%, from € 436.9 million to € 520.3
million for the year ended 31 December
2006. The related gross profit margin as a
percentage of net turnover, excluding the
inventory step-up in 2005, increased from
58.5% for the year ended 31 December
2005 to 59.8% for the year ended 31 December 2006. A favourable product mix
in 2006 compared to 2005 and improved
yield in production were the main reasons
for the improved margin.
Cost of sales
Operating expenses
As a percentage of net turnover, cost of
sales decreased from 42.6% in 2005,
excluding the amortisation of inventory
step-up from purchase accounting in
2005, to 40.2% in 2006. Excluding amortisation of inventory step-up, cost of sales
as a percentage of net turnover decreased
to 41.5% in 2005. Total direct costs as a
percentage of net turnover decreased
from 29.4% for the year ended 31
December 2005 to 28.3% for the year
ended 31 December 2006. This decrease
primarily reflects a more favourable product mix in most of our markets. Indirect
production costs as a percentage of net
turnover decreased from 11.1% to 9.8%
in the 12 months ended 31 December
2006. Despite the increased volumes, we
have been able to keep the overall cost
of goods unchanged. The improved yield
was mainly driven by high yield in the
TachoSil® (haemostatic surgical patch)
production in Austria and in the production of Calcium in Norway.
Sales and marketing expenses in the regions increased by € 39.2 million, 21.4%,
from € 183.0 million for the year ended
31 December 2005, to € 222.2 million for
the year ended 31 December 2006. This
increase mainly reflects the increased
costs in connection with the expansion of
our activities in Russia/CIS, as well as the
further expansion and launch of products
in our Big Five region.
Gross profit
Gross profit increased by € 142.1 million,
37.6%, from € 378.2 million in the year
ended 31 December 2005, to € 520.1
The increase in centralised selling expenses of € 4.1 million, 22.5%, is related
to international sales and marketing
resources and support, business development and in-licensing activities. The total
amortisation of intangible assets included
in sales and marketing expenses increased
by € 15.1 million, 18.1%, from € 83.7
2005, to € 98.9 million for the year
ended 31 December 2006. This increase
was mainly related to the 2006 full-year
effect of the application of purchase
accounting and amortisation on the stepup values related to patents and rights
and development projects.
Research and development expenses
2006. As a percentage of net turnover,
research and development expenses
increased from 3.8% in 2005 to 4.3% in
2006. As Nycomed does not perform
basic research, our research and development expense line consists of a mix of
various non-capitalised product development and support costs. Including capitalised development costs and milestone
payments concerning in-licensed products, the total development costs as a
percentage of net turnover increased
from 6.8% in 2005 to 7.2% in 2006.
Administration expenses increased by
€ 13.5 million, 16.8%, from € 80.3 million
in 2005 to € 93.8 million in 2006. As a
percentage of net turnover, administration expenses increased from 10.7% in
2005 to 10.8% in 2006. Included in
administration expenses for 2006 are
restructuring costs and costs related to
the integration of ALTANA Pharma AG.
Excluding this, administration expenses
increased by € 5.8 million, 7.2%, compared to last year and 9.9% as a percentage of sales.
The increase in administration expenses
was mainly due to increased activities in
our new subsidiaries and several corporate projects.
Net financial items
Net financial items increased by € 67.4
million, from net expenditure of € 88.7
million in 2005 to net expenditure of
€156.1 million in 2006. This was primarily
impacted by the redemption of most of
the € 400 million Senior PIK Notes and
€ 225 million Senior Notes on which a
premium above par was paid in connection with the redemption. Furthermore,
unamortised financing costs, expenditure
of € 18.4 million relating to the Senior
PIK Notes and fair value adjustment on
the Senior Notes income of € 27.4
7
million have been charged to the income
statement in connection with the redemption. In addition to this, the increase
in net financial items is impacted by the
full-year effect of interest on the Senior
PIK Notes on which there was interest for
a nine-month period in 2005, a total
increase of €15.7 million.
Tax
Income tax benefit for the year was
€ 26.7 million in 2006 compared to an
income tax benefit of € 24.1 million for
2005. The increase in tax benefit of € 2.6
million was mainly due to an increase in
loss before tax which went from a loss of
€ 105.2 million in 2005 to a loss of € 110.1
million in 2006. This increase in tax benefit was additionally affected by the net
effect of prior year adjustments, differences in local tax rates and non-deductible expenses related to our warrant
programme, as well as other minor permanent differences.
Net income (loss)
Our net income decreased slightly from a
loss of € 81.0 million in 2005 to a loss of
€ 83.4 million in 2006. Excluding the
2005 non-cash items, inventory step-up
net of tax and the 2006 full-year impact
from higher amortisations on intangible
assets as a result of the application of purchase accounting and the related step-up
of values on intangible assets, as well as
the additional financial expenses in 2006
in connection with the repayment of PIK
Notes and Senior Notes, our net income
increased by € 12.7 million.
CASH FLOW AND
CAPITAL RESOURCES
CASH FLOW
Operating activities
Cash flow from operating activities
decreased from € 20.7 million in 2005 to
€ -44.1 million in 2006. The decrease was
primarily caused by the payment of interest in PIK, originally capitalised in 2005
and during 2006 until payment end of
December 2006. Excluding this impact,
cash flow from operating activities
showed an increase of € 25.7 million. This
increase compared to 2005 was mainly
due to increased profitability in the underlying business activities, lower impact
from working capital and slightly increased tax payments. Working capital
had a negative development of € 41.1
2006 compared to a negative development of € 58.1 million for the year ended
31 December 2005. The negative development in working capital in 2006 is impacted by the prolongation of the credit
terms under the Federal Programme in
Russia. In addition, we have increased the
level of inventories primarily related to
the launch of Matrifen® (fentanyl patch)
for severe chronic opioid-sensitive pain and
Preotact®, the first full-length parathyroid
hormone (PTH 1-84) for osteoporosis,
and to take into account growth in
Russia/CIS. We are continuing to put a lot
of resources into our on-going working
capital project.
Investment activities
The cash flow from investing activities
was impacted by the acquisition of
ALTANA Pharma AG for € 4,689.8
million, before taken over cash and marketable securities of € 600.5 million.
8
Please refer to the Financial Statements
section, note 1, for further details. Investments in property, plant and equipment
amounted to € 30.3 million and mainly
comprised: expansion of our production
line in Austria which produces Actovegin®
(deproteinized haemoderivative) for
metabolic stimulation; other investments
in production in Austria, Norway and
Denmark; investments in IT and new
office facilities; and general maintenance
investments. Investments in intangible
assets comprised development costs and
milestone payments for future growth
products.
Financing activities
Cash flow from financing activities was
impacted by the acquisition of ALTANA
Pharma AG. The transaction was financed
through senior credit facilities under
which we have drawn in total € 5,491.2
million end of 2006. Financing costs
related to the transaction amounted to
€ 107.5 million of which € 103.0 was paid
in 2006. Our shareholders contributed
€ 500.0 million in cash to the Nycomed
Group. Cash net outflow from other
financing activities amounted to € 1,050.3
million covering mainly ordinary installments on senior credit facilities of € 6.8
million; repayment of the former senior
credit facilities; and repayment of Senior
PIK Notes and Senior Notes, including
premium paid in connection according to
the loan agreement.
Nycomed’s total cash position at 31
December 2006 amounted to € 697.8
million, including cash taken over from
ALTANA Pharma AG of € 600.5 million.
CAPITAL RESOURCES
In line with our business plan and strategy,
we plan to continue to devote significant
cash resources to the ongoing growth of
our business. As at 31 December 2006, we
had a cash position of € 697.8 million including cash from the acquisition of
ALTANA Pharma AG.
In connection with the acquisition, our old
senior credit facilities were repaid and
new senior credit facilities were made
available. As part of our senior credit
facilities, we have the following facilities
(the figures disclosed are book values as
per 31 December 2006):
• Term A Loan facilities of € 1,533.0
million
• Term B and C Loan facilities of
€ 1,208.1 million each
• Second Lien of € 425 million
• Bridge facility of € 551.8 million
• A € 250 million revolving facility that
may be used for general corporate and
working capital purposes of the Group
• A € 450 million In-licensing/
Restructuring facility that may be used
to finance in-licensing payments and,
up to € 150 million, to finance restructuring costs. As per 31 December 2006,
€ 241.2 million was drawn under this
facility and the amount was repaid at
the beginning of 2007.
We believe that our operating cash flow,
together with available borrowings under
the senior credit facilities and existing
cash resources, will be sufficient to fund
our anticipated working capital needs,
capital expenditures and debt service
requirements. In particular, future drawings under the senior credit facilities will
be available only if we meet certain conditions such as the financial maintenance
covenants and other conditions included
in the senior credit facilities. Our ability to
meet these covenants will depend on our
results of operations and factors outside
our control.
Subsequent events
On 14 February 2007, the Company’s
interest in Sangtec Molecular Diagnostic
A.B. and the PCR licence rights were sold
to an investor. The selling price attained,
USD 26.5 million, corresponded to the
total of the net book values and an additional profit mark-up.
In the opinion of the Board of Directors,
no important events that could have a
material influence on the assessment
of the consolidated financial statements
have occurred after the balance sheet
date, except for what is stated above.
products, either alone or together with
external partners. The global franchise
team, Respiratory Therapeutics, remains
in Florham Park.
In the future, the distribution strategy for
the US will focus more on collaboration
with partners and on out-licensing products. The ALTANA Research Institute in
Waltham, Massachusetts, will be closed
during the first half of 2007. The core
projects will be transferred to the
ALTANA Pharma Research Centre in
Konstanz where appropriate. ALTANA Inc.
in Melville on Long Island is not affected
by the restructuring.
Outlook for the financial year 2007
In 2007, we will mainly concentrate on
the integration of ALTANA Pharma AG
with a continuous focus on our customers
and markets.
The acquisition of ALTANA Pharma AG
may result in relatively major changes for
the organisation of ALTANA Pharma AG.
The strategic decisions necessary for this
will be taken by the new management
board in the course of 2007. Therefore, it
is not yet possible to specify any concrete
changes. The planning process for possible
restructuring has been under way since
the beginning of January 2007 and has
not yet been completed.
As a result of this realignment, about 400
employees will have left the company by
mid-2007.
Costs of € 33.7 million were incurred for
the restructuring in 2006 by ALTANA
Pharma AG.
We expect growth in our revenues and
EBITDA of approximately 5-10% in 2007,
excluding restructuring and integration
costs.
In October 2006, it was decided to restructure some areas of the pharmaceuticals business in the US. The US marketing
and sales organisation, Florham Park, New
Jersey, was dismantled at the end of 2006.
The functions of Clinical Development
and Regulatory Affairs in Florham Park
will continue with development work
for ALTANA Pharma AG’s new respiratory
9
MANAGEMENT’S STATEMENT
Today we approved the Annual Report
of Nycomed S.C.A. SICAR for the period
1 January 2006-31 December 2006.
In our opinion, the Annual Report 2006
gives a true and fair view of the Group’s
financial position, cash flows and results
of operations. The Annual Report 2006
has been prepared in accordance with
International Financial Reporting
Standards as adopted by the EU. We
consider that the accounting policies
used to compile the Annual Report 2006
are appropriate.
We recommend that the Annual Report
2006 is approved at the Annual General
Meeting.
Luxembourg, 14 March 2007
APPROVED BY THE BOARD OF DIRECTORS OF THE GENERAL PARTNER, NYCOMED S.A.
10
Toni Weitzberg, Chairman
Håkan Björklund
Colin Taylor
Kristoffer Melinder
Carl-Gustaf Johansson
Newton X. Aguiar
Thompson Dean
Hans-Joachim Lohrisch
INDEPENDENT AUDITORS’ REPORT
To the management of Nycomed S.C.A.
SICAR Société Anonyme Luxembourg:
priate accounting policies and making
accounting estimates that are reasonable
in the circumstances.
REPORT ON THE
CONSOLIDATED FINANCIAL
STATEMENTS
Responsibility of the “Réviseur
d’Entreprises”
Following our appointment by the management of the Company, we have
audited the accompanying consolidated
financial statements of Nycomed S.C.A.
SICAR, which comprise the consolidated
balance sheet as at 31 December 2006
and the consolidated income statement,
consolidated statement of changes in
equity and consolidated cash flow statement for the year then ended, and a
summary of significant accounting
policies and other explanatory notes.
Management responsibility for the
consolidated financial statements
The management is responsible for the
preparation and fair presentation of these
consolidated financial statements in
accordance with International Financial
Reporting Standards as adopted by the
EU. This responsibility includes: designing,
implementing and maintaining internal
control relevant to the preparation and
fair presentation of consolidated financial
statements that are free from material
misstatement, whether due to fraud or
error; and selecting and applying appro-
Our responsibility is to express an opinion
on these consolidated financial statements based on our audit. We conducted
our audit in accordance with International
Standards on Auditing as adopted by the
“Institut des Réviseurs d’Entreprises”.
Those standards require that we comply
with ethical requirements and plan and
perform the audit to obtain reasonable
assurance whether the consolidated
financial statements are free from material misstatement.
An audit involves performing procedures
to obtain audit evidence about the
amounts and disclosures in the consolidated financial statements. The procedures selected depend on the judgment
of the “Réviseur d’Entreprises”, including
the assessment of the risks of material
misstatement of the consolidated financial statements, whether due to fraud or
error. In making those risk assessments,
the “Réviseur d’Entreprises” considers
internal control relevant to the entity’s
preparation and fair presentation of the
consolidated financial statements in order
to design audit procedures that are
appropriate in the circumstances, but not
for the purpose of expressing an opinion
on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of
accounting estimates made by the management, as well as evaluating the overall
presentation of the consolidated financial
statements.
We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the consolidated financial
statements give a true and fair view of
the financial position of Nycomed S.C.A.
SICAR as of 31 December 2006, and of
the consolidated results of its operations
for the period then ended in accordance
with International Financial Reporting
Standards as adopted by the EU.
REPORT ON OTHER LEGAL
AND REGULATORY
REQUIREMENTS
The consolidated management report,
which is the responsibility of the management, is in accordance with the
consolidated financial statements.
Luxembourg, 14 March 2007
ERNST & YOUNG
Société Anonyme Réviseur d’Entreprises
Isabelle Nicks
11
KEY
PRO D UCTS
We provide medicines and products for
hospitals, specialists and general practitioners, as well as over-the-counter
medicines in selected markets.
Product highlights
During 2006, our products performed
well, with Pantoloc® (pantoprazole) for
12
gastrointestinal diseases and CalciChew®
(calcium and vitamin D) for osteoporosis
showing particularly strong sales.
Our osteoporosis portfolio was strengthened by the addition of Preotact®, the
first full-length parathyroid hormone
(PTH) for osteoporosis. Preotact®
received European market authorisation
in April 2006 and was subsequently
launched in the UK, Germany, Denmark,
Sweden, Austria and Greece.
Matrifen® (fentanyl patch) for severe
chronic opioid-sensitive pain received
Mutual Recognition in May 2006. It was
PANTOLOC® 1
(pantoprazole)
CALCICHEW® 2
(calcium and
vitamin D)
ACTOVEGIN ®
(deproteinized
haemoderivative)
TACHOSIL ® 3
(haemostatic
surgical patch)
Therapeutic area
Gastroenterology
Osteoporosis
Neurology
Tissue management
Net turnover
€ million
€ 1,589.8
€ 93.4
€ 78.8
€ 61.1
% of total net turnover
46.8 %
10.7 %
9.1 %
7.0 %
% growth 2005-2006
13.6 %
20.2 %
22.5 %
29.9 %
Indication
Acid-related
gastrointestinal diseases
such as gastroesophageal
reflux disease (GERD)
Osteoporosis
Metabolic stimulation
Haemostasis
Key customers
Hospitals
Specialists
General practitioners
Hospitals
Specialists
Pharmacists
Hospitals
Specialists
OTC
Hospitals
Specialists
Key markets
US
Germany
Canada
Benelux
CIS
Switzerland
UK
Germany
France
Russia/CIS
Germany
China
Europe
Russia/CIS
Japan
launched in Germany, Denmark and
Sweden and will be launched in the rest
of Europe during 2007-2008.
The 2006 global ACUITY clinical trial
showed that Angiox® (bivalirudin),
indicated for use as an anticoagulant in
patients undergoing percutaneous
XEFO® 4 and
XEFO® RAPID
(lornoxicam)
coronary intervention (PCI), can significantly reduce the incidence of clinically
relevant bleeding. The results of the
trial should establish Angiox® as a treatment for patients with a high risk of heart
attack.
Key products are those that had a substantial impact on our business during
2006. Please note that annual sales stated
below for 2006 for Pantoloc® are pro
forma unaudited figures for Nycomed and
ALTANA Pharma AG combined.
CUROSURF ®
(lung surfactant)
MATRIFEN ®
(fentanyl patch)
ANGIOX®
(thrombin-specific
anticoagulant)
PREOTACT ®
(full-length parathyroid
hormone)
Pain
Respiratory/
Neonatalology
Pain
Cardiology
Osteoporosis
€ 30.9
€ 12.8
€ 7.6
€ 7.3
€ 0.7
3.5 %
1.5 %
0.9 %
0.8 %
0.1 %
29.1 %
26.0 %
N.A.
48.7 %
N.A.
Pain and inflammatory
diseases
Respiratory distress
syndrome (RDS) in
premature infants
Severe chronic
opioid-sensitive pain
Percutaneous coronary
indication
Treatment of
osteoporosis in postmenopausal women at
high risk of fractures
Hospitals
Specialists
Hospitals
Specialists
Hospitals
Specialists
Pharmacists
Hospitals
Specialists
Hospitals
Specialists
Austria
CIS
Greece
Spain
Turkey
Austria
CIS
Germany
Netherlands
Germany
Europe
Europe
4
1 ) Including: Anagastra®, Apton®, Controloc®, Eupantol®, Inipomp®, Pantecta®, Panto®, Pantoc®, Pantodac®, Pantoloc®, Pantop®, Pantopac®, Pantopan®, Pantorc®,
Pantoscope®, Pantozol®, Pantpas®, Peptazol®, Protium®, Protonix®, Rifun®, Somac®, Ulcepraz®, Ulcotenal®, Zurcal®, Zurcale®, Zurcazol®
2) Including: Orocal®, Calcia™, Calcimagon®, Calcigran®, Calcilac®, Calcitugg®, Cavid®, Mastical®, Nycoplus® Calcigran®, Orotre®, Steocar®, Steovit D3®, Vicalvit®
3) Including: TachoComb®
4) Including: Xafon®, Xefocam®, Telos®, Acabel®, Taigalor®
13
P I P E L I NE
Following the acquisition of ALTANA Pharma
AG on 29 December 2006, our pipeline has
products at every stage of development and
covers the therapeutic areas of respiratory,
gastroenterology, pain and cardiology, as well
as oncology.
PRECLINICAL PHASE
PHASE II
P-CABs
Ciclesonide HFA
POSIDUR™
Preclinical
Phase I
Phase II
THERAPEUTIC AREA Gastroenterology
THERAPEUTIC AREA Respiratory
THERAPEUTIC AREA Pain
KEY CUSTOMER Specialists/General
practitioners
practitioners
KEY CUSTOMER Hospitals
INDICATION Gastroesophageal reflux
disease (GERD)
INDICATION Allergic rhinitis
PDE inhibitors
Preclinical
KEY CUSTOMER Hospitals/Specialists/
INDICATION Inflammation
HDAC inhibitors
Preclinical
THERAPEUTIC AREA Oncology
KEY CUSTOMER Hospitals/Specialists
INDICATION Cancer
Kinase and Kinesine inhibitors
Preclinical
INDICATION Cancer
14
PHASE I
INDICATION Post-surgical pain
Ciclesonide/formoterol
combination
Phase II
practitioners
INDICATION Asthma/Chronic obstructive
pulmonary disease (COPD)
PHASE III
REGISTRATION
Imagify™
OMNARIS™/OMNAIR™
Phase III
Approved in US (phase III outside US)
THERAPEUTIC AREA Cardiology
practitioners
INDICATION Diagnosis of coronary
artery disease
INDICATION Allergic rhinitis
TransMID ®
ZyComb ®
Phase III
Registration
THERAPEUTIC AREA Common cold/
Respiratory
INDICATION Malignant brain tumours
KEY CUSTOMER Pharmacists
NAF (nasal fentanyl)
LAUNCH
INDICATION Common cold
Phase III
THERAPEUTIC AREA Pain
INDICATION Breakthrough pain
Biopharmaceuticals
Registration/Phase III
THERAPEUTIC AREA Various
INDICATION Various
Daxas ®
Phase III
practitioners
INDICATION Chronic obstructive pulmonary
disease (COPD)
Venticute ®
Phase III
INDICATION Acute lung failure
15
COR P ORATE
G OV E RNANCE
A privately owned company, we have
obligations to our financial stakeholders.
In accordance with our financial arrangements, we prepare financial reports that
comply with set standards. Nycomed is
credit rated by Standard & Poor’s and
Moody. As of 31 December 2006, our
ratings were B+ and B1 respectively.
CORPORATE STRUCTURE
Nycomed S.C.A. SICAR was established
on 30 November 2006 in Luxembourg.
Nycomed S.A. is the general partner
company and the sole manager in
Nycomed S.C.A. SICAR and is, therefore,
formally the management of the
Nycomed Group. The Board of Directors
in the general partner company consists
of the individuals listed in the Board of
Directors section. The Board is elected at
the Annual General Meeting. The Board
appoints and supervises the Executive
Management Committee, and oversees
the Company’s performance and results.
Daily management is carried out by the
Executive Management Committee. In
addition to the Executive Management
Committee, there are three other
committees:
• The Development Portfolio Committee
decides which projects enter development. It also reviews development
projects and makes decisions on development programmes and levels of investment.
• The Licensing Committee determines
the in- and out-licensing strategy,
approving licensing opportunities and
reviewing the performance of licensing
partnerships.
• The Commercialisation and Lifecycle
Management Committee reviews and
decides on Lifecycle Management
(LCM) plans, agrees LCM projects and
decides on global strategy and launch
plans for key products.
Nycomed also has an independent internal audit function which reports directly
to the Nycomed Audit Committee. All
subsidiaries are internally audited, with audit
visits occurring at least every second year.
SHAREHOLDERS
There are two classes of shares. There are
no differences in voting rights and all
shareholders are entitled to have matters
considered at the Annual General Meeting.
For details of management incentive programmes, please refer to the Financial
Statements section.
AS AT 31 DECEMBER 2006, THE FOL LOW I N G S H A R E H O L D E RS
H ELD MORE THAN 5% OF THE COL L E C T I V E S H A R E H O L D I N G:
Shareholders
Nordic Capital
• Nordic Capital V, L.P.
• Nordic Capital VI, Alpha LP
• Nordic Capital VI, Beta LP
• NC VI Limited
• Nordic Industries Limited
• NC V Limited
Credit Suisse (DLJMB)
• DLJMB Overseas Partners III, C.V.
• DLJMB Overseas Partners IV, L.P.
• DLJ Offshore Partners IV, L.P.
• DLJ Merchant Banking Partners IV (Pacific), L.P.
• MBP IV Plan Investors
• DLJ Offshore Partners III, C.V.
• DLJ Offshore Partners III-1, C.V.
• DLJ Offshore Partners III-2, C.V.
• DLJMB Partners III GmbH & Co. KG
• Millennium Partners II, L.P.
• MBP III Plan Investors, L.P.
Coller International Partners
• Coller International Partners IV Limited as nominee for Coller International Partners IV-D, L.P.,
Coller International Partners IV-E, L.P. and Coller German Investors GmbH & Co. KG
• Coller International Partners V-A, L.P.
Avista
• ACP Nycom Holdings, LLC
Others (less than 5% ownership)
16
Share
Share ownership
ownership
(fully diluted)
41.4%
23.3%
8.0%
9.4%
39.8%
22.4%
7.7%
9.1%
25.1%
17.4%
24.2%
16.7%
9.4%
9.0%
5.1%
4.9%
6.4%
6.4%
17.7%
6.1%
6.1%
20.9%
RISK
M A N AGEMENT
Nycomed operates in a highly competitive and regulated business area. Specific
risks are inherent in our product range and
business model of in-licensing products.
FINANCIAL RISKS
Financial risks at Nycomed are managed
centrally. The overall objectives and policies for Nycomed’s financial risk management are outlined in the Treasury Policy,
which is approved by the Audit Committee on behalf of the Board. The Treasury
Policy sets guidelines for permitted exposure to financial risks and the financial instruments that can be employed as part
of financial management.
These guidelines include risks pertaining
to foreign exchange and interest rates
related to commercial exposure only.
Consequently, Nycomed does not enter
into speculative positions. As a result of
the acquisition of ALTANA Pharma AG,
Nycomed has decided to update the
Treasury Policy in order to cover foreign
exchange and interest rate risk related to
the commercial activities of the acquired
business.
As a result of the international focus of
ALTANA Pharma AG, currency fluctuations have a major impact on profits.
ALTANA Pharma AG’s procedure for
dealing with these currency exchange
risks has been regulated in a currency
management directive; it followed
systematic procedures, which were
reviewed and controlled by a special
steering committee (Treasury Committee). The Treasury Committee defined
amongst other things, the use of derivatives with the aim of limiting losses from
fluctuations in the exchange rate of the
euro against other currencies, especially
the US dollar, the Mexican peso, the
Brazilian real or the Canadian dollar. Only
forward exchange deals, currency swaps
and simple currency options were used.
These were concluded exclusively with
banks that have impeccable credit ratings.
ALTANA Pharma AG – like all players in
the market – is subject to financial risks,
but not such that there is a danger to the
continued existence of the company as a
going concern.
As stated above, Nycomed has decided to
update the Treasury Policy in order to
cover foreign exchange and interest rate
risk related to the commercial activities of
ALTANA Pharma AG.
FOREIGN EXCHANGE
The overall objective of foreign exchange
risk management is to limit the short-term
negative impact on earnings and cash
flows from exchange rate fluctuations.
Nycomed is exposed to foreign exchange
transaction risk as sales and purchases
may be denominated in currencies that
differ from the functional currency of our
subsidiaries. In the past, most sales were
denominated in euro, Japanese yen, US
dollars, Norwegian kroner and Danish
kroner. The main currency exposure in
Nycomed is US dollars deriving from our
activities in Russia/CIS. Our costs were
incurred in the various currencies of
countries where we maintain our production facilities, primarily Austria, Norway
and Denmark. After the acquisition of
ALTANA Pharma AG the exposure will
also cover sales and costs in Canadian
dollars, Brazilian real, Mexican pesos, as
well as sales and costs in US dollars
regarding the business activities in the
US, including sales to a main distributor
in the US.
As mentioned above, Nycomed is in the
process of updating the Treasury Policy in
order to cover the activities of ALTANA
Pharma AG.
INTEREST
The interest rate under our senior facility
is based on variable interest plus a margin.
Changes in interest rates affect Nycomed’s
income statement as well as the balance
sheet. The overall objective of the interest rate risk management is to limit negative impact on earnings and on the balance sheet from interest rate fluctuations.
The Treasury Policy stipulates that at least
50-100% of the interest risk relating to
the Group’s budgeted debt for the current
year and next year should be hedged. In
addition, 100% of the interest exposure
relating to existing long-term loans may
be hedged, by fixing the interest on debt
in the periods up to the planned outstanding debt. To finance the acquisition
of ALTANA Pharma AG and the redemption of old debt, Nycomed entered into a
new Senior Credit Facilities Agreement.
Under this agreement Nycomed is committed to hedge a minimum of 50% of
our interest rate risk within 3 months
from closing.
CREDIT
Nycomed continuously monitors and
evaluates credit risk on outstanding payments. In general, we estimate the risk to
be limited for countries in the EU.
In Russia/CIS, the standard payment
conditions are cash payment or 60 to 90day payment terms. During 2006, the
payment terms related to reimbursement
under the Federal Programme were
expanded from 180 days to 270 days. Due
to changes proposed for 2007 by the
government, the credit period might
17
expand to 360 days. As a consequence of
strict control and close follow-up on outstanding payments, we have had very few
defaulted payments in this region since
the rouble crisis in 1998. We maintain
that this region is subject to higher than
average political and economic risk and
we continue to make every effort to
secure payment from our customers. We
try to cover outstanding payments
through insurance companies. As at 31
December 2006, we had € 73.4 million
outstanding receivables from customers in
Russia/CIS, of which 46.7% was covered
by credit insurance.
WORKING CAPITAL
Due to the current rate of growth, we are
experiencing increased pressure on our
working capital and longer cycles for the
payment of trade receivables. This is due
mainly to a new reimbursement system in
Russia introduced on 1 January 2005. All
sales under this system have longer than
average payment terms; but as payments
are under the reimbursement system
introduced by the government, the
counterpart risk is considered to be low.
In December 2005, our working capital
project was relaunched to further improve
the efficiency of our internal processes
related to inventory, trade receivables and
creditors; and during 2006 we experienced
important improvement in trade working
capital.
18
INSURANCES
The objective of the Insurance Policy is to
protect the Company’s assets and profitability by minimising the adverse effects of
accidental losses occurring within the
Company or at the premises of our key
business partners. Nycomed uses an internationally recognised insurance broker as
a consultant.
Nycomed’s operations in some countries
and regions are subject to a high degree
of political and economic risk. Russia/CIS
is currently one of our largest and fastestgrowing markets and we remain vigilant
and highly focused on this particular region. Financial risk management is an important tool to minimise risk in the short
term; in the longer term, we are building
up operations in lower-risk markets with
significant growth potential.
COMMERCIAL RISKS
PRODUCT PORTFOLIO
One of the key responsibilities of the
Executive Management Committee is to
continuously assess and discuss business
risks. The Board discusses the commercial
risks outlined below on a case-by-case
basis.
Listed below are examples of the current,
most relevant risks (i.e. where the combination of impact and vulnerability is highest), along with counter measures.
BUSINESS ENVIRONMENT
Our business is subject to extensive
government regulation, control and
approval.
In addition, continued cost-control efforts
by governments and managed-care organisations may lead to lower pricing and
reimbursement levels. We regularly undertake thorough evaluations of the potential impact these scenarios could have
on our product development and marketing activities. Pricing and reimbursement
evaluations are also conducted before we
enter into any agreements to in-license
new products.
Many of our products are mature and
encountering competitive pressure. To
minimise losses/risk when products
mature, we actively manage product
lifecycles.
We depend on sole-source suppliers for
materials used in the production of
several of our products. To limit our
vulnerability, we constantly evaluate new
potential sources and secure our supply
and stock of materials. Bovine spongiform
encephalopathy (BSE) risks may adversely
affect the marketing and market share of
products containing bovine-sourced
materials. Where necessary, bovine components are sourced from countries
which, according to the classification
adopted by the European Commission
Scientific Steering Committee, are
currently BSE-free or have a low risk of
BSE. With respect to bovine components
sourced from low-risk countries, we
comply with the EU guidelines for BSErisk material. We have developed
bovine-free products and currently expect
to switch all sales in existing markets from
TachoComb® (containing bovine components) to TachoSil® (bovine-free) and we
intend to launch only TachoSil® in new
markets.
IN-LICENSING
PEOPLE
Nycomed’s future growth and success
depends on the ability to identify, inlicense, acquire, develop and market new
products. Before we in-license a new
product, its potential, along with any
adverse effects and similar factors, is
scrutinised by a team of specialists who
produce a detailed evaluation report.
In this way, we seek to ensure that the
decision-making process results in
commercially viable, profitable investments.
Nycomed has an extensive growth strategy, so there is a risk that recruiting the
right people and ensuring appropriate
training will be increasingly difficult.
To limit this risk, HR has initiated Good
Recruitment Practice to guide recruitment
procedures. A consistent approach to
training is achieved through the Nycomed
Academy, which provides training
programmes throughout the company.
Our strategy is to mainly acquire products
with clinical proof of concept (CPoC),
meaning that efficacy and safety in
patients have been demonstrated in
clinical studies. This puts us in a better
position to obtain marketing authorisation
for our new products compared to other
companies with earlier-phase product
pipelines.
ENVIRONMENT
We operate ten production facilities in
five European countries. Two of the
plants specialise in packaging, presenting
limited environmental risks. To minimise
external environmental risks, we place
compliance responsibility with the local
site manager in accordance with our HSE
policy.
Dependency on development competencies, commitment and the financial situation of co-development partners are risk
factors that we assess prior to a final
decision. Having agreed on collaboration,
we and the partner dedicate project
managers and executive teams to expedite implementation and execution.
Nycomed’s focus on fewer, but potentially
larger, products for in-licensing may increase risk if a key product faces unexpected clinical, regulatory or competitive
challenges. To minimise this risk, we seek
to diversify our pan-European in-licensing
focus across at least four main hospital
specialist areas: osteoporosis, cardiology,
tissue management and pain management.
19
B OA R D OF
D I R E C TORS
Board members of the general partner
are elected by majority vote on an annual
basis at the general partner’s Annual
20
General Meeting. Nycomed employees
elect two representatives. The largest
shareholder has the right to elect the
Chairman. Four to five Board meetings
are held every year and the proceedings
are recorded.
NATIONALITY
BORN
REMUNERATION
AS BOARD
MEMBER
NYCOMED
SHARES HELD
OTHER BOARD
MEMBERSHIPS
CHAIRMAN OF
Toni Weitzberg
Chairman of the Board
Swedish
1950
-
-
Synphora AB
Biovitrum AB
Unomedical A/S
Permobile AB
Atos Medical AB
Håkan Björklund
CEO
Swedish
1956
-
Shares: 58,976
Warrants: 124,800
Atos Medical AB
Biovitrum AB
Coloplast
Danisco A/S
-
Thompson Dean
American
1958
-
-
BioPartners
Merrill
NextPharma
Safilo
Visant
Investment Committees
of DLJMB II, DLJMB III and
DLJMB Growth Capital Partners
DeCrane Aircraft Holdings, Inc.,
Mueller Holdings (N.A.), Inc.
Carl-Gustaf Johansson
Swedish
1937
50,000 USD
-
EffeRx, Inc.
NeuroNova AB
-
Kristoffer Melinder
Swedish
1971
-
-
Atos Medical Holding
2 AB
Glacier Luxembourg
Two S.a.r.l.
-
Colin Taylor
Canadian
1962
-
-
Glacier Luxembourg
Two S.a.r.l.
Supervisory Boards of
Grohe AG and Grohe
Beteiligungs GmbH
-
Hans-Joachim Lohrisch
German
1949
-
-
ALTANA Pharma
Asset Management
GmbH
ALTANA Pharma Pty.
Ltd.
Member of the
Executive Board of the
Herbert-QuandtFoundation
Sangtec Molecular Diagnostics
AB
ALTANA Pharma Inc.
ALTANA Pharma US Inc.
ALTANA Pharma Re Insurance
AG
Newton X. Aguiar
American
1964
-
-
Supervisory Board of
Grohe AG and
Grohe Beteiligungs
GmbH
-
E X E C UTIVE MANAGEMENT
CO M MIT TEE
TITLE
NATIONALITY
BORN
NUMBER OF
YEARS IN
INDUSTRY
ACADEMIC DEGREES
Håkan Björklund
Chief Executive
Officer
Swedish
1956
22
PhD in Neuroscience from Karolinska Institutet,
Sweden
Runar Bjørklund
Chief Financial
Officer
Norwegian
1956
17
MSc in Business from Lund University, Sweden
Alfred Goll
Executive Vice
President
Human Resources
German
1956
23
MBA from Trier University, Germany
Charles Depasse
Executive Vice
President
Integration
Belgian
1958
21
Electromechanical Engineering degree from the
University of Brussels, Belgium, and an MBA
from New York University, USA
Anders Ullman
Executive Vice
President
Research &
Development
Swedish
1956
16
Physician and clinical pharmacologist with a PhD
from the University of Gothenburg, Sweden
Kerstin Valinder
Executive Vice
President
Business
Development
Swedish
1960
22
University Certificate in Journalism from
Gothenburg University, Sweden
Otto Schwarz
Executive Vice
President
Commercial
Operations
Austrian
1955
22
PhD in Pharmaceutical Chemistry from the
University of Vienna, Austria
Barthold Piening
Executive Vice
President
Operations
German
1958
18
PhD in Pharmaceutical Chemistry from Kiel
University, Germany, and an MBA from WHU
Koblenz, Germany, and the Northwestern
University of Chicago, USA
Dick Söderberg
Executive Vice
President
Marketing
Swedish
1958
22
BSc in International Economics and Business
Administration from Uppsala University,
Sweden
21
F I N A NCIAL
S TAT EMENTS
ACCO U N T I N G PR I N C I P L E S
CORPORATE
INFORMATION
The consolidated financial statement of
Nycomed S.C.A. SICAR (the Company) as
at and for the year ended 31 December
2006 comprises the Company and its
subsidiaries (collectively, the Group).
BASIS OF PREPARATION
The consolidated financial statements
have been prepared in accordance with
International Financial Reporting Standards
(IFRS). The consolidated financial statements have been prepared on the historical
cost basis except for available for-sale
financial assets, financial assets and liabilities (including derivative financial instruments) that have been measured at fair
value.
To facilitate the reading of the Annual
Report, part of the information required
by IFRS has been included in the Financial
Discussion.
The consolidated financial statements are
presented in euros and all values are
rounded to the nearest thousand (€ thousand) except when otherwise indicated.
NEW OWNERSHIP
In connection with Nycomed’s acquisition
of ALTANA Pharma AG on 29 December
2006, a new holding structure became
effective by way of a share exchange
between the private equity investors of
Nycomed A/S (the former holding company in the Nycomed Group) and the
22
new holding company, Nycomed S.C.A.
SICAR, Luxembourg. At that date,
Nycomed S.C.A. SICAR became the ultimate parent company in the Nycomed
Group. Details of the transactions are
disclosed in the Financial Summary and
note 1.
The share exchange between the private
equity investors and Nycomed S.C.A.
SICAR is considered a common control
transaction as there is no change of control over the Nycomed Group. As such,
the transaction does not represent a business combination per the definitions in
IFRS. The transaction has been accounted
for using the pooling of interest method.
As a consequence:
• The assets and liabilities are reflected
at their carrying amounts, meaning
that no adjustments are made to
reflect fair values
• No goodwill is recognised as a result of
the transaction
• The income statement reflects the
results for the full year, irrespective of
when the transaction took place
• Comparatives are presented as if
Nycomed S.C.A. SICAR had always
been the ultimate parent company.
BASIS OF
CONSOLIDATION
The consolidated financial statements
comprise the financial statements of
Nycomed S.C.A. SICAR (the parent company) and all the companies in which
Nycomed S.C.A. SICAR directly or indi-
rectly owns more than 50% of the voting
rights, or in some other way has a controlling influence (subsidiaries). Nycomed
S.C.A. SICAR and these companies are
referred to as the Group.
prepared on the basis of the financial
statements of the parent company and
the subsidiaries, and by consolidating uniform accounting items. The consolidated
financial statements are based on financial
statements prepared by applying the
Group’s accounting policies.
On consolidation, intra-Group transactions,
shareholdings, intra-Group dividend and
balances and realised and unrealised gains
and losses on intra-Group transactions are
eliminated. Minority interests’ pro rata
shares of profit or loss and the net assets
are disclosed as separate items in the income statements and within equity in the
consolidated balance sheet respectively.
The Group accounts for its investments
in joint ventures using the proportional
consolidation method as permitted under
IAS 31 “Financial Reporting of Interests
in Joint Ventures”. These joint ventures
include ALTANA Madaus, South Africa,
and Zydus ALTANA Healthcare, India.
CHANGES IN
ACCOUNTING POLICIES
OR EFFECT OF NEW
PRONOUNCEMENTS
The following new amendments and
interpretations considered relevant for
the Group have been adopted during the
year. Adoption of these revised standards
and interpretations did not have any
effect on the Annual Report of the
Group. However, they did give rise to
additional disclosures:
• Amendment to IAS 19 “Employee
Benefits”
• Amendment to IAS 39 “Financial
Instruments: Recognition and Measurement – Cash Flow Hedge Account of
Forecast Intra-Group Transactions”
• Amendment to IAS 39 “Financial
Instruments: Recognition and Measurement – Fair Value Option”. The amendment concerns the definition of
financial instruments classified in the
category “at fair value through profit
and loss” and restricts the ability to
designate certain financial investments
as part of this category
• IFRIC 4 “Determining Whether an
Agreement Contains a Lease”
• Amendment to IAS 21 “The Effects of
Changes in Foreign Exchange Rates”.
The following standards and amendments
were issued with effect from 1 January
2007. IFRS 7 “Financial Instruments:
Disclosures” and amendment to IAS 1
“Presentation of Financial Statements –
Capital Disclosures”. IFRS 7 and the
amendment to IAS have not been early
adopted. Except for additional disclosures,
the adoption of the standard and amendment is not expected to have any effect
on the Annual Report of the Group.
In November 2006, IFRS Interpretation 8
“Operating Segments” was issued and is
effective from 1 January 2009. IFRS Interpretation 8 replaces IAS 14 “Segment
Reporting”. IFRS Interpretation 8 is not
expected to have any effect on the
Annual Report except for additional
disclosures. IFRS Interpretation 8 has not
been early adopted.
A/S consolidated comparatives as at 31
December 2005.
Except as described above, the accounting
policies set out below have been applied
consistently to all periods presented in
these consolidated financial statements,
and have been applied consistently by
Group entities.
SIGNIFICANT
ACCOUNTING ESTIMATES
AND JUDGEMENTS
Certain comparative amounts have been
reclassified to conform with the current
year’s presentation.
COMPARATIVE FIGURES
The Annual Report 2005 of Nycomed A/S
covered the period from incorporation of
Nycomed A/S on 4 January 2005 to 31
December 2005, and the consolidated
financial statements covered the eightmonth period of operations from acquisition of the Nycomed Group on 9 May
2005 to 31 December 2005. For comparative reasons, we stated a pro forma
income statement and cash flow statement covering 12 months from January to
December 2005. These 12-month figures
were based on consolidated figures from
January to April 2005 for Nyco Holdings
ApS and subsidiaries, and consolidated
figures from May to December 2005 for
Nycomed A/S and subsidiaries. The pro
forma 2005 figures have been prepared in
accordance with IFRS. We have not stated
comparative figures for the full year of
2005 in the notes to the consolidated
financial statements. Accordingly, the
comparative income statement and cash
flow figures in the Annual Report 2006
comprise the eight-month period of
operations and the 12-month pro forma
figures of Nycomed A/S. Balance sheet
comparative figures comprise Nycomed
The preparation of financial statements
in conformity with IFRS requires management to make judgements, estimates and
assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date(s) of the financial statements
and the reported amounts of revenues
and expenses during the reporting
period(s). Management bases its estimates
on historical experience and various other
assumptions that are believed to be reasonable under the circumstances. This
forms the basis for making judgments
about the reported carrying amounts of
assets and liabilities and the reported
amounts of revenues and expenses that
may not be readily apparent from other
sources. Actual results could differ from
those estimates. Estimates are used when
accounting for sales discounts and
incentives, depreciation, amortisation,
employee benefits, restructuring and
other provisions, contingencies and any
asset impairments. Revisions to accounting estimates are recognised in the period
in which the estimate is revised and in
any future periods affected.
Management believes the following are
the significant accounting estimates and
related judgments used in the preparation
of its consolidated financial statements.
23
INDIRECT PRODUCTION
COSTS
Work in progress and finished goods are
stated at cost assigned by using the
average weighted price method. Cost
comprises direct production costs such
as raw materials, consumables, energy
and labour, and indirect production costs
such as employee costs, depreciation and
maintenance.
The indirect production costs are measured
based on a standard cost method which is
reviewed regularly in order to ensure relevant measures of utilisation, production
lead time and other relevant factors.
Changes in the method for calculation of
indirect production costs, including utilisation levels and production lead time in
the calculation of indirect production
costs, could have an impact on the gross
margin and the overall valuation of inventories.
DEFERRED TAXES
Management’s judgement is required in
determining the Group’s provision for income taxes, deferred tax assets and liabilities, and the extent to which deferred tax
assets can be recognised. The Group
recognises deferred tax assets if it is probable that sufficient taxable income will be
available in the future, against which the
temporary differences and unused tax
losses can be utilised.
IMPAIRMENT OF GOODWILL
AND OTHER INTANGIBLE
ASSETS
The Group determines whether goodwill
and other intangible assets comprising
patents and rights and development
projects are impaired at least on an annual
basis. This requires an estimation of the
value in use of the overall business to
which the goodwill is allocated and of
24
other intangible assets. Estimating the
value in use requires the Group to make
an estimate of the expected future cash
flows from the overall business and other
intangible assets and also to choose a
suitable discount rate in order to calculate
the present value of those cash flows.
SALES AND REVENUE
RECOGNITION
The Group derives revenue from two
primary revenue streams, namely product
sales and the licensing of product rights.
Sales represent the fair value of the sale
of goods excluding value added tax and,
after deduction of provisions for trade
discounts, allowances and returned
products.
Revenue from the sale of goods is recognised when all the following specific
conditions have been satisfied:
• Nycomed has transferred to the buyer
the significant risk and rewards of
ownership of goods
• Nycomed retains neither continuing
managerial involvement to the degree
usually associated with ownership nor
effective control over the goods sold
• The amount of revenue can be
measured reliably
• It is probable that the economic benefit
associated with the transaction will
flow to Nycomed
• The costs incurred, or to be incurred,
in respect of the transaction can be
measured reliably.
These conditions are usually met by the
time the products are delivered to the
customer with regard to revenue from
product sales; whereas for royalty income
related to the licensing of product rights,
these conditions are usually met when
royalty becomes payable or on an accrual
basis in accordance with the substance of
the relevant agreement. In certain
circumstances, the Group enters into
long-term contracts that provide an upfront payment in lieu of future royalty
payments. This payment is recorded as
deferred revenue and recognised in
income over the contractual period until
payment is non-refundable, based on the
expected underlying product sales.
Up-front payments are initially recognised when research and development
contracts are signed. Up-front payments
that are attributable to subsequent
research and/or development activities
are recognised as deferred revenue and
will subsequently be recognised as
revenue over the expected contract period. Non-refundable up-front payments
that are not attributable to subsequent
research and/or development activities
are recognised as revenue when the
contracts are signed. Up-front fees in
connection with licensing agreements are
recognised as income over the period to
which they relate.
Provisions for discounts, rebates to
customers and customer returns are estimated and provided for in the period that
the related sales are recognised and
reflected in net sales.
RESEARCH AND
DEVELOPMENT
EXPENSES
comprise expenses that relate to the
Group’s research and development
functions, including wages and salaries,
depreciation and other overheads. Any
milestone payments to third parties in
respect of research and development are
recognised in the income statement, or
are capitalised as appropriate, in the
period in which the milestones are
reached.
Research expenses are charged to the
income statement as incurred. Development expenses are capitalised if certain
criteria are met and they are likely to
generate future economic benefits.
CONSOLIDATION
PRINCIPLES
Please refer to the Basis of Consolidation
section.
FOREIGN CURRENCY
TRANSLATION
FUNCTIONAL AND
PRESENTATION CURRENCY
presented in euros, which is Nycomed’s
functional and presentation currency. A
functional currency is designated for each
entity in the Group. The functional currency is the currency used in the primary
economic environment in which the individual entity operates. Transactions
denominated in currencies other than the
functional currency are transactions in
foreign currency.
TRANSLATION OF
TRANSACTIONS AND
BALANCES
Transactions in foreign currencies are
initially recorded in the functional
currency rate ruling at the date of the
transaction. Monetary assets and liabilities
denominated in foreign currencies are
retranslated at the functional currency
rate of exchange ruling at the balance
sheet date. All differences are taken to
profit or loss with the exception of differences on foreign currency borrowings that
provide a hedge against a net investment
in a foreign entity. These are taken
directly to equity until the disposal of the
net investment, at which time they are
recognised in profit or loss. Tax charges
attributable to exchange differences on
those borrowings are also dealt with in
equity. Non-monetary items, which are
measured in terms of historical cost in a
foreign currency, are translated using the
exchange rates as at the dates of the
initial transactions. Non-monetary items
measured at fair value in a foreign
currency are translated using the exchange rates at the date when the fair
value was determined.
Transactions in foreign currencies are
translated into the functional currency at
the exchange rate prevailing on the date
of transaction. Exchange rate gains and
losses arising between the transaction
date and the date on which the payments
are made or received are recognised in
the income statement under financial
income and expenses.
Receivables and payables and other
monetary items denominated in foreign
currencies are translated into the functional currency at the exchange rate at
the end of each period. Realised and
unrealised exchange rate gains and losses
are recognised in the income statement
under financial income and expenses.
Unrealised exchange gains and losses on
loans in foreign currency that serve to
hedge future foreign currency cash flows
are deferred until repayment of the loan.
TRANSLATION OF
AND GROUP COMPANIES
For consolidation purposes, the income
statements of foreign subsidiaries with
functional currencies other than euro are
translated at transaction rates, and assets
and liabilities are translated using balance
sheet rates. Transactions rates are calculated as the average rates of the individual month to the extent that this does
not provide a materially different picture.
Exchange rate differences are recognised
directly in capital and reserves.
BUSINESS
COMBINATIONS
Enterprises acquired during the year are
recognised in the consolidated financial
statements from the date control
commences. Enterprises disposed of
or liquidated are recognised in the consolidation income statement until the date
where control ceases or the entity is
liquidated.
Acquisitions of enterprises in which the
parent company obtains control are
accounted for by using the purchase
method. The purchase price is measured
as the fair value of the assets given and
liabilities incurred or assumed at the date
of exchange, plus costs directly attributable to the acquisition. Identifiable assets
acquired, and liabilities and contingent
liabilities assumed in a business combination, are measured initially at their fair
values at the acquisition date, irrespective
of the extent of any minority interest.
Identifiable intangible assets are recognised insofar as they are separable or arise
from contractual rights and a reliable fair
25
26
value can be calculated. The amount in
deferred tax resulting from the restatement is recognised.
carrying amount of net assets, including
goodwill at the date of disposal plus
anticipated disposal or liquidation costs.
The excess of the cost of acquisition over
the fair value of the acquired asset, liability and contingent liability is capitalised as
goodwill. Goodwill is tested annually for
impairment – the first impairment test
is performed before the expiry of the
year of acquisition. Upon the acquisition,
goodwill is allocated to the cash-generating units, subsequently providing a basis
for the impairment test.
Entities in which the Group and outside
shareholders have agreed to exercise joint
control over significant financial and
operational policies are accounted for using the proportionate consolidation
method. A list of all the subsidiaries is
presented separately.
If the initial accounting for a business
combination can be determined only
provisionally by the end of the period in
which the combination is effected, adjustments made within twelve months of the
acquisition date to the provisional fair
value of acquired assets, liabilities and
contingent liabilities or cost of the acquisition, are adjusted to the initial goodwill.
The adjustment is calculated as if it was
recognised at the acquisition date. The
effect of the adjustment is recognised in
capital and reserves, and the comparative
figures are restated. Subsequent to this
period, goodwill is only adjusted for
changes in estimates of the cost of the
acquisition that are contingent on future
events. However, subsequent realisation
of deferred tax assets not recognised on
acquisition will result in the recognition in
the income statement of the tax benefit
concurrently with a write-down of the
carrying amount of goodwill to the
amount that would have been recognised
if the deferred tax asset had been recognised at the time of the acquisition.
COST OF SALES
Gains or losses on the disposal or liquidation of subsidiaries and associates are
measured as the difference between
the sales or liquidation amount and the
FINANCIAL INCOME AND
EXPENSES
INCOME STATEMENT
Cost of sales consists of variable production costs, including raw materials, other
production materials and direct labour
costs. In addition, cost of sales includes
fixed production overhead costs such as
indirect labour and materials, repairs,
maintenance and depreciation costs related to property, plant and equipment
used in the production process and costs
related to production administration and
management.
SALES AND MARKETING
EXPENSES
Sales and marketing expenses comprise
all expenditures incurred in connection
with selling and marketing of the Group’s
products, including distribution costs and
amortisation of intangible assets.
ADMINISTRATIVE EXPENSES
Administration expenses comprise costs
relating to the Group’s management
and administration, office premises and
depreciation.
Financial income and expenses comprise
interest, amortisation of financing costs,
realised and unrealised exchange gains
and losses, and other financial expenses.
The unrealised exchange gains and losses
include changes in the fair value of derivatives designated as fair value hedges.
INCOME TAX (EXPENSE)
BENEFIT
Income tax is allocated to the relevant
fiscal year and recognised in the income
statement. Income tax comprises current
tax as well as deferred tax.
BALANCE SHEET
INTANGIBLE ASSETS
Intangible assets acquired separately are
measured on initial recognition at cost.
The cost of intangible assets acquired in a
business combination is fair value as at
the date of acquisition. Following initial
recognition, intangible assets are carried
at cost, less any accumulated amortisation
and any accumulated impairment losses.
The useful lives of intangible assets are
assessed to be either finite or indefinite.
Intangible assets with finite lives are
amortised over the useful economic life
and assessed for impairment whenever
there is an indication that the intangible
asset may be impaired. The amortisation
period and the amortisation method for
an intangible asset with a finite useful life
are reviewed at least at each financial
year-end. Changes in the expected useful
life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by
changing the amortisation period or
method, as appropriate, and treated as
changes in accounting estimates. The
amortisation expense on intangible assets
with finite lives is recognised in the income statement in the expense category
consistent with the function of the
intangible asset. Intangible assets with
indefinite useful lives are tested for
impairment annually. Such intangibles are
not amortised. The useful life of an intangible asset with an indefinite life is
reviewed annually to determine whether
indefinite life assessment continues to be
supportable. If not, the change in the useful life assessment from indefinite to
finite is made on a prospective basis. Costs
relating to development projects are capitalised if all of the following
capitalisation requirements are met:
• It is probable that all the necessary
regulatory approvals, public registration
and marketing authorisations will be
received
• The completion of products is
technically feasible
• There is an ability and continuing
intention to complete the underlying
product and use or sell it
• The costs related to the development
of the product are readily measurable
• Future economic benefits are likely to
be generated.
If these criteria are not achieved, all
development expenses are expensed as
incurred.
In determining the probability of regulatory approval, the following are regarded
as strong indicators that a product will
receive regulatory approval:
• The product is a generic substitute of an
approved product
• The product is approved in other
countries
• The product is in late phase II or phase
III clinical trials with the results of
previous trials indicating that there is no
obvious reason why the product should
not be approved
• The product is based on a known
substance or existing product.
These development projects are amortised
over the life of the associated product;
amortisation begins when the product
becomes marketable. Distribution rights
to pharmaceutical products that are
acquired from third parties, prior to
receipt of regulatory approval to market
the products, are capitalised in certain
circumstances using the same criteria as
for the capitalisation of development
expenses.
These rights are amortised on a straightline basis over their estimated useful life
once the product has begun to be distributed. Intangibles are subject to an
impairment test when events or circumstances indicate that impairment may exist. The amortisation periods are generally
as follows:
Completed development projects and
patent and distribution rights:
• 2-30 years
Development projects in progress:
• Estimated product life
GOODWILL
Goodwill is initially measured at cost as
described in Business Combinations.
Following initial recognition, goodwill is
measured at cost less any accumulated
impairment losses. Goodwill is reviewed
for impairment annually or more
frequently if events or circumstances
indicate that the carrying value may be
impaired.
PROPERTY, PLANT AND
EQUIPMENT
Property, plant and equipment are
measured at cost, less accumulated depreciation and impairment losses. Costs
comprise the purchase price and any costs
directly attributable to the asset purchase
until the asset is available for use.
Depreciation is generally calculated on
a straight-line basis over the expected
useful lives of the assets, as follows:
Buildings
Machinery and equipment
Other property, plant and
equipment
5-50 years
2-14 years
1-20 years
Land is not depreciated.
The depreciation base is determined
taking into account the scrap value of
the asset and with reduction of any
depreciation. The scrap value is determined at the time of acquisition and is
re-valued annually. If the scrap value
exceeds the carrying amount of the asset,
depreciation will cease.
The carrying values of plant and equipment are tested for impairment when
events or changes in circumstances indicate that the carrying value may not be
recoverable. An item of property, plant
and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal.
Any gain or loss arising on derecognition
of the asset (calculated as the difference
between the net disposal proceeds and
the carrying amount of the asset) is
recognised in the income statement in
the year the asset is derecognised. The
asset’s residual values, useful lives and
methods are reviewed, and adjusted if
appropriate, at each financial year-end.
27
When each major inspection is performed, its cost is recognised in the
carrying amount of the plant and equipment as a replacement if the recognition
criteria are satisfied.
IMPAIRMENT
If an asset does not generate cash flows
that are largely independent of cash flows
from other assets, an enterprise should
determine the recoverable amount of the
cash-generating unit. A cash-generating
unit is the smallest identifiable group of
assets for which identifiable cash flows
can be identified and measured. Nycomed
considers the total business to be one
cash-generating unit as the cash flows
from individual brands, products, other assets or geographical segments are not
clearly identifiable. As such, Nycomed
tests impairment at Group level.
Impairment of goodwill is determined by
assessing the recoverable amount of the
cash-generating unit to which the goodwill relates. Where the recoverable
amount of the cash-generating unit is less
than the carrying amount, an impairment
loss is recognised.
An impairment test is conducted in
respect of the book value of intangible,
tangible and financial assets, and where
write-downs are required, the book value
is written down to the higher of net
realisable value and the present value
of future cash flows in connection with
continued use. Consequently, intangible
and tangible assets are written down in
the income statement in those cases
where the book value exceeds the
expected future cash flow from the
undertaking or the assets to which the
goodwill is related.
28
The book value of financial assets is
written down if, as a result of a change in
the expected cash flows, the expected
present value of such cash flows is lower
than the carrying value. When computing
the present value, the original effective
rate of interest is applied. If, subsequently,
the present value of written-down
financial assets increases, the write-down
is reversed. Such reversal of previous
impairments will not result in financial
assets being measured at more than the
amortised cost.
INVESTMENTS AND OTHER
FINANCIAL ASSETS
Financial assets in the scope of IAS 39 are
classified as either financial assets at fair
value through profit or loss, loans and
receivables, held-to-maturity investments,
or available-for-sale financial assets, as
appropriate. When financial assets are
recognised initially, they are measured at
fair value, plus, in the case of investments
not at fair value through profit or loss,
directly attributable transaction costs.
The Group determines the classification
of its financial assets after initial recognition and, where allowed and appropriate,
re-evaluates this designation at each
financial year-end.
All regular way purchases and sales of
financial assets are recognised on the
trade date, i.e. the date that the Group
commits to purchase the asset. Regular
way purchases or sales are purchases or
sales of financial assets that require
delivery of assets within the period
generally established by regulation or
convention in the marketplace.
FINANCIAL ASSETS AT
FAIR VALUE THROUGH
PROFIT OR LOSS
Financial assets classified as held for
trading are included in the category
“financial assets at fair value through
profit or loss”. Financial assets are
classified as held for trading if they are
acquired for the purpose of selling in the
near term. Derivatives are also classified
as held for trading unless they are designated as effective hedging instruments.
Gains or losses on investments held for
trading are recognised in the income
statement.
Loans and receivables
Loans and receivables are non-derivative
financial assets with fixed or determinable
payments that are not quoted in an active
market. Such assets are carried at amortised
cost using the effective interest method.
Gains and losses are recognised in the
income statement when the loans and
receivables are derecognised or impaired,
as well as through the amortisation process.
Available-for-sale financial assets
Available-for-sale financial assets are
those non-derivative financial assets that
are designated as available-for-sale or are
not classified in any of the two preceding
categories. After initial recognition,
available-for-sale financial assets are
measured at fair value with gains or losses
being recognised as a separate component of equity until the investment is
derecognised or until the investment is
determined to be impaired. In this case,
the cumulative gain or loss previously
reported in equity is recognised in the
income statement. The fair value of
investments that are actively traded in
organised financial markets is determined
by reference to quoted market bid prices
at the close of business on the balance
sheet date. For investments where there
is no active market, fair value is determined using valuation techniques. Such
techniques include using recent arm’s
length market transactions, reference to
the current market value of another
instrument (which is substantially the
same), discounted cash flow analysis,
and option pricing models.
INVENTORIES
Inventories are measured at the lower of
cost in accordance with the weighted
average price method and the net realisable value. The net realisable value is made
up of the expected sales price, considering
obsolescence, less any remaining
production and sales costs.
The cost of manufactured, finished and
semi-finished products includes raw
materials, direct labour, other production
materials and production overheads.
Production overheads include indirect
labour and materials, repair, maintenance
and depreciation costs related to machinery
and buildings used in the production process, and costs related to production administration and management.
Goods for resale include the purchase
price and related transportation costs.
TRADE AND OTHER
RECEIVABLES
Trade receivables are recognised and
carried at original invoice amount less an
allowance for any uncollectible amounts.
Allowances are made on the basis of
probability of default.
in-hand and short-term deposits, with an
original maturity of three months or less.
For the purpose of the consolidated cash
flow statement, cash and cash equivalents
consist of cash and cash equivalents as
defined above.
TREASURY SHARES
Own equity instruments which are reacquired (treasury shares) are deducted
from equity. No gain or loss is recognised
in profit or loss on the purchase, sale,
issue or cancellation of the Group’s own
equity instruments.
INTEREST-BEARING LOANS
AND BORROWINGS
All loans and borrowings are initially
recognised at the fair value of the consideration received, less directly attributable
transaction costs. After initial recognition,
interest-bearing loans and borrowings are
measured at amortised cost using the
effective interest method. Gains and
losses are recognised in net profit or loss
when the liabilities are derecognised, as
well as through the amortisation
process.
TAXES
Current tax
Current tax assets and liabilities for the
current and prior periods are measured at
the amount expected to be recovered
from or paid to the taxation authorities.
The tax rates and tax laws used to
compute the amount are those that are
enacted or substantively enacted at the
balance sheet date.
Deferred tax
CASH AND CASH
EQUIVALENTS
Cash and short-term deposits in the
balance sheet comprise cash at banks and
Deferred income tax is provided using the
liability method on temporary differences
at the balance sheet date between the
tax bases of assets and liabilities and their
carrying amounts for financial reporting
purposes.
Deferred tax liabilities are recognised for
all taxable temporary differences, except:
• Where the deferred tax liability arises
from the initial recognition of goodwill
or of an asset or liability in a transaction
that is not a business combination and,
at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss
• In respect of taxable temporary differences associated with investments in
subsidiaries, associates and interests in
joint ventures, where the timing of the
reversal of the temporary differences
can be controlled and it is probable that
the temporary differences will not
reverse in the foreseeable future.
Deferred income tax assets are recognised
for all deductible temporary differences,
carry-forward of unused tax credits and
unused tax losses, to the extent that it is
probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of
unused tax credits and unused tax losses,
can be utilised, except:
• Where the deferred income tax asset
relating to the deductible temporary
difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction,
affects neither the accounting profit nor
taxable profit or loss
• In respect of deductible temporary
differences associated with investments
in subsidiaries, associates and interests
in joint ventures, deferred tax assets are
recognised only to the extent that it is
probable that the temporary differences
29
will reverse in the foreseeable future
and taxable profit will be available
against which the temporary differences
can be utilised.
The carrying amount of deferred income
tax assets is reviewed at each balance
sheet date and reduced to the extent that
it is no longer probable that sufficient
taxable profit will be available to allow all
or part of the deferred income tax asset
to be utilised. Unrecognised deferred
income tax assets are reassessed at each
balance sheet date and are recognised to
the extent that it has become probable
that future taxable profit will allow the
deferred tax asset to be recovered.
Deferred income tax assets and liabilities
are measured at the tax rates that are
expected to apply to the year when the
asset is realised or the liability is settled,
based on tax rates (and tax laws) that
have been enacted or substantively
enacted at the balance sheet date. Income
tax relating to items recognised directly in
equity is recognised in equity and not in
the income statement.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable
right exists to set off current tax assets
against current tax liabilities and the
deferred taxes relate to the same taxable
entity and the same taxation authority.
Sales tax
Revenues, expenses and assets are
recognised net of the amount of sales
tax except:
• Where the sales tax incurred on a
purchase of assets or services is not
recoverable from the taxation authority,
in which case the sales tax is recognised
as part of the cost of acquisition of the
30
asset or as part of the expense item as
applicable
• Receivables and payables that are stated
with the amount of sales tax included.
The net amount of sales tax recoverable
from, or payable to, the taxation authority
is included as part of receivables or payables in the balance sheet.
effects of changes in actuarial assumptions (actuarial gains/losses) are recognised in the period they occur and
charged to equity.
The defined benefit liability is the aggregate of the present value of the defined
benefit obligation, including recognition
of all actuarial gains and losses and the
fair value of plan assets out of which the
obligations are to be settled directly.
DIVIDENDS
Proposed dividend for the year is shown
as a separate item within shareholders’
equity. There were no such dividends
proposed or paid in any of the periods
presented.
EMPLOYEE BENEFITS AND
PENSIONS
Wages, salaries, social security contributions, paid annual leave and sick leave,
bonuses, and non-monetary benefits are
accrued in the year in which the associated services are rendered by employees
of the Group.
Pension provisions
The Group operates a number of defined
benefit and defined contribution plans in
the subsidiaries.
The costs for the year for defined benefit
plans are determined using the projected
unit credit method. This reflects services
rendered by employees to the dates
of valuation and is based on actuarial
assumptions primarily regarding discount
rates used in determining the present
value of benefits, projected rates of
remuneration growth, and long-term
expected rates of return for plan assets.
The impact from differences between
assumptions and actual events, and
The Group’s contributions to the defined
contribution plans are charged to the
income statement in the year to which
they relate.
SHARE-BASED PAYMENT
TRANSACTIONS
Nycomed operates equity-settled, sharebased compensation plans.
The cost of equity-settled transactions
with employees is measured by reference
to the fair value at grant date, measured
by Black & Scholes.
The cost of equity-settled transactions is
recognised, together with a corresponding
increase in equity, over the period in
which any performance and/or service
conditions are fulfilled, ending on the
date on which the relevant employees
become fully entitled to the award (‘the
vesting date’). If there are no vesting
conditions, the fair vale is expensed in full
at grant date. No expense is recognised
for awards that do not ultimately vest,
except for awards where vesting is conditional upon a market condition, which are
treated as vesting irrespective of whether
or not the market condition is satisfied,
provided that all other performance
conditions are satisfied.
Where the terms of an equity-settled
award are modified, as a minimum an
expense is recognised as if the terms
had not been modified. In addition, an expense is recognised for any modification, which increases the total fair value
of the share-based payment arrangement,
or is otherwise beneficial to the employee
as measured at the date of modification.
Where an equity-settled award is
cancelled, it is treated as if it had vested
on the date of cancellation, and any
expense not yet recognised for the award
is recognised immediately. However, if
a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted,
the cancelled and new awards are treated
as if they were a modification of the original award, as described in the previous
paragraph.
PROVISIONS
Provisions are recognised when the Group
has a present obligation (legal or constructive) as a result of a past event
occurring before or at the balance sheet
date. It is probable that an outflow of
resources embodying economic benefits
will be required to settle the obligation
and a reliable estimate can be made of
the amount of the obligation.
CURRENT DEBT
Generally, other liabilities, which also
include trade payables, amounts owed to
Group enterprises and associated enterprises and other liabilities, are measured
at amortised cost unless specifically
mentioned otherwise.
SEGMENT INFORMATION
The Group’s primary segment reporting
is geographic, based on the location of its
customers. The Group’s segments reflect
the structure of its management and sales
organisation, its system of internal financial
reporting, and the predominant source of
risk and return in its business. Segment
reporting is therefore divided into six geographic segments: (i) the North Western
Europe region consists of product sales in
Denmark, Sweden, Norway, the Baltic
States, Belgium and the Netherlands;
(ii) the Central Europe region includes
product sales in Austria, Switzerland,
Greece and Poland (iii) the Big Five includes product sales in Germany, France,
the UK, Spain and Italy; (iv) operations in
Finland; (v) Russia/CIS; (vi) sales in China
and export arrangements primarily in Japan and the US, collectively constituting
the International Sales segment. The segment ‘Other’ comprises our contract production activities for third parties.
as management believes that any such
allocation would be based on arbitrary
factors, such as sales in a particular segment, and would not provide a better
understanding of the business. These expenses are managed on a worldwide basis.
For purposes of segment reporting, the
following measures are used:
• Segment net sales comprise sales to
third parties. For purposes of management reporting, all internal sales are
eliminated from the measures that are
used to monitor the business
Any gains or losses arising from changes
in fair value on derivatives that do not
qualify for hedge accounting are recognised in net profit or loss for the year. The
fair value of forward currency contracts is
calculated by reference to current forward
exchange rates for contracts with similar
maturity profiles. The fair value of interest
rate swap contracts is determined by
reference to market values for similar
instruments. In general, Nycomed does
not apply hedge accounting under the
specific rules of IAS 39 to forward exchange contracts and other derivative
financial instruments except interest rate
swaps applied to maintain a reasonable
balance between fixed and floating interest rate risk. For the financial year 2006,
management decided to apply hedge
accounting under IAS 39 for certain future
transactions and customers or contracts.
• Segment operating income is an internal financial reporting measurement
utilised by the Group’s management.
Under this approach, transfers from the
Group’s centralised production facilities
in Europe are charged to the segments at
standard production costs and any
deviation from standard production costs
is included in indirect production costs.
Unallocated expenses include indirect
production overheads, amortisation of
intangible assets, and costs associated
with centralised support functions to the
segments. These costs are not allocated,
FINANCIAL INSTRUMENTS
The Group uses derivative financial
instruments, such as forward currency
contracts and interest rate swaps, to
hedge its risks associated with interest
rate and foreign currency fluctuations.
Such derivative financial instruments are
initially measured at fair value on the date
on which a derivative contract is entered
into and are subsequently re-measured at
fair value. Derivatives are included in
other receivables when the fair value is
positive and in other payables when the
fair value is negative.
31
Hedges of a net investment
Hedges of a net investment in a foreign
operation, including a hedge of a monetary item that is accounted for as part of
the net investment, are treated as follows:
• Gains or losses on the hedging instrument relating to the effective portion
of the hedge are recognised directly in
equity, while any gains or losses relating
to the ineffective portion are recognised
in profit or loss
CONSOLIDATED CASH FLOW
STATEMENT
The consolidated cash flow statement
is prepared using the indirect method.
The cash flow statement shows the
consolidated cash flow for the year and
the net cash position at the end of the
year. The cash flow relates to three
main activities: operating, investing and
financing activities.
• On disposal of the foreign operation,
the cumulative value of any such gains
or losses recognised directly in equity is
transferred to profit or loss.
32
Cash flow from operating activities is
calculated as the operating income or loss,
adjusted for non-cash items, plus changes
in working capital, less taxes paid and
interest paid or received. Working capital
consists of current assets, excluding items
included in net cash; and current liabilities,
excluding items included in net cash; and
debt to financial institutions, taxes and
dividend.
Cash flow from investing activities
Cash flow from investing activities comprises the purchases and sales of noncurrent assets including investments in
enterprises. The purchase prices are
measured at cost, including distribution
rights and goodwill.
Cash flow from financing activities
Cash flow from financing activities comprises payments to and from shareholders,
the raising and repayment of debt to
financial institutions, and other long-term
and current liabilities not included in the
working capital or in net cash.
N YCO M E D S . C . A . S I CA R
CO N S O L I DAT E D I N CO M E S TAT E M E N T
1 J A N U A RY - 3 1 D E C E M B E R
01.01.06
31.12.06
€ thousand
Note
2
3
(8 months of
operations)
04.01.05
31.12.05
€ thousand
Pro forma
unaudited
01.01.05
31.12.05
€ thousand
Net turnover
Cost of sales
869,949
-349,859
507,870
-266,270
747,483
-369,269
GROSS PROFIT
520,090
241,600
378,214
3
3
3
Sales and marketing expenses
Administrative expenses
-342,925
-37,368
-93,775
-208,992
-18,440
-50,970
-286,143
-28,281
-80,260
2
OPERATING INCOME/(LOSS)
46,022
-36,802
-16,470
4
5
Financial income
Financial expenses
2,269
-158,367
4,967
-79,924
2,814
-91,500
-110,076
-111,759
-105,156
Income tax
26,684
25,251
24,115
NET LOSS
-83,392
-86,508
-81,041
-80,005
-3,387
-83,392
-83,013
-3,495
-86,508
-81,041
-81,041
LOSS BEFORE TAX
6
Attributable to:
Equity holders of the parent
Minority interest
33
NYCOMED S.C . A . S I CA R
CONSOLIDAT E D BA L A N C E S H E E T
3 1 DECEMBER
Note ASSETS
31.12.06
€ thousand
31.12.05
€ thousand
3,828,918
2,097,691
521,670
6,448,279
914,599
642,237
223,304
1,780,140
7
7
7
Non-current assets
Patents and rights, currently marketed products
Goodwill
Development projects in progress and prepayments for intangibles
Total intangibles
8
8
8
8
Land and buildings
Machinery and equipment
Other property, plant and equipment
Assets under construction and prepayments for assets
392,542
205,975
158,437
45,353
105,919
53,102
12,210
11,099
Total property, plant and equipment
802,307
182,330
Other investments in shares and bonds
Other receivables
13,090
24,958
13,245
378
Total investments
38,048
13,623
Deferred tax assets
151,173
8,356
7,439,807
1,984,449
9
9
12
TOTAL NON-CURRENT ASSETS
Current assets
34
15
Total inventories
432,765
156,688
14
Trade receivables
Income tax receivable
Other receivables and prepayments
517,491
255
88,417
140,363
117
22,439
Total receivables
606,163
162,919
Cash and cash equivalents
697,754
46,617
TOTAL CURRENT ASSETS
1,736,682
366,224
TOTAL ASSETS
9,176,489
2,350,673
CO N S O L I DAT E D BA L A N C E S H E E T
31 DECEMBER
Note EQUITY AND LIABILITIES
10
10
Capital stock
Other reserves
31.12.06
€ thousand
31.12.05
€ thousand
16,677
1,178,480
1,195,157
99
819,285
819,384
Minority interest
37,279
0
TOTAL EQUITY
1,232,436
819,384
11
12
13
Non-current liabilities
Pension commitments
Deferred tax
Provisions
Deferred income and other non-current liabilities
289,390
1,435,415
55,024
18,198
31,444
298,595
0
0
18
Financial institutions
4,266,754
1,025,624
6,064,781
1,355,663
1,140,502
233,814
55,213
167,804
211,257
70,682
33,690
57,167
15,914
0
68,855
0
TOTAL CURRENT LIABILITIES
1,879,272
175,626
TOTAL LIABILITIES
7,944,053
1,531,289
TOTAL EQUITY AND LIABILITIES
9,176,489
2,350,673
TOTAL NON-CURRENT LIABILITIES
Current liabilities
18
14
13
16
17
18
19
20
Financial institutions
Trade payables
Income tax payable
Provisions
Other payables
Deferred income
Contingent liabilities, guarantee commitments, etc.
Employee costs
Foreign currency and interest rate exposure
Related party transactions
Auditors’ fees
35
EQUITY
S TAT E M E N T O F C H ANGES IN EQUITY
Capital
stock
Reserves
(note 10)
(note 10)
Total
€ thousand € thousand € thousand
Capital increase 4 January 2005
Capital increase 9 May 2005
Share-based payments (note 17)
Total
equity
€ thousand
64
31
-
861,514
8,232
64
861,545
8,232
3
36,271
347
67
897,816
8,579
95
869,746
869,841
36,621
906,462
Unrealised result on cash flow hedging,
interest rate swaps
Unrealised gain/loss on investments available for sale
Change in actuarial gains and losses (note 11)
Tax on equity postings
Foreign currency translation
Total income and expense for the year recognised
directly in equity
-
5,035
2,478
-2,726
772
-6,106
5,035
2,478
-2,726
772
-6,106
212
104
-115
33
-257
5,247
2,582
-2,841
805
-6,363
0
-547
-547
-23
-570
Net loss for the period
Total income and expense for the year
0
-83,013
-83,560
-83,013
-83,560
-3,495
-3,518
-86,508
-87,078
Equity as at 31 December 2005
95
786,186
786,281
33,103
819,384
Equity as at 1 January 2006
95
786,186
786,281
33,103
819,384
31
4,808
-95
11,838
495,193
95
-11,838
31
500,001
0
0
1
2,634
-
32
502,635
0
0
-
-5,179
3,240
-5,179
3,240
5,179
136
0
3,376
16,677
1,267,697
1,284,374
41,053
1,325,427
Issue of share capital (Nycomed S.C.A. SICAR)
Subscription of new shares by fund investors
Issue of shares in exchange for shares in Nycomed A/S
Issue of shares in exchange for shares in Nycomed A/S
Effect of changes in minority share and
investors contribution
Unrealised result on cash flow hedging, interest rate swaps
Unrealised gain/loss on investments available for sale
Tax on equity postings 2006
Other direct equity postings
Total income and expense for the year recognised
directly in equity
-
-1,895
-8,275
769
275
1,001
-1,086
-1,895
-8,275
769
275
1,001
-1,086
-80
-348
32
12
42
-46
-1,975
-8,623
801
287
1,043
-1,132
0
-9,211
-9,211
-388
-9,599
Net loss for the year
Total income and expense for the year
0
-80,005
-89,216
-80,005
-89,216
-3,387
-3,775
-83,392
-92,991
16,677
1,178,480
1,195,157
37,279
1,232,436
Equity as at 31 December 2006
36
Minority
interest
€ thousand
CO N S O L I DAT E D CAS H F LOW S TAT E M E N T
1 J A N U A RY - 3 1 D E C E M B E R
01.01.06
31.12.06
€ thousand
Note
Operating income (loss)
21
23
1
1
Pro forma
unaudited
01.01.05
31.12.05
€ thousand
46,022
-36,802
-16,470
Adjustments
Change in working capital
Financial income received
Financial expenses paid
Income taxes received (paid)
127,404
-41,076
2,269
-147,967
-30,725
144,779
-35,160
2,020
-31,820
-26,226
168,890
-58,139
2,304
-47,732
-28,171
Net cash flow from operating activities
-44,073
16,791
20,682
Cash flow from investing activities
Acquisition of ALTANA Pharma AG
Net cash from acquisition of ALTANA Pharma AG
Acquisition of Nyco Holdings ApS
Net cash from the acquisition of Nyco Holdings ApS
Acquisition fees, acquistion of Nyco Holdings ApS
-4,689,800
600,497
0
0
0
0
0
-777,299
36,164
-7,211
0
0
-777,299
0
-7,211
Purchase of tangible assets, net
Purchase of intangible assets, net
Other investments
Net cash flow from (used in) investing activities
-30,345
-23,366
378
-4,142,636
-16,578
-12,806
0
-777,730
-20,672
-22,876
3,651
-824,407
5,491,206
500,001
2,634
0
0
0
412,000
0
396,000
856
0
412,000
0
396,000
856
0
-1,052,965
-103,008
4,837,868
47,800
-30,572
-18,475
807,609
47,800
-10,872
-18,475
827,309
Net cash flow
651,159
46,670
23,584
Net cash beginning of the period
Currency translation adjustments
Net cash at 31 December
46,617
-22
697,754
0
-53
46,617
23,073
-40
46,617
Cash flow from financing activities
Proceeds from new facilities
Capital contribution from shareholders
Capital contribution from minority interest
Proceeds from issuance of PIK Notes
Interest on financing funds
22
(8 months of
operations)
04.01.05
31.12.05
€ thousand
Proceeds from exercise of warrants
Change in long-term bank debt
Financing fees
Net cash flow from (used in) financing activities
37
NOTES
1.
Business combination
Acquisition of ALTANA Pharma AG
On 29 December 2006, Nycomed acquired all the shares in ALTANA Pharma AG for € 4,768.6 million. ALTANA
Pharma AG is a pharmaceutical company and provides innovative pharmaceutical products with a focus on prescription drugs for gastrointestinal and respiratory diseases. If the acquisition had occurred at 1 January 2006, management
estimates that consolidated revenue would have been € 3,394.1 million and consolidated adjusted EBITDA for the
period would have been € 933.4 million. The consolidated income statement for 2006 has not been impacted by
the acquisition of ALTANA Pharma AG as the closing of the transaction took place at 29 December 2006. Consolidated
EBITDA, stated as EBITDA, and adjusted EBITDA are key measures used in order to have a more comprehensive
analysis of Nycomed’s operating performance and of the ability to service our debt.
The acquisition of ALTANA Pharma AG and the related application of purchase accounting adjustments and financing
transactions have affected, and will continue to affect, our results of operations following the acquisition. In particular:
• The substantial indebtedness we incurred to finance the acquisition will increase our interest expense onwards
significantly for the combined Group
• The significant adjustment to intangible assets we recorded in connection with the acquisition in respect of patents
and other intellectual property rights will lead to a significant increase in amortisation expense
• The purchase accounting adjustment relating to inventory resulted in a non-recurring charge of € 49.4 million. This
will be reflected in our consolidated income statement, net of the related income tax benefit, as the inventory on
hand at the acquisition date is sold to customers. This impact and the related effect on gross and operating margins
will be reflected in our consolidated income statement within the first six months following the closing of the
acquisition
• The purchase price allocation and purchase accounting adjustments may be subject to subsequent adjustments of
fair values. IFRS 3 Business Combinations effectively requires allocation of the cost of an acquisition to identifiable
assets, liabilities and contingent liabilities to be completed within a period of 12 months of the acquisition date (29
December 2006).
The fair value of indentifiable assets and liabilities at the date of acquisition was:
Patents and rights
In process research & development
Intangible assets, recorded by ALTANA Pharma AG
Contract manufacturing
Chemical library
Property, plant and equipment
Inventories
Long-term investment
Other non-current assets
Trade receivables
Deferred tax asset
Other current assets
Marketable securities
Cash
Total assets
38
Recognised on
acquisition
€ million
2,970.0
275.0
0.0
18.2
25.0
Fair value
adjustment
€ million
2,970.0
275.0
-151.9
18.2
25.0
Carrying
amount
€ million
0.0
0.0
151.9
0.0
0.0
614.3
269.2
8.5
24.9
355.0
92.5
60.8
20.0
580.5
5,313.9
83.0
49.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
3,268.7
531.3
219.8
8.5
24.9
355.0
92.5
60.8
20.0
580.5
2,045.2
N OT E S
1.
Business combination, continued
Recognised on
acquisition
€ million
259.8
1,151.7
597.7
Fair value
adjustment
€ million
0.0
0.0
0.0
Carrying
amount
€ million
259.8
0.0
597.7
Total liabilities
2,009.2
0.0
857.5
Fair value of net assets
Goodwill arising on acquisition
Purchase price
3,304.7
1,463.9
4,768.6
3,268.7
1,187.7
Pension provisions
Deferred tax on fair value adjustments
Current and non-current liabilities
The cost of the acquisition was € 4,768.6 million and comprised:
Net cash
Purchase price adjustment accrued
Acquisition costs
4,689.8
49.7
29.1
4,768.6
Separable intangible assets have been identified and valued at € 3,288.2 million.
We considered the following approaches when estimating the fair value (FV) of the subject assets of the
Company: the Income Approach, the Market Approach, and the Cost Approach.
• The Income Approach indicates the FV of an asset based on the projected annual cash flows that the subject asset can be expected to generate over its remaining useful life. The projected annual cash flows are then discounted to a present value equivalent by applying a rate of return appropriate to the risk of the asset
• The Market Approach estimates the FV of an asset by comparing it to market transactions of other similar assets.
The time of sale, physical characteristics, conditions of sale, location and other factors are considered for the comparable asset. The market price of the comparable asset is then adjusted to indicate the FV of the subject asset
• The Cost Approach is based on the theory that a prudent investor would pay no more for an asset than the amount
for which the asset could be replaced. To the extent that the asset being valued provides less utility than the new
asset, replacement cost is reduced for such factors as physical deterioration and functional or economic obsolescence.
The selection of the appropriate valuation approach is based on the nature and specific characteristics of the underlying asset that is valued. In general, income-producing assets, such as certain intangibles, are often valued based on
the Income Approach; while certain tangible assets, such as property, plant and equipment, are valued based on a
combination of the Market and/or the Cost Approaches.
In order to utilise the Income Approach in valuing the currently marketed products In process research and development and Toll manufacturing contracts, appropriate discount rates must be derived. We have computed these rates
by considering an industry-based weighted average cost of capital and the Internal Rate of Return implied by the FV
of the Operating Business Enterprise Value of ALTANA Pharma AG.
A deferred tax liability of € 1,151.7 million has been provided against intangible assets, resulting in an increase in
residual goodwill by this amount. Although this liability has been recognised in accordance with IAS 12, and a proportion will be amortised to the income statement as the related intangible asset is amortised, this liability is only
payable if the intangible asset is sold separately.
The residual goodwill recognised on the acquisition is attributable mainly to the synergies expected to be achieved
from integrating the company into the Group’s existing business.
These synergies result from R&D savings; sales force reduction where there are overlaps and reduction in general;
reduction in administrative expenses; and revenue upside by introducing respective products in each of the entity’s
networks. In addition, the Company’s diversified revenue sources from in-licensing and product development,
combined with a strong product pipeline and an opportunity to cross-sell products, provides significant potential
for growth both in the medium- and the long-term.
The acquisition also strengthens the Company’s geographic presence and in-licensing potential, as well as providing
a more diversified product portfolio and complementary R&D skills.
In June 2006, Nycomed acquired the Romanian pharmaceutical company Ruby de Tacos. The value of total assets taken
over in connection with the acquisition was less than € 1 million and there were no material fair value adjustments.
39
NOTES
1.
Business combination, continued (comparatives)
Acquisition of Nyco Holdings ApS
On 10 March 2005, Nycomed A/S entered into a subscription, share purchase and contribution agreement pursuant
to which Nycomed A/S agreed to acquire all of the capital stock of Nyco Holdings ApS (the former parent company
in the Group). The acquisition was consummated on 9 May 2005, following regulatory approvals.
The fair value of indentifiable assets and liabilities of Nycomed A/S and subsidiaries as at the date of acquisition:
Patents and rights
Development projects
Investment in shares and bonds and other receivables
Inventories
Trade receivables
Other current assets
Cash
Total assets
Pension provisions
Deferred tax liability
Other provisions
Debt to financial institutions
Trade payables
Income tax payable
Other payables
Deferred income
Total liabilities
Fair value of net assets
Goodwill arising on acquisition
Purchase price
Recognised on
acquisition
€ million
979.9
211.0
180.8
12.7
200.1
124.3
15.5
36.2
1,760.5
Carrying
amount
€ million
358.6
199.6
180.8
12.7
141.4
124.3
15.5
102.6
1,135.5
28.4
28.4
344.4
2.9
643.9
47.2
15.1
69.4
2.2
1,153.5
173.7
2.9
621.5
47.2
15.1
69.3
2.2
960.3
607.0
668.3
175.2
1,275.3
The cost of the acquisition was € 1,275.3 million and comprised an issue of shares. In total 9,883,603 ordinary shares
were issued in connection with the acquisition of Nyco Holdings ApS.
Cash
Conversion of shares of Nyco Holdings ApS
Shares issued, capital increase, paid in capital, cash
Acquisition costs
777.3
485.0
5.4
7.6
1,275.3
All business activities in the Nycomed A/S Group relate to Nyco Holdings ApS and subsidiaries and the consolidated
financials reflect the business activities from the date of acqusition.
Included in the € 642.2 million of goodwill recognised above are certain marketing- and customer-related intangible
assets and contract-based intangible assets, which are not recognised separately mainly because the fair value of
these assets cannot be measured reliably and therefore they do not meet the criteria for recognition as intangible
assets under IAS 38.
40
N OT E S
2.
Segment information
The Group’s primary segment reporting is geographic, based on the location of its customers. The Group’s segments
reflect the structure of its management and sales organisation, its system of internal financial reporting, and the
predominant source of risk and return in its business.
The secondary segment is the total business. Nycomed does not split its business into business segments as the Group
has over 6 thousand products across a whole range of markets and distribution channels, even within individual
countries. None of Nycomed’s major products meets the definition of a reporting segment.
Segment liabilities are not segmented as each legal entity contains a mix of management responsibilities and
functions related to the worldwide Group.
The segments are:
Central Europe
Big Five
Finland
CIS
Export
Other
Unallocated central costs
Norway, Denmark, Sweden, Belgium, the Netherlands and the Baltics
Austria, Greece, Switzerland, Poland, the Czech Republic, Romania, Hungary
France, Germany, Italy, Spain, Portugal, UK
Finland
Russia/CIS
Direct export business
Contract production
Administration, Operations, International Product Development, International Product
Management, Amortisations and write-downs.
INCOME STATEMENT
01/01 - 31/12 2006
North
Western
Europe
Revenue
Sales to external
customers
Inter-segment
sales
Central
Europe Big Five Finland
Russia/
CIS
Export
Unallocated
central
Other costs*
Eliminations
Consolidated
Group
289,099
107,115 60,748
69,262
221,902
98,943
22,880
0
0
869,949
80,139
66,712 36,529
8,694
0
0
0
0
-192,074
0
22,880
Total revenue
369,238 173,827 97,277
77,956 221,902 98,943
Result
Segment results
(operation
income/loss)
140,409
30,061
34,653
-1,440
90,877
66,034
0 -192,074 869,949
8,994 -323,566
0
46,022
Royalty and other income from primary activities included in net turnover, € 24,214 thousand.
* Unallocated central costs include amortisations, € 98,863 thousand.
41
NOTES
2.
Segment information, continued
BALANCE SHEET
31/12 2006
North
Western
Europe
Central
Europe Big Five Finland
4,947
Export
UnalloOther cated
0
0
0 27,618
Land & buildings
55,218
18,212
Machinery &
equipment
19,321
21,181
0
938
0
0
0
Other PP&E
7,789
4,304
642
440
4,355
0
0
0
Assets under
construction
0
Russia/
CIS
ALTANA ConsoliPharma
dated
AG
Group
286,547
392,542
11,016
153,519
205,975
-433
141,340
158,437
6,755
5,591
0
107
0
0
0
32,900
45,353
Finished goods
39,921
41,275
1,274
8,850
18,234
1,065
265 -16,419
150,322
244,787
Raw materials &
semi-finished
21,126
238
0
1,126
1,642
4,271
4,045 34,991
111,714
179,153
Prepayments
for goods
Trade receivables
1,692
0
0
0
0
0
0
0
7,133
8,825
41,384
24,808
7,983
6,486
73,537
16,390
2,705
-1,871
346,069
517,491
Segment assets
Intangibles
1,752,563
1,704,644 4,743,635 6,448,279
Other receivables
39,966
237,927
Cash
97,257
600,497
Total assets
277,893
697,754
9,176,489
Property plant and equipment and inventory are based on physical location. Trade receivables are based on customer
location.
As the acquired group ALTANA Pharma AG does not segment any balance sheet items, the total balance sheet of
ALTANA Pharma AG is disclosed separately above.
42
N OT E S
2.
Segment information, continued (comparatives)
The geographical segmentation in 2005 was different from the segmentation for 2006 due to changes in the management structure for the sales organisation.
The segments are:
Scandinavia and Baltics
Central Europe
Western Europe
Finland and Poland
CIS
Export
Other
Unallocated central costs
Norway, Denmark, Sweden and the Baltics
Austria, Switzerland, Germany, Greece and Italy
Belgium, Holland, France, UK, Spain and Portugal
Finland and Poland
Russia/CIS
Direct export business
Contract production
Administration, Operations, International Product Development, International
Product Management, Amortisations and write-downs.
INCOME STATEMENT
4/1 - 31/12 2005
Scandinavia
and Baltics
CIS
Export
Unallocated
Consolicentral Elimidated
Other
costs* nations
Group
47,088 105,731
60,856
14,784
0
0
100,727
52,231 105,731
60,856
25,822
18,992 36,869
42,656
Finland
Central Western
and
Europe Europe Poland
Revenue
Sales to external
customers
127,551
85,318
66,381
Inter-segment sales
34,377
12,166
34,346
161,928
97,484
65,752
23,959
Total revenue
Result
Segment results
(operation
income/loss)
5,143
161
0
507,870
0
0 -86,032
0
14,784
161 -86,032
507,870
5,957 -256,809
0
-36,802
Royalty and other income from primary activities included in net turnover, € 11,418 thousand.
* Unallocated central costs include amortisations (€ 65,600 thousand), step-up of inventory (€ 58,732 thousand),
and warrants programme (€ 8,579 thousand).
43
NOTES
2.
Segment information, continued (comparatives)
BALANCE SHEET
31/12 2005
Scandinavia Central Western
and Baltics Europe Europe
Finland
and
Poland
CIS
Export Other
Unallocated
Consolidated
Group
Land & buildings
51,810
17,913
4,408
2,948
0
0
0
28,840
105,919
Machinery & equipment
15,893 21,070
1,482
964
0
0
0
13,693
53,102
Other PP&E
7,289
3,811
1,058
478
0
0
0
-426
12,210
Assets under construction
5,872
3,220
406
1,601
0
0
0
0
11,099
Finished goods
28,596
16,887
11,197
13,338
31,182
0
0
-15,281
85,919
Raw materials &
semi-finished
14,739 49,322
69,077
Prepayments for goods
Trade receivables
3,762
1,254
0
0
0
0
1,692
0
0
0
0
0
0
0
1,692
36,233
19,196
14,350
10,514
44,794
11,582
3,414
280
140,363
Segment assets
Intangibles
479,381
1,780,140 1,780,140
Other receivables
44,535
Cash
46,617
Total assets
44,535
46,617
2,350,673
Property plant and equipment and inventory are based on physical location. Trade receivables are based on customer
location.
44
N OT E S
3.
Amortisation/depreciation of fixed assets
01.01.06
31.12.06
€ thousand
(8 months of
operations)
04.01.05
31.12.05
€ thousand
Amortisation/depreciation and write-down of fixed assets is included
in the total expenses of the Group at the following amounts:
Cost of sales
Total
4.
8,537
67,905
754
4,240
81,436
2,269
0
2,269
2,533
2,434
4,967
-57,958
-52,880
-4,758
-20,503
-22,027
-241
-158,367
-33,709
-37,652
-4,728
0
0
-3,835
-79,924
Financial income
Interest income
Amortisation of financing cost
Total
5.
11,607
103,118
1,011
6,220
121,956
Financial expenses
Interest expenses
Interest PIK Notes
Foreign exchange losses
Loan disbursement premium and charge of fair value adjustment
Amortisation of outstanding finance fee and discount PIK Notes
Other financial expenses
Total
45
NOTES
6.
Income tax
Accrued income tax for the year
Adjustment of deferred tax for the year
-45,376
72,904
-25,699
50,903
Adjustment prior years (accrued tax)
Adjustment prior years (deferred tax)
Total
127
-971
26,684
-839
886
25,251
633
587
-716
504
760
-456
501
805
30,821
-2,066
-1,880
31,426
-1,486
-1,711
-945
0
1,587
-833
26,684
-2,402
727
-1,350
47
25,251
Income tax related to items charged directly to equity:
Pension commitments
Unrealised result on cash flow hedging, interest rate swaps
Exchange rate adjustment of internal gain on inventory
Analysis of income tax:
Calculated 28% of income before tax
Non-deductible interest expenses
Other non-deductible expenses
Non-deductible expenses related to warrants programme
Impact of change in Danish tax rate from 30% to 28%
Higher/(lower) tax rates in foreign subsidiaries
Adjustment of tax concerning prior years
Total
46
01.01.06
31.12.06
€ thousand
(8 months of
operations)
04.01.05
31.12.05
€ thousand
N OT E S
7.
Intangibles
Cost as at 4 January 2005
Patents and
rights, currently
marketed products
0
Development
projects in
progress and
prepayments
Goodwill for intangibles
0
0
Total
0
Additions from acquisition of subsidiaries
Additions in the year
Disposals of business activities
Cost as at 31 December 2005
979,913
317
-717
979,513
642,237
0
0
642,237
211,000
12,304
0
223,304
1,833,150
12,621
-717
1,845,054
Amortisations as at 4 January 2005
Amortisation for the period
Write-down for the year
Amortisations as at 31 December 2005
0
65,631
-717
64,914
0
0
0
0
0
65,631
0
0
64,914
Book value as at 31 December 2005
914,599
642,237
223,304
1,780,140
Currency retranslation effect
979,513
0
642,237
3
223,304
0
1,845,054
3
3,013,182
0
3,992,695
1,455,451
0
2,097,691
275,000
23,366
521,670
4,743,633
23,366
6,612,056
64,914
98,863
163,777
0
0
0
0
0
0
64,914
98,863
163,777
3,828,918
2,097,691
521,670
6,448,279
Amortisation period
2-30 years
-
-
Amortisations as at 1 January 2006
Amortisation for the period
Amortisations as at 31 December 2006
As a result of the impairment tests, there is no basis for recognising impairment loss on goodwill or other intangibles.
Impairment tests are conducted at least annually and in connection with management’s strategy review. In the
impairment tests, the discounted values of future cash flows are compared against the carrying amounts. Future cash
flows are based on the budget for 2007, strategic plans for the years 2008-2011 and projections for the following
years. Important parameters are sales, EBIT, working capital and growth assumptions subsequent to the budget and
strategic plan period. Budget and strategic plans build on specific commercial assessments of the business entities
and the relevant products, while projections that go beyond 2011 build on general parameters for growth rates. For
discounted cash flow calculations, a discount rate of 12% has been applied, based on the Group’s weighted average
cost of capital before the new financing relating to the acquisiton of ALTANA Pharma AG. Furthermore, external
Company valuations have been applied for the impairment testing of the goodwill.
47
NOTES
8.
Assets under
construction
and prepayments
for assets
0
Total
0
Land
and
buildings
0
Machinery
and
equipment
0
Other
property
plant and
equipment
0
Additions from acquisition of subsidiaries 106,615
668
1,833
Disposals in the year
-603
Transfers
818
109,331
55,053
539
5,209
-1,243
248
59,806
12,720
465
4,020
-2,871
25
14,359
6,382
50
5,758
0
-1,091
11,099
180,770
1,722
16,820
-4,717
0
194,595
0
222
3,775
-585
3,412
0
346
7,586
-1,228
6,704
0
350
4,444
-2,645
2,149
0
0
0
0
0
0
918
15,805
-4,458
12,265
105,919
53,102
12,210
11,099
182,330
109,331
Additions from acquisition of subsidiaries 286,548
-1,190
2,935
-137
Revaluations
453
Transfers
3,960
401,900
59,806
153,519
-666
9,523
-1,785
1,010
1,898
223,305
14,359
141,339
-1,164
9,104
-6,616
-3,301
514
154,235
11,099
32,900
-117
8,674
0
-906
-6,298
45,353
194,595
614,306
-3,137
30,237
-8,537
-2,744
73
824,793
3,412
-403
6,147
-136
338
9,358
6,704
-603
10,413
-1,828
2,644
17,330
2,149
-642
6,532
-6,516
-5,726
-4,203
0
0
0
0
0
0
12,265
-1,648
23,093
-8,480
-2,744
22,486
392,542
205,975
158,437
45,353
802,307
5-50 years
2-14 years
1-20 years
-
Depreciation as at 4 January 2005
Depreciation for the year
Depreciation as at 31 December 2005
Depreciation as at 1 January 2006
Depreciation for the year
Revaluations
Depreciation as at 31 December 2006
Amortisation period
Total official assessment of Danish property at a book value of € 23,688 thousand is € 38,761 thousand
(€ 33,510 thousand in 2005) at the yearly assessment made 1 October 2006.
Note 16 provides more details on security for loans, etc., as regards property, plant and equipment.
48
N OT E S
9.
Investments
Other
investments
in shares
0
12,454
0
Other
receivables
0
243
135
Total
0
12,697
135
12,454
378
12,832
0
791
791
0
0
0
0
791
791
13,245
378
13,623
12,454
8,451
53
378
24,912
0
12,832
33,363
53
20,958
25,290
46,248
Revaluations as at 1 January 2006
Write-up/down for the year
Revaluations as at 31 December 2006
791
-8,659
-7,868
0
-332
-332
791
-8,991
-8,200
13,090
24,958
38,048
Revaluations as at 4 January 2005
Write-up/down for the year
Revaluations as at 31 December 2005
49
NOTES
10
Reserves
Capital increase 9 May 2005
Share
premium
€ thousand
897,785
Other
reserves
€ thousand
-
Total
reserves
€ thousand
897,785
interest rate swaps
Unrealised gain/loss on investments
held for sale
-
-
-
8,579
8,579
-
-
-
5,247
5,247
-
-
-6,363
2,582
-2,841
805
-
2,582
-2,841
805
-6,363
Net loss for the period
-
-86,508
-
-
-86,508
At 31 December 2005
897,785
-86,508
-6,363
14,372
819,286
Subscription of new shares
by fund investors
Share exchange by shareholders
497,827
95
-
-
-
497,827
95
Share exchange by shareholders
-11,838
interest rate swaps
Unrealised gain/loss on investments
held for sale (note 9)
Other direct equity postings
-
-
-
3,376
-11,838
3,376
-
-
-1,975
-1,975
-
1,043
-
-8,623
801
287
-1,132
-8,623
801
287
1,043
-1,132
-
-83,392
-
-
-83,392
1,383,869
-169,900
-5,320
7,106
1,215,755
Net loss for the year
At 31 December 2006
Reserves attributable to equity holders of the parent
Reserves attributable to minority interest
50
Retained
earnings
€ thousand
-
Foreign
currency
translation
reserve
€ thousand
-
1,178,480
37,275
1,215,755
N OT E S
10
Capital stock
Number of shares issued
Issuance of ordinary shares in connection with establishing Nycomed A/S
Issuance of ordinary shares in connection with acquisition, 9 May 2005
Reduction of number of shares, 9 May 2005
Conversion of shares in Nyco Holdings A/S
Issuance of ordinary shares in connection with establishing
Issuance of ordinary shares in connection with share exchange
Issuance of ordinary shares in connection with capital contribution
Number of shares issued as at 31 December
Capital stock value
Issuance of ordinary shares in connection with acquisition, 9 May 2005
Reduction of number of shares, 9 May 2005
Conversion of shares in Nyco Holdings A/S
Issuance of ordinary shares in connection with establishing
Issuance of ordinary shares in connection with share exchange
Issuance of ordinary shares in connection with capital contribution
Capital stock value as at 31 December
31.12.06
31.12.05
-
1,480
9,077,500
-4,539,490
5,344,113
24,800
9,470,415
3,846,156
13,341,371
9,883,603
€ thousand
-
€ thousand
91
-45
53
31
11,838
4,808
-
16,677
99
51
NOTES
11.
Pension commitments
Many employees in Nycomed are covered by retirement plans in the form of primarily defined contribution plans or
alternatively defined benefit plans. Nycomed entities sponsor these plans either directly or by contributing to independently administered funds. The nature of such plans varies according to legal regulations, fiscal requirements and
the economic conditions of the countries in which the employees are employed. The benefits are generally based on
the employees’ remuneration and years of service. Defined benefit plans comprise Nycomed subsidiaries in Norway,
Austria, Germany, Belgium and the Netherlands, ALTANA Italy, ALTANA France, ALTANA US and ALTANA Mexico.
Post-employment benefit plans are usually funded by payments from Nycomed entities and by employees to funds
independent of the Group. Where a plan is unfunded, a liability for the obligation is recognised in the balance sheet.
The following tables summarise the components of net benefit expense recognised in the consolidated income
statement, the funded status and amounts recognised in the consolidated balance sheet for the respective plans.
31.12.06
€ thousand
2,959
2,787
-1,591
20
0
4,175
31.12.05
€ thousand
2,471
2,805
-1,813
22
0
3,485
1,046
1,591
305
1,813
378,710
89,321
289,390
66,716
35,272
31,444
Changes in the present value of the defined benefit obligation
are as follows:
Opening defined benefit obligation
Interest cost
Current service cost
Benefits paid
Actuarial (gains)/losses on obligation
Exchange differences on foreign plans
66,716
312,383
2,787
2,959
-3,301
-1,585
-1,249
0
59,013
2,805
2,471
-3,212
5,438
200
Defined benefit obligation at 31 December
378,710
66,716
Changes in the fair value of plan assets are as follows:
Opening fair value of plan assets
Expected return
Contributions by employer
Benefits paid
Actuarial gains/(losses)
Exchange differences on foreign plans
35,272
52,782
1,046
2,711
-1,614
0
-877
0
30,572
305
2,533
-1,310
3,172
0
Fair value of plan assets at 31 December
89,321
35,272
4.5% - 5.5%
4.5% - 7%
3.0% - 4.5%
1.4% - 1.8%
4.25% - 5.5%
4.25% - 5.5%
2.5% - 3.0%
2.0% - 3.0%
Current service cost
Interest cost on benefit obligation
Expected return on plan assets
Net actuarial (gain)/loss recognised in the year
Past service cost
Net benefit expense
Actual return on plan assets
Expected return on plan assets
Defined benefit obligation at 31 December
Fair value of plan assets at 31 December
Recognised as pension obligation in balance sheet
The actuarial assumptions used in the actuarial computations and valuations
vary from country to country due to local economic and social conditions.
The range of assumptions used is as follows:
Assumptions
Discount rate:
Expected rate of return on assets:
Future salary increases:
Future pension increases:
52
N OT E S
12.
31.12.06
€ thousand
31.12.05
€ thousand
290,239
1,066,586
-363
-248
971
0
343,144
0
12
-886
Adjustment for the year
Deferred tax posted to equity
Provision as at 31 December
-72,904
-39
1,284,242
-50,903
-1,128
290,239
Deferred tax relates to:
Intangibles
Financial fixed assets
Current assets
Provisions
Non-current liabilities
Tax loss carry-forwards
Unamortised financing costs
Foreign exchange gains/losses
1,380,468
51,371
3,858
-370
-58,252
-1,731
-94,926
20,151
6,240
303,240
10,369
0
-2,805
-7,970
-7,666
-15,829
-4,539
4,870
Deferred income for tax purposes
Provision as at 31 December
-22,567
1,284,242
10,569
290,239
1,435,415
151,173
1,284,242
298,595
8,356
290,239
Deferred tax
Provision as at 1 January
Deferred tax in subsidiaries acquired in 2006
Reclassification deferred tax/accrued tax
Adjustment prior years
Allocation of deferred tax:
Deferred tax liabilities
Deferred tax assets
Deferred tax assets mainly relates to tax loss carry-forwards in the
Danish, German and Austrian companies and timing differences in
the Norwegian subsidiary.
Calculation of deferred taxes is based on local tax rates.
Based on the concrete expectation of future profits, deferred tax
assets were recognised based on the tax loss carry-forwards
primarily in Denmark.
53
NOTES
13.
31.12.06
31.12.05
€ thousand € thousand
Provisions
Employees
Provisions as at 1 January
0
Addition from acquisition of subsidiaries
104,920
Arising during the year
0
Utilised during the year
Unused amount reserved
Provisions as at 31 December
0
0
104,920
Thereof long-term at 31 December 2006
Sales and
marketing
0
57,156
0
Warranty
0
8,040
0
Other
0
52,712
0
Total
0
222,828
0
Total
0
0
2,299
0
0
57,156
0
0
8,040
0
0
52,712
0
0
222,828
-1,101
-1,198
0
55,024
0
The employee-related provisions encompass accruals for special bonuses, as well as anniversary and paid vacation. Provisions
for sales and marketing pertain primarily to sales bonuses and commissions. Provisions for warranty cover commitments in
connection with goods delivered and services rendered.
The items included in other provisions are primarily related to taxes other than income taxes and similar fees, pending
litigation, legal costs, professional fees, clinical trials and research. Additionally, at 31 December 2006, an accrual for environmental costs totaling € 3.8 million was included and a part of the provisions for environmental risks. A corresponding asset
of € 3.8 million was recorded which represents amounts due from the previous land owners.
Owing to the delay in new products gaining their anticipated approval in the USA, the sales and marketing structure at
ALTANA Pharma Inc. US was significantly reduced. A restructuring reserve of € 21.8 million was set aside for this purpose,
mainly to be used late 2006/early 2007. A restructuring reserve of € 3.8 million was also set aside due to a necessary
adaptation of the sales and marketing structures at ALTANA Pharma Ltd. UK.
14.
Income tax receivable/payable
Accrued as at 1 January
Accrued tax in subsidiaries acquired in 2006
Reclassification accrued tax/deferred tax
Income taxes paid during the year
Adjustment prior years
Accrued income tax for the year
Accrued tax posted to equity
Accrued as at 31 December
Allocation of income tax
Income tax payables
Income tax receivables
54
31.12.06
31.12.05
€ thousand € thousand
15,797
25,047
363
-306
-30,727
-127
45,376
-465
54,958
0
15,081
0
80
-26,225
839
25,699
323
15,797
55,213
255
54,958
15,914
117
1,579
N OT E S
15
Inventories
Raw materials and packaging
Semi-finished goods
Finished goods
Prepayment for goods
Total
The amount of write-down of inventories recognised as an expense
(recognised in cost of sales) during the period
Amount of reversal of write-down of inventories during the year
Amount of write-down to net realisable value
16.
31.12.06
€ thousand
31.12.05
€ thousand
95,103
84,050
244,787
8,825
432,765
32,664
36,413
85,919
1,692
156,688
7,688
3,252
-86
7,486
3,329
819
Operating
leases
37,343
30,689
21,920
14,425
Operating
leases
6,105
3,937
2,253
1,366
10,747
19,333
134,457
841
972
15,474
32,544
15,387
47,931
0
392
392
Contingent liabilities, guarantee commitments, etc.
Contractual obligations
The Company rents and leases property, company cars and equipment
used in its operations.
These leases are classified as either operating or capital leases and amortised
over the life of the respective lease. The lease contracts expire on various
dates in the future.
Future minimum lease payments for non-cancellable operating and capital
leases were:
Lease and rent commitments expiring within the following
periods as from the balance sheet date:
Finance
leases
Within one year
53
Between one and two years
50
Between two and three years
38
Between three and four years
Between four and five years
After five years
141
The majority of the operating lease obligations represented rent or
leasing of buildings in the USA and UK, which are partially counterreflected in a provision for onerous contracts based on the restructuring
decision for the US and UK.
Commitments and guarantees
Commitments for capital expenditures and other
purchase obligations
Other
Total
The main commitments are for the new administration building
in Konstanz with a respective commitment of € 18.4 million.
55
NOTES
16.
Contingent liabilities, guarantee commitments, etc., continued
The following legal entities are borrowers or guarantors under the Senior Facilities Agreement and therefore liable
under that agreement for the full amount or part of the amount. Except for Nyco Holdings 2 ApS, the shares of
these entities have been pledged in favour of the banks. The shares of the following additional legal entities are
pledged to the banks: ALTANA Pharma AG (Germany), OY Leiras Finland AB, Nycomed Pharma GmbH, Nycomed
Austria GmbH and ALTANA Pharma GmbH (Austria). Nycomed Danmark ApS, Nycomed Pharma AS (Norway) and
Nycomed Christiaens SCA (Belgium) have also granted security over receivables, registered bonds, floating charges
over business equipment and inventory and real property. The Danish entities have also registered negative pledges
in the personal register.
Nyco Holdings 3 ApS, Denmark
Nycomed Danmark ApS, Denmark
Nycomed Germany Holding GmbH, Germany
Nycomed AB, Sweden
Nycomed Holding GmbH, Austria
Nycomed Christiaens B.V., the Netherlands
Nycomed Christiaens SCA, Belgium
Nycomed Holding ApS, Denmark
Nyco Holdings 2 ApS, Denmark
Nyco Holdings Belgium SPRL, Belgium
Nycomed Pharma AS, Norway
The total debt covered by such guarantees as of 31 December 2006 is € 5,497,956 thousand.
The assets covered by these guarantees as of 31 December 2006 are set out below:
Asset securities
Mortgage of property, plant and equipment
Property mortgage for property in Norway (Nycomed Pharma AS)
Property mortgage for property in Roskilde (Nycomed Danmark ApS)
Pledge over plant and equipment in Norway (Nycomed Pharma AS)
Total
31.12.06
€ thousand
31.12.05
€ thousand
25,496
23,688
15,340
64,524
26,098
24,641
17,847
68,586
14,329
14,878
14,322
5,914
0
269,650
79,300
15,119
14,298
14,882
2,273
3,655
0
0
0
8,117
0
0
0
406,510
0
50,227
Securities over other current assets
Pledge over inventory in Norway (Nycomed Pharma AS)
Receivables in Belgium (Nycomed Christiaens SCA)
Receivables in Norway (Nycomed Pharma AS)
Deposits in specific bank accounts in Norway (Nycomed Pharma AS)
Deposits in specific bank accounts in Belgium
Receivables in Austria under intra-Group agreement (Nyco Holdings 3 ApS)
Pledge over registered bonds in Belgium
Negative pledge registered in personal and land registry (Nyco Holdings 2 ApS,
Nyco Holdings 3 ApS, Nyco Holdings ApS, Nycomed Danmark ApS)
Account pledge (Nyco Holdings 2 ApS)
Assignment of rights under Share Purchase Agreement between Nycomed
Group and ALTANA Pharma AG
Total
The above securities are to some extent limited to certain amounts. However, the limitation generally exceeds the
value of the assets so that the limitation does not actually limit or reduce the security granted to the banks.
56
N OT E S
16.
Contingent liabilities, guarantee commitments, etc., continued
Mortgages on the property St. Hede Roskilde Jorder 54, totaling € 33,530 thousand, have been registered to the
mortgagor and are held by Nordea AB as security for bank debt.
In connection with the 2005 acquisition, certain contingent notes to the sharesholders selling shares as part of the
transaction have been issued. The aggregate principal amount of the contingent notes will be an amount equal to
30% of the financial value to Nycomed of a final judicial decision or settlement related to claims made by Nycomed
against a certain third-party pharmaceutical company relating to the alleged infringement by such third party of
intellectual property rights relating to a particular substance/products, to which Nycomed has exclusive rights
pursuant to a development and license agreement. The contingent notes are not current obligations for Nycomed A/S
but would become obligations of Nycomed A/S only upon the successful outcome of patent infringement proceedings that a subsidiary of Nyco Holdings ApS has commenced. The subsidiary has a contingent asset in connection
with this.
Contingencies
From time to time, the Group may be party to legal proceedings in the ordinary course of business. The Group decides from case to case whether it will settle the matter or whether it will defend itself (depending on the general
or strategic importance of the case to the Group). In the opinion of management, the ultimate resolution of any
threatened or pending litigation will not have a material effect on the Group’s financial position or results of operations.
The Group maintains liability insurance in an effort to reduce the impact of negative judgements in legal matters.
The Group has entered into long-term contracts for the purchase of raw materials for certain strategic products
in order to secure supplies. Furthermore, certain of the Group’s in-licensing agreements require the purchase of
minimum quantities.
The Group has certain other contingent liabilities resulting from claims, performance guarantees and other commitments incidental to the ordinary course of business. Management believes that the probable resolution of any other
contingencies will not materially impact the financial position or results of operations.
Based on a tax assessment towards our Indian subsidiary Zydus ALTANA Pharma Healthcare Pvt. Ltd stating an
amount of € 7.9 million, a contingent liability exists. An objection was raised against this tax assessment. We consider the legal enforceability of this claim as improbable. ALTANA Pharma AG owns 50% of the shares in this company.
57
NOTES
17.
Employee costs
01.01.06
31.12.06
€ thousand
(8
( months of
operations)
04.01.05
31.12.05
€ thousand
Salaries and wages, etc. are included in the Group’s total expenses
at the following amounts:
Wages and salaries for the employees
Pension
Other social security costs
Warrants
Total
169,711
11,671
24,935
3,376
209,693
106,058
6,722
15,677
8,579
137,036
59,743
85,530
22,426
41,994
209,693
44,956
51,436
15,575
25,069
137,036
3,821
12,741
3,252
-
Salaries and wages, etc. are included in the income statement as follows:
Cost of sales
Total
Average number of employees
Total number of employees after the acquisition
The aggregate amount of salary, pension and compensation paid to the Executive Management Committee for the
year was € 2,642 thousand (€ 2,525 thousand for 2005). In addition, a total bonus of € 629 thousand was paid for
the year (€ 686 thousand for 2005). The aggregate amount of salary, pension and compensation paid to the CEO in
2006 was € 791 thousand. In addition, a bonus of € 424 thousand was paid. A fee of USD 50 thousand was paid to
the Board in 2006. The shareholders have authorised the Board to remunerate the Directors with fees which cannot
exceed USD 50 thousand per director per year. In 2006, one Director of the Board received a fee.
In connection with the acquisition of ALTANA Pharma AG and the financing of the transaction, a new legal holding
company structure was implemented in 2006. As a consequence of this, management’s shares and warrants in
Nycomed A/S were exchanged with shares and warrants in Nycomed Sweden Holding 2 AB. Each warrant
corresponds to one share in this company.
In July 2006, Nycomed granted management and a group of other employees warrants corresponding to 1.26% of
the current capital stock at the time of granting the warrants, in total 124,450 warrants. Each warrant corresponds to
one share. The exercise price is based on the share price level for the shares in Nycomed A/S applied in connection
with the 2005 acquisition. The warrants will vest for exercise in the period from the time of granting the warrants
and the following 10 years. € 3,376 thousand was expensed in the income statement in 2006 for this programme.
The market value for the warrants has been calculated using the Black-Scholes option pricing model.
The main assumptions were as follows:
• Expected volatility of 30% has been calculated based on historical data for comparable companies
• Risk-free interest rate is 3.95% and the share price used is the price for the Nycomed A/S shares in connection
with the 2005 acquisition
• Expected life of the warrants has been set to four years and no expected dividend has been included in the
calculation.
58
N OT E S
17.
Employee costs, continued
In August 2005, Nycomed A/S granted management and a group of other employees warrants corresponding to
3.83% of the current capital stock, in total 379,000 warrants. Each warrant corresponds to one share in Nycomed A/S.
The exercise price is based on the share price level for the shares in Nycomed A/S applied in connection with the
2005 acquisition. The warrants will vest for exercise in the period from the time of granting the warrants and the
following 10 years. € 8,579 thousand was expensed in the income statement in 2005 for this programme. The market value for the warrants has been calculated using the Black-Scholes option pricing model. The main assumptions
were as follows:
• Expected volatility of 26% has been calculated based on historical data for comparable companies
• Risk-free interest rate is 2.8% and the share price used is the price for the Nycomed A/S shares in connection with
the 2005 acquisition
• Expected life of the warrants has been set to four years and no expected dividend has been included in the
calculation.
The Executive Management Committee effective in 2006 has a total of 115,012 shares and 213,406 warrants as of 31
December 2006.
The Company’s CEO has 58,976 shares and 124,800 warrants. The CEO’s contract is subject to a six-month
termination clause. If the Board of Directors terminates the contract, the CEO will receive severance pay for 18
months in addition to salary during the notice period.
18.
Foreign currency and interest rate exposure
Market risk
The Group is exposed to market risk, primarily related to foreign exchange and interest rates. Management actively
monitors these exposures. The Group has established strategies to hedge fluctuations in exchange rates and interest
rates. The Group’s objective is to reduce, where it is deemed appropriate to do so, fluctuations in earnings and cash
flows associated with changes in market interest rates and foreign currency exchange rates. The Group does not
engage in financial transactions or risk exposures that are not related to the hedging of underlying business driven
risks. Only transactions that are justified from a hedging perspective are allowed. Financial instruments normally
have a maximum duration of 12 months.
Foreign exchange rates
The Group uses euro as its reporting currency and is therefore exposed to foreign exchange currency movements,
with the exposure primarily in Danish, Norwegian, Swiss, Japanese and US currencies. Consequently, the Group
enters into various contracts which change in value as foreign exchange rates change, to preserve the value of Group
assets, and to mitigate currency-related increases in its commitments. Forward contracts in foreign currencies are
entered into to hedge receivables, payables and cash flows in foreign currencies.
Outstanding forward contracts classified as fair value
hedges, by currency
Purchases of currency
NOK
DKK
CHF
SEK
JPY
Total purchases of currency
Sales of currency
EUR
USD
DKK
GBP
JPY
PLN
SEK
Total sales of currency
31.12.06
€ thousand
31.12.05
€ thousand
121,388
84,608
5,600
0
892
212,488
88,935
66,956
5,785
2,343
0
164,019
0
77,448
937
3,723
0
522
3,318
85,948
88,500
65,271
7,796
1,459
864
0
0
163,890
59
NOTES
18.
31.12.06
€ thousand
31.12.05
€ thousand
Purchases of currency
DKK
Total purchases of currency
6,162
6,162
90,372
90,372
Sales of currency
USD
SEK
CHF
JPY
Total sales of currency
3,797
1,106
622
637
6,162
63,575
9,586
7,781
11,879
92,821
Foreign currency and interest rate exposure, continued
Forward contracts classified as cash flow hedges, by currency
In connection with the acquisition of ALTANA Pharma AG on 29 December 2006, the Nycomed Group has taken
over additional derivatives which are based on the following:
The due date of transactions depends on the time of the Company’s anticipated foreign currency payment transactions. Pending contracts have a remaining term of no more than two years.
Forward foreign exchange contracts are also used to hedge against currency risks arising in connection with internal
financing.
The nominal values of pending forward foreign exchange contracts amounted to € 207.4 million as of 31 December
2006, of which € 167.9 million was in USD.
The nominal values of pending option transactions amounted to € 50.1 million of which € 50.1 million was in USD.
Non-current
A-tranche
B-tranche
C-tranche
Second Lien
Financing fees
A-, B-, C-tranche
Current
A-tranche
Revolver facility
In-licensing facility
Fougera bridge
PIK Notes
High yield bond
Other current debt
Revolver facility
In-licensing facility
Total debt
60
Currency
USD
USD/EUR
USD/EUR
EUR
EUR
-
USD
EUR
EUR
USD
EUR
EUR
EUR
Effective
Maturity
interest rate
2013
EURIBOR + 2%
2014 EURIBOR + 2.5%
2015
EURIBOR + 3%
2016 EURIBOR + 5.25%
-
2007
2007
2007
2007
2007
2007
2007
EURIBOR + 2%
EURIBOR + 2%
EURIBOR + 2%
EURIBOR + 2%
11.75%
11.50%
-
31.12.06
€ thousand
1,533,014
1,208,100
1,208,100
425,000
-107,460
4,266,754
31.12.05
€ thousand
-18,402
332,727
80,692
250,000
241,206
551,844
3,864
4,104
8,792
1,140,502
433,579
252,379
3,831
15,000
40,200
5,407,256
1,059,314
N OT E S
18.
Foreign currency and interest rate exposure, continued
In accordance with our Senior Facility Agreement, we are committed to hedging a minimum of 50% of our interest
rate risk within three months of closing.
We are also committed to fulfilling several restrictions, including testing of the covenants on a quarterly basis.
In connection with this, we have to deliver a compliance certificate to the syndicate.
Long-term bank loans covered by basis and interest rate swaps:
Market value at 31 December 2006
NOK interest rate swap, maturity 30 September 2008
EUR interest rate swap, maturity 31 March 2006
NOK currency swap, maturity 30 September 2008
19.
31.12.06
€ thousand
1,398
0
1,398
31.12.05
€ thousand
450
-181
269
2,670
1,276
Related party transactions
Related parties with a significant interest include Group enterprises and associated enterprises, including such enterprises’ supervisory boards, executive boards and executive officers and members of their families. Furthermore,
related parties include enterprises and companies in which aforementioned persons have significant interests.
In the periods presented, no transactions with members of the supervisory or executive boards, executive officers,
significant shareholders, other than stated in note 17, or other related parties, were undertaken apart from intraGroup transactions, which have been eliminated in the consolidated financial statements.
Affiliates of CSFB also own a controlling interest in BioPartners SA (BioPartners), one of the Group’s significant inlicensing partners with which there are eight in-licensed products currently in phase III clinical trials. However, the
agreements with BioPartners were entered into prior to CSFB Private Equity acquiring an interest in the Group.
For the acquired group of ALTANA Pharma AG, the amount for services and goods acquired, and balances due to
and due from related parties, mainly related to the toll manufacturing of Bracco ALTANA Pharma GmbH and
business transactions with Nycomed companies. The latter have been eliminated in the consolidated balance sheet
as of 31 December 2006. The terms and conditions of the agreements are at arm’s length.
In connection with the acquisition of ALTANA Pharma AG, financing of the transaction and refinancing of old debt,
an advisory fee to Nordic Capital and a fee to CSFB of € 10 million and € 2 million respectively have been accrued
and paid in 2007.
61
NOTES
20.
21.
Auditors’ fee
Audit fees, Ernst & Young
Audit fees, other
1,007
14
951
0
Total audit fees
1,021
951
Fees other services, Ernst & Young
Total fees other services
1,251
1,251
365
365
Total
2,272
1,316
23,093
98,863
0
3,376
483
1,589
15,805
65,631
58,732
8,579
-2,732
-1,236
127,404
144,779
-412,848
-406,108
-252,068
-6,819
0
25,000
0
0
0
0
-8,182
-52,390
25,000
5,000
-122
-1,052,965
0
-30,572
-90,084
-32,155
-25,728
-147,967
0
-12,937
-18,883
-31,820
Adjustments
Depreciations of property, plant and equipment
Amortisations of goodwill and other intangibles
Inventory step-up
Warrants programme
Change in provisions
Foreign exchange differences
22.
Change in long-term bank debt
Repayment PIK Notes
Repayment Senior Credit Facility
Repayment Senior Notes
Ordinary installments, Senior Credit Facilities
Repayment Mezzanine loan
Drawn under in-licensing facility
Drawn under export credit facility
Unrealised swap result
23.
Financial expenses paid
Interest PIK Notes
Interest, Senior Notes
Interest, Senior Credit Facilities
62
01.01.06
31.12.06
€ thousand
(8 months of
operations)
04.01.05
31.12.05
€ thousand
S U B S I D I A R I E S I N T H E N YCO M E D G RO U P
The table below contains information on the subsidiaries included in the consolidated financial statements as at
31 December 2006.
Company
Nycomed Sweden Holding 1 AB
Nycomed Sweden Holding 2 AB
Nycomed Germany Holding GmbH
Nycomed Holding GmbH
Nycomed A/S
Nyco Holdings ApS
Nyco Denmark ApS
Nyco Holdings 2 ApS
Nyco Holdings 3 ApS
Nycomed Holding ApS
ApS KBIL 38 NR 2505
Nycomed Danmark ApS
Nettopharma ApS
Nycomed Consumer ApS
Nycomed Pharma GmbH
Nycomed Christiaens B.V.
Nycomed Nederland B.V.
APIC B.V.
Nycomed France SAS
Nycomed Christiaens SCA
Sandipro
Centrapharm
Exel Pharma
Nyco Holdings Belgium Sprl
Nirvana Netherlands Holdings BV
Nycomed Belgium
Nycomed Beteiligungs GmbH
Nycomed Austria GmbH
Nycomed AG
Nycomed Hellas SA
Nycomed East Europe Marketing Service GmbH
Chemisch Pharmazeutische Forschungs GmbH
Nycomed A/O
Nycomed Distribution Center T.O.O
Nycomed Siberia
B.N.S. Pharma Vertriebs GmbH
Nycomed Pharma AS
Nycomed AB
Nycomed BV
Nycomed SEFA AS
Nycomed Eesti AS
Oy Leiras Finland AB
Nycomed UK Limited
Nycomed Italia S.r.l.
Nycomed Polska Sp. z.o.o
Nycomed Spain SL
SC Ruby De Tacos S.R.L
Nycomed Czeck Rep. s.r.o
Country
Luxembourg
Sweden
Sweden
Germany
Austria
Denmark
Denmark
Denmark
Denmark
Denmark
Denmark
Denmark
Denmark
Denmark
Denmark
Germany
Holland
Holland
Holland
France
Belgium
Belgium
Belgium
Belgium
Belgium
Holland
Belgium
Austria
Austria
Switzerland
Greece
Austria
Austria
Russia
Russia
Russia
Austria
Norway
Sweden
Holland
Estonia
Estonia
Finland
UK
Italy
Poland
Spain
Romania
Czech Rep.
Nominal capital stock
(in thousands)
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
DKK
EUR
DKK
DKK
DKK
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
CHF
EUR
EUR
EUR
RUB
RUB
RUB
EUR
NOK
SEK
EUR
EEK
EEK
EUR
GBP
EUR
PLN
EUR
RON
CZK
16,677
94,715
138
10,000
64,145
99
129
17
81
82
10,084
17
800,000
125
4,000
2,000
13,457
18
16
38
5,578
62
273
62
18
18
62
6,500
7,825
500
2,700
37
37
50
0,1
55
37
79,200
2,000
23
2,200
875
1,322
300
90
50
3
2,500
200,000
Equity interest
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
63
SUBSIDIARIES I N T H E N YCO M E D G RO U P
The table below contains information on the subsidiaries included in the consolidated financial statements as at
31 December 2006.
Company
ATP GmbH
ALTANA Pharma AG
ALTANA Pharma Asset Management GmbH
ALTANA Pharma Deutschland GmbH
ALTANA Pharma Re Insurance AG
Byk Tosse Arzneimittel GmbH
Schnetztor-Verlag GmbH
Unipharma GmbH
Byk Diagnostica GmbH
ALTANA Pharma Oranienburg GmbH
ALTANA Pharma Netherland B.V.
ALTANA Pharma Belgium
ALTANA Pharma Austria GmbH
ALTANA Pharma Italy S.p.A.
ALTANA Pharma France S.A.S.
ALTANA Pharma Switzerland AG
ALTANA Pharma Portugal Lda.
ALTANA Madaus RSA
ALTANA Pharma Australia
Zydus ALTANA India
ALTANA Pharma Private Ltd.
ALTANA Pharma Japan KK
AP US Specialities
ALTANA Pharma Canada Inc.
ALTANA Pharma US Inc.
ALTANA Pharma ARI
ALTANA Pharma Mexico S.A. de C.V.
ALTANA Pharma Argentina S.A.
ALTANA Pharma Brazil Ltda.
Byk Gulden S.ADE C.V.
ALTANA Pharma Spain S.A.
ALTANA Pharma Ireland Production
ALTANA Pharma UK Ltd.
ALTANA Pharma Czech Rep.
ZF ALTANA Pharma Poland (Distribution)
ZF ALTANA Pharma Poland
Sangtec Molecular Diagnostics AB
ALTANA Pharma Greece
ALTANA Pharma Turkey
ALTANA Pharma Romania
ALTANA Pharma Service Sp. z.o.o
ALTANA Pharma Slovakia s.r.o.
ALTANA Pharma Hungary
ALTANA Pharma Croatia d.o.o.
64
Country
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Holland
Belgium
Austria
Italy
France
Switzerland
Portugal
South Africa
Australia
India
India
Japan
USA
Canada
USA
USA
Mexico
Argentina
Brazil
Mexico
Spain
Ireland
UK
Czech Rep.
Poland
Poland
Sweden
Greece
Turkey
Romania
Poland
Slovakia
Hungary
Croatia
Nominal capital stock
(in thousands)
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
CHF
EUR
ZAR
AUD
INR
INR
JPY
USD
CAD
USD
USD
MXN
ARS
BRL
MXN
EUR
EUR
GBP
CZK
PLN
PLN
SEK
EUR
TRY
RON
PLN
SKK
HUF
HRK
10,500
70,000
5,625
2,000
7,500
30
30
30
1,050
7,700
4,600
250
600
1,500
920
250
249
1,400
451
200,000
333,917
20,000
4,000
6,000
12,572
0
1,741
1,267
23,826
1,000
1,214
500
500
1,000
26,854
164,479
100
18
15
4
50
250
3,000
20
Equity interest
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
100%
50%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
DEFINITIONS OF KEY FIGURES
A N D F I N A N C I A L R AT I O S
EBITDA
=
and amortisation
Adjusted EBITDA
=
=
EBITDA margin
=
=
Published by
Concept and design
Bysted A/S
Text by
Eye for Image ApS
Print
PE Offset A/S
CO N T E N T S
2
3
4
12
14
16
22
D E F I N I T IONS OF KEY FIGURES
A N D F I NANCIAL RATIOS
EBITDA
=
and amortisation
Adjusted EBITDA
=
=
EBITDA margin
=
=
NYCOMED S.C.A. SICAR
8-10 RUE MATTHIAS HARDT
1717
LUXEMBOURG
www.nycomed.com
Annual Report
2006
COMPANY PROFILE
LET TER FROM THE CEO
FINANCIAL SUMMARY
KEY PRODUCTS
PIPELINE

Annual Report 2006

Transcription

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