The 2023 fees paid by UCB to its External Auditors amounted to:
2023 \u2013 Actuals | Audit (\u20ac) | Other Attestation Related (\u20ac) | Tax Services (\u20ac) | Other Missions External To The Audit (\u20ac) | |
TOTAL (\u20ac) | |||||
Mazars Belgium (Auditor) | 820 980 | 98 300 | - | 45 712 | 964 992 |
Mazars Other Related Networks | 1 466 835 | 38 536 | 50 179 | - | 1 555 550 |
Total | 2 287 815 | 136 836 | 50 179 | 45 712 | 2 520 542 |
1. General information
UCB SA/NV (UCB or the Company) and its subsidiaries (together the Group) is a global biopharmaceutical company focused on severe diseases in two main therapeutic areas namely Neurology and Immunology.
The consolidated financial statements of the Company as at and for the year ended December 31, 2023 comprise the Company and its subsidiaries. Within the Group, UCB Pharma\u00a0SA, UCB Biopharma SRL, UCB S.R.O and UCB Inc., all wholly owned subsidiaries, have branches. UCB Pharma SA and UCB Biopharma SRL have branches in the U.K., UCB S.R.O and UCB Inc. have branches respectively in Slovakia and Puerto Rico. These branches are integrated into their accounts.
UCB SA/NV, the parent company, is a limited liability company incorporated and domiciled in Belgium
The registered office is at 60, All\u00e9e de la Recherche, B-1070 Brussels, Belgium. UCB SA/NV is listed on the Euronext Brussels Stock Exchange.
The Board of Directors approved these consolidated financial statements and the statutory financial statements of UCB SA for issue on February 28, 2024. The shareholders will be requested to approve the statutory financial statements of UCB SA at their annual meeting on April 25, 2024
3. Summary of significant accounting policies
The accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
3.1 Basis of preparation
The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) as endorsed by the European Union as of December 31, 2023.
The preparation of consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.
3.2 New and amended standards adopted by the group
A number of amendments to standards are mandatory for the first time for the financial year beginning January 1, 2023. However, the Group does not have to change its accounting policies or make retrospective adjustments as a result of adopting these amendments and improvements to the standards.
UCB has a subsidiary in Turkey, UCB Pharma A.S., with functional currency being Turkish lira which is the currency of a hyper-inflationary economy. The assets, liabilities, equity items, income and expenses of UCB Pharma A.S. have not been restated in accordance with IAS 29 Hyper-inflation before being included in the condensed consolidated financial statements of UCB as per December 31, 2023 because UCB has assessed the impact of the restatement as being immaterial. In accordance with UCB\u2019s accounting policies as disclosed in this 2023 Integrated Annual Report, assets and liabilities of UCB Pharma A.S. are translated at the rate as per December 31, 2023. Income and expenses are translated at the average exchange rate of December 2023
3.3 Amendments to standards issued but not yet applied
There are no amendments to standards that have been issued by the IASB that are not yet effective and that would be expected to have a material impact on the Group\u2019s consolidated financial statements.
UCB is in scope of the Pillar 2 international tax reform, which has been enacted or substantively enacted in most jurisdictions the Group operates, for the Group\u2019s financial year beginning January 1, 2024.
In 2023, the European Union endorsed IASB amendments to IAS 12 Income taxes on the implementation of the Pillar 2 model rules. These amendments notably aim at providing temporary relief from accounting for deferred taxes arising from the implementation of the Pillar 2 model rules. These amendments to IAS 12 are to be applied immediately in accordance with IAS 8 Accounting policies, changes in accounting estimates and errors. The Group has applied the exception to recognizing and disclosing information about deferred tax assets and liabilities related to Pillar 2 income taxes and will, in case applicable, provide disclosure about Pillar 2 current taxes.
Although (substantively) enacted, the Pillar 2 legislation was not applicable over financial year 2023 and hence, the group has no related current tax exposure. Based on the most recent available tax filings, country-by-country reporting and financial statements for the UCB constituent entities in the Group, UCB has performed a preliminary assessment of the Group\u2019s potential exposure to Pillar 2 income taxes. Based on this assessment, the Pillar 2 effective tax rates in the majority of jurisdictions in which the Group operates are above the minimum effective tax rate and no Pillar 2 impact is hence expected in those jurisdictions. In a very limited number of jurisdictions however, transitional safe harbor relief would not apply and a limited exposure to Pillar 2 income taxes may be expected based on best estimates available per balance sheet date. The Group will be in a position to report this exposure in 2024.
3.4 Consolidation
3.4.1 Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.
The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration agreement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at acquisition date. On an acquisition-by-acquisition basis, the Group recognizes any non-controlling interest in the acquiree either at fair value or at the non-controlling interest\u2019s proportionate share of the acquiree\u2019s net assets.
Any contingent consideration to be transferred by the Group is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognized in profit or loss. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or loss.
Inter-company transactions, balances and unrealized gains on transactions between Group companies are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
3.4.2 Changes in ownership interests in subsidiaries without change of control
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.
3.4.3 Disposal of subsidiary
When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognized in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently
accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss.
3.4.4 Associates
Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20%-50% of the voting rights. Investments in associates are accounted for using the equity method of accounting and are initially recognized at cost and the carrying amount is increased or decreased to recognize the investor\u2019s share of the profit or loss of the investee after the date of acquisition. The Group\u2019s investment in associates includes goodwill identified on acquisition.
When the Group ceases to equity account for an investment because of a loss of significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognized in profit or loss. The fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as a financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss where appropriate.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income are classified to profit or loss where appropriate.
The Group share of its associates\u2019 post-acquisition profits or losses is recognized in the income statement, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group\u2019s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate.
The carrying amount of investments in associates is tested for impairment in accordance with the policy described in Note 3.10. Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group\u2019s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.
Dilution gains and losses arising in investments in associates are recognized in the income statement.
3.4.5 Interests in joint operations
A joint operation is a joint arrangement whereby the parties, or joint operators that have joint control of the arrangement, have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
When conducting activities under joint operations, the Group recognizes in relation to its interest in a joint operation:
its assets, including its share of any assets held jointly;
its liabilities, including its share of any liability incurred jointly;
its revenue from the sale of its share of the output arising from the joint operations;
its share of the revenue from the sale of the output by the joint operation;
its expenses, including its share of any expenses incurred jointly.
When a Group entity transacts with a joint operation in which a Group entity is a joint operator, the Group is considered to be conducting the transaction with the other parties to the joint operation, and gains and losses resulting from the transactions are recognized in the Group\u2019s consolidated financial statements only to the extent of the other parties\u2019 interests in the joint operation.
3.5 Segment reporting
The Group\u2019s activities are in one segment, Biopharmaceuticals. There are no other significant classes of business, either singularly or in aggregate. The Chief Operating Decision Makers, being the Executive Committee, review the operating results and operating plans, and make resource allocation decisions on a company-wide basis; therefore UCB operates as one segment.
3.6 Foreign currency translation
The following important exchange rates were used in preparing the consolidated financial statements:
Closing rate | Average rate | |||
2023 | 2022 | 2023 | 2022 | |
USD | 1.106 | 1.071 | 1.081 | 1.051 |
JPY | 155.850 | 140.350 | 151.560 | 137.767 |
GBP | 0.867 | 0.886 | 0.870 | 0.852 |
CHF | 0.929 | 0.988 | 0.971 | 1.004 |
The closing rates represent spot rates as at December 31, 2023 and December 31, 2022.
3.6.1 Functional and presentation currency
Items included in the individual financial statements of each of the Group\u2019s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in euro (\u20ac), which is the functional currency of the Company, and the presentation currency of the Group.
3.6.2 Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement under Financial income or Financial expenses (Note 17), except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges or when attributable to part of the net investment in a foreign operation.
Exchange differences on a foreign currency monetary financial asset measured at FVOCI are recognized partly in profit or loss and partly in other comprehensive income. For the purpose of recognizing foreign exchange gains and losses under IAS 21, the asset is treated as if it were carried at amortized cost in the foreign currency. Accordingly, foreign exchange differences on the amortized cost balance and those arising from changes in amortized cost (such as interest calculated using the effective interest method and impairment losses) are recognized in profit or loss. All other gains and losses (that is, changes in fair value, including exchange differences thereon) are recognized in other comprehensive income.
Exchange differences on a foreign currency non-monetary financial asset measured at FVOCI are recognized in other comprehensive income as part of the fair value gain or loss.
3.6.3 Group companies
The results and financial position of all Group entities (none of which has the currency of a hyperinflationary economy except for the Turkish entity) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;
income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and
all resulting exchange differences are recognized in other comprehensive income (referred to as \u201ccumulative translation adjustments\u201d).
On consolidation, exchange difference arising from the translation of the net investment in foreign operations, and of borrowings and other currency instruments designated as hedges of such investments, are taken to other comprehensive income. When a foreign operation is partially or wholly disposed of or sold, exchange differences that were recorded in equity are recognized in the income statement as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.
3.7 Revenue
Revenue is recognized when control of a good or service transfers to a customer.
3.7.1 Net sales
Net sales encompass revenue recognized resulting from transferring control over products to the customer.
The amount of revenue recognized is the amount allocated to the satisfied performance obligation taking into account variable consideration. The estimated amount of variable consideration is included in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Variable consideration that is included in the transaction price relates to sales returns, rebates, trade and cash discounts, charge-backs granted to various customers that are part of commercial and governmental contractual arrangements or other reimbursement programs, including the U.S. Medicaid Drug Rebate program, the U.S. Federal Medicare program and others as well as the U.S. Branded Prescription Drug Fee. A liability is recognized for expected sales returns, rebates, trade and cash discounts, charge-backs or other reimbursements payable directly or indirectly to customers in relation to sales made until the end of the reporting period. Payment terms can differ from contract to contract but no element of financing is deemed present. Therefore the transaction price is not adjusted for the effects of a significant financing component. A receivable is recognized as soon as control over the products is transferred to the customer as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
The transaction price is adjusted for any consideration payable to the customer (directly or indirectly) that is economically linked to the revenue contract unless the payment is for distinct services received from the customer. In the latter case, the fair value of the services received is estimated and accounted for as part of marketing and selling expenses.
The amount of variable consideration is estimated on the basis of historical experience and the specific terms in the individual agreements.
Net sales are presented net of value added tax, other sales related taxes or any other amounts collected on behalf of third parties such as the government or governmental institutions.
3.7.2 Royalty income
Sales-based royalties resulting from the out-licensing of IP are recognized as the subsequent underlying sales occur provided that the related performance obligation has been satisfied by then.
3.7.3 Other revenue
Other revenue comprises revenue generated through out-licensing and profit-sharing agreements as well as contract manufacturing agreements. The underlying performance obligations can be satisfied at a point in time or over time depending on the specific situation.
For performance obligations satisfied over time, revenue is recognized based on a pattern that best reflects the transfer of control of the service to the customer. Usually this progress is measured by an input method whereby costs incurred and hours expended relative to total costs expected to be incurred and total hours expected to be expended are used as a basis.
Any variable consideration that is promised in exchange of a license of IP and that is based upon achieving certain sales targets, is accounted for in the same way as sales-based royalties i.e. at the moment the related sales occur provided that the related performance obligation has been satisfied.
Any variable consideration such as a development milestone payment that is promised in exchange for development services or the license of IP, is only included in the transaction price as from the moment the achievement of the related milestone event is highly probable, which then results in a catch up of revenue at that moment for any performances up till that moment.
Any upfront payments or license fees for which there are subsequent performance obligations, are initially reported as deferred revenue and are recognized as revenue when performance obligations are satisfied over the period of the development collaboration or manufacturing obligation.
3.7.4 Interest income
Interest is recognized on a time proportion basis that takes into account the effective yield on the asset.
3.7.5 Dividend income
Dividends are recognized when the shareholder\u2019s right to receive the payment is established.
3.8 Cost of sales
Cost of sales includes primarily the direct production costs, related production overheads and the amortization of the related intangible assets as well as services rendered. Start-up costs are expensed as incurred. Royalty expenses directly linked to goods sold are included in \u201ccost of goods sold\u201d.
3.9 Research and development
3.9.1 Internally generated intangible assets, research and development expenditure
All internal research costs are expensed as incurred. Internal development expenditure is capitalized only if it meets the recognition criteria of IAS 38 Intangible Assets. Due to long development periods and significant uncertainties related to the development of new products (such as the risks related to the outcome of clinical trials as well as the likelihood of regulatory approval), internal development costs generally do not qualify for capitalization as intangible assets. At December 31, 2023, no internal development expenditures have met the recognition criteria.
3.9.2 Acquired intangible assets
Payments for acquired in-process research and development projects obtained through in-licensing arrangements, business combinations or separate asset purchases are capitalized as intangible assets provided that they are separately identifiable, controlled by the Group and expected to provide future economic benefits. As the probability criterion in IAS 38 is always considered to be satisfied for separately acquired research and development assets and the amount of the payments is determinable, upfront and milestone payments to third parties for pharmaceutical products or compounds for which regulatory marketing approval has not yet been obtained are recognized as intangible assets, and amortized on a straight line basis over their useful lives from the date on which the products are launched for sale.
3.10 Impairment of non-financial assets
At each reporting date, the Group reviews the carrying amounts of its intangible assets, goodwill, property, plant and equipment and investments in associates to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. Irrespective of whether there is an indication of impairment, an impairment assessment of the intangibles not yet available for use and goodwill is carried out annually. These assets are not amortized. An impairment loss is recognized for the amount by which the asset\u2019s carrying amount exceeds its recoverable amount.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit (CGU) to which the asset belongs. The recoverable amount is the higher of an asset\u2019s fair value less costs to sell and value in use. To determine the value in use, the Group uses estimates of future cash flows generated by the asset or the CGU, using the same methods as those used in the initial measurement of the asset or the CGU on the basis of the medium-term plans of each business activity. Estimated cash flows are discounted using an appropriate rate that reflects current market assessments of the time value of money and the risks specific to the asset or the CGU.
An impairment loss is recognized directly in the income statement under the \u201cimpairment of non-financial assets\u201d caption. Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. The reversal of the impairment is recognized in the income statement. An impairment loss is reversed only to the extent that the asset\u2019s
carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. Impairment losses on goodwill are never reversed.
Intangible assets are assessed for impairment on a compound by compound basis.
3.11 Restructuring expenses, other income and expenses
The expenses made by the Group in order to be better positioned to face the economic environment in which it operates are presented in the income statement as \u201crestructuring expenses\u201d.
The gains and losses arising upon the divestment of intangible assets other than development stage assets or property, plant and equipment as well as increases or reversals of provisions for litigations, other than tax litigations or litigations related to discontinued operations, are presented in the income statement as \u201cother income and expenses\u201d.
3.12 Income taxes
The tax expense for the period comprises current and deferred income taxes. Tax expense is recognized in the income statement except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In the case of items recognized in other comprehensive income or in equity, the tax is also recognized in other comprehensive income or directly in equity, respectively.
For the accounting policies related to R&D tax credits we refer to Note 3.13.2under Government grants.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement of financial position date in the countries where the Company\u2019s subsidiaries operate and generate taxable income.
Current tax assets and tax liabilities are offset if there is a legally enforceable right to offset and intention either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Deferred income tax is recognized, using the liability method, on temporary differences arising between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred income tax liabilities are generally recognized for all taxable temporary differences and deferred income tax assets are recognized to the extent that it is probable that future taxable profits will be available against which deductible temporary differences, carried forward tax credits or carried forward losses can be utilized, taking into account the function and risk profile of the taxable entity concerned. Deferred income tax is not accounted for if it arises from the initial recognition of goodwill or from the initial recognition of an asset or liability in a transaction (other than in a business combination) that at the time of the transaction affects neither accounting nor taxable profit.
The carrying amount of deferred income tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred income tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the asset realized. The Group only considers substantively enacted tax laws when estimating the amount of deferred taxes to be recognized. Deferred tax assets and liabilities are not discounted.
Deferred tax liabilities and assets are not recognized for temporary differences between the carrying amount and tax bases of investments in foreign operations where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are only offset if there is a legally enforceable right to offset current tax liabilities and assets and the deferred income taxes relate to the same taxable entity and the same taxation authority.
3.13 Government grants
Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions.
3.13.1 Recoverable cash payments received from the government
The Group receives cash payments from the government to partially finance certain research and development projects. The cash payments received from the government are repayable in cash only if the Group decides to exploit and commercialize the results of the research phase of the related project. If the Group decides not to proceed with the results from the research phase, the cash payments are not repayable. In this case the rights to the research need to be transferred to the government. When the Group receives these cash payments, these are accounted for as other non-current liabilities. Only at the moment when there is reasonable assurance that the Group will not have to reimburse the cash payments, these cash payments are accounted for as government grants and taken up in \u201cother operating income\u201d. More specifically, this is at the moment the government confirms the receipt of the research results and its agreement with the Group\u2019s decision not to proceed with the research.
3.13.2 R&D tax credit
The R&D tax credit is considered as a government grant related to assets if no additional relevant requirements are to be met that are not directly related to the asset. The tax credit is taken in profit and loss in line with the costs it is intended to compensate. If the tax credit is received to compensate research and development expenses that are not capitalized, the R&D tax credit is recognized in P&L at the same moment as the research and development expenses as a credit to the line \u201cResearch and development expenses\u201d. If the tax credit is received to compensate amortizations on intangible assets e.g. licenses, the R&D tax credit is recognized in profit and loss over the (remaining) useful life of the asset and reported as \u201cOther operating income\u201d.
The part of the R&D tax credit that cannot be deducted from the taxable income is accounted for as a deferred tax asset. In this case, the R&D tax credit can either (i) be received as a cash tax refund after the legally foreseen waiting period or (ii) be offset against future taxable income. If the R&D tax credit is not refundable by the tax authorities, the recoverability of
the deferred tax asset is assessed on a regular basis as for the other deferred tax assets. The part of the R&D tax credit that can be deducted from taxable income is debited to the current income tax liability.
3.14 Intangible assets
3.14.1 Patents, licenses, trademarks and other intangible assets
Patents, licenses, trademarks and other intangible assets (collectively referred to as \u201cintangible assets\u201d) are shown at historical cost. Intangible assets acquired in a business combination are recognized at fair value at the acquisition date.
Intangible assets (except for goodwill) are amortized over their useful lives on a straight-line basis as from the moment they are available for use (i.e., in case of a license related to a compound or product, when the product (containing the compound) is launched for sale). Estimated useful life is based on the lower of the contract life or the economic useful life (generally between 5 to 20 years). Intangible assets (except for goodwill) are considered to have a finite economic useful life; therefore no intangible assets with an indefinite life have been identified.
3.14.2 Computer software
Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortized over their estimated useful lives (3 to 5 years) on a straight-line basis.
3.15 Goodwill
Goodwill arises on the acquisition of subsidiaries and associates and represents the excess of the consideration transferred over the Group\u2019s interest in the net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree.
Goodwill is initially recognized as an asset at cost and is subsequently carried at cost less accumulated impairment losses. Goodwill related to the acquisition of subsidiaries is presented separately on the face of the statements of financial position, whereas goodwill arising upon acquisition of associated companies is included in the investment in associated companies.
UCB operates as one segment and has one cash generating unit for the purpose of impairment testing.
As goodwill is considered to have an indefinite life, it is tested for impairment annually, and whenever there is an indication that it may be impaired, by comparing its carrying amount with its recoverable amount. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit. Impairment losses on goodwill are not reversed.
On disposal of a subsidiary or an associate, the attributable amount of goodwill is included in the determination of the profit or loss on disposal of the entity.
In the event that the fair value of the identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess remaining after reassessment is recognized directly in profit or loss.
3.16 Property, plant and equipment
All property, plant and equipment are carried at cost less accumulated depreciation and impairment losses except for property, plant and equipment under construction, which is carried at cost less accumulated impairment losses.
Cost includes all directly attributable costs of bringing the asset to its working condition for its intended use.
Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment.
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the cost of that asset.
Subsequent costs are included in the asset\u2019s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are expensed as they are incurred.
Depreciation is calculated using the straight-line method to allocate the cost of assets, other than land and properties under construction, to their residual values over their estimated useful lives. Depreciation commences when the asset is ready to be used. Land is not depreciated.
The residual value and the useful life of an asset are reviewed at least at each financial year-end and, if expectations differ from previous estimates, the change(s) is(are) accounted for as a change in an accounting estimate in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
The following useful lives are applicable to the main property, plant and equipment categories:
Buildings | 20 \u2013 33 years |
Machinery | 7 \u2013 15 years |
Laboratory equipment | 7 years |
Prototype equipment | 3 years |
Furniture and fixtures | 7 years |
Vehicles | 5 \u2013 7 years |
Computer equipment | 3 years |
Right-of-use assets | Shorter of asset\u2019s useful life and leasing term |
Gains and losses on disposals are determined by comparing the proceeds from disposal with the carrying amount and are recognized under \u201cother income and expenses\u201d in the income statement.
Investment property is indicative of land and buildings held to earn rentals. Such assets are initially carried at cost and depreciated on a straight-line basis over their estimated useful lives. The underlying useful lives correspond to those of self-used tangible assets. Given the insignificant amount of investment property, it is not separately presented in the statement of financial position.
3.17 Leases
The Group leases various properties, equipment and cars and the rental contracts are typically made for a fixed, short or long term period. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.
Leases are recognized as a right-of-use asset and corresponding liability at the date of which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset\u2019s useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
fixed payments (including in-substance fixed payments), less any lease incentives receivable;
variable lease payments that are based on an index or a rate.
There are no leases for which it is expected that the Group would need to pay a residual value guarantee or a certain amount to exercise a purchase option whereby it is reasonably certain that the Group will exercise this option or any penalties for terminating the lease in case the lease term reflects that the Group will exercise this option.
The lease payments are discounted using the interest rate implicit in the lease, if that rate can be determined, or the Group\u2019s incremental borrowing rate.
Right-of-use assets are measured at cost comprising the following:
the amount of the initial measurement of lease liability;
any lease payments made at or before the commencement date;
any initial direct costs (except for the leases already existing at transition date), and
restoration costs.
Right-of-use assets are presented as part of property, plant and equipment and lease liabilities as part of borrowings in the statement of financial position. All lease payments that are due within 12 months are classified as current liabilities. All lease payments that are due at least 12 months after the statement of financial position date are classified as non-current liabilities.
Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise mainly IT-equipment (laptops, tablets, mobile phones, PCs) and small items of office equipment and furniture.
Some of the car leases contain variable lease payments. It concerns car lease agreements that contain a Terminal Rental Adjustment Clause (TRAC): a final settlement calculation is made at termination of the lease to determine the final rental
adjustment. This final rent adjustment is a rent payment (or credit) that reflects actual usage of the vehicle while under lease. This final amount is not known at lease commencement. The rental adjustment amount is not a specified amount but depends upon known factors such as monthly depreciation and initial acquisition cost, and several unknown factors at lease commencement, such as mileage, condition of the vehicle, wear and tear, damage, geography of operation, disposal channel, and other factors. Together, these factors generally represent \u201cuse\u201d of the vehicle. Payments that vary due to use of the underlying asset and vehicle mileage specifically are variable lease payments. The final rental adjustment is recognized as expense or, in case of a credit, as a reduction of expenses when realized.
Extension options are included in a number of property and car leases across the Group. These terms are used to maximize operational flexibility in terms of managing contracts. The extension options held are exercisable only by the Group and not by the respective Lessor.
There are no material lease agreements whereby the Group is lessor.
3.18 Financial assets investments
3.18.1 Classification
The Group classifies its financial assets in the following measurement categories: those to be measured subsequently at fair value through profit or loss (FVPL), those to be measured subsequently at fair value through other comprehensive income (FVOCI), those to be measured at amortized cost. The classification depends on the Group\u2019s business model for managing the financial assets and the contractual terms of the cash flows.
Investments are included in non-current assets unless management intends to dispose of the investment within 12 months of the statement of financial position date.
Regular purchases and sales of financial assets are recognized on the trade date \u2013 the date on which the Group commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income (OCI). For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through OCI (FVOCI).
3.18.2 Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
Debt instruments
The Group currently does not have any investments in debt instruments.
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group\u2019s management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognized in profit or loss as financial income when the Group\u2019s right to receive payments is established.
Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
Changes in the fair value of financial assets at FVPL are recognized in financial income / expenses in the income statement.
The fair value of listed investments is based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques.
3.19 Derivative financial instruments and hedging activities
The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational, financing and investment activities. The Group does not engage in speculative transactions.
Derivative financial instruments are initially recorded at fair value and attributable transaction costs are recognized in the income statement when incurred. Derivative financial instruments are subsequently remeasured at their fair value.
The Group includes the credit and the nonperformance risks into its valuation techniques leading to non-material impact on derivative valuation resulting from credit or debit margin adjustments made on counterparts with who financial market transactions are contracted.
The method of recognizing the resulting gains or losses depends on whether the derivative financial instrument is designated as a hedging instrument and if so, the nature of the item being hedged. The Group designates derivative financial instruments as either cash flow hedges, fair value hedges or net investment hedges.
The Group documents at inception of the transaction the economic relationship between the hedging instrument and the hedged item, as well as its risk management objectives and strategy for undertaking the hedging transaction. The Group updates this assessment when required for example when the hedge ratio is rebalanced or when the analysis of sources of hedge ineffectiveness is updated.
The full fair value of a hedging derivative financial instrument is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months.
Derivative financial instruments embedded in financial liabilities are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative financial instrument are not closely related, a separate instrument with the same terms as the embedded derivative financial instrument would meet the definition of a derivative financial instrument, and the combined instrument is not measured at fair value through profit or loss.
3.19.1 Cash flow hedges
The effective portion of changes in the fair value of derivative financial instruments that are designated and qualify as cash flow hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the income statement within \u201cFinancial income/Financial expenses\u201d.
When option contracts are used to hedge a firm commitment or forecast transaction, the group designates only the intrinsic value of the options as the hedging instrument. Gains or losses relating to the effective portion of the change in intrinsic value of the options are recognized in other comprehensive income. The changes in the time value of the options that relate to the hedged item (\u2018aligned time value\u2019) are also recognized within OCI. These will be moved to the income statement (financial income / expenses) when the hedged transaction affects the P&L (in case of transaction related hedges) or over the period of the hedge (in case of time-period related hedges).
When forward contracts are used to hedge forecast transactions, the Group generally designates only the change in fair value of the forward contract related to the spot component as the hedging instrument. Gains or losses relating to the effective portion of the change in the spot component of the forward contracts are recognized in OCI. The change in the forward element of the contract that relates to the hedged item (\u2018aligned forward element\u2019) is recognized in the income statement (financial income / expenses).
Gains or losses relating to the effective portion of the change in intrinsic value of the options or relating to the effective portion of the change in the spot component of the forward contracts accumulated in other comprehensive income are reclassified to profit or loss in the periods when the hedged item affects profit or loss on the same line of the income statement where the designated hedged item affects profit or loss. However if the cash flow hedge of a firm commitment or forecasted transaction results in the recognition of a non-financial asset or a non-financial liability, then, at the time the asset or liability is recognized, the associated gains or losses on the derivative financial instrument that had previously been recognized in other comprehensive income are included in the initial measurement of the asset or liability.
When hedging with forwards and financial instruments with foreign currency basis spreads, the Group decides on a hedging-relationship-by-hedging-relationship basis to account for the changes in the currency basis spread by applying either the same accounting as for the time value of options or by recognizing these changes in value in the income statement (financial income / expenses).
When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative deferred gain or loss in other comprehensive income at that time remains in other comprehensive income until the forecast transaction occurs, resulting in the recognition of a non-financial asset or liability. When the forecast transaction is no longer expected to occur, the cumulative gains or losses that were reported in other comprehensive income are immediately reclassified to the income statement (financial income / expenses).
3.19.2 Fair value hedges
Changes in the fair value of derivative financial instruments that are designated and qualify as fair value hedges are recorded in the income statement under \u201cFinancial income/Financial expenses\u201d, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
3.19.3 Net investment hedges
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognized in the cumulative translation adjustments reserve; the gain or loss relating to the ineffective portion is recognized immediately in the income statement within \u201cFinancial income/Financial expenses\u201d. Gains and losses accumulated in equity are recycled to the income statement when the foreign operation is partially disposed of or sold.
3.19.4 Derivative financial instruments that do not qualify for hedge accounting
Changes in the fair value of any derivative financial instruments that do not qualify for hedge accounting are recognized immediately in the income statement within \u201cFinancial income/ Financial expenses\u201d.
3.20 Inventories
Raw materials, consumables, goods purchased for resale, work in progress and finished goods are valued at the lower of cost and net realisable value.
Cost is determined using the weighted average cost method. The cost of work in progress and finished goods comprises all the costs of conversion and other costs incurred in bringing the inventories to their present location and condition. The conversion costs include the cost of production and the related fixed and variable production overhead costs (including depreciation charges).
Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
Clinical trial materials are active substances and development supplies that are used in R&D activities. As these are not used to be sold in the ordinary course of business, these do not meet the definition of inventory. However these are presented as other current assets in the statement of financial position as the clinical trial materials meet the definition of an asset as it is probable they will result in future economic benefits flowing to the Group and as their cost or value can be measured reliably.
3.21 Trade receivables
Trade receivables are recognized initially at fair value and are subsequently measured at amortized cost using the effective interest rate method, less provision for expected credit losses.
For determining the expected credit losses, the Group applies the simplified approach permitted by IFRS 9, which requires lifetime losses to be recognized from initial recognition of the receivables. The Group identified 2 categories of trade receivables: receivables on private customers and receivables on public sector customers. For each of these categories, the Group makes use of a provision matrix in order to determine lifetime expected credit losses.
In case there is an indication or evidence of impairment for a specific receivable, this receivable will be impaired for the amount of lifetime expected credit losses.
For all receivables that are covered by a credit insurance or by a factoring agreement without recourse, the lifetime expected credit losses will be calculated taking into account this cover.
3.22 Cash and cash equivalents
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.
3.23 Non-current assets (or disposal groups) held for sale and discontinued operations
A discontinued operation is a component of the company that either has been disposed of, or that is classified as held for sale. It must either: represent a major separate line of business or geographical area of operations; be part of a single coordinated disposal plan; or be a subsidiary acquired exclusively with a view to resale.
Non-current assets or a disposal group are classified as held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. Non-current assets and disposal groups are measured at the lower of the carrying amount and fair value less costs to sell if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. Impairment losses upon initial classification as held for sale are recognized in the income statement. Non-current assets classified as held for sale are neither depreciated nor amortized.
3.24 Share capital
3.24.1 Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. The Company did not issue any preference or mandatory redeemable preference shares.
3.24.2 Treasury shares
When any Group company purchases the Company\u2019s equity share capital (treasury shares), the consideration paid, including attributable direct costs (net of income taxes) is deducted from the equity attributable to the Company\u2019s equity holders until the shares are cancelled or sold. Where such shares are subsequently sold, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company\u2019s equity holders.
3.25 Bonds and borrowings
Bonds, borrowings and overdrafts are initially measured at fair value, net of transaction costs incurred, and are subsequently measured at amortized cost, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognized over the term of the borrowings in accordance with the Group accounting policy.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the statement of financial position date.
3.26 Trade payables
Trade payables are initially measured at fair value and are subsequently measured at amortized cost using the effective interest method.
3.27 Employee benefits
3.27.1 Pension obligations
The Group operates various post-employment schemes, including both defined benefit and defined contribution pension plans.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity and has no legal or constructive obligations to pay further contributions in the event that the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in the consolidated income statement when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.
Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The liability recognized in the consolidated statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation less the fair value of plan assets. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
The defined benefit obligation is calculated by independent actuaries using the Projected Unit Credit Method. A full actuarial valuation based on updated personnel information is performed at least every three years. Additionally, if the net fluctuation recognized on the statement of financial position is more than 10% from one year to the next due to plan circumstances (significant membership changes, modification
to plan, etc.), a full actuarial valuation is also required. For years where a full actuarial valuation is not required, projections (known as \u201croll-forwards\u201d) from the previous year with updated assumptions (discount rate, salary increase, turnover) is used. For these \u201croll-forward\u201d valuations, the individual employee data from the last full valuation date are used taking into account assumptions for salary increases and possibly turnover.
All valuations measure liabilities at the applicable statement of financial position date and the market value of retirement plan assets are also reported at this date regardless of whether a full or a \u201croll-forward\u201d valuation is performed.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using yields on high quality corporate bonds that have maturity dates approximating the terms of the related Group obligations and that are denominated in the same currency in which the benefits are expected to be paid.
Remeasurement comprising of actuarial gains and losses, the effect of the asset ceiling (if applicable) and the return on plan assets (excluding interest) are recognized immediately in the statement of financial position with a charge or credit to other comprehensive income in the period in which they occur. Remeasurement recorded in other comprehensive income is not recycled. However, the entity may transfer those amounts recognized in other comprehensive income within equity. Past service cost is recognized in profit or loss in the period of plan amendment. Net-interest is calculated by applying the discount rate to the net defined benefit liability or asset. Defined benefit costs are split into three categories:
service cost, past-service cost, gains and losses on curtailments and settlements;
net-interest expense or income;
remeasurement.
The Group presents the first two components of defined benefit costs in the line item \u201cemployee benefits expense\u201d in its consolidated income statement (by nature of expenses aggregation). Net-interest expense or income is presented as part of the Operating profit. Curtailments gains and losses are accounted for as past-service cost. Remeasurements are recorded in other comprehensive income.
3.27.2 Other post-retirement employee benefits
Some Group companies provide post-retirement healthcare benefits to their retirees. The Group\u2019s net obligation is the amount of future benefits that employees have earned in return for their service in the current and prior periods. The expected costs of these benefits are accrued over the period of employment using the same methodology used for defined benefit plans.
3.27.3 Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Group recognizes termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after statement of financial position date are discounted to present value.
3.27.4 Other long-term employee benefits
The liabilities for jubilee premiums and long service awards are measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using yields on high quality corporate bonds with terms and currencies that match, as closely as possible, the estimated future cash outflows. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognized in profit or loss.
3.27.5 Profit-sharing and bonus plans
The Group recognizes a liability and an expense for bonuses and profit-sharing, based on a formula that takes into consideration the profit attributable to the company\u2019s shareholders after certain adjustments. The Group recognizes a provision when a reliable estimate of the obligation can be made as there is a past practice for bonus and profit-sharing payments that has created a constructive obligation.
3.27.6 Share-based payments
The Group operates several equity-settled and cash-settled share-based compensation plans.
The fair value of the employee services received in exchange for the grant of stock options is recognized as an expense. The total amount to be expensed is determined by reference to the fair value of the stock options granted, excluding the impact of any service and non-market performance vesting conditions (for example profitability, remaining an employee of the entity over a specified time period).
Service and non-market vesting conditions are included in the assumptions about the number of options that are expected to vest. The total amount expensed is recognized over the vesting period, which is the period over which all the specified vesting conditions are to be satisfied.
The fair value of the stock option plan is measured at the grant date using the \u201cBlack-Scholes\u201d valuation model which takes into account the expected life and cancellation rate of the options. At each statement of financial position date, the entity revises its estimates of the number of options that are expected to vest. It recognizes the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. The fair value of the amount payable to employees in respect of share appreciation rights, phantom share option, share award and performance share plans, which are settled in cash, is recognized as an expense, with a corresponding increase in liabilities, over the period that the employees become unconditionally entitled to payment. The liability is re-measured at each statement of financial position date and at settlement date.
Any changes in the fair value of the liability are recognized as personnel expenses in the income statement.
3.28 Provisions
Provisions are recognized in the statement of financial position when:
there is a present obligation (legal or constructive) as a result of a past event;
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.
The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the statement of financial position date. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as interest expense.
A restructuring provision is recognized when the Group has a detailed formal plan and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it.
Environmental provisions are mainly resulting from legal contractual obligations. For more information about these environmental and other provisions we refer to Note 34Note 34. .
3.1 Basis of preparation
The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) as endorsed by the European Union as of December 31, 2023.
", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f102729": { "value": "3.1 Basis of preparation
The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) as endorsed by the European Union as of December 31, 2023.
The preparation of consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f102730": { "value": "3.1 Basis of preparation
The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) as endorsed by the European Union as of December 31, 2023.
The preparation of consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f102844": { "value": "3.2 New and amended standards adopted by the group
A number of amendments to standards are mandatory for the first time for the financial year beginning January 1, 2023. However, the Group does not have to change its accounting policies or make retrospective adjustments as a result of adopting these amendments and improvements to the standards.
UCB has a subsidiary in Turkey, UCB Pharma A.S., with functional currency being Turkish lira which is the currency of a hyper-inflationary economy. The assets, liabilities, equity items, income and expenses of UCB Pharma A.S. have not been restated in accordance with IAS 29 Hyper-inflation before being included in the condensed consolidated financial statements of UCB as per December 31, 2023 because UCB has assessed the impact of the restatement as being immaterial. In accordance with UCB\u2019s accounting policies as disclosed in this 2023 Integrated Annual Report, assets and liabilities of UCB Pharma A.S. are translated at the rate as per December 31, 2023. Income and expenses are translated at the average exchange rate of December 2023
", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f102845": { "value": "3.2 New and amended standards adopted by the group
A number of amendments to standards are mandatory for the first time for the financial year beginning January 1, 2023. However, the Group does not have to change its accounting policies or make retrospective adjustments as a result of adopting these amendments and improvements to the standards.
UCB has a subsidiary in Turkey, UCB Pharma A.S., with functional currency being Turkish lira which is the currency of a hyper-inflationary economy. The assets, liabilities, equity items, income and expenses of UCB Pharma A.S. have not been restated in accordance with IAS 29 Hyper-inflation before being included in the condensed consolidated financial statements of UCB as per December 31, 2023 because UCB has assessed the impact of the restatement as being immaterial. In accordance with UCB\u2019s accounting policies as disclosed in this 2023 Integrated Annual Report, assets and liabilities of UCB Pharma A.S. are translated at the rate as per December 31, 2023. Income and expenses are translated at the average exchange rate of December 2023
", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesAccountingEstimatesAndErrorsExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f102905": { "value": "UCB has a subsidiary in Turkey, UCB Pharma A.S., with functional currency being Turkish lira which is the currency of a hyper-inflationary economy. The assets, liabilities, equity items, income and expenses of UCB Pharma A.S. have not been restated in accordance with IAS 29 Hyper-inflation before being included in the condensed consolidated financial statements of UCB as per December 31, 2023 because UCB has assessed the impact of the restatement as being immaterial. In accordance with UCB\u2019s accounting policies as disclosed in this 2023 Integrated Annual Report, assets and liabilities of UCB Pharma A.S. are translated at the rate as per December 31, 2023. Income and expenses are translated at the average exchange rate of December 2023", "dimensions": { "concept": "ifrs-full:DisclosureOfHyperinflationaryReportingExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f103383": { "value": "3.4.1 Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.
The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration agreement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at acquisition date. On an acquisition-by-acquisition basis, the Group recognizes any non-controlling interest in the acquiree either at fair value or at the non-controlling interest\u2019s proportionate share of the acquiree\u2019s net assets.
Any contingent consideration to be transferred by the Group is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognized in profit or loss. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or loss.
Inter-company transactions, balances and unrealized gains on transactions between Group companies are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f103462": { "value": "The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration agreement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at acquisition date. On an acquisition-by-acquisition basis, the Group recognizes any non-controlling interest in the acquiree either at fair value or at the non-controlling interest\u2019s proportionate share of the acquiree\u2019s net assets.
Any contingent consideration to be transferred by the Group is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognized in profit or loss. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or loss.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f103463": { "value": "The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration agreement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at acquisition date. On an acquisition-by-acquisition basis, the Group recognizes any non-controlling interest in the acquiree either at fair value or at the non-controlling interest\u2019s proportionate share of the acquiree\u2019s net assets.
Any contingent consideration to be transferred by the Group is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognized in profit or loss. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or loss.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsAndGoodwillExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f103464": { "value": "The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration agreement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at acquisition date. On an acquisition-by-acquisition basis, the Group recognizes any non-controlling interest in the acquiree either at fair value or at the non-controlling interest\u2019s proportionate share of the acquiree\u2019s net assets.
Any contingent consideration to be transferred by the Group is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognized in profit or loss. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or loss.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f103946": { "value": "3.4.4 Associates
Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20%-50% of the voting rights. Investments in associates are accounted for using the equity method of accounting and are initially recognized at cost and the carrying amount is increased or decreased to recognize the investor\u2019s share of the profit or loss of the investee after the date of acquisition. The Group\u2019s investment in associates includes goodwill identified on acquisition.
When the Group ceases to equity account for an investment because of a loss of significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognized in profit or loss. The fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as a financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss where appropriate.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income are classified to profit or loss where appropriate.
The Group share of its associates\u2019 post-acquisition profits or losses is recognized in the income statement, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group\u2019s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate.
The carrying amount of investments in associates is tested for impairment in accordance with the policy described in Note 3.10. Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group\u2019s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.
Dilution gains and losses arising in investments in associates are recognized in the income statement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociates", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f104403": { "value": "3.4.5 Interests in joint operations
A joint operation is a joint arrangement whereby the parties, or joint operators that have joint control of the arrangement, have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
When conducting activities under joint operations, the Group recognizes in relation to its interest in a joint operation:
its assets, including its share of any assets held jointly;
its liabilities, including its share of any liability incurred jointly;
its revenue from the sale of its share of the output arising from the joint operations;
its share of the revenue from the sale of the output by the joint operation;
its expenses, including its share of any expenses incurred jointly.
When a Group entity transacts with a joint operation in which a Group entity is a joint operator, the Group is considered to be conducting the transaction with the other parties to the joint operation, and gains and losses resulting from the transactions are recognized in the Group\u2019s consolidated financial statements only to the extent of the other parties\u2019 interests in the joint operation.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociatesAndJointVenturesExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f104404": { "value": "3.4.5 Interests in joint operations
A joint operation is a joint arrangement whereby the parties, or joint operators that have joint control of the arrangement, have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
When conducting activities under joint operations, the Group recognizes in relation to its interest in a joint operation:
its assets, including its share of any assets held jointly;
its liabilities, including its share of any liability incurred jointly;
its revenue from the sale of its share of the output arising from the joint operations;
its share of the revenue from the sale of the output by the joint operation;
its expenses, including its share of any expenses incurred jointly.
When a Group entity transacts with a joint operation in which a Group entity is a joint operator, the Group is considered to be conducting the transaction with the other parties to the joint operation, and gains and losses resulting from the transactions are recognized in the Group\u2019s consolidated financial statements only to the extent of the other parties\u2019 interests in the joint operation.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsInJointVentures", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f104626": { "value": "3.5 Segment reporting
The Group\u2019s activities are in one segment, Biopharmaceuticals. There are no other significant classes of business, either singularly or in aggregate. The Chief Operating Decision Makers, being the Executive Committee, review the operating results and operating plans, and make resource allocation decisions on a company-wide basis; therefore UCB operates as one segment.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f104684": { "value": "3.6 Foreign currency translation
The following important exchange rates were used in preparing the consolidated financial statements:
Closing rate | Average rate | |||
2023 | 2022 | 2023 | 2022 | |
USD | 1.106 | 1.071 | 1.081 | 1.051 |
JPY | 155.850 | 140.350 | 151.560 | 137.767 |
GBP | 0.867 | 0.886 | 0.870 | 0.852 |
CHF | 0.929 | 0.988 | 0.971 | 1.004 |
The closing rates represent spot rates as at December 31, 2023 and December 31, 2022.
3.6.1 Functional and presentation currency
Items included in the individual financial statements of each of the Group\u2019s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in euro (\u20ac), which is the functional currency of the Company, and the presentation currency of the Group.
3.6.2 Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement under Financial income or Financial expenses (Note 17), except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges or when attributable to part of the net investment in a foreign operation.
Exchange differences on a foreign currency monetary financial asset measured at FVOCI are recognized partly in profit or loss and partly in other comprehensive income. For the purpose of recognizing foreign exchange gains and losses under IAS 21, the asset is treated as if it were carried at amortized cost in the foreign currency. Accordingly, foreign exchange differences on the amortized cost balance and those arising from changes in amortized cost (such as interest calculated using the effective interest method and impairment losses) are recognized in profit or loss. All other gains and losses (that is, changes in fair value, including exchange differences thereon) are recognized in other comprehensive income.
Exchange differences on a foreign currency non-monetary financial asset measured at FVOCI are recognized in other comprehensive income as part of the fair value gain or loss.
3.6.3 Group companies
The results and financial position of all Group entities (none of which has the currency of a hyperinflationary economy except for the Turkish entity) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position;
income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and
all resulting exchange differences are recognized in other comprehensive income (referred to as \u201ccumulative translation adjustments\u201d).
On consolidation, exchange difference arising from the translation of the net investment in foreign operations, and of borrowings and other currency instruments designated as hedges of such investments, are taken to other comprehensive income. When a foreign operation is partially or wholly disposed of or sold, exchange differences that were recorded in equity are recognized in the income statement as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.
3.6.1 Functional and presentation currency
Items included in the individual financial statements of each of the Group\u2019s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in euro (\u20ac), which is the functional currency of the Company, and the presentation currency of the Group.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f105400": { "value": "3.7.1 Net sales
Net sales encompass revenue recognized resulting from transferring control over products to the customer.
The amount of revenue recognized is the amount allocated to the satisfied performance obligation taking into account variable consideration. The estimated amount of variable consideration is included in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Variable consideration that is included in the transaction price relates to sales returns, rebates, trade and cash discounts, charge-backs granted to various customers that are part of commercial and governmental contractual arrangements or other reimbursement programs, including the U.S. Medicaid Drug Rebate program, the U.S. Federal Medicare program and others as well as the U.S. Branded Prescription Drug Fee. A liability is recognized for expected sales returns, rebates, trade and cash discounts, charge-backs or other reimbursements payable directly or indirectly to customers in relation to sales made until the end of the reporting period. Payment terms can differ from contract to contract but no element of financing is deemed present. Therefore the transaction price is not adjusted for the effects of a significant financing component. A receivable is recognized as soon as control over the products is transferred to the customer as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
The transaction price is adjusted for any consideration payable to the customer (directly or indirectly) that is economically linked to the revenue contract unless the payment is for distinct services received from the customer. In the latter case, the fair value of the services received is estimated and accounted for as part of marketing and selling expenses.
The amount of variable consideration is estimated on the basis of historical experience and the specific terms in the individual agreements.
Net sales are presented net of value added tax, other sales related taxes or any other amounts collected on behalf of third parties such as the government or governmental institutions.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f105420": { "value": "The amount of revenue recognized is the amount allocated to the satisfied performance obligation taking into account variable consideration. The estimated amount of variable consideration is included in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Variable consideration that is included in the transaction price relates to sales returns, rebates, trade and cash discounts, charge-backs granted to various customers that are part of commercial and governmental contractual arrangements or other reimbursement programs, including the U.S. Medicaid Drug Rebate program, the U.S. Federal Medicare program and others as well as the U.S. Branded Prescription Drug Fee. A liability is recognized for expected sales returns, rebates, trade and cash discounts, charge-backs or other reimbursements payable directly or indirectly to customers in relation to sales made until the end of the reporting period. Payment terms can differ from contract to contract but no element of financing is deemed present. Therefore the transaction price is not adjusted for the effects of a significant financing component. A receivable is recognized as soon as control over the products is transferred to the customer as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
The transaction price is adjusted for any consideration payable to the customer (directly or indirectly) that is economically linked to the revenue contract unless the payment is for distinct services received from the customer. In the latter case, the fair value of the services received is estimated and accounted for as part of marketing and selling expenses.
The amount of variable consideration is estimated on the basis of historical experience and the specific terms in the individual agreements.
Net sales are presented net of value added tax, other sales related taxes or any other amounts collected on behalf of third parties such as the government or governmental institutions.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDiscountsAndRebatesExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f106055": { "value": "3.7.4 Interest income
Interest is recognized on a time proportion basis that takes into account the effective yield on the asset.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceIncomeAndCostsExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f106056": { "value": "3.7.4 Interest income
Interest is recognized on a time proportion basis that takes into account the effective yield on the asset.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInterestIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f106080": { "value": "3.7.5 Dividend income
Dividends are recognized when the shareholder\u2019s right to receive the payment is established.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDividendsExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f106183": { "value": "3.9.1 Internally generated intangible assets, research and development expenditure
All internal research costs are expensed as incurred. Internal development expenditure is capitalized only if it meets the recognition criteria of IAS 38 Intangible Assets. Due to long development periods and significant uncertainties related to the development of new products (such as the risks related to the outcome of clinical trials as well as the likelihood of regulatory approval), internal development costs generally do not qualify for capitalization as intangible assets. At December 31, 2023, no internal development expenditures have met the recognition criteria.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForResearchAndDevelopmentExpenseExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f106402": { "value": "3.10 Impairment of non-financial assets
At each reporting date, the Group reviews the carrying amounts of its intangible assets, goodwill, property, plant and equipment and investments in associates to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. Irrespective of whether there is an indication of impairment, an impairment assessment of the intangibles not yet available for use and goodwill is carried out annually. These assets are not amortized. An impairment loss is recognized for the amount by which the asset\u2019s carrying amount exceeds its recoverable amount.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit (CGU) to which the asset belongs. The recoverable amount is the higher of an asset\u2019s fair value less costs to sell and value in use. To determine the value in use, the Group uses estimates of future cash flows generated by the asset or the CGU, using the same methods as those used in the initial measurement of the asset or the CGU on the basis of the medium-term plans of each business activity. Estimated cash flows are discounted using an appropriate rate that reflects current market assessments of the time value of money and the risks specific to the asset or the CGU.
An impairment loss is recognized directly in the income statement under the \u201cimpairment of non-financial assets\u201d caption. Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. The reversal of the impairment is recognized in the income statement. An impairment loss is reversed only to the extent that the asset\u2019s
carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. Impairment losses on goodwill are never reversed.
Intangible assets are assessed for impairment on a compound by compound basis.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f106403": { "value": "3.10 Impairment of non-financial assets
At each reporting date, the Group reviews the carrying amounts of its intangible assets, goodwill, property, plant and equipment and investments in associates to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. Irrespective of whether there is an indication of impairment, an impairment assessment of the intangibles not yet available for use and goodwill is carried out annually. These assets are not amortized. An impairment loss is recognized for the amount by which the asset\u2019s carrying amount exceeds its recoverable amount.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit (CGU) to which the asset belongs. The recoverable amount is the higher of an asset\u2019s fair value less costs to sell and value in use. To determine the value in use, the Group uses estimates of future cash flows generated by the asset or the CGU, using the same methods as those used in the initial measurement of the asset or the CGU on the basis of the medium-term plans of each business activity. Estimated cash flows are discounted using an appropriate rate that reflects current market assessments of the time value of money and the risks specific to the asset or the CGU.
An impairment loss is recognized directly in the income statement under the \u201cimpairment of non-financial assets\u201d caption. Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. The reversal of the impairment is recognized in the income statement. An impairment loss is reversed only to the extent that the asset\u2019s
carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. Impairment losses on goodwill are never reversed.
Intangible assets are assessed for impairment on a compound by compound basis.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f106756": { "value": "3.11 Restructuring expenses, other income and expenses
The expenses made by the Group in order to be better positioned to face the economic environment in which it operates are presented in the income statement as \u201crestructuring expenses\u201d.
The gains and losses arising upon the divestment of intangible assets other than development stage assets or property, plant and equipment as well as increases or reversals of provisions for litigations, other than tax litigations or litigations related to discontinued operations, are presented in the income statement as \u201cother income and expenses\u201d.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForExceptionalItemsExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f106849": { "value": "3.12 Income taxes
The tax expense for the period comprises current and deferred income taxes. Tax expense is recognized in the income statement except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In the case of items recognized in other comprehensive income or in equity, the tax is also recognized in other comprehensive income or directly in equity, respectively.
For the accounting policies related to R&D tax credits we refer to Note 3.13.2under Government grants.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the statement of financial position date in the countries where the Company\u2019s subsidiaries operate and generate taxable income.
Current tax assets and tax liabilities are offset if there is a legally enforceable right to offset and intention either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Deferred income tax is recognized, using the liability method, on temporary differences arising between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred income tax liabilities are generally recognized for all taxable temporary differences and deferred income tax assets are recognized to the extent that it is probable that future taxable profits will be available against which deductible temporary differences, carried forward tax credits or carried forward losses can be utilized, taking into account the function and risk profile of the taxable entity concerned. Deferred income tax is not accounted for if it arises from the initial recognition of goodwill or from the initial recognition of an asset or liability in a transaction (other than in a business combination) that at the time of the transaction affects neither accounting nor taxable profit.
The carrying amount of deferred income tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred income tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the asset realized. The Group only considers substantively enacted tax laws when estimating the amount of deferred taxes to be recognized. Deferred tax assets and liabilities are not discounted.
Deferred tax liabilities and assets are not recognized for temporary differences between the carrying amount and tax bases of investments in foreign operations where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are only offset if there is a legally enforceable right to offset current tax liabilities and assets and the deferred income taxes relate to the same taxable entity and the same taxation authority.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f107016": { "value": "Deferred income tax is recognized, using the liability method, on temporary differences arising between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred income tax liabilities are generally recognized for all taxable temporary differences and deferred income tax assets are recognized to the extent that it is probable that future taxable profits will be available against which deductible temporary differences, carried forward tax credits or carried forward losses can be utilized, taking into account the function and risk profile of the taxable entity concerned. Deferred income tax is not accounted for if it arises from the initial recognition of goodwill or from the initial recognition of an asset or liability in a transaction (other than in a business combination) that at the time of the transaction affects neither accounting nor taxable profit.
The carrying amount of deferred income tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred income tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the asset realized. The Group only considers substantively enacted tax laws when estimating the amount of deferred taxes to be recognized. Deferred tax assets and liabilities are not discounted.
Deferred tax liabilities and assets are not recognized for temporary differences between the carrying amount and tax bases of investments in foreign operations where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are only offset if there is a legally enforceable right to offset current tax liabilities and assets and the deferred income taxes relate to the same taxable entity and the same taxation authority.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f107385": { "value": "3.13 Government grants
Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions.
3.13.1 Recoverable cash payments received from the government
The Group receives cash payments from the government to partially finance certain research and development projects. The cash payments received from the government are repayable in cash only if the Group decides to exploit and commercialize the results of the research phase of the related project. If the Group decides not to proceed with the results from the research phase, the cash payments are not repayable. In this case the rights to the research need to be transferred to the government. When the Group receives these cash payments, these are accounted for as other non-current liabilities. Only at the moment when there is reasonable assurance that the Group will not have to reimburse the cash payments, these cash payments are accounted for as government grants and taken up in \u201cother operating income\u201d. More specifically, this is at the moment the government confirms the receipt of the research results and its agreement with the Group\u2019s decision not to proceed with the research.
3.13.2 R&D tax credit
The R&D tax credit is considered as a government grant related to assets if no additional relevant requirements are to be met that are not directly related to the asset. The tax credit is taken in profit and loss in line with the costs it is intended to compensate. If the tax credit is received to compensate research and development expenses that are not capitalized, the R&D tax credit is recognized in P&L at the same moment as the research and development expenses as a credit to the line \u201cResearch and development expenses\u201d. If the tax credit is received to compensate amortizations on intangible assets e.g. licenses, the R&D tax credit is recognized in profit and loss over the (remaining) useful life of the asset and reported as \u201cOther operating income\u201d.
The part of the R&D tax credit that cannot be deducted from the taxable income is accounted for as a deferred tax asset. In this case, the R&D tax credit can either (i) be received as a cash tax refund after the legally foreseen waiting period or (ii) be offset against future taxable income. If the R&D tax credit is not refundable by the tax authorities, the recoverability of
the deferred tax asset is assessed on a regular basis as for the other deferred tax assets. The part of the R&D tax credit that can be deducted from taxable income is debited to the current income tax liability.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGovernmentGrants", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f107843": { "value": "3.14 Intangible assets
3.14.1 Patents, licenses, trademarks and other intangible assets
Patents, licenses, trademarks and other intangible assets (collectively referred to as \u201cintangible assets\u201d) are shown at historical cost. Intangible assets acquired in a business combination are recognized at fair value at the acquisition date.
Intangible assets (except for goodwill) are amortized over their useful lives on a straight-line basis as from the moment they are available for use (i.e., in case of a license related to a compound or product, when the product (containing the compound) is launched for sale). Estimated useful life is based on the lower of the contract life or the economic useful life (generally between 5 to 20 years). Intangible assets (except for goodwill) are considered to have a finite economic useful life; therefore no intangible assets with an indefinite life have been identified.
3.14.2 Computer software
Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortized over their estimated useful lives (3 to 5 years) on a straight-line basis.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f108031": { "value": "3.15 Goodwill
Goodwill arises on the acquisition of subsidiaries and associates and represents the excess of the consideration transferred over the Group\u2019s interest in the net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree.
Goodwill is initially recognized as an asset at cost and is subsequently carried at cost less accumulated impairment losses. Goodwill related to the acquisition of subsidiaries is presented separately on the face of the statements of financial position, whereas goodwill arising upon acquisition of associated companies is included in the investment in associated companies.
UCB operates as one segment and has one cash generating unit for the purpose of impairment testing.
As goodwill is considered to have an indefinite life, it is tested for impairment annually, and whenever there is an indication that it may be impaired, by comparing its carrying amount with its recoverable amount. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit. Impairment losses on goodwill are not reversed.
On disposal of a subsidiary or an associate, the attributable amount of goodwill is included in the determination of the profit or loss on disposal of the entity.
In the event that the fair value of the identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess remaining after reassessment is recognized directly in profit or loss.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f108032": { "value": "3.15 Goodwill
Goodwill arises on the acquisition of subsidiaries and associates and represents the excess of the consideration transferred over the Group\u2019s interest in the net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree.
Goodwill is initially recognized as an asset at cost and is subsequently carried at cost less accumulated impairment losses. Goodwill related to the acquisition of subsidiaries is presented separately on the face of the statements of financial position, whereas goodwill arising upon acquisition of associated companies is included in the investment in associated companies.
UCB operates as one segment and has one cash generating unit for the purpose of impairment testing.
As goodwill is considered to have an indefinite life, it is tested for impairment annually, and whenever there is an indication that it may be impaired, by comparing its carrying amount with its recoverable amount. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit. Impairment losses on goodwill are not reversed.
On disposal of a subsidiary or an associate, the attributable amount of goodwill is included in the determination of the profit or loss on disposal of the entity.
In the event that the fair value of the identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess remaining after reassessment is recognized directly in profit or loss.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f108351": { "value": "3.16 Property, plant and equipment
All property, plant and equipment are carried at cost less accumulated depreciation and impairment losses except for property, plant and equipment under construction, which is carried at cost less accumulated impairment losses.
Cost includes all directly attributable costs of bringing the asset to its working condition for its intended use.
Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment.
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the cost of that asset.
Subsequent costs are included in the asset\u2019s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are expensed as they are incurred.
Depreciation is calculated using the straight-line method to allocate the cost of assets, other than land and properties under construction, to their residual values over their estimated useful lives. Depreciation commences when the asset is ready to be used. Land is not depreciated.
The residual value and the useful life of an asset are reviewed at least at each financial year-end and, if expectations differ from previous estimates, the change(s) is(are) accounted for as a change in an accounting estimate in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
The following useful lives are applicable to the main property, plant and equipment categories:
Buildings | 20 \u2013 33 years |
Machinery | 7 \u2013 15 years |
Laboratory equipment | 7 years |
Prototype equipment | 3 years |
Furniture and fixtures | 7 years |
Vehicles | 5 \u2013 7 years |
Computer equipment | 3 years |
Right-of-use assets | Shorter of asset\u2019s useful life and leasing term |
Gains and losses on disposals are determined by comparing the proceeds from disposal with the carrying amount and are recognized under \u201cother income and expenses\u201d in the income statement.
Investment property is indicative of land and buildings held to earn rentals. Such assets are initially carried at cost and depreciated on a straight-line basis over their estimated useful lives. The underlying useful lives correspond to those of self-used tangible assets. Given the insignificant amount of investment property, it is not separately presented in the statement of financial position.
Depreciation is calculated using the straight-line method to allocate the cost of assets, other than land and properties under construction, to their residual values over their estimated useful lives. Depreciation commences when the asset is ready to be used. Land is not depreciated.
The residual value and the useful life of an asset are reviewed at least at each financial year-end and, if expectations differ from previous estimates, the change(s) is(are) accounted for as a change in an accounting estimate in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
The following useful lives are applicable to the main property, plant and equipment categories:
Buildings | 20 \u2013 33 years |
Machinery | 7 \u2013 15 years |
Laboratory equipment | 7 years |
Prototype equipment | 3 years |
Furniture and fixtures | 7 years |
Vehicles | 5 \u2013 7 years |
Computer equipment | 3 years |
Right-of-use assets | Shorter of asset\u2019s useful life and leasing term |
3.17 Leases
The Group leases various properties, equipment and cars and the rental contracts are typically made for a fixed, short or long term period. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.
Leases are recognized as a right-of-use asset and corresponding liability at the date of which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset\u2019s useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
fixed payments (including in-substance fixed payments), less any lease incentives receivable;
variable lease payments that are based on an index or a rate.
There are no leases for which it is expected that the Group would need to pay a residual value guarantee or a certain amount to exercise a purchase option whereby it is reasonably certain that the Group will exercise this option or any penalties for terminating the lease in case the lease term reflects that the Group will exercise this option.
The lease payments are discounted using the interest rate implicit in the lease, if that rate can be determined, or the Group\u2019s incremental borrowing rate.
Right-of-use assets are measured at cost comprising the following:
the amount of the initial measurement of lease liability;
any lease payments made at or before the commencement date;
any initial direct costs (except for the leases already existing at transition date), and
restoration costs.
Right-of-use assets are presented as part of property, plant and equipment and lease liabilities as part of borrowings in the statement of financial position. All lease payments that are due within 12 months are classified as current liabilities. All lease payments that are due at least 12 months after the statement of financial position date are classified as non-current liabilities.
Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise mainly IT-equipment (laptops, tablets, mobile phones, PCs) and small items of office equipment and furniture.
Some of the car leases contain variable lease payments. It concerns car lease agreements that contain a Terminal Rental Adjustment Clause (TRAC): a final settlement calculation is made at termination of the lease to determine the final rental
adjustment. This final rent adjustment is a rent payment (or credit) that reflects actual usage of the vehicle while under lease. This final amount is not known at lease commencement. The rental adjustment amount is not a specified amount but depends upon known factors such as monthly depreciation and initial acquisition cost, and several unknown factors at lease commencement, such as mileage, condition of the vehicle, wear and tear, damage, geography of operation, disposal channel, and other factors. Together, these factors generally represent \u201cuse\u201d of the vehicle. Payments that vary due to use of the underlying asset and vehicle mileage specifically are variable lease payments. The final rental adjustment is recognized as expense or, in case of a credit, as a reduction of expenses when realized.
Extension options are included in a number of property and car leases across the Group. These terms are used to maximize operational flexibility in terms of managing contracts. The extension options held are exercisable only by the Group and not by the respective Lessor.
There are no material lease agreements whereby the Group is lessor.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f109512": { "value": "3.18 Financial assets investments
3.18.1 Classification
The Group classifies its financial assets in the following measurement categories: those to be measured subsequently at fair value through profit or loss (FVPL), those to be measured subsequently at fair value through other comprehensive income (FVOCI), those to be measured at amortized cost. The classification depends on the Group\u2019s business model for managing the financial assets and the contractual terms of the cash flows.
Investments are included in non-current assets unless management intends to dispose of the investment within 12 months of the statement of financial position date.
Regular purchases and sales of financial assets are recognized on the trade date \u2013 the date on which the Group commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income (OCI). For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through OCI (FVOCI).
3.18.2 Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
Debt instruments
The Group currently does not have any investments in debt instruments.
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group\u2019s management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognized in profit or loss as financial income when the Group\u2019s right to receive payments is established.
Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
Changes in the fair value of financial assets at FVPL are recognized in financial income / expenses in the income statement.
The fair value of listed investments is based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForAvailableforsaleFinancialAssetsExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f109513": { "value": "3.18 Financial assets investments
3.18.1 Classification
The Group classifies its financial assets in the following measurement categories: those to be measured subsequently at fair value through profit or loss (FVPL), those to be measured subsequently at fair value through other comprehensive income (FVOCI), those to be measured at amortized cost. The classification depends on the Group\u2019s business model for managing the financial assets and the contractual terms of the cash flows.
Investments are included in non-current assets unless management intends to dispose of the investment within 12 months of the statement of financial position date.
Regular purchases and sales of financial assets are recognized on the trade date \u2013 the date on which the Group commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income (OCI). For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through OCI (FVOCI).
3.18.2 Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
Debt instruments
The Group currently does not have any investments in debt instruments.
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group\u2019s management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognized in profit or loss as financial income when the Group\u2019s right to receive payments is established.
Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
Changes in the fair value of financial assets at FVPL are recognized in financial income / expenses in the income statement.
The fair value of listed investments is based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f109514": { "value": "3.18 Financial assets investments
3.18.1 Classification
The Group classifies its financial assets in the following measurement categories: those to be measured subsequently at fair value through profit or loss (FVPL), those to be measured subsequently at fair value through other comprehensive income (FVOCI), those to be measured at amortized cost. The classification depends on the Group\u2019s business model for managing the financial assets and the contractual terms of the cash flows.
Investments are included in non-current assets unless management intends to dispose of the investment within 12 months of the statement of financial position date.
Regular purchases and sales of financial assets are recognized on the trade date \u2013 the date on which the Group commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income (OCI). For investments in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through OCI (FVOCI).
3.18.2 Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.
Debt instruments
The Group currently does not have any investments in debt instruments.
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group\u2019s management has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognized in profit or loss as financial income when the Group\u2019s right to receive payments is established.
Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
Changes in the fair value of financial assets at FVPL are recognized in financial income / expenses in the income statement.
The fair value of listed investments is based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f109920": { "value": "Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f110002": { "value": "3.19 Derivative financial instruments and hedging activities
The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational, financing and investment activities. The Group does not engage in speculative transactions.
Derivative financial instruments are initially recorded at fair value and attributable transaction costs are recognized in the income statement when incurred. Derivative financial instruments are subsequently remeasured at their fair value.
The Group includes the credit and the nonperformance risks into its valuation techniques leading to non-material impact on derivative valuation resulting from credit or debit margin adjustments made on counterparts with who financial market transactions are contracted.
The method of recognizing the resulting gains or losses depends on whether the derivative financial instrument is designated as a hedging instrument and if so, the nature of the item being hedged. The Group designates derivative financial instruments as either cash flow hedges, fair value hedges or net investment hedges.
The Group documents at inception of the transaction the economic relationship between the hedging instrument and the hedged item, as well as its risk management objectives and strategy for undertaking the hedging transaction. The Group updates this assessment when required for example when the hedge ratio is rebalanced or when the analysis of sources of hedge ineffectiveness is updated.
The full fair value of a hedging derivative financial instrument is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months.
Derivative financial instruments embedded in financial liabilities are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative financial instrument are not closely related, a separate instrument with the same terms as the embedded derivative financial instrument would meet the definition of a derivative financial instrument, and the combined instrument is not measured at fair value through profit or loss.
3.19.1 Cash flow hedges
The effective portion of changes in the fair value of derivative financial instruments that are designated and qualify as cash flow hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the income statement within \u201cFinancial income/Financial expenses\u201d.
When option contracts are used to hedge a firm commitment or forecast transaction, the group designates only the intrinsic value of the options as the hedging instrument. Gains or losses relating to the effective portion of the change in intrinsic value of the options are recognized in other comprehensive income. The changes in the time value of the options that relate to the hedged item (\u2018aligned time value\u2019) are also recognized within OCI. These will be moved to the income statement (financial income / expenses) when the hedged transaction affects the P&L (in case of transaction related hedges) or over the period of the hedge (in case of time-period related hedges).
When forward contracts are used to hedge forecast transactions, the Group generally designates only the change in fair value of the forward contract related to the spot component as the hedging instrument. Gains or losses relating to the effective portion of the change in the spot component of the forward contracts are recognized in OCI. The change in the forward element of the contract that relates to the hedged item (\u2018aligned forward element\u2019) is recognized in the income statement (financial income / expenses).
Gains or losses relating to the effective portion of the change in intrinsic value of the options or relating to the effective portion of the change in the spot component of the forward contracts accumulated in other comprehensive income are reclassified to profit or loss in the periods when the hedged item affects profit or loss on the same line of the income statement where the designated hedged item affects profit or loss. However if the cash flow hedge of a firm commitment or forecasted transaction results in the recognition of a non-financial asset or a non-financial liability, then, at the time the asset or liability is recognized, the associated gains or losses on the derivative financial instrument that had previously been recognized in other comprehensive income are included in the initial measurement of the asset or liability.
When hedging with forwards and financial instruments with foreign currency basis spreads, the Group decides on a hedging-relationship-by-hedging-relationship basis to account for the changes in the currency basis spread by applying either the same accounting as for the time value of options or by recognizing these changes in value in the income statement (financial income / expenses).
When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative deferred gain or loss in other comprehensive income at that time remains in other comprehensive income until the forecast transaction occurs, resulting in the recognition of a non-financial asset or liability. When the forecast transaction is no longer expected to occur, the cumulative gains or losses that were reported in other comprehensive income are immediately reclassified to the income statement (financial income / expenses).
3.19.2 Fair value hedges
Changes in the fair value of derivative financial instruments that are designated and qualify as fair value hedges are recorded in the income statement under \u201cFinancial income/Financial expenses\u201d, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
3.19.3 Net investment hedges
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognized in the cumulative translation adjustments reserve; the gain or loss relating to the ineffective portion is recognized immediately in the income statement within \u201cFinancial income/Financial expenses\u201d. Gains and losses accumulated in equity are recycled to the income statement when the foreign operation is partially disposed of or sold.
3.19.4 Derivative financial instruments that do not qualify for hedge accounting
Changes in the fair value of any derivative financial instruments that do not qualify for hedge accounting are recognized immediately in the income statement within \u201cFinancial income/ Financial expenses\u201d.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f110003": { "value": "3.19 Derivative financial instruments and hedging activities
The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational, financing and investment activities. The Group does not engage in speculative transactions.
Derivative financial instruments are initially recorded at fair value and attributable transaction costs are recognized in the income statement when incurred. Derivative financial instruments are subsequently remeasured at their fair value.
The Group includes the credit and the nonperformance risks into its valuation techniques leading to non-material impact on derivative valuation resulting from credit or debit margin adjustments made on counterparts with who financial market transactions are contracted.
The method of recognizing the resulting gains or losses depends on whether the derivative financial instrument is designated as a hedging instrument and if so, the nature of the item being hedged. The Group designates derivative financial instruments as either cash flow hedges, fair value hedges or net investment hedges.
The Group documents at inception of the transaction the economic relationship between the hedging instrument and the hedged item, as well as its risk management objectives and strategy for undertaking the hedging transaction. The Group updates this assessment when required for example when the hedge ratio is rebalanced or when the analysis of sources of hedge ineffectiveness is updated.
The full fair value of a hedging derivative financial instrument is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months.
Derivative financial instruments embedded in financial liabilities are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative financial instrument are not closely related, a separate instrument with the same terms as the embedded derivative financial instrument would meet the definition of a derivative financial instrument, and the combined instrument is not measured at fair value through profit or loss.
3.19.1 Cash flow hedges
The effective portion of changes in the fair value of derivative financial instruments that are designated and qualify as cash flow hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the income statement within \u201cFinancial income/Financial expenses\u201d.
When option contracts are used to hedge a firm commitment or forecast transaction, the group designates only the intrinsic value of the options as the hedging instrument. Gains or losses relating to the effective portion of the change in intrinsic value of the options are recognized in other comprehensive income. The changes in the time value of the options that relate to the hedged item (\u2018aligned time value\u2019) are also recognized within OCI. These will be moved to the income statement (financial income / expenses) when the hedged transaction affects the P&L (in case of transaction related hedges) or over the period of the hedge (in case of time-period related hedges).
When forward contracts are used to hedge forecast transactions, the Group generally designates only the change in fair value of the forward contract related to the spot component as the hedging instrument. Gains or losses relating to the effective portion of the change in the spot component of the forward contracts are recognized in OCI. The change in the forward element of the contract that relates to the hedged item (\u2018aligned forward element\u2019) is recognized in the income statement (financial income / expenses).
Gains or losses relating to the effective portion of the change in intrinsic value of the options or relating to the effective portion of the change in the spot component of the forward contracts accumulated in other comprehensive income are reclassified to profit or loss in the periods when the hedged item affects profit or loss on the same line of the income statement where the designated hedged item affects profit or loss. However if the cash flow hedge of a firm commitment or forecasted transaction results in the recognition of a non-financial asset or a non-financial liability, then, at the time the asset or liability is recognized, the associated gains or losses on the derivative financial instrument that had previously been recognized in other comprehensive income are included in the initial measurement of the asset or liability.
When hedging with forwards and financial instruments with foreign currency basis spreads, the Group decides on a hedging-relationship-by-hedging-relationship basis to account for the changes in the currency basis spread by applying either the same accounting as for the time value of options or by recognizing these changes in value in the income statement (financial income / expenses).
When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative deferred gain or loss in other comprehensive income at that time remains in other comprehensive income until the forecast transaction occurs, resulting in the recognition of a non-financial asset or liability. When the forecast transaction is no longer expected to occur, the cumulative gains or losses that were reported in other comprehensive income are immediately reclassified to the income statement (financial income / expenses).
3.19.2 Fair value hedges
Changes in the fair value of derivative financial instruments that are designated and qualify as fair value hedges are recorded in the income statement under \u201cFinancial income/Financial expenses\u201d, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
3.19.3 Net investment hedges
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognized in the cumulative translation adjustments reserve; the gain or loss relating to the ineffective portion is recognized immediately in the income statement within \u201cFinancial income/Financial expenses\u201d. Gains and losses accumulated in equity are recycled to the income statement when the foreign operation is partially disposed of or sold.
3.19.4 Derivative financial instruments that do not qualify for hedge accounting
Changes in the fair value of any derivative financial instruments that do not qualify for hedge accounting are recognized immediately in the income statement within \u201cFinancial income/ Financial expenses\u201d.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f110004": { "value": "3.19 Derivative financial instruments and hedging activities
The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational, financing and investment activities. The Group does not engage in speculative transactions.
Derivative financial instruments are initially recorded at fair value and attributable transaction costs are recognized in the income statement when incurred. Derivative financial instruments are subsequently remeasured at their fair value.
The Group includes the credit and the nonperformance risks into its valuation techniques leading to non-material impact on derivative valuation resulting from credit or debit margin adjustments made on counterparts with who financial market transactions are contracted.
The method of recognizing the resulting gains or losses depends on whether the derivative financial instrument is designated as a hedging instrument and if so, the nature of the item being hedged. The Group designates derivative financial instruments as either cash flow hedges, fair value hedges or net investment hedges.
The Group documents at inception of the transaction the economic relationship between the hedging instrument and the hedged item, as well as its risk management objectives and strategy for undertaking the hedging transaction. The Group updates this assessment when required for example when the hedge ratio is rebalanced or when the analysis of sources of hedge ineffectiveness is updated.
The full fair value of a hedging derivative financial instrument is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months.
Derivative financial instruments embedded in financial liabilities are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative financial instrument are not closely related, a separate instrument with the same terms as the embedded derivative financial instrument would meet the definition of a derivative financial instrument, and the combined instrument is not measured at fair value through profit or loss.
3.19.1 Cash flow hedges
The effective portion of changes in the fair value of derivative financial instruments that are designated and qualify as cash flow hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the income statement within \u201cFinancial income/Financial expenses\u201d.
When option contracts are used to hedge a firm commitment or forecast transaction, the group designates only the intrinsic value of the options as the hedging instrument. Gains or losses relating to the effective portion of the change in intrinsic value of the options are recognized in other comprehensive income. The changes in the time value of the options that relate to the hedged item (\u2018aligned time value\u2019) are also recognized within OCI. These will be moved to the income statement (financial income / expenses) when the hedged transaction affects the P&L (in case of transaction related hedges) or over the period of the hedge (in case of time-period related hedges).
When forward contracts are used to hedge forecast transactions, the Group generally designates only the change in fair value of the forward contract related to the spot component as the hedging instrument. Gains or losses relating to the effective portion of the change in the spot component of the forward contracts are recognized in OCI. The change in the forward element of the contract that relates to the hedged item (\u2018aligned forward element\u2019) is recognized in the income statement (financial income / expenses).
Gains or losses relating to the effective portion of the change in intrinsic value of the options or relating to the effective portion of the change in the spot component of the forward contracts accumulated in other comprehensive income are reclassified to profit or loss in the periods when the hedged item affects profit or loss on the same line of the income statement where the designated hedged item affects profit or loss. However if the cash flow hedge of a firm commitment or forecasted transaction results in the recognition of a non-financial asset or a non-financial liability, then, at the time the asset or liability is recognized, the associated gains or losses on the derivative financial instrument that had previously been recognized in other comprehensive income are included in the initial measurement of the asset or liability.
When hedging with forwards and financial instruments with foreign currency basis spreads, the Group decides on a hedging-relationship-by-hedging-relationship basis to account for the changes in the currency basis spread by applying either the same accounting as for the time value of options or by recognizing these changes in value in the income statement (financial income / expenses).
When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative deferred gain or loss in other comprehensive income at that time remains in other comprehensive income until the forecast transaction occurs, resulting in the recognition of a non-financial asset or liability. When the forecast transaction is no longer expected to occur, the cumulative gains or losses that were reported in other comprehensive income are immediately reclassified to the income statement (financial income / expenses).
3.19.2 Fair value hedges
Changes in the fair value of derivative financial instruments that are designated and qualify as fair value hedges are recorded in the income statement under \u201cFinancial income/Financial expenses\u201d, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
3.19.3 Net investment hedges
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognized in the cumulative translation adjustments reserve; the gain or loss relating to the ineffective portion is recognized immediately in the income statement within \u201cFinancial income/Financial expenses\u201d. Gains and losses accumulated in equity are recycled to the income statement when the foreign operation is partially disposed of or sold.
3.19.4 Derivative financial instruments that do not qualify for hedge accounting
Changes in the fair value of any derivative financial instruments that do not qualify for hedge accounting are recognized immediately in the income statement within \u201cFinancial income/ Financial expenses\u201d.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f111067": { "value": "3.19.4 Derivative financial instruments that do not qualify for hedge accounting
Changes in the fair value of any derivative financial instruments that do not qualify for hedge accounting are recognized immediately in the income statement within \u201cFinancial income/ Financial expenses\u201d.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f111110": { "value": "3.20 Inventories
Raw materials, consumables, goods purchased for resale, work in progress and finished goods are valued at the lower of cost and net realisable value.
Cost is determined using the weighted average cost method. The cost of work in progress and finished goods comprises all the costs of conversion and other costs incurred in bringing the inventories to their present location and condition. The conversion costs include the cost of production and the related fixed and variable production overhead costs (including depreciation charges).
Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
Clinical trial materials are active substances and development supplies that are used in R&D activities. As these are not used to be sold in the ordinary course of business, these do not meet the definition of inventory. However these are presented as other current assets in the statement of financial position as the clinical trial materials meet the definition of an asset as it is probable they will result in future economic benefits flowing to the Group and as their cost or value can be measured reliably.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForMeasuringInventories", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f111334": { "value": "3.21 Trade receivables
Trade receivables are recognized initially at fair value and are subsequently measured at amortized cost using the effective interest rate method, less provision for expected credit losses.
For determining the expected credit losses, the Group applies the simplified approach permitted by IFRS 9, which requires lifetime losses to be recognized from initial recognition of the receivables. The Group identified 2 categories of trade receivables: receivables on private customers and receivables on public sector customers. For each of these categories, the Group makes use of a provision matrix in order to determine lifetime expected credit losses.
In case there is an indication or evidence of impairment for a specific receivable, this receivable will be impaired for the amount of lifetime expected credit losses.
For all receivables that are covered by a credit insurance or by a factoring agreement without recourse, the lifetime expected credit losses will be calculated taking into account this cover.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLoansAndReceivablesExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f111335": { "value": "3.21 Trade receivables
Trade receivables are recognized initially at fair value and are subsequently measured at amortized cost using the effective interest rate method, less provision for expected credit losses.
For determining the expected credit losses, the Group applies the simplified approach permitted by IFRS 9, which requires lifetime losses to be recognized from initial recognition of the receivables. The Group identified 2 categories of trade receivables: receivables on private customers and receivables on public sector customers. For each of these categories, the Group makes use of a provision matrix in order to determine lifetime expected credit losses.
In case there is an indication or evidence of impairment for a specific receivable, this receivable will be impaired for the amount of lifetime expected credit losses.
For all receivables that are covered by a credit insurance or by a factoring agreement without recourse, the lifetime expected credit losses will be calculated taking into account this cover.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f111496": { "value": "3.22 Cash and cash equivalents
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f111497": { "value": "3.22 Cash and cash equivalents
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForCashFlowsExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f111580": { "value": "3.23 Non-current assets (or disposal groups) held for sale and discontinued operations
A discontinued operation is a component of the company that either has been disposed of, or that is classified as held for sale. It must either: represent a major separate line of business or geographical area of operations; be part of a single coordinated disposal plan; or be a subsidiary acquired exclusively with a view to resale.
Non-current assets or a disposal group are classified as held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. Non-current assets and disposal groups are measured at the lower of the carrying amount and fair value less costs to sell if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. Impairment losses upon initial classification as held for sale are recognized in the income statement. Non-current assets classified as held for sale are neither depreciated nor amortized.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f111581": { "value": "3.23 Non-current assets (or disposal groups) held for sale and discontinued operations
A discontinued operation is a component of the company that either has been disposed of, or that is classified as held for sale. It must either: represent a major separate line of business or geographical area of operations; be part of a single coordinated disposal plan; or be a subsidiary acquired exclusively with a view to resale.
Non-current assets or a disposal group are classified as held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. Non-current assets and disposal groups are measured at the lower of the carrying amount and fair value less costs to sell if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. Impairment losses upon initial classification as held for sale are recognized in the income statement. Non-current assets classified as held for sale are neither depreciated nor amortized.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleAndDiscontinuedOperationsExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f111654": { "value": "Non-current assets or a disposal group are classified as held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. Non-current assets and disposal groups are measured at the lower of the carrying amount and fair value less costs to sell if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. Impairment losses upon initial classification as held for sale are recognized in the income statement. Non-current assets classified as held for sale are neither depreciated nor amortized.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f111756": { "value": "3.24.1 Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. The Company did not issue any preference or mandatory redeemable preference shares.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIssuedCapitalExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f111807": { "value": "3.24.2 Treasury shares
When any Group company purchases the Company\u2019s equity share capital (treasury shares), the consideration paid, including attributable direct costs (net of income taxes) is deducted from the equity attributable to the Company\u2019s equity holders until the shares are cancelled or sold. Where such shares are subsequently sold, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company\u2019s equity holders.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTreasurySharesExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f111887": { "value": "3.25 Bonds and borrowings
Bonds, borrowings and overdrafts are initially measured at fair value, net of transaction costs incurred, and are subsequently measured at amortized cost, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognized over the term of the borrowings in accordance with the Group accounting policy.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the statement of financial position date.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingsExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f111888": { "value": "3.25 Bonds and borrowings
Bonds, borrowings and overdrafts are initially measured at fair value, net of transaction costs incurred, and are subsequently measured at amortized cost, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognized over the term of the borrowings in accordance with the Group accounting policy.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the statement of financial position date.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingCostsExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f111889": { "value": "3.25 Bonds and borrowings
Bonds, borrowings and overdrafts are initially measured at fair value, net of transaction costs incurred, and are subsequently measured at amortized cost, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognized over the term of the borrowings in accordance with the Group accounting policy.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the statement of financial position date.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f111987": { "value": "3.26 Trade payables
Trade payables are initially measured at fair value and are subsequently measured at amortized cost using the effective interest method.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f112013": { "value": "3.27 Employee benefits
3.27.1 Pension obligations
The Group operates various post-employment schemes, including both defined benefit and defined contribution pension plans.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity and has no legal or constructive obligations to pay further contributions in the event that the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in the consolidated income statement when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.
Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The liability recognized in the consolidated statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation less the fair value of plan assets. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.
The defined benefit obligation is calculated by independent actuaries using the Projected Unit Credit Method. A full actuarial valuation based on updated personnel information is performed at least every three years. Additionally, if the net fluctuation recognized on the statement of financial position is more than 10% from one year to the next due to plan circumstances (significant membership changes, modification
to plan, etc.), a full actuarial valuation is also required. For years where a full actuarial valuation is not required, projections (known as \u201croll-forwards\u201d) from the previous year with updated assumptions (discount rate, salary increase, turnover) is used. For these \u201croll-forward\u201d valuations, the individual employee data from the last full valuation date are used taking into account assumptions for salary increases and possibly turnover.
All valuations measure liabilities at the applicable statement of financial position date and the market value of retirement plan assets are also reported at this date regardless of whether a full or a \u201croll-forward\u201d valuation is performed.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using yields on high quality corporate bonds that have maturity dates approximating the terms of the related Group obligations and that are denominated in the same currency in which the benefits are expected to be paid.
Remeasurement comprising of actuarial gains and losses, the effect of the asset ceiling (if applicable) and the return on plan assets (excluding interest) are recognized immediately in the statement of financial position with a charge or credit to other comprehensive income in the period in which they occur. Remeasurement recorded in other comprehensive income is not recycled. However, the entity may transfer those amounts recognized in other comprehensive income within equity. Past service cost is recognized in profit or loss in the period of plan amendment. Net-interest is calculated by applying the discount rate to the net defined benefit liability or asset. Defined benefit costs are split into three categories:
service cost, past-service cost, gains and losses on curtailments and settlements;
net-interest expense or income;
remeasurement.
The Group presents the first two components of defined benefit costs in the line item \u201cemployee benefits expense\u201d in its consolidated income statement (by nature of expenses aggregation). Net-interest expense or income is presented as part of the Operating profit. Curtailments gains and losses are accounted for as past-service cost. Remeasurements are recorded in other comprehensive income.
3.27.2 Other post-retirement employee benefits
Some Group companies provide post-retirement healthcare benefits to their retirees. The Group\u2019s net obligation is the amount of future benefits that employees have earned in return for their service in the current and prior periods. The expected costs of these benefits are accrued over the period of employment using the same methodology used for defined benefit plans.
3.27.3 Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Group recognizes termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after statement of financial position date are discounted to present value.
3.27.4 Other long-term employee benefits
The liabilities for jubilee premiums and long service awards are measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using yields on high quality corporate bonds with terms and currencies that match, as closely as possible, the estimated future cash outflows. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognized in profit or loss.
3.27.5 Profit-sharing and bonus plans
The Group recognizes a liability and an expense for bonuses and profit-sharing, based on a formula that takes into consideration the profit attributable to the company\u2019s shareholders after certain adjustments. The Group recognizes a provision when a reliable estimate of the obligation can be made as there is a past practice for bonus and profit-sharing payments that has created a constructive obligation.
3.27.6 Share-based payments
The Group operates several equity-settled and cash-settled share-based compensation plans.
The fair value of the employee services received in exchange for the grant of stock options is recognized as an expense. The total amount to be expensed is determined by reference to the fair value of the stock options granted, excluding the impact of any service and non-market performance vesting conditions (for example profitability, remaining an employee of the entity over a specified time period).
Service and non-market vesting conditions are included in the assumptions about the number of options that are expected to vest. The total amount expensed is recognized over the vesting period, which is the period over which all the specified vesting conditions are to be satisfied.
The fair value of the stock option plan is measured at the grant date using the \u201cBlack-Scholes\u201d valuation model which takes into account the expected life and cancellation rate of the options. At each statement of financial position date, the entity revises its estimates of the number of options that are expected to vest. It recognizes the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. The fair value of the amount payable to employees in respect of share appreciation rights, phantom share option, share award and performance share plans, which are settled in cash, is recognized as an expense, with a corresponding increase in liabilities, over the period that the employees become unconditionally entitled to payment. The liability is re-measured at each statement of financial position date and at settlement date.
Any changes in the fair value of the liability are recognized as personnel expenses in the income statement.
3.27.3 Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Group recognizes termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after statement of financial position date are discounted to present value.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTerminationBenefits", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f113038": { "value": "3.27.6 Share-based payments
The Group operates several equity-settled and cash-settled share-based compensation plans.
The fair value of the employee services received in exchange for the grant of stock options is recognized as an expense. The total amount to be expensed is determined by reference to the fair value of the stock options granted, excluding the impact of any service and non-market performance vesting conditions (for example profitability, remaining an employee of the entity over a specified time period).
Service and non-market vesting conditions are included in the assumptions about the number of options that are expected to vest. The total amount expensed is recognized over the vesting period, which is the period over which all the specified vesting conditions are to be satisfied.
The fair value of the stock option plan is measured at the grant date using the \u201cBlack-Scholes\u201d valuation model which takes into account the expected life and cancellation rate of the options. At each statement of financial position date, the entity revises its estimates of the number of options that are expected to vest. It recognizes the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. The fair value of the amount payable to employees in respect of share appreciation rights, phantom share option, share award and performance share plans, which are settled in cash, is recognized as an expense, with a corresponding increase in liabilities, over the period that the employees become unconditionally entitled to payment. The liability is re-measured at each statement of financial position date and at settlement date.
Any changes in the fair value of the liability are recognized as personnel expenses in the income statement.
3.28 Provisions
Provisions are recognized in the statement of financial position when:
there is a present obligation (legal or constructive) as a result of a past event;
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.
The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the statement of financial position date. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as interest expense.
A restructuring provision is recognized when the Group has a detailed formal plan and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it.
Environmental provisions are mainly resulting from legal contractual obligations. For more information about these environmental and other provisions we refer to Note 34Note 34. .
3.28 Provisions
Provisions are recognized in the statement of financial position when:
there is a present obligation (legal or constructive) as a result of a past event;
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.
The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the statement of financial position date. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as interest expense.
A restructuring provision is recognized when the Group has a detailed formal plan and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it.
Environmental provisions are mainly resulting from legal contractual obligations. For more information about these environmental and other provisions we refer to Note 34Note 34. .
4. Critical judgments and accounting estimates
Estimates and judgments are continuously evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
4.1 Critical judgments in applying the group accounting policies
Revenue recognition
The Group is party to out-licensing agreements, which can involve upfront payments, development milestones, sales milestones and royalties that may occur over several years and involve certain future contract liabilities. For all out-licensing agreements whereby a license is transferred with other goods or services, the Group first makes an assessment about whether or not the license is to be considered as a distinct performance obligation or not. If the transfer of the license is considered to be a separate performance obligation, revenue relating to the transfer of the license is recognized at a point in time or over time depending on the nature of the license. Revenues are only recognized over time if the Group is performing development, manufacturing or other activities that could significantly affect the IP transferred, hereby exposing the licensee to the effects of these activities when these activities do not represent a separate service. If the Group assesses that these conditions are not fulfilled, revenue resulting from out-licensing agreements is recognized at the moment control over the license is transferred.
If revenues are recognized over time and in case the input method is assessed as the best method to reflect the transfer of control of the service to the customer, some judgment may be required in applying this method especially in estimating the total costs and hours to be incurred. In this case the Group uses its best estimate based on past experience and actual knowledge and progress of the service to be provided. Estimates are reassessed on a continuous basis. Seen the activities of the Group, in most cases, the input method provides the most faithful depiction of the transfer of the service to the customer.
For licenses that are bundled with other services (e.g. development or manufacturing services) the Group will apply judgment to assess whether the combined performance obligation is satisfied at a point in time or over time. If revenue is recognized over time, the Group will apply judgment in determining the period over which the services are provided. The Group will also apply judgment when allocating the components of the transaction price to the different performance obligations in case the out-licensing agreement includes other performance obligations in addition to the transfer of the license.
Revenue recognition for out-licensing agreements is therefore based on the specific conditions of each out-licensing agreement. This might result in cash receipts being initially recognized as contract liabilities and then released to revenue in subsequent accounting periods based on the different conditions specified in the agreement.
Discontinued operations
Operations that are classified as held for sale or have been disposed of, are presented as discontinued operations in the consolidated income statement when the operations represent a major separate line of business or geographical
area of operations, are part of a single coordinated disposal plan or represent a subsidiary acquired exclusively with a view to resale. The assessment on what is a major separate line of business is done on a case by case basis and depends on the size of the operations in terms of revenues, gross profit or total value of assets and liabilities compared to the total operations of the Group.
Leases
In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension or termination option. The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment. During the current financial year, there was no material financial effect of revising lease terms to reflect the effect of exercising extension or termination options.
4.2 Critical accounting estimates and assumptions
The preparation of the financial statements in conformity with IFRS as adopted for use by the European Union requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.
Management bases its estimates on historical experience and various other assumptions that are reasonable under the circumstances, the results of which form the basis for making the reported amounts of revenue and expenses that may not be readily apparent from other sources. Actual results will by definition not equal those estimates. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary.
4.2.1 Sales allowances
The Group has accruals for expected sales returns, chargebacks and other rebates, including the U.S. Medicaid Drug Rebate program and the U.S. Federal Medicare program, and similar rebates in other countries. Such estimates are based on analyses of existing contractual obligations or legislation, historical trends and the Group experience. After assessment of the Management, the total accruals for these items are adequate, based upon currently available information and interpretation of relevant regulations. As these deductions are based on management estimates, the actual deductions might differ from these estimates.
Such differences could impact the accruals recognized in the statement of the financial position in future periods and consequently the level of sales recognized in the income statement in future period, as there is often a time lag of several months between the recording of the estimate and the final accounting of the sales allowances. In general, the discounts, rebates and other deductions shown on the invoice are accounted for as an immediate deduction from gross sales in the income statement. The sales returns, chargebacks, rebates and discounts that are not mentioned on the invoice are estimated, deducted from sales and presented on the statement of the financial position in the appropriate accrual account and deducted from sales.
All sales allowances are considered as being part of the variable consideration included in the transaction price. The amount of variable consideration included in the transaction price is determined so that the total transaction price is the price estimated by management as not being constrained.
4.2.2 Intangible assets and goodwill
The Group has intangible assets with a carrying amount of \u20ac 4\u00a0232 million (Note 20) and goodwill with a carrying amount of \u20ac 5\u00a0254 million (Note 21). Intangible assets are amortized over their useful lives on a straight-line basis as from the moment they are available for use (i.e. when related products are launched for sale).
Management estimates that the useful life for acquired in-progress R&D compounds equates to the period these compounds benefit from patent protection or data exclusivity. For the intangible assets acquired through a business combination and which comprises compounds that are marketed but for which no patent protection or data exclusivity exists, management estimates that the useful life equates to the period in which these compounds will realize substantially all the cash contributions.
These intangible assets and goodwill are regularly reviewed for impairment and whenever there is an indication that an impairment might exist. The intangible assets that are not yet available for use and goodwill are subject to at least annual impairment testing.
To assess if there is any impairment, estimates are made of the future cash flows expected to result from the use of these assets and their eventual disposal. These estimated cash flows are then adjusted to the present value using an appropriate discount rate that reflects the risks and uncertainties associated with the forecasted cash flows.
Actual outcomes could vary significantly from such estimates of discounted future cash flows. Factors such as the entrance or absence of competition, technical obsolescence or lower than expected rights could result in shortened useful lives and impairments.
The Group applied the following key assumptions for the \u201cvalue in use\u201d calculations required for the impairment testing of intangible assets and goodwill at year-end:
Since the cash flows also take into account tax expenses, a post-tax discount rate is used in the impairment testing.
Growth rate for terminal value | 2.0% |
Discount rate in respect of goodwill and Intangibles related to marketed products | 7.17% |
Management estimates that the use of the post-tax discount rate approximates the results of using a pre-tax rate applied to pre-tax cash flows.
4.2.3 Environmental provisions
The Group has provisions for environmental remediation costs, which are disclosed in Note 34. The most significant elements of the environmental provisions consist of costs to fully clean and refurbish contaminated sites and to treat contamination at certain other sites, mainly related to the discontinued chemical and films activities of the Group.
Future remediation expenses are affected by a number of uncertainties that include, among others, the detection of previously unknown contaminated sites, the method and extent of remediation, the percentage of waste attributable to the Group, and the financial capabilities of the other potentially responsible parties. Given the inherent difficulties in estimating the liabilities in this area, it cannot be guaranteed that additional costs will not be incurred beyond the amounts currently accrued. The effect of resolution of environmental matters on results of operations cannot be predicted due to uncertainty concerning both the amount and timing of future expenditures and the results of future operations. Such changes that arise could impact the provisions recognized in the statement of the financial position in the future.
4.2.4 Employee benefits
The Group currently has many defined benefit plans, which are disclosed in Note 33. The calculation of the assets or liabilities related to these plans is based upon statistical and actuarial assumptions. This is in particular the case for the present value of the defined benefit obligation which is impacted by assumptions on discount rates used to arrive at the present value of future pension liabilities, and assumptions on future increases in salaries and benefits.
Furthermore, the Group uses statistically-based assumptions covering areas such as future withdrawals of participants from the plans and estimates of life expectancy. The actuarial assumptions used might differ materially from actual results due to changes in market and economic conditions, higher or lower employee turnover, longer or shorter life spans of participants, and other changes in the factors being assessed.
These differences could impact the assets or liabilities recognized in the statement of financial position in future periods.
4.2.5 Tax positions
The Group operates in multiple jurisdictions with often complex legal and tax regulatory environments. The Group engages constructively with the tax authorities. Where appropriate, we engage advisors and legal counsel to obtain opinions on tax legislation and principles. The income tax positions taken are considered by the Group to be supportable and are intended to withstand challenge from tax authorities. However, it is acknowledged that some of the positions are uncertain and include interpretations of complex tax laws as well as transfer pricing considerations which could be disputed by tax authorities. The Group judges these positions on their technical merits and this on a regular basis using all the information available (legislation, case law, regulations, established practice, authoritative doctrine as well as the current state of discussions with tax authorities, where appropriate).
A liability is recorded for each item that is not probable of being sustained on examination by the tax authorities and after using all legal remedies of defending the position before Court, based on all relevant information. The liability is calculated taking into account the most likely outcome for corporate income tax related matters or the expected value for corporate income tax and transfer pricing matters, depending on which is thought to give a better prediction of the resolution of each uncertain tax position in view of reflecting the likelihood of
an adjustment being recognized upon examination. These estimates are based on facts and circumstances existing at the end of the reporting period. The tax liability and income tax expense include expected penalties and late payment interests arising from tax disputes.
An asset for tax audit adjustments is recorded when the Group considers it probable, based on the technical merits of the tax case, that a Mutual Agreement or Arbitration Procedure may provide for relief in one or more jurisdictions. The asset is calculated as the expected value (as relating to transfer pricing matters) of the recoverability in corporate income taxes in the concerning jurisdiction upon completion of the Mutual Agreement or Arbitration procedure.
The Group has recognized net deferred tax assets of \u20ac 518 million (Note 32). The recognition of deferred tax assets is based upon whether it is probable that sufficient taxable profits will be available in the future against which the reversal of temporary differences can be used. Where the temporary differences relate to losses or carry-forward tax attributes (such as innovation income deduction), the availability of sufficient forecasted taxable profits to offset against the tax attributes is also considered, taking into account the function and risk profile of the taxable entity concerned.
Significant items on which management has exercised judgment include recognition on the statement of financial position of deferred tax assets relating to losses in jurisdictions where losses have been made in prior periods but where profits now arise or are forecast to do so for the foreseeable future. Management has used its best estimate of the correct value of asset to recognize in such cases, which includes a judgment on the length of the future time period to use in such assessments. These judgments are made on a case by case basis taking into account the origin and nature of the expected revenues, based on the functional profiles of the concerning entities and on an entity-by-entity basis, but this time period in most cases does not exceed five years.
Differences in forecasted taxable profits and actual profitability or a downgrade in future forecasted taxable profits could impact the deferred tax assets recognized in future periods.
No material deferred tax assets are recognized for entities that are currently still lossmaking or not using their tax attributes.
Given the international tax reform developments, Management is assessing the impact of the pending international OECD tax reform (\u2018Tax Challenges arising from the Digitalization of the Economy\u2019) on recognition and measurement of deferred tax assets. Given lack of enactment in the countries where UCB operates, this currently does not generate any impact.
4.2.6 Valuation of intangibles and related deferred taxes acquired in business combination
Assets that have been identified as a result of a business combination are valued incorporating the concept of highest and best use in accordance with IFRS 13, Fair Value Measurement and IFRS 3, Business Combinations from the viewpoint of a market participant.
In order to value the existing In-Process Research & Development (IPR&D) assets as of the effective date of the business combination, the multi-period excess earnings method is used which is a variation of the income approach that estimates an intangible asset\u2019s value based on the present value of the incremental after-tax cash flows (or \u201cexcess earnings\u201d) attributable only to the intangible asset. As a basis for this valuation, management-prepared prospective financial information is used for the prospective earnings associated with the IPR&D. Specifically, this prospective financial information relates to revenues, cost of goods sold, R&D expenses, distribution, sales and marketing expenses, general and administrative costs and Probability of Technical and Regulatory Success (PTRS) specific to the IPR&D assets. The determination of these PTRS is based on benchmarks and internal analysis.
Other assumptions relate to income tax rate and tax amortization benefit, useful life and discount rate. The fair value of the IPR&D assets is considered amortizable for income tax purposes from the viewpoint of a market participant. The present value of the tax benefit from amortization of the assets is added to the present value of the incremental after-tax cash flows to arrive at the indicated value of the IPR&D assets. The magnitude of the discount rate applied to the projected cash flows is related to the current capital costs. The discount rate utilized represents an estimate of the Weighted Average Cost of Capital.
All prospective financial information, PTRS and other assumptions are assessed on a case by case basis taking into account all specific circumstances. Actual outcomes could vary significantly from such assumptions and could impact the value of the intangibles and related deferred taxes in future periods. An impairment test is performed at least once a year and whenever there is an indication that an impairment might exist. See also Note 4.2.2Intangible assets and goodwill.
4.2.7 Assessment of control over an investment in case more than 50% of the shares are held by non-controlling interests
In order to assess whether or not UCB has control over an investment in case more than 50% of the shares are held by non-controlling interests, any contractual arrangement between UCB and the investment is considered as well as the design and the purpose of investment, the power to direct the relevant activities of the investment, the contractual sharing of risk as well as the power of UCB compared to the non-controlling interests to affect the returns of the investment.
4.2.7 Assessment of control over an investment in case more than 50% of the shares are held by non-controlling interests
In order to assess whether or not UCB has control over an investment in case more than 50% of the shares are held by non-controlling interests, any contractual arrangement between UCB and the investment is considered as well as the design and the purpose of investment, the power to direct the relevant activities of the investment, the contractual sharing of risk as well as the power of UCB compared to the non-controlling interests to affect the returns of the investment.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTransactionsWithNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f116619": { "value": "5. Financial risk management
The Group is exposed to various financial risks arising from its underlying operations and corporate finance activities.
These financial risks mainly include market risk (including currency risk, interest risk and price risk), credit risk and liquidity risk.
This note presents information about the Group\u2019s exposure and management of the above-mentioned risks and the Group\u2019s management of capital.
5.1 Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group income statement or the value of its assets and liabilities. The objective of market risk management is to manage and control market risk exposures. The Group enters into derivative financial instruments and also incurs financial liabilities or holds financial assets in order to manage market risk. Where possible, the Group seeks to apply hedge accounting in order to manage volatility in the income statement. It is the Group policy and practice not to enter into derivative transactions for speculative purposes.
5.1.1 Foreign exchange risk
The Group operates across the world and is exposed to movements in foreign currencies affecting its net income and financial position, as expressed in euro. The Group actively monitors its currency exposures, and when appropriate, enters into transactions with the aim of preserving the value of existing assets and liabilities, as well as anticipated transactions. The Group uses forward contracts, foreign exchange options
and cross-currency swaps to hedge certain committed and anticipated foreign exchange flows and financing transactions.
The instruments purchased to hedge transactional exposure are primarily denominated in U.S. dollar, British pound, Japanese yen and Swiss franc, the currencies where the Group has its most important exposures. The Group\u2019s financial risk management policy is to hedge for the impact from the translation of foreign currency assets and liabilities into the functional currency of the relevant group subsidiaries, as well as the impact of currency fluctuations on the Group\u2019s anticipated net foreign currency cash flows for a period of minimum 6 and maximum 26 months.
Also, the Group has certain investments in foreign operations, whose net assets (or net liabilities) are exposed to foreign currency translation risk.
The effect of translational exposure arising from the consolidation of the foreign currency denominated financial statements of the Group foreign subsidiaries as well as from assimilated net foreign investment positions and net investment hedges is shown as a cumulative translation adjustment in the Group consolidated statement of changes in equity.
5.1.2 Effect of currency fluctuations
At December 31, 2023, if the euro had strengthened or weakened by 10% against the following currencies with all other variables being held constant, the impact on equity and post-tax profit for the year, based on the outstanding currency balances and hedge instruments at that date, would have been as follows
At December 31, 2023 | |||
\u20ac\u00a0million | Change in rate.Strengthening/ weakening (-) EUR | Impact on equity: Loss (-)/gain | Impact on income statement: Loss (-)/gain |
USD | |||
+ 10% | 100 | 2 | |
- 10% | - 123 | - 2 | |
GBP | |||
+ 10% | 1 | 1 | |
- 10% | - 1 | - 1 | |
CHF | |||
+ 10% | - 66 | - 3 | |
- 10% | 81 | 4 | |
JPY | |||
+ 10% | 2 | 1 | |
- 10% | - 2 | - 1 |
At December 31, 2022 | |||
\u20ac\u00a0million | Change in rate.Strengthening/ weakening (-) EUR | Impact on equity: Loss (-)/gain | Impact on income statement: Loss (-)/gain |
USD | |||
+ 10% | 93 | 8 | |
- 10% | - 114 | - 10 | |
GBP | |||
+ 10% | 2 | 0 | |
- 10% | - 2 | 0 | |
CHF | |||
+ 10% | - 70 | 1 | |
- 10% | 86 | - 1 | |
JPY | |||
+ 10% | 5 | 1 | |
- 10% | - 6 | - 1 |
5.1.3 Interest rate risk
Changes in interest rates may cause variations in interest income and expenses resulting from interest-bearing assets and liabilities. In addition, they can affect the market value of certain financial assets, liabilities and instruments as described in the following section on market risk of financial assets. The interest rates on the Group\u2019s major debt instruments are both fixed and floating, as described in Notes 29and 30. The Group uses interest rate derivatives to manage its interest rate risk, as described in Note 39.
The Group designates derivative financial instruments (interest rate swaps) as hedging instruments, either under fair value hedges to fixed rate financial assets and liabilities, or under cash flow hedges to floating rate financial assets or liabilities. Under fair value hedges, both the derivative financial instrument and the hedged item are accounted for at fair value through profit or loss. Under cash flow hedges, changes in fair value resulting from interest rate derivatives designated to the floating rate liabilities of the Group are accounted for through equity.
5.1.4 Effect of interest rate fluctuations
A 300 basis points increase in interest rates at statement of financial position date would have increased equity by \u20ac 69 million (in 2022 a 300 basis points increase would have increased the equity by \u20ac 119 millions); a 300 basis points decrease in interest rates would have decreased equity by \u20ac 77 million (in 2022 a 300 points decrease would have decreased the equity by \u20ac 96 million).
A 300 basis points increase or decrease in interest rates at statement of financial position date would have no impact on profit and loss (2022: \u20ac 0 million).
All interest rate derivatives are either designated as cash flow hedges or fair value hedges under IFRS9 and therefore, except for minimal hedge inefficiency, the result of a change in the interest rate curve is accounted for through equity, respectively offset by the revaluation through P&L of the hedged item. In addition to interest rate derivatives, changes in interest rates also affect the valuation of forward contracts, foreign exchange options and cross-currency swaps, however the net impact has been assumed to be neutral taking a parallel shift in interest rate curves of both currencies into consideration.
These concern all pre-tax calculations.
In function of its anticipated foreign currency cash flows, the Group may target certain combined levels of foreign currency loans, borrowings, investments and derivative instruments. Assuming the rolling of the aforementioned foreign currency derivative instruments, as at the statement of financial position date, the Group was predominantly exposed to changes in USD interest rates.
5.1.5 Other market price risk
Changes in the market value of certain financial assets and derivative financial instruments can affect the income or the financial position of the Group. Financial long-term assets, if any, are held for contractual purposes, and marketable securities, if any, are mainly held for regulatory purposes. The risk of loss in value is managed by reviews prior to investing and continuous monitoring of the performance of investments and changes in their risk profile.
Investments in equities, bonds, debentures and other fixed income instruments are entered into on the basis of guidelines with regard to liquidity and credit rating.
Amounts subject to market price risk are rather immaterial and therefore the impact on equity or the income statement of a reasonable change of this market price risk is assumed to be negligible.
Similar to 2022, during 2023 the Group traded on treasury shares, which were accounted for through equity.
5.2 Credit risk
Credit risk arises from the possibility that the counterparty to a transaction may be unable or unwilling to meet its obligations causing a financial loss to the Group. Trade receivables are subject to a policy of active risk management, which focuses on the assessment of country risk, credit availability, on-going credit evaluation and account monitoring procedures. There are certain concentrations within trade receivables of counterparty credit risk, particularly in the U.S., due to the sales via wholesalers (Note 25).
For some credit exposures in critical countries, such as International Markets and Southern European countries, the Group has obtained credit insurance.
In the U.S., the Group entered into a trade receivable financing agreement that qualifies for derecognition. According to the terms and conditions of the agreement UCB does not retain any non-payment or further late payment risk relating to the transferred trade receivables.
The exposure of other financial assets to credit risk is controlled by setting a policy for limiting credit exposure to high quality counterparties, regular reviews of credit ratings, and setting defined limits for each individual counterparty. The criteria set by Group Treasury for their investment policy are based on generally considered high quality long-term credit ratings and 5 years Credit Default Swap rate.
Where appropriate to reduce exposure, netting agreements under an ISDA (International Swaps and Derivatives Association) master agreement are signed with the respective counterparties. The maximum exposure to credit risk resulting from financial activities, without considering netting agreements, is equal to the carrying amount of financial assets plus the positive fair value of derivative instruments.
5.3 Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group\u2019s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under normal circumstances without incurring unacceptable losses or risking damage to the Group reputation.
The Group maintains sufficient reserves of cash and readily realisable marketable securities to meet its liquidity requirements at all times. In addition, the Group has certain unutilized committed revolving and loan facilities at its disposal.
At the statement of financial position date, the Group had the following sources of liquidity available:
cash and cash equivalents (Note 26): \u20ac 861 million (2022: \u20ac 899 million)
unutilized credit facilities and undrawn available amount under finance contract (Note 29): \u20ac 21 million (2022: \u20ac 30 million), linearly degressive since 2016 and available until March 31, 2024.
unutilized revolving credit facilities (Note 29): \u20ac 1 billion (2022: \u20ac 1 billion); the existing \u20ac 1 billion syndicated committed revolving credit facility of the Group, maturing in 2025 has been cancelled and replaced with a new sustainability-linked facility in 2023 for the same amount and with a new maturity date of 2028 (including the option to request further extensions of the maturity date by up to two additional years). Pursuant to the first extension request, in February 2024, the maturity date of commitments aggregating \u20ac 928 million under this revolving credit facility was extended to 2029. This facility was undrawn per end 2023. This facility was undrawn per end 2023.
The table below analyses the contractual maturities of the Group financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position date to the contractual maturity date, excluding the impact of netting. The amounts mentioned below with respect to the financial derivatives are indicative of the contractual undiscounted cash flows. The amounts with respect to borrowings are indicative of the contractual undiscounted cash flows, including interests calculated based on fixed rate agreements or, in absence thereof, last available fixing of the relevant reference rate
At December 31, 2023 | |||||||
\u20ac\u00a0million | Note | Balance Sheet Total | |||||
Contractual cash flow (including interests) | |||||||
Less than 1\u00a0year | Between 1and 2 years | Between 25 years | Over 5 years | ||||
Bank Borrowings and other long term loans | 1 981 | 2 447 | 124 | 653 | 1 126 | 544 | |
Debentures and other short term loans | 0 | 0 | 0 | 0 | 0 | 0 | |
Lease liabilities | 160 | 184 | 43 | 34 | 52 | 55 | |
Institutional Eurobond maturing in 2028 | 448 | 525 | 5 | 5 | 515 | 0 | |
Private Placement maturing in 2027 | 136 | 157 | 2 | 2 | 153 | 0 | |
Retail bond maturing in 2023 | 0 | 0 | 0 | 0 | 0 | 0 | |
Retail bond maturing in 2029 | 313 | 395 | 16 | 16 | 47 | 316 | |
Trade and other liabilities | 2 411 | 2 411 | 2 313 | 5 | 71 | 22 | |
Bank overdrafts | 0 | 0 | 0 | 0 | 0 | 0 | |
Interest rate swaps | - 87 | - 87 | - 7 | - 13 | - 64 | - 3 | |
Forward exchange contracts and other derivative financial instruments used for hedging purposes | |||||||
Outflow | 3 098 | 3 098 | 0 | 0 | 0 | ||
Inflow | 3 126 | 3 126 | 0 | 0 | 0 | ||
Forward exchange contracts and other derivative financial instruments at fair value through profit and loss | |||||||
Outflow | 888 | 888 | 0 | 0 | 0 | ||
Inflow | 880 | 880 | 0 | 0 | 0 |
At December 31, 2022 | |||||||
\u20ac\u00a0million | Note | Balance Sheet Total | |||||
Contractual cash flow (including interests) | |||||||
Less than 1\u00a0year | Between 1and 2 years | Between 25 years | Over 5 years | ||||
Bank Borrowings and other long term loans | 1 987 | 2 337 | 101 | 102 | 2 003 | 131 | |
Debentures and other short term loans | 9 | 9 | 9 | 0 | 0 | 0 | |
Lease liabilities | 141 | 152 | 42 | 28 | 42 | 40 | |
Institutional Eurobond maturing in 2028 | 420 | 530 | 5 | 5 | 15 | 505 | |
Private Placement maturing in 2027 | 129 | 159 | 2 | 2 | 155 | 0 | |
Retail bond maturing in 2023 | 174 | 185 | 185 | 0 | 0 | 0 | |
Retail bond maturing in 2029 | 0 | 0 | 0 | 0 | 0 | 0 | |
Trade and other liabilities | 2 611 | 2 611 | 2 492 | 5 | 81 | 33 | |
Bank overdrafts | 40 | 40 | 40 | 0 | 0 | 0 | |
Interest rate swaps | - 38 | - 38 | 9 | - 5 | - 35 | - 7 | |
Forward exchange contracts and other derivative financial instruments used for hedging purposes | |||||||
Outflow | 4 696 | 4 696 | 0 | 0 | 0 | ||
Inflow | 4 641 | 4 641 | 0 | 0 | 0 | ||
Forward exchange contracts and other derivative financial instruments at fair value through profit and loss | |||||||
Outflow | 3 399 | 3 399 | 0 | 0 | 0 | ||
Inflow | 3 436 | 3 436 | 0 | 0 | 0 |
5.4 Capital risk management
The Group policy with respect to managing capital is to safeguard the Group\u2019s ability to continue as a going concern in order to provide returns to shareholders and benefits to
patients and to reduce the Group external debt further, in order to obtain a capital structure that is consistent with others in the industry.
5.5 Fair value estimation
The fair value of financial instruments traded in active markets (such as financial assets at fair value through OCI) is based on quoted market prices at the statement of financial position date.
The fair value of financial instruments that are not traded in an active market is determined by using established valuation techniques such as option pricing models and estimated discounted values of cash flows. The Group uses a variety of methods and makes assumptions that are based on market conditions and the credit and the non-performance risks existing at each statement of financial position date.
Quoted market prices are used for long-term debt. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of the interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of the forward exchange contract is determined using discounted value of the exchanged amounts in currencies, converted at the prevailing spot rate at the statement of financial position date.
The carrying amount less impairment provision of trade receivables and trade payables is assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rates that is available to the Group for similar financial instruments.
5.5.1 Fair value hierarchy
IFRS 7 requires disclosure of fair value measurements by level of the following hierarchy:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly;
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.
All fair value measurements disclosed are recurring.
5.5.2 Financial assets measured at fair value
December 31, 2023 | |||||
\u20ac\u00a0million | Note | Level 1 | Level 2 | Level 3 | Total |
Financial assets | |||||
Financial assets at FVOCI | |||||
Quoted equity securities | 190 | 0 | 0 | 190 | |
Quoted debt securities | 0 | 0 | 0 | 0 | |
Derivative financial assets\u00a0 | |||||
Forward foreign exchange contracts \u2013 cash flow hedges | 0 | 38 | 0 | 38 | |
Forward foreign exchange contracts \u2013 fair value through profit and loss | 0 | 7 | 0 | 7 | |
Forward foreign exchange contracts \u2013 net investment hedges | 0 | 1 | 0 | 1 | |
Interest rate derivatives \u2013 cash flow hedges | 0 | 19 | 0 | 19 | |
Interest rate derivatives \u2013 fair value through profit and loss | 0 | 12 | 0 | 12 | |
Other financial assets excluding derivatives |
December 31, 2022 | |||||
\u20ac\u00a0million | Note | Level 1 | Level 2 | Level 3 | Total |
Financial assets | |||||
Financial assets at FVOCI | |||||
Quoted equity securities | 180 | 0 | 0 | 180 | |
Quoted debt securities | 0 | 0 | 0 | 0 | |
Derivative financial assets\u00a0 | |||||
Forward foreign exchange contracts \u2013 cash flow hedges | 0 | 31 | 0 | 31 | |
Forward foreign exchange contracts \u2013 fair value through profit and loss | 0 | 25 | 0 | 25 | |
Forward foreign exchange contracts \u2013 net investment hedges | 0 | 54 | 0 | 54 | |
Foreign exchange options \u2013 net investment hedges | 0 | 0 | 0 | 0 | |
Interest rate derivatives \u2013 cash flow hedges | 0 | 38 | 0 | 38 | |
Interest rate derivatives \u2013 fair value through profit and loss | 0 | 4 | 0 | 4 | |
Other financial assets excluding derivatives |
5.5.3 Financial liabilities measured at fair value
December 31, 2023 | |||||
\u20ac\u00a0million | Note | Level 1 | Level 2 | Level 3 | Total |
Financial liabilities | |||||
Derivative financial liabilities\u00a0 | |||||
Forward foreign exchange contracts \u2013 cash flow hedges | 0 | 4 | 0 | 4 | |
Forward foreign exchange contracts \u2013 fair value through profit and loss | 0 | 3 | 0 | 3 | |
Forward foreign exchange contracts \u2013 net investment hedges | 0 | 14 | 0 | 14 | |
Interest rate derivatives \u2013 cash flow hedges | 0 | 5 | 0 | 5 | |
Interest rate derivatives \u2013 fair value through profit and loss | 0 | 59 | 0 | 59 | |
Other financial liabilities excluding derivatives | |||||
December 31, 2022 | |||||
\u20ac\u00a0million | Note | Level 1 | Level 2 | Level 3 | Total |
Financial liabilities | |||||
Derivative financial liabilities\u00a0 | |||||
Forward foreign exchange contracts \u2013 cash flow hedges | 0 | 36 | 0 | 36 | |
Forward foreign exchange contracts \u2013 fair value through profit and loss | 0 | 60 | 0 | 60 | |
Forward foreign exchange contracts \u2013 net investment hedges | 0 | 26 | 0 | 26 | |
Interest rate derivatives \u2013 cash flow hedges | 0 | 2 | 0 | 2 | |
Interest rate derivatives \u2013 fair value through profit and loss | 0 | 93 | 0 | 93 | |
Other financial liabilities excluding derivatives |
During the reporting period ending December 31, 2023, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements.
Fair value measurements categorized within Level 2 of the fair value hierarchy are calculated using either the \u201cDiscounted cash flow\u201d or the \u201cBlack-Scholes\u201d method (for FX options only) and market data publicly available.
5.6 Offsetting financial assets and financial liabilities
While the Group has amounts subject to an enforceable master netting arrangement or similar agreements, financial assets and financial liabilities are reported gross on the statement of financial position as the requirements are not met to report them net. The reconciliations below depict the amounts
subject to an enforceable master netting arrangement or similar agreement that have not been netted on the statement of financial position.
The tables below show financial assets and liabilities subject to enforceable master netting arrangements:
December 31, 2023 | Related amounts not set off in the statement of financial position | |||
\u20ac\u00a0million | Gross financial assets in the statement of financial position | Financial instruments | Cash collateralreceived | Net amounts |
Derivatives | 77 | 36 | 0 | 41 |
Other | 0 | 0 | 0 | 0 |
Total | 77 | 36 | 0 | 41 |
December 31, 2023 | Related amounts not set off in the statement of financial position | |||
\u20ac\u00a0million | Gross financial liabilities in the statement of financial position | |||
Financialinstruments | Cash collateral received | |||
Net amounts | ||||
Derivatives | 85 | 36 | 0 | 49 |
Other | 0 | 0 | 0 | 0 |
Total | 85 | 36 | 0 | 49 |
ISDA master agreements (International Swaps and Derivatives Association) have been signed with the respective counterparties allowing offsetting of financial assets and liabilities. This is applicable to the fair value settlement in
case of default, but it is not applicable at the closing date December 31, 2023.
The tables below show financial assets and liabilities subject to enforceable master netting arrangements:
December 31, 2022 | Related amounts not set off in the statement of financial position | |||
\u20ac\u00a0million | Gross financial assets in the statement of financial position | Financial instruments | Cash collateralreceived | Net amounts |
Derivatives | 152 | 121 | 0 | 31 |
Other | 0 | 0 | 0 | 0 |
Total | 152 | 121 | 0 | 31 |
December 31, 2022 | Related amounts not set off in the statement of financial position | |||
\u20ac\u00a0million | Gross financial liabilities in the statement of financial position | |||
Financialinstruments | Cash collateral received | |||
Net amounts | ||||
Derivatives | 217 | 121 | 0 | 96 |
Other | 0 | 0 | 0 | 0 |
Total | 217 | 121 | 0 | 96 |
5.1 Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group income statement or the value of its assets and liabilities. The objective of market risk management is to manage and control market risk exposures. The Group enters into derivative financial instruments and also incurs financial liabilities or holds financial assets in order to manage market risk. Where possible, the Group seeks to apply hedge accounting in order to manage volatility in the income statement. It is the Group policy and practice not to enter into derivative transactions for speculative purposes.
5.1.1 Foreign exchange risk
The Group operates across the world and is exposed to movements in foreign currencies affecting its net income and financial position, as expressed in euro. The Group actively monitors its currency exposures, and when appropriate, enters into transactions with the aim of preserving the value of existing assets and liabilities, as well as anticipated transactions. The Group uses forward contracts, foreign exchange options
and cross-currency swaps to hedge certain committed and anticipated foreign exchange flows and financing transactions.
The instruments purchased to hedge transactional exposure are primarily denominated in U.S. dollar, British pound, Japanese yen and Swiss franc, the currencies where the Group has its most important exposures. The Group\u2019s financial risk management policy is to hedge for the impact from the translation of foreign currency assets and liabilities into the functional currency of the relevant group subsidiaries, as well as the impact of currency fluctuations on the Group\u2019s anticipated net foreign currency cash flows for a period of minimum 6 and maximum 26 months.
Also, the Group has certain investments in foreign operations, whose net assets (or net liabilities) are exposed to foreign currency translation risk.
The effect of translational exposure arising from the consolidation of the foreign currency denominated financial statements of the Group foreign subsidiaries as well as from assimilated net foreign investment positions and net investment hedges is shown as a cumulative translation adjustment in the Group consolidated statement of changes in equity.
5.1.2 Effect of currency fluctuations
At December 31, 2023, if the euro had strengthened or weakened by 10% against the following currencies with all other variables being held constant, the impact on equity and post-tax profit for the year, based on the outstanding currency balances and hedge instruments at that date, would have been as follows
At December 31, 2023 | |||
\u20ac\u00a0million | Change in rate.Strengthening/ weakening (-) EUR | Impact on equity: Loss (-)/gain | Impact on income statement: Loss (-)/gain |
USD | |||
+ 10% | 100 | 2 | |
- 10% | - 123 | - 2 | |
GBP | |||
+ 10% | 1 | 1 | |
- 10% | - 1 | - 1 | |
CHF | |||
+ 10% | - 66 | - 3 | |
- 10% | 81 | 4 | |
JPY | |||
+ 10% | 2 | 1 | |
- 10% | - 2 | - 1 |
At December 31, 2022 | |||
\u20ac\u00a0million | Change in rate.Strengthening/ weakening (-) EUR | Impact on equity: Loss (-)/gain | Impact on income statement: Loss (-)/gain |
USD | |||
+ 10% | 93 | 8 | |
- 10% | - 114 | - 10 | |
GBP | |||
+ 10% | 2 | 0 | |
- 10% | - 2 | 0 | |
CHF | |||
+ 10% | - 70 | 1 | |
- 10% | 86 | - 1 | |
JPY | |||
+ 10% | 5 | 1 | |
- 10% | - 6 | - 1 |
5.1.3 Interest rate risk
Changes in interest rates may cause variations in interest income and expenses resulting from interest-bearing assets and liabilities. In addition, they can affect the market value of certain financial assets, liabilities and instruments as described in the following section on market risk of financial assets. The interest rates on the Group\u2019s major debt instruments are both fixed and floating, as described in Notes 29and 30. The Group uses interest rate derivatives to manage its interest rate risk, as described in Note 39.
The Group designates derivative financial instruments (interest rate swaps) as hedging instruments, either under fair value hedges to fixed rate financial assets and liabilities, or under cash flow hedges to floating rate financial assets or liabilities. Under fair value hedges, both the derivative financial instrument and the hedged item are accounted for at fair value through profit or loss. Under cash flow hedges, changes in fair value resulting from interest rate derivatives designated to the floating rate liabilities of the Group are accounted for through equity.
5.1.4 Effect of interest rate fluctuations
A 300 basis points increase in interest rates at statement of financial position date would have increased equity by \u20ac 69 million (in 2022 a 300 basis points increase would have increased the equity by \u20ac 119 millions); a 300 basis points decrease in interest rates would have decreased equity by \u20ac 77 million (in 2022 a 300 points decrease would have decreased the equity by \u20ac 96 million).
A 300 basis points increase or decrease in interest rates at statement of financial position date would have no impact on profit and loss (2022: \u20ac 0 million).
All interest rate derivatives are either designated as cash flow hedges or fair value hedges under IFRS9 and therefore, except for minimal hedge inefficiency, the result of a change in the interest rate curve is accounted for through equity, respectively offset by the revaluation through P&L of the hedged item. In addition to interest rate derivatives, changes in interest rates also affect the valuation of forward contracts, foreign exchange options and cross-currency swaps, however the net impact has been assumed to be neutral taking a parallel shift in interest rate curves of both currencies into consideration.
These concern all pre-tax calculations.
In function of its anticipated foreign currency cash flows, the Group may target certain combined levels of foreign currency loans, borrowings, investments and derivative instruments. Assuming the rolling of the aforementioned foreign currency derivative instruments, as at the statement of financial position date, the Group was predominantly exposed to changes in USD interest rates.
5.1.5 Other market price risk
Changes in the market value of certain financial assets and derivative financial instruments can affect the income or the financial position of the Group. Financial long-term assets, if any, are held for contractual purposes, and marketable securities, if any, are mainly held for regulatory purposes. The risk of loss in value is managed by reviews prior to investing and continuous monitoring of the performance of investments and changes in their risk profile.
Investments in equities, bonds, debentures and other fixed income instruments are entered into on the basis of guidelines with regard to liquidity and credit rating.
Amounts subject to market price risk are rather immaterial and therefore the impact on equity or the income statement of a reasonable change of this market price risk is assumed to be negligible.
Similar to 2022, during 2023 the Group traded on treasury shares, which were accounted for through equity.
", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f118085": { "value": "5.2 Credit risk
Credit risk arises from the possibility that the counterparty to a transaction may be unable or unwilling to meet its obligations causing a financial loss to the Group. Trade receivables are subject to a policy of active risk management, which focuses on the assessment of country risk, credit availability, on-going credit evaluation and account monitoring procedures. There are certain concentrations within trade receivables of counterparty credit risk, particularly in the U.S., due to the sales via wholesalers (Note 25).
For some credit exposures in critical countries, such as International Markets and Southern European countries, the Group has obtained credit insurance.
In the U.S., the Group entered into a trade receivable financing agreement that qualifies for derecognition. According to the terms and conditions of the agreement UCB does not retain any non-payment or further late payment risk relating to the transferred trade receivables.
The exposure of other financial assets to credit risk is controlled by setting a policy for limiting credit exposure to high quality counterparties, regular reviews of credit ratings, and setting defined limits for each individual counterparty. The criteria set by Group Treasury for their investment policy are based on generally considered high quality long-term credit ratings and 5 years Credit Default Swap rate.
Where appropriate to reduce exposure, netting agreements under an ISDA (International Swaps and Derivatives Association) master agreement are signed with the respective counterparties. The maximum exposure to credit risk resulting from financial activities, without considering netting agreements, is equal to the carrying amount of financial assets plus the positive fair value of derivative instruments.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f118382": { "value": "5.3 Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group\u2019s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under normal circumstances without incurring unacceptable losses or risking damage to the Group reputation.
The Group maintains sufficient reserves of cash and readily realisable marketable securities to meet its liquidity requirements at all times. In addition, the Group has certain unutilized committed revolving and loan facilities at its disposal.
At the statement of financial position date, the Group had the following sources of liquidity available:
cash and cash equivalents (Note 26): \u20ac 861 million (2022: \u20ac 899 million)
unutilized credit facilities and undrawn available amount under finance contract (Note 29): \u20ac 21 million (2022: \u20ac 30 million), linearly degressive since 2016 and available until March 31, 2024.
unutilized revolving credit facilities (Note 29): \u20ac 1 billion (2022: \u20ac 1 billion); the existing \u20ac 1 billion syndicated committed revolving credit facility of the Group, maturing in 2025 has been cancelled and replaced with a new sustainability-linked facility in 2023 for the same amount and with a new maturity date of 2028 (including the option to request further extensions of the maturity date by up to two additional years). Pursuant to the first extension request, in February 2024, the maturity date of commitments aggregating \u20ac 928 million under this revolving credit facility was extended to 2029. This facility was undrawn per end 2023. This facility was undrawn per end 2023.
The table below analyses the contractual maturities of the Group financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position date to the contractual maturity date, excluding the impact of netting. The amounts mentioned below with respect to the financial derivatives are indicative of the contractual undiscounted cash flows. The amounts with respect to borrowings are indicative of the contractual undiscounted cash flows, including interests calculated based on fixed rate agreements or, in absence thereof, last available fixing of the relevant reference rate
At December 31, 2023 | |||||||
\u20ac\u00a0million | Note | Balance Sheet Total | |||||
Contractual cash flow (including interests) | |||||||
Less than 1\u00a0year | Between 1and 2 years | Between 25 years | Over 5 years | ||||
Bank Borrowings and other long term loans | 1 981 | 2 447 | 124 | 653 | 1 126 | 544 | |
Debentures and other short term loans | 0 | 0 | 0 | 0 | 0 | 0 | |
Lease liabilities | 160 | 184 | 43 | 34 | 52 | 55 | |
Institutional Eurobond maturing in 2028 | 448 | 525 | 5 | 5 | 515 | 0 | |
Private Placement maturing in 2027 | 136 | 157 | 2 | 2 | 153 | 0 | |
Retail bond maturing in 2023 | 0 | 0 | 0 | 0 | 0 | 0 | |
Retail bond maturing in 2029 | 313 | 395 | 16 | 16 | 47 | 316 | |
Trade and other liabilities | 2 411 | 2 411 | 2 313 | 5 | 71 | 22 | |
Bank overdrafts | 0 | 0 | 0 | 0 | 0 | 0 | |
Interest rate swaps | - 87 | - 87 | - 7 | - 13 | - 64 | - 3 | |
Forward exchange contracts and other derivative financial instruments used for hedging purposes | |||||||
Outflow | 3 098 | 3 098 | 0 | 0 | 0 | ||
Inflow | 3 126 | 3 126 | 0 | 0 | 0 | ||
Forward exchange contracts and other derivative financial instruments at fair value through profit and loss | |||||||
Outflow | 888 | 888 | 0 | 0 | 0 | ||
Inflow | 880 | 880 | 0 | 0 | 0 |
At December 31, 2022 | |||||||
\u20ac\u00a0million | Note | Balance Sheet Total | |||||
Contractual cash flow (including interests) | |||||||
Less than 1\u00a0year | Between 1and 2 years | Between 25 years | Over 5 years | ||||
Bank Borrowings and other long term loans | 1 987 | 2 337 | 101 | 102 | 2 003 | 131 | |
Debentures and other short term loans | 9 | 9 | 9 | 0 | 0 | 0 | |
Lease liabilities | 141 | 152 | 42 | 28 | 42 | 40 | |
Institutional Eurobond maturing in 2028 | 420 | 530 | 5 | 5 | 15 | 505 | |
Private Placement maturing in 2027 | 129 | 159 | 2 | 2 | 155 | 0 | |
Retail bond maturing in 2023 | 174 | 185 | 185 | 0 | 0 | 0 | |
Retail bond maturing in 2029 | 0 | 0 | 0 | 0 | 0 | 0 | |
Trade and other liabilities | 2 611 | 2 611 | 2 492 | 5 | 81 | 33 | |
Bank overdrafts | 40 | 40 | 40 | 0 | 0 | 0 | |
Interest rate swaps | - 38 | - 38 | 9 | - 5 | - 35 | - 7 | |
Forward exchange contracts and other derivative financial instruments used for hedging purposes | |||||||
Outflow | 4 696 | 4 696 | 0 | 0 | 0 | ||
Inflow | 4 641 | 4 641 | 0 | 0 | 0 | ||
Forward exchange contracts and other derivative financial instruments at fair value through profit and loss | |||||||
Outflow | 3 399 | 3 399 | 0 | 0 | 0 | ||
Inflow | 3 436 | 3 436 | 0 | 0 | 0 |
5.4 Capital risk management
The Group policy with respect to managing capital is to safeguard the Group\u2019s ability to continue as a going concern in order to provide returns to shareholders and benefits to
patients and to reduce the Group external debt further, in order to obtain a capital structure that is consistent with others in the industry.
5.5 Fair value estimation
The fair value of financial instruments traded in active markets (such as financial assets at fair value through OCI) is based on quoted market prices at the statement of financial position date.
The fair value of financial instruments that are not traded in an active market is determined by using established valuation techniques such as option pricing models and estimated discounted values of cash flows. The Group uses a variety of methods and makes assumptions that are based on market conditions and the credit and the non-performance risks existing at each statement of financial position date.
Quoted market prices are used for long-term debt. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of the interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of the forward exchange contract is determined using discounted value of the exchanged amounts in currencies, converted at the prevailing spot rate at the statement of financial position date.
The carrying amount less impairment provision of trade receivables and trade payables is assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rates that is available to the Group for similar financial instruments.
5.5.1 Fair value hierarchy
IFRS 7 requires disclosure of fair value measurements by level of the following hierarchy:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly;
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.
All fair value measurements disclosed are recurring.
5.5.2 Financial assets measured at fair value
December 31, 2023 | |||||
\u20ac\u00a0million | Note | Level 1 | Level 2 | Level 3 | Total |
Financial assets | |||||
Financial assets at FVOCI | |||||
Quoted equity securities | 190 | 0 | 0 | 190 | |
Quoted debt securities | 0 | 0 | 0 | 0 | |
Derivative financial assets\u00a0 | |||||
Forward foreign exchange contracts \u2013 cash flow hedges | 0 | 38 | 0 | 38 | |
Forward foreign exchange contracts \u2013 fair value through profit and loss | 0 | 7 | 0 | 7 | |
Forward foreign exchange contracts \u2013 net investment hedges | 0 | 1 | 0 | 1 | |
Interest rate derivatives \u2013 cash flow hedges | 0 | 19 | 0 | 19 | |
Interest rate derivatives \u2013 fair value through profit and loss | 0 | 12 | 0 | 12 | |
Other financial assets excluding derivatives |
December 31, 2022 | |||||
\u20ac\u00a0million | Note | Level 1 | Level 2 | Level 3 | Total |
Financial assets | |||||
Financial assets at FVOCI | |||||
Quoted equity securities | 180 | 0 | 0 | 180 | |
Quoted debt securities | 0 | 0 | 0 | 0 | |
Derivative financial assets\u00a0 | |||||
Forward foreign exchange contracts \u2013 cash flow hedges | 0 | 31 | 0 | 31 | |
Forward foreign exchange contracts \u2013 fair value through profit and loss | 0 | 25 | 0 | 25 | |
Forward foreign exchange contracts \u2013 net investment hedges | 0 | 54 | 0 | 54 | |
Foreign exchange options \u2013 net investment hedges | 0 | 0 | 0 | 0 | |
Interest rate derivatives \u2013 cash flow hedges | 0 | 38 | 0 | 38 | |
Interest rate derivatives \u2013 fair value through profit and loss | 0 | 4 | 0 | 4 | |
Other financial assets excluding derivatives |
5.5.3 Financial liabilities measured at fair value
December 31, 2023 | |||||
\u20ac\u00a0million | Note | Level 1 | Level 2 | Level 3 | Total |
Financial liabilities | |||||
Derivative financial liabilities\u00a0 | |||||
Forward foreign exchange contracts \u2013 cash flow hedges | 0 | 4 | 0 | 4 | |
Forward foreign exchange contracts \u2013 fair value through profit and loss | 0 | 3 | 0 | 3 | |
Forward foreign exchange contracts \u2013 net investment hedges | 0 | 14 | 0 | 14 | |
Interest rate derivatives \u2013 cash flow hedges | 0 | 5 | 0 | 5 | |
Interest rate derivatives \u2013 fair value through profit and loss | 0 | 59 | 0 | 59 | |
Other financial liabilities excluding derivatives | |||||
December 31, 2022 | |||||
\u20ac\u00a0million | Note | Level 1 | Level 2 | Level 3 | Total |
Financial liabilities | |||||
Derivative financial liabilities\u00a0 | |||||
Forward foreign exchange contracts \u2013 cash flow hedges | 0 | 36 | 0 | 36 | |
Forward foreign exchange contracts \u2013 fair value through profit and loss | 0 | 60 | 0 | 60 | |
Forward foreign exchange contracts \u2013 net investment hedges | 0 | 26 | 0 | 26 | |
Interest rate derivatives \u2013 cash flow hedges | 0 | 2 | 0 | 2 | |
Interest rate derivatives \u2013 fair value through profit and loss | 0 | 93 | 0 | 93 | |
Other financial liabilities excluding derivatives |
During the reporting period ending December 31, 2023, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements.
Fair value measurements categorized within Level 2 of the fair value hierarchy are calculated using either the \u201cDiscounted cash flow\u201d or the \u201cBlack-Scholes\u201d method (for FX options only) and market data publicly available.
5.5 Fair value estimation
The fair value of financial instruments traded in active markets (such as financial assets at fair value through OCI) is based on quoted market prices at the statement of financial position date.
The fair value of financial instruments that are not traded in an active market is determined by using established valuation techniques such as option pricing models and estimated discounted values of cash flows. The Group uses a variety of methods and makes assumptions that are based on market conditions and the credit and the non-performance risks existing at each statement of financial position date.
Quoted market prices are used for long-term debt. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of the interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of the forward exchange contract is determined using discounted value of the exchanged amounts in currencies, converted at the prevailing spot rate at the statement of financial position date.
The carrying amount less impairment provision of trade receivables and trade payables is assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rates that is available to the Group for similar financial instruments.
5.5.1 Fair value hierarchy
IFRS 7 requires disclosure of fair value measurements by level of the following hierarchy:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly;
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.
All fair value measurements disclosed are recurring.
5.5.2 Financial assets measured at fair value
December 31, 2023 | |||||
\u20ac\u00a0million | Note | Level 1 | Level 2 | Level 3 | Total |
Financial assets | |||||
Financial assets at FVOCI | |||||
Quoted equity securities | 190 | 0 | 0 | 190 | |
Quoted debt securities | 0 | 0 | 0 | 0 | |
Derivative financial assets\u00a0 | |||||
Forward foreign exchange contracts \u2013 cash flow hedges | 0 | 38 | 0 | 38 | |
Forward foreign exchange contracts \u2013 fair value through profit and loss | 0 | 7 | 0 | 7 | |
Forward foreign exchange contracts \u2013 net investment hedges | 0 | 1 | 0 | 1 | |
Interest rate derivatives \u2013 cash flow hedges | 0 | 19 | 0 | 19 | |
Interest rate derivatives \u2013 fair value through profit and loss | 0 | 12 | 0 | 12 | |
Other financial assets excluding derivatives |
December 31, 2022 | |||||
\u20ac\u00a0million | Note | Level 1 | Level 2 | Level 3 | Total |
Financial assets | |||||
Financial assets at FVOCI | |||||
Quoted equity securities | 180 | 0 | 0 | 180 | |
Quoted debt securities | 0 | 0 | 0 | 0 | |
Derivative financial assets\u00a0 | |||||
Forward foreign exchange contracts \u2013 cash flow hedges | 0 | 31 | 0 | 31 | |
Forward foreign exchange contracts \u2013 fair value through profit and loss | 0 | 25 | 0 | 25 | |
Forward foreign exchange contracts \u2013 net investment hedges | 0 | 54 | 0 | 54 | |
Foreign exchange options \u2013 net investment hedges | 0 | 0 | 0 | 0 | |
Interest rate derivatives \u2013 cash flow hedges | 0 | 38 | 0 | 38 | |
Interest rate derivatives \u2013 fair value through profit and loss | 0 | 4 | 0 | 4 | |
Other financial assets excluding derivatives |
5.5.3 Financial liabilities measured at fair value
December 31, 2023 | |||||
\u20ac\u00a0million | Note | Level 1 | Level 2 | Level 3 | Total |
Financial liabilities | |||||
Derivative financial liabilities\u00a0 | |||||
Forward foreign exchange contracts \u2013 cash flow hedges | 0 | 4 | 0 | 4 | |
Forward foreign exchange contracts \u2013 fair value through profit and loss | 0 | 3 | 0 | 3 | |
Forward foreign exchange contracts \u2013 net investment hedges | 0 | 14 | 0 | 14 | |
Interest rate derivatives \u2013 cash flow hedges | 0 | 5 | 0 | 5 | |
Interest rate derivatives \u2013 fair value through profit and loss | 0 | 59 | 0 | 59 | |
Other financial liabilities excluding derivatives | |||||
December 31, 2022 | |||||
\u20ac\u00a0million | Note | Level 1 | Level 2 | Level 3 | Total |
Financial liabilities | |||||
Derivative financial liabilities\u00a0 | |||||
Forward foreign exchange contracts \u2013 cash flow hedges | 0 | 36 | 0 | 36 | |
Forward foreign exchange contracts \u2013 fair value through profit and loss | 0 | 60 | 0 | 60 | |
Forward foreign exchange contracts \u2013 net investment hedges | 0 | 26 | 0 | 26 | |
Interest rate derivatives \u2013 cash flow hedges | 0 | 2 | 0 | 2 | |
Interest rate derivatives \u2013 fair value through profit and loss | 0 | 93 | 0 | 93 | |
Other financial liabilities excluding derivatives |
During the reporting period ending December 31, 2023, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements.
Fair value measurements categorized within Level 2 of the fair value hierarchy are calculated using either the \u201cDiscounted cash flow\u201d or the \u201cBlack-Scholes\u201d method (for FX options only) and market data publicly available.
5.5 Fair value estimation
The fair value of financial instruments traded in active markets (such as financial assets at fair value through OCI) is based on quoted market prices at the statement of financial position date.
The fair value of financial instruments that are not traded in an active market is determined by using established valuation techniques such as option pricing models and estimated discounted values of cash flows. The Group uses a variety of methods and makes assumptions that are based on market conditions and the credit and the non-performance risks existing at each statement of financial position date.
Quoted market prices are used for long-term debt. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of the interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of the forward exchange contract is determined using discounted value of the exchanged amounts in currencies, converted at the prevailing spot rate at the statement of financial position date.
The carrying amount less impairment provision of trade receivables and trade payables is assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rates that is available to the Group for similar financial instruments.
5.5.1 Fair value hierarchy
IFRS 7 requires disclosure of fair value measurements by level of the following hierarchy:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly;
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.
All fair value measurements disclosed are recurring.
5.5.2 Financial assets measured at fair value
December 31, 2023 | |||||
\u20ac\u00a0million | Note | Level 1 | Level 2 | Level 3 | Total |
Financial assets | |||||
Financial assets at FVOCI | |||||
Quoted equity securities | 190 | 0 | 0 | 190 | |
Quoted debt securities | 0 | 0 | 0 | 0 | |
Derivative financial assets\u00a0 | |||||
Forward foreign exchange contracts \u2013 cash flow hedges | 0 | 38 | 0 | 38 | |
Forward foreign exchange contracts \u2013 fair value through profit and loss | 0 | 7 | 0 | 7 | |
Forward foreign exchange contracts \u2013 net investment hedges | 0 | 1 | 0 | 1 | |
Interest rate derivatives \u2013 cash flow hedges | 0 | 19 | 0 | 19 | |
Interest rate derivatives \u2013 fair value through profit and loss | 0 | 12 | 0 | 12 | |
Other financial assets excluding derivatives |
December 31, 2022 | |||||
\u20ac\u00a0million | Note | Level 1 | Level 2 | Level 3 | Total |
Financial assets | |||||
Financial assets at FVOCI | |||||
Quoted equity securities | 180 | 0 | 0 | 180 | |
Quoted debt securities | 0 | 0 | 0 | 0 | |
Derivative financial assets\u00a0 | |||||
Forward foreign exchange contracts \u2013 cash flow hedges | 0 | 31 | 0 | 31 | |
Forward foreign exchange contracts \u2013 fair value through profit and loss | 0 | 25 | 0 | 25 | |
Forward foreign exchange contracts \u2013 net investment hedges | 0 | 54 | 0 | 54 | |
Foreign exchange options \u2013 net investment hedges | 0 | 0 | 0 | 0 | |
Interest rate derivatives \u2013 cash flow hedges | 0 | 38 | 0 | 38 | |
Interest rate derivatives \u2013 fair value through profit and loss | 0 | 4 | 0 | 4 | |
Other financial assets excluding derivatives |
5.5.3 Financial liabilities measured at fair value
December 31, 2023 | |||||
\u20ac\u00a0million | Note | Level 1 | Level 2 | Level 3 | Total |
Financial liabilities | |||||
Derivative financial liabilities\u00a0 | |||||
Forward foreign exchange contracts \u2013 cash flow hedges | 0 | 4 | 0 | 4 | |
Forward foreign exchange contracts \u2013 fair value through profit and loss | 0 | 3 | 0 | 3 | |
Forward foreign exchange contracts \u2013 net investment hedges | 0 | 14 | 0 | 14 | |
Interest rate derivatives \u2013 cash flow hedges | 0 | 5 | 0 | 5 | |
Interest rate derivatives \u2013 fair value through profit and loss | 0 | 59 | 0 | 59 | |
Other financial liabilities excluding derivatives | |||||
December 31, 2022 | |||||
\u20ac\u00a0million | Note | Level 1 | Level 2 | Level 3 | Total |
Financial liabilities | |||||
Derivative financial liabilities\u00a0 | |||||
Forward foreign exchange contracts \u2013 cash flow hedges | 0 | 36 | 0 | 36 | |
Forward foreign exchange contracts \u2013 fair value through profit and loss | 0 | 60 | 0 | 60 | |
Forward foreign exchange contracts \u2013 net investment hedges | 0 | 26 | 0 | 26 | |
Interest rate derivatives \u2013 cash flow hedges | 0 | 2 | 0 | 2 | |
Interest rate derivatives \u2013 fair value through profit and loss | 0 | 93 | 0 | 93 | |
Other financial liabilities excluding derivatives |
During the reporting period ending December 31, 2023, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements.
Fair value measurements categorized within Level 2 of the fair value hierarchy are calculated using either the \u201cDiscounted cash flow\u201d or the \u201cBlack-Scholes\u201d method (for FX options only) and market data publicly available.
5.5 Fair value estimation
The fair value of financial instruments traded in active markets (such as financial assets at fair value through OCI) is based on quoted market prices at the statement of financial position date.
The fair value of financial instruments that are not traded in an active market is determined by using established valuation techniques such as option pricing models and estimated discounted values of cash flows. The Group uses a variety of methods and makes assumptions that are based on market conditions and the credit and the non-performance risks existing at each statement of financial position date.
Quoted market prices are used for long-term debt. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments. The fair value of the interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of the forward exchange contract is determined using discounted value of the exchanged amounts in currencies, converted at the prevailing spot rate at the statement of financial position date.
The carrying amount less impairment provision of trade receivables and trade payables is assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rates that is available to the Group for similar financial instruments.
5.5.1 Fair value hierarchy
IFRS 7 requires disclosure of fair value measurements by level of the following hierarchy:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly;
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.
All fair value measurements disclosed are recurring.
5.5.2 Financial assets measured at fair value
December 31, 2023 | |||||
\u20ac\u00a0million | Note | Level 1 | Level 2 | Level 3 | Total |
Financial assets | |||||
Financial assets at FVOCI | |||||
Quoted equity securities | 190 | 0 | 0 | 190 | |
Quoted debt securities | 0 | 0 | 0 | 0 | |
Derivative financial assets\u00a0 | |||||
Forward foreign exchange contracts \u2013 cash flow hedges | 0 | 38 | 0 | 38 | |
Forward foreign exchange contracts \u2013 fair value through profit and loss | 0 | 7 | 0 | 7 | |
Forward foreign exchange contracts \u2013 net investment hedges | 0 | 1 | 0 | 1 | |
Interest rate derivatives \u2013 cash flow hedges | 0 | 19 | 0 | 19 | |
Interest rate derivatives \u2013 fair value through profit and loss | 0 | 12 | 0 | 12 | |
Other financial assets excluding derivatives |
December 31, 2022 | |||||
\u20ac\u00a0million | Note | Level 1 | Level 2 | Level 3 | Total |
Financial assets | |||||
Financial assets at FVOCI | |||||
Quoted equity securities | 180 | 0 | 0 | 180 | |
Quoted debt securities | 0 | 0 | 0 | 0 | |
Derivative financial assets\u00a0 | |||||
Forward foreign exchange contracts \u2013 cash flow hedges | 0 | 31 | 0 | 31 | |
Forward foreign exchange contracts \u2013 fair value through profit and loss | 0 | 25 | 0 | 25 | |
Forward foreign exchange contracts \u2013 net investment hedges | 0 | 54 | 0 | 54 | |
Foreign exchange options \u2013 net investment hedges | 0 | 0 | 0 | 0 | |
Interest rate derivatives \u2013 cash flow hedges | 0 | 38 | 0 | 38 | |
Interest rate derivatives \u2013 fair value through profit and loss | 0 | 4 | 0 | 4 | |
Other financial assets excluding derivatives |
5.5.3 Financial liabilities measured at fair value
December 31, 2023 | |||||
\u20ac\u00a0million | Note | Level 1 | Level 2 | Level 3 | Total |
Financial liabilities | |||||
Derivative financial liabilities\u00a0 | |||||
Forward foreign exchange contracts \u2013 cash flow hedges | 0 | 4 | 0 | 4 | |
Forward foreign exchange contracts \u2013 fair value through profit and loss | 0 | 3 | 0 | 3 | |
Forward foreign exchange contracts \u2013 net investment hedges | 0 | 14 | 0 | 14 | |
Interest rate derivatives \u2013 cash flow hedges | 0 | 5 | 0 | 5 | |
Interest rate derivatives \u2013 fair value through profit and loss | 0 | 59 | 0 | 59 | |
Other financial liabilities excluding derivatives | |||||
December 31, 2022 | |||||
\u20ac\u00a0million | Note | Level 1 | Level 2 | Level 3 | Total |
Financial liabilities | |||||
Derivative financial liabilities\u00a0 | |||||
Forward foreign exchange contracts \u2013 cash flow hedges | 0 | 36 | 0 | 36 | |
Forward foreign exchange contracts \u2013 fair value through profit and loss | 0 | 60 | 0 | 60 | |
Forward foreign exchange contracts \u2013 net investment hedges | 0 | 26 | 0 | 26 | |
Interest rate derivatives \u2013 cash flow hedges | 0 | 2 | 0 | 2 | |
Interest rate derivatives \u2013 fair value through profit and loss | 0 | 93 | 0 | 93 | |
Other financial liabilities excluding derivatives |
During the reporting period ending December 31, 2023, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements.
Fair value measurements categorized within Level 2 of the fair value hierarchy are calculated using either the \u201cDiscounted cash flow\u201d or the \u201cBlack-Scholes\u201d method (for FX options only) and market data publicly available.
5.6 Offsetting financial assets and financial liabilities
While the Group has amounts subject to an enforceable master netting arrangement or similar agreements, financial assets and financial liabilities are reported gross on the statement of financial position as the requirements are not met to report them net. The reconciliations below depict the amounts
subject to an enforceable master netting arrangement or similar agreement that have not been netted on the statement of financial position.
The tables below show financial assets and liabilities subject to enforceable master netting arrangements:
December 31, 2023 | Related amounts not set off in the statement of financial position | |||
\u20ac\u00a0million | Gross financial assets in the statement of financial position | Financial instruments | Cash collateralreceived | Net amounts |
Derivatives | 77 | 36 | 0 | 41 |
Other | 0 | 0 | 0 | 0 |
Total | 77 | 36 | 0 | 41 |
December 31, 2023 | Related amounts not set off in the statement of financial position | |||
\u20ac\u00a0million | Gross financial liabilities in the statement of financial position | |||
Financialinstruments | Cash collateral received | |||
Net amounts | ||||
Derivatives | 85 | 36 | 0 | 49 |
Other | 0 | 0 | 0 | 0 |
Total | 85 | 36 | 0 | 49 |
ISDA master agreements (International Swaps and Derivatives Association) have been signed with the respective counterparties allowing offsetting of financial assets and liabilities. This is applicable to the fair value settlement in
case of default, but it is not applicable at the closing date December 31, 2023.
The tables below show financial assets and liabilities subject to enforceable master netting arrangements:
December 31, 2022 | Related amounts not set off in the statement of financial position | |||
\u20ac\u00a0million | Gross financial assets in the statement of financial position | Financial instruments | Cash collateralreceived | Net amounts |
Derivatives | 152 | 121 | 0 | 31 |
Other | 0 | 0 | 0 | 0 |
Total | 152 | 121 | 0 | 31 |
December 31, 2022 | Related amounts not set off in the statement of financial position | |||
\u20ac\u00a0million | Gross financial liabilities in the statement of financial position | |||
Financialinstruments | Cash collateral received | |||
Net amounts | ||||
Derivatives | 217 | 121 | 0 | 96 |
Other | 0 | 0 | 0 | 0 |
Total | 217 | 121 | 0 | 96 |
6. Segment reporting
The Group\u2019s activities are in one segment, Biopharmaceuticals.
There are no other significant classes of business, either singularly or in aggregate. The Chief Operating Decision Makers, that being the Executive Committee, review the operating results and operating plans, and make resource
allocation decisions on a company-wide basis, therefore UCB operates as one segment.
Enterprise-wide disclosures about product sales, geographic areas and revenues from major customers are presented below.
6.1 Product sales information
Net sales consist of the following:
\u20ac million | 2023 | 2022 |
CIMZIA\u00ae | 2 087 | 2 085 |
KEPPRA\u00ae(including KEPPRA\u00aeXR / E KEPPRA\u00ae) | 636 | 729 |
BRIVIACT\u00ae | 576 | 485 |
VIMPAT\u00ae | 394 | 1 124 |
FINTEPLA\u00ae | 226 | 116 |
BIMZELX\u00ae | 148 | 35 |
NAYZILAM\u00ae | 94 | 78 |
EVENITY\u00ae | 60 | 25 |
RYSTIGGO\u00ae | 19 | 0 |
Other products | 577 | 630 |
Designated hedges reclassified to net sales | 50 | - 167 |
Total net sales | 4 867 | 5 140 |
6.2 Geographic information
The table below shows net sales in each geographic market in which customers are located:
\u20ac million | 2023 | 2022 |
U.S. | 2 454 | 2 902 |
Europe \u2013 other | 365 | 348 |
Germany | 310 | 330 |
Japan | 269 | 324 |
Spain | 224 | 213 |
France (including French territories) | 162 | 169 |
China | 151 | 154 |
Italy | 143 | 159 |
U.K. and Ireland | 133 | 151 |
Belgium | 52 | 49 |
Other countries | 554 | 507 |
Designated hedges reclassified to net sales | 50 | - 167 |
Total net sales | 4 867 | 5 140 |
The table below illustrates the property, plant and equipment in each geographic market in which the assets are located:
\u20ac\u00a0million | 2023 | 2022 |
Belgium | 924 | 771 |
Switzerland | 240 | 251 |
U.K. and Ireland | 215 | 181 |
U.S. | 138 | 151 |
Germany | 23 | 20 |
China | 20 | 20 |
Japan | 17 | 19 |
Other countries | 18 | 21 |
Total | 1 595 | 1 434 |
6.3 Information about major customers
UCB has 3 customers which individually account for more than 8% of the total net sales for 2023 and 2022:
Mckesson, U.S. for which net sales 2023 amount to \u20ac 643 million (13% of total net sales) (2022: \u20ac 977 million, 19% of net sales)
Cardinal Health, U.S. for which net sales 2023 amount to \u20ac 508 million (10% of total net sales) (2022: \u20ac 680 million, 13% of net sales)
Amerisourcebergen Corp, U.S. for which net sales 2023 amount to \u20ac 413 million (8% of total net sales) (2022: \u20ac 509 million, 10% of net sales)
7. Revenue from contracts with customers
The Group has recognized the following amounts relating to revenue in the consolidated income statement:
\u20ac million | 2023 | 2022 |
Revenue from contracts with customers | 5 222 | 5 486 |
Revenue from agreements whereby risks and rewards are shared | 30 | 31 |
Total revenue | 5 252 | 5 517 |
7.1 Disaggregation of revenue from contracts with customers
Actual | Timing of revenue recognition | |||||
2023 | 2022 | 2023 | 2022 | |||
\u20ac million | At a point in time | Over time | At a point in time | Over time | ||
Net sales U.S. | 2 454 | 2 902 | 2 454 | 0 | 2 902 | 0 |
CIMZIA\u00ae | 1 364 | 1 381 | 1 364 | 0 | 1 381 | 0 |
BRIVIACT\u00ae | 445 | 380 | 445 | 0 | 380 | 0 |
FINTEPLA\u00ae | 201 | 107 | 201 | 0 | 107 | 0 |
KEPPRA\u00ae | 132 | 156 | 132 | 0 | 156 | 0 |
VIMPAT\u00ae | 96 | 706 | 96 | 0 | 706 | 0 |
NAYZILAM\u00ae | 94 | 78 | 94 | 0 | 78 | 0 |
RYSTIGGO\u00ae | 19 | 0 | 19 | 0 | 0 | 0 |
BIMZELX\u00ae* | 9 | 0 | 9 | 0 | 0 | 0 |
Established brands / Other products | 94 | 94 | 94 | 0 | 94 | 0 |
Net sales Europe | 1 397 | 1 414 | 1 397 | 0 | 1 414 | 0 |
CIMZIA\u00ae | 428 | 416 | 428 | 0 | 416 | 0 |
KEPPRA\u00ae | 205 | 206 | 205 | 0 | 206 | 0 |
VIMPAT\u00ae | 140 | 272 | 140 | 0 | 272 | 0 |
BRIVIACT\u00ae | 110 | 88 | 110 | 0 | 88 | 0 |
BIMZELX\u00ae* | 112 | 29 | 112 | 0 | 29 | 0 |
EVENITY\u00ae | 60 | 25 | 60 | 0 | 25 | 0 |
FINTEPLA\u00ae | 21 | 8 | 21 | 0 | 8 | 0 |
Established brands / Other products | 321 | 370 | 321 | 0 | 370 | 0 |
Net sales Japan | 269 | 324 | 269 | 0 | 324 | 0 |
E KEPPRA\u00ae | 97 | 149 | 97 | 0 | 149 | 0 |
VIMPAT\u00ae | 83 | 68 | 83 | 0 | 68 | 0 |
CIMZIA\u00ae | 39 | 51 | 39 | 0 | 51 | 0 |
BIMZELX\u00ae* | 16 | 4 | 16 | 0 | 4 | 0 |
FINTEPLA\u00ae | 1 | 1 | 1 | 0 | 1 | 0 |
Established brands / Other products | 33 | 51 | 33 | 0 | 51 | 0 |
Net sales international markets | 697 | 667 | 697 | 0 | 667 | 0 |
CIMZIA\u00ae | 257 | 237 | 257 | 0 | 237 | 0 |
KEPPRA\u00ae | 202 | 217 | 202 | 0 | 217 | 0 |
VIMPAT\u00ae | 75 | 77 | 75 | 0 | 77 | 0 |
BRIVIACT\u00ae | 21 | 17 | 21 | 0 | 17 | 0 |
BIMZELX\u00ae* | 12 | 2 | 12 | 0 | 2 | 0 |
FINTEPLA\u00ae | 3 | 1 | 3 | 0 | 1 | 0 |
Established brands / Other products | 127 | 115 | 127 | 0 | 115 | 0 |
Net sales before hedging | 4 817 | 5 307 | 4 817 | 0 | 5 307 | 0 |
Designated hedges reclassified to net sales | 50 | - 167 | 50 | 0 | - 167 | 0 |
Total net sales | 4 867 | 5 140 | 4 867 | 0 | 5 140 | 0 |
Royalty income and fees | 77 | 85 | 77 | 0 | 85 | 0 |
Contract manufacturing revenues | 119 | 103 | 119 | 0 | 103 | 0 |
Income from licensing deals (upfront payments, development milestones, sales milestones) | 147 | 150 | 87 | 60 | 104 | 46 |
Revenue resulting from services and other deliveries | 12 | 8 | 12 | 0 | 8 | 0 |
Total other revenue | 278 | 261 | 218 | 60 | 215 | 46 |
Total revenue from contracts with\u00a0customers | 5 222 | 5 486 | 5 162 | 60 | 5 440 | 46 |
7.2 Contract assets and liabilities
The group has recognized the following revenue-related contract liabilities:
\u20ac million | Note | 2023 | 2022 |
Contract liabilities resulting from out-licensing agreements\u00a0 | |||
Non-current | 0 | 0 | |
Current | 140 | 183 | |
Contract liabilities resulting from other agreements\u00a0 | 0 | 1 | |
Total revenue-related contract liabilities | 140 | 184 |
The Group does not have any revenue-related contract assets.
Revenue-related contract liabilities mainly relate to unsatisfied performance obligations resulting from out-licensing agreements with Otsuka, Genentech and Novartis (see below). These liabilities have decreased because of the recognition of revenue during the year resulting from performance obligations that were satisfied in 2023.
The following table shows how much of the revenue recognized in the current reporting period was included in the contract liability balance at the beginning of the period and how much relates to performance obligations that were satisfied in previous periods.
\u20ac million | 2023 | 2022 |
Revenue recognized that was included in the contract liability balance at the beginning of the period\u00a0 | 56 | 41 |
Revenue resulting from other agreements | 1 | 0 |
Revenue resulting from out-licensing agreements | 55 | 41 |
Revenue recognized that relates to performance obligations that were satisfied in a prior year | 211 | 121 |
Product sales | 40 | 0 |
Revenue resulting from out-licensing agreements | 171 | 121 |
The following table shows unsatisfied performance obligations resulting from out-licensing agreements:
\u20ac million | Note | 2023 | 2022 |
Aggregate amount of the transaction price allocated to development agreements that are partially or fully unsatisfied as at December 31 | 140 | 183 | |
Upfront payments received for out-licensing agreements to be taken in revenue as performance obligations are satisfied over time | 0 | 0 | |
Unsatisfied performance obligations resulting from out-licensing agreements | 140 | 183 |
Management expects that 39% of the transaction price allocated to the unsatisfied development agreements as of December 31, 2023 will be recognized as revenue during the next reporting period. 21% is assessed to be recognized during 2025 and the remaining 40% will be recognized in financial years 2026 till 2030. The amount disclosed above does not include variable consideration which is constrained. The performance obligations still to be satisfied concern development activities to be performed over the next years.
All other development, manufacturing or other service agreements are for periods of one year or less or are billed based on time incurred. As permitted under IFRS 15, the transaction price allocated to these unsatisfied agreements is not disclosed.
No assets are recognized from costs to fulfill a contract.
7. Revenue from contracts with customers
The Group has recognized the following amounts relating to revenue in the consolidated income statement:
\u20ac million | 2023 | 2022 |
Revenue from contracts with customers | 5 222 | 5 486 |
Revenue from agreements whereby risks and rewards are shared | 30 | 31 |
Total revenue | 5 252 | 5 517 |
7.1 Disaggregation of revenue from contracts with customers
Actual | Timing of revenue recognition | |||||
2023 | 2022 | 2023 | 2022 | |||
\u20ac million | At a point in time | Over time | At a point in time | Over time | ||
Net sales U.S. | 2 454 | 2 902 | 2 454 | 0 | 2 902 | 0 |
CIMZIA\u00ae | 1 364 | 1 381 | 1 364 | 0 | 1 381 | 0 |
BRIVIACT\u00ae | 445 | 380 | 445 | 0 | 380 | 0 |
FINTEPLA\u00ae | 201 | 107 | 201 | 0 | 107 | 0 |
KEPPRA\u00ae | 132 | 156 | 132 | 0 | 156 | 0 |
VIMPAT\u00ae | 96 | 706 | 96 | 0 | 706 | 0 |
NAYZILAM\u00ae | 94 | 78 | 94 | 0 | 78 | 0 |
RYSTIGGO\u00ae | 19 | 0 | 19 | 0 | 0 | 0 |
BIMZELX\u00ae* | 9 | 0 | 9 | 0 | 0 | 0 |
Established brands / Other products | 94 | 94 | 94 | 0 | 94 | 0 |
Net sales Europe | 1 397 | 1 414 | 1 397 | 0 | 1 414 | 0 |
CIMZIA\u00ae | 428 | 416 | 428 | 0 | 416 | 0 |
KEPPRA\u00ae | 205 | 206 | 205 | 0 | 206 | 0 |
VIMPAT\u00ae | 140 | 272 | 140 | 0 | 272 | 0 |
BRIVIACT\u00ae | 110 | 88 | 110 | 0 | 88 | 0 |
BIMZELX\u00ae* | 112 | 29 | 112 | 0 | 29 | 0 |
EVENITY\u00ae | 60 | 25 | 60 | 0 | 25 | 0 |
FINTEPLA\u00ae | 21 | 8 | 21 | 0 | 8 | 0 |
Established brands / Other products | 321 | 370 | 321 | 0 | 370 | 0 |
Net sales Japan | 269 | 324 | 269 | 0 | 324 | 0 |
E KEPPRA\u00ae | 97 | 149 | 97 | 0 | 149 | 0 |
VIMPAT\u00ae | 83 | 68 | 83 | 0 | 68 | 0 |
CIMZIA\u00ae | 39 | 51 | 39 | 0 | 51 | 0 |
BIMZELX\u00ae* | 16 | 4 | 16 | 0 | 4 | 0 |
FINTEPLA\u00ae | 1 | 1 | 1 | 0 | 1 | 0 |
Established brands / Other products | 33 | 51 | 33 | 0 | 51 | 0 |
Net sales international markets | 697 | 667 | 697 | 0 | 667 | 0 |
CIMZIA\u00ae | 257 | 237 | 257 | 0 | 237 | 0 |
KEPPRA\u00ae | 202 | 217 | 202 | 0 | 217 | 0 |
VIMPAT\u00ae | 75 | 77 | 75 | 0 | 77 | 0 |
BRIVIACT\u00ae | 21 | 17 | 21 | 0 | 17 | 0 |
BIMZELX\u00ae* | 12 | 2 | 12 | 0 | 2 | 0 |
FINTEPLA\u00ae | 3 | 1 | 3 | 0 | 1 | 0 |
Established brands / Other products | 127 | 115 | 127 | 0 | 115 | 0 |
Net sales before hedging | 4 817 | 5 307 | 4 817 | 0 | 5 307 | 0 |
Designated hedges reclassified to net sales | 50 | - 167 | 50 | 0 | - 167 | 0 |
Total net sales | 4 867 | 5 140 | 4 867 | 0 | 5 140 | 0 |
Royalty income and fees | 77 | 85 | 77 | 0 | 85 | 0 |
Contract manufacturing revenues | 119 | 103 | 119 | 0 | 103 | 0 |
Income from licensing deals (upfront payments, development milestones, sales milestones) | 147 | 150 | 87 | 60 | 104 | 46 |
Revenue resulting from services and other deliveries | 12 | 8 | 12 | 0 | 8 | 0 |
Total other revenue | 278 | 261 | 218 | 60 | 215 | 46 |
Total revenue from contracts with\u00a0customers | 5 222 | 5 486 | 5 162 | 60 | 5 440 | 46 |
7.2 Contract assets and liabilities
The group has recognized the following revenue-related contract liabilities:
\u20ac million | Note | 2023 | 2022 |
Contract liabilities resulting from out-licensing agreements\u00a0 | |||
Non-current | 0 | 0 | |
Current | 140 | 183 | |
Contract liabilities resulting from other agreements\u00a0 | 0 | 1 | |
Total revenue-related contract liabilities | 140 | 184 |
The Group does not have any revenue-related contract assets.
Revenue-related contract liabilities mainly relate to unsatisfied performance obligations resulting from out-licensing agreements with Otsuka, Genentech and Novartis (see below). These liabilities have decreased because of the recognition of revenue during the year resulting from performance obligations that were satisfied in 2023.
The following table shows how much of the revenue recognized in the current reporting period was included in the contract liability balance at the beginning of the period and how much relates to performance obligations that were satisfied in previous periods.
\u20ac million | 2023 | 2022 |
Revenue recognized that was included in the contract liability balance at the beginning of the period\u00a0 | 56 | 41 |
Revenue resulting from other agreements | 1 | 0 |
Revenue resulting from out-licensing agreements | 55 | 41 |
Revenue recognized that relates to performance obligations that were satisfied in a prior year | 211 | 121 |
Product sales | 40 | 0 |
Revenue resulting from out-licensing agreements | 171 | 121 |
The following table shows unsatisfied performance obligations resulting from out-licensing agreements:
\u20ac million | Note | 2023 | 2022 |
Aggregate amount of the transaction price allocated to development agreements that are partially or fully unsatisfied as at December 31 | 140 | 183 | |
Upfront payments received for out-licensing agreements to be taken in revenue as performance obligations are satisfied over time | 0 | 0 | |
Unsatisfied performance obligations resulting from out-licensing agreements | 140 | 183 |
Management expects that 39% of the transaction price allocated to the unsatisfied development agreements as of December 31, 2023 will be recognized as revenue during the next reporting period. 21% is assessed to be recognized during 2025 and the remaining 40% will be recognized in financial years 2026 till 2030. The amount disclosed above does not include variable consideration which is constrained. The performance obligations still to be satisfied concern development activities to be performed over the next years.
All other development, manufacturing or other service agreements are for periods of one year or less or are billed based on time incurred. As permitted under IFRS 15, the transaction price allocated to these unsatisfied agreements is not disclosed.
No assets are recognized from costs to fulfill a contract.
8. Business combination
Acquisition of Zogenix, Inc.
On March 7, 2022, UCB announced the successful acquisition of Zogenix, Inc. for a total purchase consideration (in accordance with IFRS 3) of \u20ac 1.5 billion (excluding post-closing settlement of convertible debt in a separate transaction). UCB acquired shares of Zogenix, Inc. for a purchase price per share of US$ 26 in cash at closing, plus a contingent value right (CVR) for a potential cash payment of US$ 2 upon EU approval by December 31, 2023, of FINTEPLA\u00aeas an orphan medicine for treatment of Lennox-Gastaut syndrome (LGS). On February 8, 2023, FINTEPLA\u00aeoral solution was approved in the EU for the treatment of seizures associated with LGS as an add-on therapy to other anti-epileptic medicines for patients two years of age and older. This approval triggered the payment of the CVR.
As a result of the acquisition, Zogenix, Inc. has become a wholly-owned subsidiary of UCB and the common stock of Zogenix, Inc. has been delisted from the NASDAQ Global Market. Zogenix, Inc. is a global biopharmaceutical company commercializing and developing therapies for rare diseases.
By acquiring Zogenix, Inc., UCB reinforces its sustainable patient value strategy and continued commitment to addressing unmet needs of people living with epilepsy with an increasing focus on those living with specific or rare forms of epilepsy, where few options exist. Complementing UCB\u2019s existing therapeutic offerings, the Zogenix, Inc. acquisition provides UCB with an approved medicine for a life-threatening, rare infant- and childhood-onset epilepsy marked by frequent and severe treatment-resistant seizures that are particularly challenging to treat. Utilizing UCB\u2019s deep expertise, experience and global capabilities, it plans to accelerate access for patients to the treatment.
The acquisition builds on UCB\u2019s continued epilepsy ambitions, as it provides medicine that complements UCB\u2019s existing symptomatic treatments, bringing significant and differentiated
value to patients suffering from Dravet syndrome and from seizures associated with Lennox-Gastaut syndrome and potentially other rare epilepsies. It expands benefits for patients globally, as UCB brings an established global footprint, together with deep research and development, commercial, medical, and regulatory expertise in epilepsy, which will be utilized to rapidly advance and optimize the availability of these new treatments and reach additional patients. Last, but not least, it enhances future epilepsy pipeline and strategic priorities in rare/orphan diseases, as Zogenix, Inc.\u2019s pipeline will add to UCB\u2019s short-term and long-term epilepsy pipeline, as well as provide critical learnings in rare/orphan disease health ecosystems and enhances UCB\u2019s top-line growth, as FINTEPLA\u00aewas launched in the U.S. and Europe in 2020 and has significant potential for usage in other seizure types. The acquisition has contributed to UCB\u2019s revenue growth in 2022 and was accretive to UCB\u2019s earnings in 2023.
The total purchase consideration represents an amount of \u20ac 1 519 million (US$ 1 651 million). UCB has entered into a borrowing agreement to partially fund the acquisition price (see Note 29Borrowings).
The purchase consideration consists of a closing payment \u20ac 1 406 million and contingent consideration (Contingent Value Rights) for a total amount of \u20ac 113 million.
The fair value of the contingent consideration was estimated at \u20ac 113 million (US$ 123 million) upon acquisition. This fair value took into account the assumed likelihood and timing of achieving the arrangement\u2019s regulatory milestones. No changes were necessary to this estimate since acquisition date. In the meantime, the liability, presented within other current liabilities in the opening statement of financial position for an amount of US$ 123 million, was paid in February 2023.
The table below shows the final amounts for the net assets acquired and goodwill recognized at the acquisition date:
\u20ac\u00a0million | Initial opening statement of financial position | Adjustments due to initial purchase price allocation | Adjusted opening statement of financial position |
Total acquisition value | 1 519 | 0 | 1 519 |
Cash consideration paid | 1 406 | 0 | 1 406 |
Contingent consideration | 113 | 0 | 113 |
Recognized amounts of identifiable assets acquired and liabilities assumed | - 101 | 1 606 | 1 505 |
Non-current assets | |||
Intangibles | 0 | 1 803 | 1 803 |
Property, plant and equipment (including right-of-use assets) | 16 | 0 | 16 |
Deferred income tax assets | 23 | 212 | 235 |
Other non-current assets | 2 | 0 | 2 |
Current assets | |||
Cash | 194 | 0 | 194 |
Other current assets | 50 | 2 | 52 |
Non-current liabilities | |||
Deferred taxes | 0 | 410 | 410 |
Debt and debt like items | 50 | - 19 | 31 |
Current liabilities | |||
Debt and debt like items | 264 | 20 | 284 |
Payables | 72 | 0 | 72 |
Goodwill | 1 620 | - 1 606 | 14 |
The opening statement of financial position includes a financial liability of US$ 307 million (\u20ac 282 million), that corresponds to the US$ 230 million principal amount of 2.75% convertible senior notes (due 2027), issued by Zogenix, Inc. in 2020. The notes are measured at the fair value at the acquisition date, which reflects the expected settlement of the notes shortly after the acquisition date (between March 7 and April 11, 2022) as well as the additional CVRs granted to the noteholders.
The purchase accounting assessment has been finalized. The estimated fair values primarily consisting of intangible assets, deferred income tax assets, deferred tax liabilities and goodwill as noted above are therefore to be considered as final. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the UCB\u2019s results of operations.
The Group identified and separately recognized intangible assets for a total amount of \u20ac 1 803 million. These intangibles are amortized on a straight line basis from acquisition till moment of loss of exclusivity.
No contingent liabilities that could meet recognition requirements under IFRS 3 have been identified.
The goodwill is attributable to expected synergies with UCB\u2019s biotech research activities as well as the assembled workforce. Goodwill is not expected to be tax deductible.
Acquisition-related costs, which includes legal and other fees for an amount of \u20ac 41 million have been recorded under Other Expenses in 2022. This payment cannot be considered as being
part of the consideration transferred to the sellers in exchange for control of Zogenix, Inc. in accordance with the provisions in IFRS 3 Business combinations.
\u20ac 143 million revenue was included in the consolidated income statement for 2022 since acquisition. Except for transaction and acquisition costs, the loss of Zogenix, Inc. included in the consolidated income statement for 2022 since acquisition was \u20ac 80 million. The amounts of revenue and loss for Zogenix, Inc. assuming the acquisition date would have been January 1, 2022 would not have been materially different from what was included in the consolidated income statement for 2022.
Post-acquisition settlement of the convertible notes of Zogenix, Inc.
Under the terms of the (original) indenture of the convertible notes, the acquisition of Zogenix, Inc. by UCB constituted a Make-Whole Fundamental Change. This has resulted in a temporary adjustment of the conversion rate applicable to the notes as follows:
the conversion rate in effect prior to 7 March 2022 was 41.1794 shares of Zogenix, Inc. common stock per US$1 000 principal amount of notes.
an adjusted conversion rate is applicable for notes converted from March 7, 2022 to April 11, 2022, i.e. 47.5994 of reference property units per US$1 000 principal amount of notes (temporary adjustment in connection with the Make-Whole Fundamental Change pursuant to \u00a7 5.07 of the (original) Indenture.
any note that would have been converted after April 11, 2022 \u2013 5:00 p.m. NY City time, would have been settled based on the unadjusted conversion rate, i.e. 41.1794 of reference property units per US$1 000 principal amount of notes.
As from March 7, 2022, the reference property unit consists of US$ 26 in cash plus one contingent value right.
Following the closing of the acquisition, all notes were converted at the adjusted conversion rate of 47 5994 reference
property units per US$ 1 000 principal amount of notes, resulting in the cash outflow of US$ 285 million and additional CVRs granted to the noteholders, recognized in the opening balance sheet as a financial liability for the amount of US$ 22 million and finally paid in February 2023.
9. Discontinued operations and assets and liabilities of disposal group classified as held for sale
9.1 Discontinued operations
For 2023, the loss from discontinued operations amounts to \u20ac 0 million (\u20ac - 2 million for 2022), and prior year mainly relates to the additional provision related to the Films business in Belgium.
9.2 Assets and liabilities of disposal group classified as held for sale
Assets of disposal group classified as held for sale as per December 31, 2023 relate to inventories following the divestment of non-core established brand products. There were no assets held for sale as per December 31, 2022.
As not all market authorizations were transferred to the buyer, UCB was still owner of the inventories for these divested non-core established brand products in some countries. No write-off was accounted for on these inventories.
9. Discontinued operations and assets and liabilities of disposal group classified as held for sale
9.1 Discontinued operations
For 2023, the loss from discontinued operations amounts to \u20ac 0 million (\u20ac - 2 million for 2022), and prior year mainly relates to the additional provision related to the Films business in Belgium.
9.2 Assets and liabilities of disposal group classified as held for sale
Assets of disposal group classified as held for sale as per December 31, 2023 relate to inventories following the divestment of non-core established brand products. There were no assets held for sale as per December 31, 2022.
As not all market authorizations were transferred to the buyer, UCB was still owner of the inventories for these divested non-core established brand products in some countries. No write-off was accounted for on these inventories.
9.2 Assets and liabilities of disposal group classified as held for sale
Assets of disposal group classified as held for sale as per December 31, 2023 relate to inventories following the divestment of non-core established brand products. There were no assets held for sale as per December 31, 2022.
As not all market authorizations were transferred to the buyer, UCB was still owner of the inventories for these divested non-core established brand products in some countries. No write-off was accounted for on these inventories.
11. Operating expenses by nature
The table below illustrates certain items of expense recognized in the income statement using a classification based on their nature within the Group:
\u20ac\u00a0million | Note | 2023 | 2022 |
Employee benefit expenses | 1 682 | 1 658 | |
Depreciation of property, plant and equipment | 158 | 146 | |
Amortization of intangible assets | 533 | 439 | |
Impairment of non-financial assets (net) | 5 | 0 | |
Total | 2 378 | 2 243 |
11. Operating expenses by nature
The table below illustrates certain items of expense recognized in the income statement using a classification based on their nature within the Group:
\u20ac\u00a0million | Note | 2023 | 2022 |
Employee benefit expenses | 1 682 | 1 658 | |
Depreciation of property, plant and equipment | 158 | 146 | |
Amortization of intangible assets | 533 | 439 | |
Impairment of non-financial assets (net) | 5 | 0 | |
Total | 2 378 | 2 243 |
12. Employee benefit expense
\u20ac\u00a0million | Note | 2023 | 2022 |
Wages and salaries | 1 214 | 1 207 | |
Social security costs | 172 | 167 | |
Post-employment benefits \u2013 defined benefit plans | 53 | 68 | |
Post-employment benefits \u2013 defined contribution plans | 24 | 21 | |
Share-based payments to employees and directors | 104 | 81 | |
Insurance | 50 | 41 | |
Other employee benefits | 65 | 73 | |
Total employee benefit expense | 1 682 | 1 658 |
The total employee benefit expense has been allocated along functional lines within the income statement.
Other employee benefits consist mainly of termination benefits, severance payments, and other long-term/ short-term disability benefits.
13. Other operating income/expenses
\u20ac\u00a0million | 2023 | 2022 |
Provisions | - 17 | - 8 |
Impairment intangibles and PPE | 0 | - 2 |
Impairment trade and other receivable | 26 | - 23 |
Gain/Loss (-) on disposal of non-current assets | - 2 | - 2 |
Reimbursement by third parties for development expenses | 10 | 5 |
Grants received | 2 | 11 |
Collaboration agreement for the development and commercialization of EVENITY\u00ae | 368 | 240 |
Other income/expenses (-) | 179 | - 5 |
Total other operating income / expenses (-) | \u00a0566 | \u00a0216 |
The result of the collaboration agreement with Amgen for the development and commercialization of EVENITY\u00aeamounted to \u20ac 368 million income (compared to \u20ac 240 million income in 2022). All recharges of development and commercialization expenses to/from Amgen are classified as other operating income/expenses. The equivalent total net recharges as per December 31, 2023 consisted of \u20ac 373 million marketing
and selling income (\u20ac 246 million in 2022) and \u20ac - 5 million development expenses (\u20ac - 6 million in 2022).
The provisions are mostly related to VAT risks and grant recoverability risks.
The Group accounted the sale of an established brands portfolio of five prescription medicines commercialized in Europe (\u20ac 145 million).
13. Other operating income/expenses
\u20ac\u00a0million | 2023 | 2022 |
Provisions | - 17 | - 8 |
Impairment intangibles and PPE | 0 | - 2 |
Impairment trade and other receivable | 26 | - 23 |
Gain/Loss (-) on disposal of non-current assets | - 2 | - 2 |
Reimbursement by third parties for development expenses | 10 | 5 |
Grants received | 2 | 11 |
Collaboration agreement for the development and commercialization of EVENITY\u00ae | 368 | 240 |
Other income/expenses (-) | 179 | - 5 |
Total other operating income / expenses (-) | \u00a0566 | \u00a0216 |
The result of the collaboration agreement with Amgen for the development and commercialization of EVENITY\u00aeamounted to \u20ac 368 million income (compared to \u20ac 240 million income in 2022). All recharges of development and commercialization expenses to/from Amgen are classified as other operating income/expenses. The equivalent total net recharges as per December 31, 2023 consisted of \u20ac 373 million marketing
and selling income (\u20ac 246 million in 2022) and \u20ac - 5 million development expenses (\u20ac - 6 million in 2022).
The provisions are mostly related to VAT risks and grant recoverability risks.
The Group accounted the sale of an established brands portfolio of five prescription medicines commercialized in Europe (\u20ac 145 million).
13. Other operating income/expenses
\u20ac\u00a0million | 2023 | 2022 |
Provisions | - 17 | - 8 |
Impairment intangibles and PPE | 0 | - 2 |
Impairment trade and other receivable | 26 | - 23 |
Gain/Loss (-) on disposal of non-current assets | - 2 | - 2 |
Reimbursement by third parties for development expenses | 10 | 5 |
Grants received | 2 | 11 |
Collaboration agreement for the development and commercialization of EVENITY\u00ae | 368 | 240 |
Other income/expenses (-) | 179 | - 5 |
Total other operating income / expenses (-) | \u00a0566 | \u00a0216 |
The result of the collaboration agreement with Amgen for the development and commercialization of EVENITY\u00aeamounted to \u20ac 368 million income (compared to \u20ac 240 million income in 2022). All recharges of development and commercialization expenses to/from Amgen are classified as other operating income/expenses. The equivalent total net recharges as per December 31, 2023 consisted of \u20ac 373 million marketing
and selling income (\u20ac 246 million in 2022) and \u20ac - 5 million development expenses (\u20ac - 6 million in 2022).
The provisions are mostly related to VAT risks and grant recoverability risks.
The Group accounted the sale of an established brands portfolio of five prescription medicines commercialized in Europe (\u20ac 145 million).
14. Impairment ofnon-financial assets
A review of the recoverable amounts of the Group\u2019s assets did not result in the recognition of impairment charges (2022: \u20ac 0 million).
An impairment of \u20ac 5 million was recognized on the FesoterodineIP rights for U.S. and Europe as loss of exclusivity was reached for these regions when rights were acquired upon settlement of the Toviaz\u00aelitigation.
No impairment charges for Group property, plant and equipment were recognized in 2023 (2022: \u20ac 0 million).
No reasonably possible change in a key assumption on which management has based its determination of the assets recoverable amounts would cause the assets carrying amount to exceed its recoverable amount.
17. Financial income and financial expenses
The net financial expenses for the year amounted to \u20ac 163 million (2022: \u20ac 74 million). The breakdown of the financial expenses and financial income is as follows:
Financial Expenses | ||
\u20ac\u00a0million | 2023 | 2022 |
Interest expenses on: | ||
Retail and Institutional bonds | - 15 | - 16 |
Other borrowings | - 124 | - 51 |
Financial charges on leases | - 5 | - 4 |
Impairment of long term loans granted | 0 | - 2 |
Net loss on interest rate derivatives | 0 | - 1 |
Net fair value losses on foreign exchange derivatives | 0 | - 33 |
Net foreign exchange losses | - 54 | 0 |
Net other financial income/expenses (-) | - 12 | - 5 |
Total financial expenses | - 210 | - 112 |
Financial Income | ||
\u20ac\u00a0million | 2023 | 2022 |
Interest income on: | ||
\u00a0\u00a0 Bank deposits | 22 | 4 |
\u00a0\u00a0 Interest rate derivatives | 5 | 8 |
Net gain on interest rate derivatives | 3 | 0 |
Net fair value gain on foreign exchange derivatives | 17 | 0 |
Net foreign exchange gains | 0 | 26 |
Total financial income | 47 | 38 |
17. Financial income and financial expenses
The net financial expenses for the year amounted to \u20ac 163 million (2022: \u20ac 74 million). The breakdown of the financial expenses and financial income is as follows:
Financial Expenses | ||
\u20ac\u00a0million | 2023 | 2022 |
Interest expenses on: | ||
Retail and Institutional bonds | - 15 | - 16 |
Other borrowings | - 124 | - 51 |
Financial charges on leases | - 5 | - 4 |
Impairment of long term loans granted | 0 | - 2 |
Net loss on interest rate derivatives | 0 | - 1 |
Net fair value losses on foreign exchange derivatives | 0 | - 33 |
Net foreign exchange losses | - 54 | 0 |
Net other financial income/expenses (-) | - 12 | - 5 |
Total financial expenses | - 210 | - 112 |
Financial Income | ||
\u20ac\u00a0million | 2023 | 2022 |
Interest income on: | ||
\u00a0\u00a0 Bank deposits | 22 | 4 |
\u00a0\u00a0 Interest rate derivatives | 5 | 8 |
Net gain on interest rate derivatives | 3 | 0 |
Net fair value gain on foreign exchange derivatives | 17 | 0 |
Net foreign exchange gains | 0 | 26 |
Total financial income | 47 | 38 |
17. Financial income and financial expenses
The net financial expenses for the year amounted to \u20ac 163 million (2022: \u20ac 74 million). The breakdown of the financial expenses and financial income is as follows:
Financial Expenses | ||
\u20ac\u00a0million | 2023 | 2022 |
Interest expenses on: | ||
Retail and Institutional bonds | - 15 | - 16 |
Other borrowings | - 124 | - 51 |
Financial charges on leases | - 5 | - 4 |
Impairment of long term loans granted | 0 | - 2 |
Net loss on interest rate derivatives | 0 | - 1 |
Net fair value losses on foreign exchange derivatives | 0 | - 33 |
Net foreign exchange losses | - 54 | 0 |
Net other financial income/expenses (-) | - 12 | - 5 |
Total financial expenses | - 210 | - 112 |
Financial Income | ||
\u20ac\u00a0million | 2023 | 2022 |
Interest income on: | ||
\u00a0\u00a0 Bank deposits | 22 | 4 |
\u00a0\u00a0 Interest rate derivatives | 5 | 8 |
Net gain on interest rate derivatives | 3 | 0 |
Net fair value gain on foreign exchange derivatives | 17 | 0 |
Net foreign exchange gains | 0 | 26 |
Total financial income | 47 | 38 |
17. Financial income and financial expenses
The net financial expenses for the year amounted to \u20ac 163 million (2022: \u20ac 74 million). The breakdown of the financial expenses and financial income is as follows:
Financial Expenses | ||
\u20ac\u00a0million | 2023 | 2022 |
Interest expenses on: | ||
Retail and Institutional bonds | - 15 | - 16 |
Other borrowings | - 124 | - 51 |
Financial charges on leases | - 5 | - 4 |
Impairment of long term loans granted | 0 | - 2 |
Net loss on interest rate derivatives | 0 | - 1 |
Net fair value losses on foreign exchange derivatives | 0 | - 33 |
Net foreign exchange losses | - 54 | 0 |
Net other financial income/expenses (-) | - 12 | - 5 |
Total financial expenses | - 210 | - 112 |
Financial Income | ||
\u20ac\u00a0million | 2023 | 2022 |
Interest income on: | ||
\u00a0\u00a0 Bank deposits | 22 | 4 |
\u00a0\u00a0 Interest rate derivatives | 5 | 8 |
Net gain on interest rate derivatives | 3 | 0 |
Net fair value gain on foreign exchange derivatives | 17 | 0 |
Net foreign exchange gains | 0 | 26 |
Total financial income | 47 | 38 |
17. Financial income and financial expenses
The net financial expenses for the year amounted to \u20ac 163 million (2022: \u20ac 74 million). The breakdown of the financial expenses and financial income is as follows:
Financial Expenses | ||
\u20ac\u00a0million | 2023 | 2022 |
Interest expenses on: | ||
Retail and Institutional bonds | - 15 | - 16 |
Other borrowings | - 124 | - 51 |
Financial charges on leases | - 5 | - 4 |
Impairment of long term loans granted | 0 | - 2 |
Net loss on interest rate derivatives | 0 | - 1 |
Net fair value losses on foreign exchange derivatives | 0 | - 33 |
Net foreign exchange losses | - 54 | 0 |
Net other financial income/expenses (-) | - 12 | - 5 |
Total financial expenses | - 210 | - 112 |
Financial Income | ||
\u20ac\u00a0million | 2023 | 2022 |
Interest income on: | ||
\u00a0\u00a0 Bank deposits | 22 | 4 |
\u00a0\u00a0 Interest rate derivatives | 5 | 8 |
Net gain on interest rate derivatives | 3 | 0 |
Net fair value gain on foreign exchange derivatives | 17 | 0 |
Net foreign exchange gains | 0 | 26 |
Total financial income | 47 | 38 |
17. Financial income and financial expenses
The net financial expenses for the year amounted to \u20ac 163 million (2022: \u20ac 74 million). The breakdown of the financial expenses and financial income is as follows:
Financial Expenses | ||
\u20ac\u00a0million | 2023 | 2022 |
Interest expenses on: | ||
Retail and Institutional bonds | - 15 | - 16 |
Other borrowings | - 124 | - 51 |
Financial charges on leases | - 5 | - 4 |
Impairment of long term loans granted | 0 | - 2 |
Net loss on interest rate derivatives | 0 | - 1 |
Net fair value losses on foreign exchange derivatives | 0 | - 33 |
Net foreign exchange losses | - 54 | 0 |
Net other financial income/expenses (-) | - 12 | - 5 |
Total financial expenses | - 210 | - 112 |
17. Financial income and financial expenses
The net financial expenses for the year amounted to \u20ac 163 million (2022: \u20ac 74 million). The breakdown of the financial expenses and financial income is as follows:
Financial Expenses | ||
\u20ac\u00a0million | 2023 | 2022 |
Interest expenses on: | ||
Retail and Institutional bonds | - 15 | - 16 |
Other borrowings | - 124 | - 51 |
Financial charges on leases | - 5 | - 4 |
Impairment of long term loans granted | 0 | - 2 |
Net loss on interest rate derivatives | 0 | - 1 |
Net fair value losses on foreign exchange derivatives | 0 | - 33 |
Net foreign exchange losses | - 54 | 0 |
Net other financial income/expenses (-) | - 12 | - 5 |
Total financial expenses | - 210 | - 112 |
18. Income tax expenses (-) /credit
\u20ac million | 2023 | 2022 |
Current income taxes | - 158 | - 183 |
Deferred income taxes | 60 | 92 |
Total income tax expense (-)/credit | - 98 | - 91 |
The Group operates internationally, implying being subject to income taxes in many different tax jurisdictions.
The income tax expense on the Group\u2019s profit before tax slightly differs from the theoretical amount that would arise
using the weighted average tax rate applicable to profits (losses) of the consolidated companies.
Income taxes recognized in the income statement can be detailed as follows:
\u20ac million | 2023 | 2022 |
Profit before income taxes | 441 | 511 |
Income tax expense (-) calculated at domestic tax rates applicable in the respective countries | - 96 | - 96 |
Theoretical income tax rate | 22 % | 19 % |
Reported current income tax | - 158 | - 183 |
Reported deferred income tax | 60 | 92 |
Total reported tax charge | - 98 | - 91 |
Effective income tax rate | 22 % | 18 % |
Difference between theoretical and reported tax | - 2 | 5 |
Expenses non-deductible for tax purposes | - 63 | - 45 |
Non-taxable income | - 9 | - 10 |
Increase (-) / decrease of liabilities for uncertain tax positions | 49 | 20 |
Tax credits | 126 | 98 |
Variation in tax rates | - 30 | - 2 |
Current tax adjustments related to prior years | 23 | 3 |
Deferred tax adjustments related to prior years | 4 | - 8 |
Net effect of previously unrecognized DTA and non-recognition of current year deferred tax assets | - 104 | - 48 |
Withholding tax | - 1 | - 2 |
Other taxes | 2 | - 4 |
Total difference between theoretical and reported income tax | - 2 | 5 |
The theoretical income tax rate is at 22% compared to 19% in the previous year.
The effective tax rate of 22% stems from a current tax charge and a deferred tax credit. The key drivers for the rate can be summarized as follows:
Current Tax:
Impact of predominantly R&D related tax incentives in key jurisdictions.
U.S. regulations requiring taxpayers to capitalize and amortize R&D expenses.
Higher disallowed expenses relating to sales and marketing supporting UCB\u2019s product launch agenda.
Reversal of a number of reserves for uncertain tax positions in key jurisdictions and the positive outcome of a federal tax audit in a key country.
Deferred Tax:
Increase to the tax rate in respect of unrecognized deferred tax assets, notably carry-forward losses and innovation income deduction mainly fueled by the launch expenses. This increase was partially compensated with the recognition of a deferred tax asset in the hands of the main IP owner (see Note 32).
Recognition of additional deferred tax assets on R&D tax credits which will be offset against future taxable income.
Remeasurement of tax attributes based upon the level of projected future taxable profits.
Factors affecting the tax charge in future years
The Group is aware of many factors that could impact the future effective tax rate of the Group, in particular the profit/losses mix between different territories in which the Group operates, the amount of unrecognized losses and other tax attributes that in future can be recognized as a deferred tax asset on the statement of financial position and the outcome of ongoing and future tax audits.
Corporate restructuring, acquisitions, disposals and other transactions may also impact the Group\u2019s future tax charge.
Changes to tax legislation in jurisdictions where the Group operates as well as the impact of international tax rules may also have a major impact. UCB is closely following up the implementation of the international tax reform (\u201cOECD Pillar 2\u201d) that has been enacted into local legislation in most jurisdictions in 2023 with effect as from January 1, 2024. These new international tax rules will have an impact on UCB\u2019s longer term tax position (see Note32).
Next to the OECD developments, UCB follows up closely on tax developments in the entire EU and in key jurisdictions with a substantial sales or R&D footprint, such as Belgium, the U.S. and the U.K.
20. Intangible assets
2023 \u20ac\u00a0million | Trademarks, patents and licenses | ||
Other | Total | ||
Gross carrying amount at January 1 | 7 413 | 503 | 7 917 |
Additions | 33 | 51 | 84 |
Disposals | - 30 | - 23 | - 53 |
Transfer from one heading to another | 0 | 1 | 1 |
Divestments | 0 | - 9 | - 9 |
Effect of movements in exchange rates | - 158 | - 1 | - 159 |
Gross carrying amount at December 31 | 7 258 | 522 | 7 780 |
Accumulated amortization and impairment losses at January 1 | - 2 789 | - 312 | - 3 101 |
Amortization charge for the year | - 487 | - 46 | - 533 |
Disposals | 29 | 22 | 51 |
Impairment losses recognized in the income statement | - 5 | 0 | - 5 |
Divestments | 0 | 6 | 6 |
Effect of movements in exchange rates | 34 | 0 | 34 |
Accumulated amortization and impairment losses at December 31 | - 3 218 | - 330 | - 3 548 |
Net carrying amount at December 31 | 4 040 | 192 | 4 232 |
2022 \u20ac\u00a0million | |||
Trademarks, patents and licenses | |||
Other | Total | ||
Gross carrying amount at January 1 | 5 359 | 461 | 5 820 |
Additions | 45 | 45 | 90 |
Disposals | - 5 | - 21 | - 26 |
Business combinations | 1 803 | 0 | 1 803 |
FX on Business combinations | 63 | 0 | 63 |
Transfer from one heading to another | 4 | 15 | 19 |
Effect of movements in exchange rates | 144 | 3 | 147 |
Gross carrying amount at December 31 | 7 413 | 503 | 7 916 |
Accumulated amortization and impairment losses at January 1 | - 2 376 | - 285 | - 2 661 |
Amortization charge for the year | - 398 | - 44 | - 442 |
Disposals | 8 | 20 | 28 |
Impairment losses recognized in the income statement | - 2 | 0 | - 2 |
Transfer from one heading to another | 2 | 0 | 2 |
Effect of movements in exchange rates | - 23 | - 2 | - 25 |
Accumulated amortization and impairment losses at December 31 | - 2 789 | - 311 | - 3 100 |
Net carrying amount at December 31 | 4 624 | 192 | 4 816 |
The Group amortizes all intangible assets once they are placed in service. The amortization of intangible assets is allocated to cost of sales for all intangible assets that are related to compounds. The amortization charges related to software are allocated to the functions that use this software.
The majority of the Group\u2019s intangible assets arose from previous acquisitions. During 2023, the Group acquired intangible assets totaling \u20ac 84 million (2022: \u20ac 90 million). These additions stem from in-licensing deals, software and capitalized eligible development costs and capitalization of external development expenses for post approval studies. Regarding the software and eligible software development costs, the Group capitalized \u20ac 27 million (2022: \u20ac 15 million).
In 2022, UCB recognized intangible assets of \u20ac 1 803 million from business combinations with Zogenix, Inc. (refer to Note 8).
Disposals in 2023 and in 2022 mainly relate to old software not used anymore.
During the year, the Group recognized total impairment charges of \u20ac 5 million (2022: \u20ac 2 million).
The amortization charge for the period amounted to \u20ac 533 million (2022: \u20ac 442 million).
Divestments with a net book value of \u20ac 3 million relate to the intangibles of Nile Al, Inc.
There was also a transfer of assets for \u20ac 1 million from property, plant and equipment to intangibles.
Furthermore, there was an impact from translation of foreign currencies of \u20ac - 125 million in 2023 (2022: \u20ac 122 million).
Other intangible assets are primarily comprised of software and in-process development projects. The in-process development project assets are not amortized until they are available for use (i.e. when related products are launched for sale) and transferred to the licenses caption.
21. Goodwill
\u20ac\u00a0million | 2023 | 2022 |
Net book value at January 1 | 5 340 | 5 173 |
Acquisition | - 5 | 19 |
FX on acquisition | 0 | 1 |
Effect of movements in exchange rates | - 80 | 147 |
Net book value at December 31 | 5 254 | 5 340 |
The Group tests goodwill for impairment annually or more frequently if there are indications that goodwill might be impaired. For the purpose of the impairment testing, the Group operates as one segment, Biopharmaceuticals, and has one single cash generating unit (CGU), which represents the lowest level at which the goodwill is monitored.
The recoverable amount of the CGU is determined based on the value-in-use calculations and the methodology applied for performing the impairment testing has not been modified compared to 2022.
Key assumptions
The calculations performed are based on the cash flow projections as derived from the financials underlying the 10-year strategic plan approved by management and the Board of Directors. Given the nature of the industry, the long-term projections are used to fully model the appropriate product lifecycles based on the patent expiry and therapeutic area. These long-term projections, which are based on past performance and management\u2019s expectations of market developments, are adjusted for specific risks and include:
the revenue growth rates of newly launched products;
the probability of reaching commercial stage for new products and or indications;
the probability of success of future product launches and the expected dates thereof;
the post-patent expiry erosion.
The key assumptions, when comparing to 2022, were adapted taking into account the latest developments of the probabilities of success and the post-patent expiry erosion.
For the \u201cvalue in use\u201d calculations required for the impairment testing, a discount rate of 7.17% was used.
Taking into account current market evolutions, the cash flows beyond the projected forecasted period (terminal value) are extrapolated using an estimated growth rate of 2%, compared to 2% in 2022. The growth rate does not exceed the long-term average growth rate for the relevant territories in which the CGU operates.
The Group has most of its revenue and expenses in EUR- and USD-based countries. The following important exchange rates were used in preparing the future cash flows:
10 Years Projection | 2022 | |
USD | 1.08 - 1.14 | 1.15 - 1.16 |
GBP | 0.84 - 0.88 | 0.85 - 0.96 |
JPY | 128 - 155 | 111 - 133 |
CHF | 0.91 - 0.98 | 1.02 - 1.04 |
Starting from risk-free short-term LIBOR EUR 6 months and long-term EU generic government bonds 20 years (2022: 20\u00a0years), the discount rate applied is determined based on the weighted average cost of capital for DCF models, including the 20 years (2022: 20 year) benchmark cost of debt and equity, adjusted to reflect the specific asset and
country risks associated with the CGU. Given the industry, the Group used a discount rate of 7.17% (2022: 6.64%). The\u00a0discount rate is reviewed at least annually.
Since after-tax cash flows are incorporated into the calculation of the value-in-use of the CGU, a post-tax discount rate is used in order to remain consistent.
The use of the post-tax discount rate approximates the result of using a pre-tax rate applied to pre-tax cash flows. A tax rate up to 23% was used (2022: 20%).
Sensitivity analysis
Based on the above, management assessed that no reasonable change in any of the key assumptions for the determination of the recoverable amount would cause the carrying value of the CGU to materially exceed its recoverable amount. For information purposes, the sensitivity analysis using a -\u00a03% perpetual growth rate combined with an overall discount rate below 18% would not result in an impairment of the goodwill.
20. Intangible assets
2023 \u20ac\u00a0million | Trademarks, patents and licenses | ||
Other | Total | ||
Gross carrying amount at January 1 | 7 413 | 503 | 7 917 |
Additions | 33 | 51 | 84 |
Disposals | - 30 | - 23 | - 53 |
Transfer from one heading to another | 0 | 1 | 1 |
Divestments | 0 | - 9 | - 9 |
Effect of movements in exchange rates | - 158 | - 1 | - 159 |
Gross carrying amount at December 31 | 7 258 | 522 | 7 780 |
Accumulated amortization and impairment losses at January 1 | - 2 789 | - 312 | - 3 101 |
Amortization charge for the year | - 487 | - 46 | - 533 |
Disposals | 29 | 22 | 51 |
Impairment losses recognized in the income statement | - 5 | 0 | - 5 |
Divestments | 0 | 6 | 6 |
Effect of movements in exchange rates | 34 | 0 | 34 |
Accumulated amortization and impairment losses at December 31 | - 3 218 | - 330 | - 3 548 |
Net carrying amount at December 31 | 4 040 | 192 | 4 232 |
2022 \u20ac\u00a0million | |||
Trademarks, patents and licenses | |||
Other | Total | ||
Gross carrying amount at January 1 | 5 359 | 461 | 5 820 |
Additions | 45 | 45 | 90 |
Disposals | - 5 | - 21 | - 26 |
Business combinations | 1 803 | 0 | 1 803 |
FX on Business combinations | 63 | 0 | 63 |
Transfer from one heading to another | 4 | 15 | 19 |
Effect of movements in exchange rates | 144 | 3 | 147 |
Gross carrying amount at December 31 | 7 413 | 503 | 7 916 |
Accumulated amortization and impairment losses at January 1 | - 2 376 | - 285 | - 2 661 |
Amortization charge for the year | - 398 | - 44 | - 442 |
Disposals | 8 | 20 | 28 |
Impairment losses recognized in the income statement | - 2 | 0 | - 2 |
Transfer from one heading to another | 2 | 0 | 2 |
Effect of movements in exchange rates | - 23 | - 2 | - 25 |
Accumulated amortization and impairment losses at December 31 | - 2 789 | - 311 | - 3 100 |
Net carrying amount at December 31 | 4 624 | 192 | 4 816 |
The Group amortizes all intangible assets once they are placed in service. The amortization of intangible assets is allocated to cost of sales for all intangible assets that are related to compounds. The amortization charges related to software are allocated to the functions that use this software.
The majority of the Group\u2019s intangible assets arose from previous acquisitions. During 2023, the Group acquired intangible assets totaling \u20ac 84 million (2022: \u20ac 90 million). These additions stem from in-licensing deals, software and capitalized eligible development costs and capitalization of external development expenses for post approval studies. Regarding the software and eligible software development costs, the Group capitalized \u20ac 27 million (2022: \u20ac 15 million).
In 2022, UCB recognized intangible assets of \u20ac 1 803 million from business combinations with Zogenix, Inc. (refer to Note 8).
Disposals in 2023 and in 2022 mainly relate to old software not used anymore.
During the year, the Group recognized total impairment charges of \u20ac 5 million (2022: \u20ac 2 million).
The amortization charge for the period amounted to \u20ac 533 million (2022: \u20ac 442 million).
Divestments with a net book value of \u20ac 3 million relate to the intangibles of Nile Al, Inc.
There was also a transfer of assets for \u20ac 1 million from property, plant and equipment to intangibles.
Furthermore, there was an impact from translation of foreign currencies of \u20ac - 125 million in 2023 (2022: \u20ac 122 million).
Other intangible assets are primarily comprised of software and in-process development projects. The in-process development project assets are not amortized until they are available for use (i.e. when related products are launched for sale) and transferred to the licenses caption.
21. Goodwill
\u20ac\u00a0million | 2023 | 2022 |
Net book value at January 1 | 5 340 | 5 173 |
Acquisition | - 5 | 19 |
FX on acquisition | 0 | 1 |
Effect of movements in exchange rates | - 80 | 147 |
Net book value at December 31 | 5 254 | 5 340 |
The Group tests goodwill for impairment annually or more frequently if there are indications that goodwill might be impaired. For the purpose of the impairment testing, the Group operates as one segment, Biopharmaceuticals, and has one single cash generating unit (CGU), which represents the lowest level at which the goodwill is monitored.
The recoverable amount of the CGU is determined based on the value-in-use calculations and the methodology applied for performing the impairment testing has not been modified compared to 2022.
Key assumptions
The calculations performed are based on the cash flow projections as derived from the financials underlying the 10-year strategic plan approved by management and the Board of Directors. Given the nature of the industry, the long-term projections are used to fully model the appropriate product lifecycles based on the patent expiry and therapeutic area. These long-term projections, which are based on past performance and management\u2019s expectations of market developments, are adjusted for specific risks and include:
the revenue growth rates of newly launched products;
the probability of reaching commercial stage for new products and or indications;
the probability of success of future product launches and the expected dates thereof;
the post-patent expiry erosion.
The key assumptions, when comparing to 2022, were adapted taking into account the latest developments of the probabilities of success and the post-patent expiry erosion.
For the \u201cvalue in use\u201d calculations required for the impairment testing, a discount rate of 7.17% was used.
Taking into account current market evolutions, the cash flows beyond the projected forecasted period (terminal value) are extrapolated using an estimated growth rate of 2%, compared to 2% in 2022. The growth rate does not exceed the long-term average growth rate for the relevant territories in which the CGU operates.
The Group has most of its revenue and expenses in EUR- and USD-based countries. The following important exchange rates were used in preparing the future cash flows:
10 Years Projection | 2022 | |
USD | 1.08 - 1.14 | 1.15 - 1.16 |
GBP | 0.84 - 0.88 | 0.85 - 0.96 |
JPY | 128 - 155 | 111 - 133 |
CHF | 0.91 - 0.98 | 1.02 - 1.04 |
Starting from risk-free short-term LIBOR EUR 6 months and long-term EU generic government bonds 20 years (2022: 20\u00a0years), the discount rate applied is determined based on the weighted average cost of capital for DCF models, including the 20 years (2022: 20 year) benchmark cost of debt and equity, adjusted to reflect the specific asset and
country risks associated with the CGU. Given the industry, the Group used a discount rate of 7.17% (2022: 6.64%). The\u00a0discount rate is reviewed at least annually.
Since after-tax cash flows are incorporated into the calculation of the value-in-use of the CGU, a post-tax discount rate is used in order to remain consistent.
The use of the post-tax discount rate approximates the result of using a pre-tax rate applied to pre-tax cash flows. A tax rate up to 23% was used (2022: 20%).
Sensitivity analysis
Based on the above, management assessed that no reasonable change in any of the key assumptions for the determination of the recoverable amount would cause the carrying value of the CGU to materially exceed its recoverable amount. For information purposes, the sensitivity analysis using a -\u00a03% perpetual growth rate combined with an overall discount rate below 18% would not result in an impairment of the goodwill.
22. Property, plant and equipment
2023 \u20ac\u00a0million | Land and buildings | Plant and machinery | Office, computer equipment, vehicles and other | ||
Assets under construction | |||||
Total | |||||
Gross carrying amount at January 1 | 903 | 1 082 | 181 | 541 | 2 707 |
Additions | 23 | 39 | 44 | 214 | 320 |
Business combinations | 0 | 0 | 0 | 0 | 0 |
Disposals | - 11 | - 20 | - 27 | - 3 | - 61 |
Transfer from one heading to another | 30 | 64 | 5 | - 112 | - 13 |
Effect of movements in exchange rates | 8 | 23 | - 2 | 1 | 30 |
Gross carrying amount at December 31 | 953 | 1 188 | 201 | 641 | 2 983 |
Accumulated depreciation at January 1 | - 440 | - 713 | - 121 | 0 | - 1 273 |
Depreciation charge for the year | - 51 | - 75 | - 32 | 0 | - 158 |
Disposals | 10 | 14 | 27 | 0 | 51 |
Transfers from one heading to another | 2 | 11 | 0 | 0 | 13 |
Business combinations | 0 | 0 | 0 | 0 | 0 |
Effect of movements in exchange rates | - 4 | - 16 | 0 | 0 | - 20 |
Accumulated depreciation at December 31 | - 483 | - 779 | - 126 | 0 | - 1 388 |
Net carrying amount at December 31 | 470 | 408 | 76 | 641 | 1 595 |
2022 \u20ac\u00a0million | Land and buildings | Plant and machinery | Office, computer equipment, vehicles and other | ||
Assets under construction | Total | ||||
Gross carrying amount at January 1 | 828 | 1 007 | 167 | 418 | 2 420 |
Additions | 12 | 28 | 33 | 231 | 304 |
Business combinations | 20 | 0 | 1 | 0 | 21 |
Disposals | - 4 | - 5 | - 27 | 0 | - 36 |
Transfer from one heading to another | 43 | 41 | 5 | - 110 | - 21 |
Effect of movements in exchange rates | 4 | 11 | 2 | 2 | 19 |
Gross carrying amount at December 31 | 903 | 1 082 | 181 | 541 | 2 707 |
Accumulated depreciation at January 1 | - 390 | - 640 | - 115 | 0 | - 1 145 |
Depreciation charge for the year | - 48 | - 70 | - 30 | 0 | - 148 |
Disposals | 3 | 3 | 27 | 0 | 33 |
Business combinations | - 4 | 0 | - 1 | 0 | - 5 |
Effect of movements in exchange rates | - 2 | - 6 | - 2 | 0 | - 10 |
Accumulated depreciation at December 31 | - 440 | - 713 | - 121 | 0 | - 1 273 |
Net carrying amount at December 31 | 463 | 369 | 60 | 541 | 1 434 |
None of the Group property, plant and equipment is subject to restrictions on title nor has it been pledged as security for liabilities.
During 2023, the Group acquired property, plant and equipment totaling \u20ac 320 million (2022: \u20ac 304 million). These additions include right-of-use assets for \u20ac 68 million (2022: \u20ac 39 million). \u20ac 51 million relates to Bioplant Braine-l\u2019Alleud site (Belgium), \u20ac 47 million relates to the Gene Therapy site (BE) and \u20ac 38 million relates to the new campus site in the U.K. all reported in assets under construction. In 2022, tangible assets with net book value of \u20ac 16 million were recognized from Zogenix, Inc. acquisition (see Note 8). Other additions relate to
the revamping of the office environment, building facilities and IT hardware and other plant facilities and equipment.
During the year, the Group did not recognize any impairment expenses (2022: impairment of \u20ac 0 million).
The depreciation charge for the year amounts to \u20ac 158 million (2022: \u20ac 148 million) and includes the depreciation on the right-of-use assets (\u20ac 48 million).
Capitalized borrowing costs
No borrowing costs were capitalized during 2023 (2022: \u20ac 0 million).
23. Financial and other assets
23.1 Non-current financial and other assets
\u20ac\u00a0million | Note | 2023 | 2022 |
Financial assets at FVOCI (excluding derivatives) | 128 | 134 | |
Cash deposits | 17 | 16 | |
Derivative financial instruments | 31 | 28 | |
Reimbursement rights with respect to German defined benefit plans | 24 | 24 | |
Other financial assets | 10 | 16 | |
Non-current financial and other assets | 210 | 218 |
23.2 Current financial and other assets
\u20ac\u00a0million | Note | 2023 | 2022 |
Clinical trial materials | 133 | 196 | |
Financial assets at FVOCI (excluding derivatives) | 62 | 47 | |
Loans granted to third parties | 0 | 3 | |
Derivative financial instruments\u00a0 | 46 | 123 | |
Current financial and other assets | 241 | 369 |
23.3 Financial assets at fair value through other comprehensive income (FVOCI) (excluding derivatives)
The current and non-current financial assets at FVOCI (excludingderivatives) comprise the following:
\u20ac\u00a0million | 2023 | 2022 |
Equity securities | 190 | 181 |
Financial assets at FVOCI (excluding derivatives) | 190 | 181 |
The movement in the carrying values of the financial assets at FVOCI (excludingderivatives) is as follows:
2023 | 2022 | |
\u20ac\u00a0million | Equity securities | Equity securities |
At\u00a0January 1 | 181 | 179 |
Additions | 35 | 22 |
Disposals | - 3 | - 20 |
Fair value gains/losses (-) going through OCI | - 23 | 0 |
At December 31 | 190 | 181 |
For more information on the derivatives of which fair value movements are accounted for through OCI, we refer to Note 39.
For the financial assets that are valued at amortized cost, the carrying amount approximates the fair value.
The Group does not have any investments in debt instruments.
The equity securities include investments in UCB Ventures as well as investments in companies where UCB does not have significant influence. These investments have been classified as financial assets at FVOCI. The investments are measured at fair value. All fair value gains and losses are presented in OCI.
The additions to financial assets at FVOCI in the year include \u20ac 16 million investments made in UCB Ventures, UCB\u2019s corporate venture fund. The fair value gains and losses going through OCI resulted in a net loss of \u20ac 23 million.
The current financial assets at FVOCI (\u20ac 62 million in 2023 compared to \u20ac 47 million in 2022) relate to vested long term
incentives granted to employees. These are held in custody for the account of the relevant participants on a separate securities account of UCB. There is a corresponding liability which is recorded in Other Payables (Note 35). As these shares are held for the account of the relevant participants and not for UCB\u2019s account, these are not treated as treasury shares in accordance with IAS 32.33.
23.4 Investment in associates
The Group has no investments in associates.
23.5 Joint operations
No joint operations were entered into by the Group in 2023.
23.6 Subsidiaries with material non-controlling interests
As of December 31, 2023 and 2022 there is no accumulated non-controlling interest.
23. Financial and other assets
23.1 Non-current financial and other assets
\u20ac\u00a0million | Note | 2023 | 2022 |
Financial assets at FVOCI (excluding derivatives) | 128 | 134 | |
Cash deposits | 17 | 16 | |
Derivative financial instruments | 31 | 28 | |
Reimbursement rights with respect to German defined benefit plans | 24 | 24 | |
Other financial assets | 10 | 16 | |
Non-current financial and other assets | 210 | 218 |
23.2 Current financial and other assets
\u20ac\u00a0million | Note | 2023 | 2022 |
Clinical trial materials | 133 | 196 | |
Financial assets at FVOCI (excluding derivatives) | 62 | 47 | |
Loans granted to third parties | 0 | 3 | |
Derivative financial instruments\u00a0 | 46 | 123 | |
Current financial and other assets | 241 | 369 |
23.3 Financial assets at fair value through other comprehensive income (FVOCI) (excluding derivatives)
The current and non-current financial assets at FVOCI (excludingderivatives) comprise the following:
\u20ac\u00a0million | 2023 | 2022 |
Equity securities | 190 | 181 |
Financial assets at FVOCI (excluding derivatives) | 190 | 181 |
The movement in the carrying values of the financial assets at FVOCI (excludingderivatives) is as follows:
2023 | 2022 | |
\u20ac\u00a0million | Equity securities | Equity securities |
At\u00a0January 1 | 181 | 179 |
Additions | 35 | 22 |
Disposals | - 3 | - 20 |
Fair value gains/losses (-) going through OCI | - 23 | 0 |
At December 31 | 190 | 181 |
For more information on the derivatives of which fair value movements are accounted for through OCI, we refer to Note 39.
For the financial assets that are valued at amortized cost, the carrying amount approximates the fair value.
The Group does not have any investments in debt instruments.
The equity securities include investments in UCB Ventures as well as investments in companies where UCB does not have significant influence. These investments have been classified as financial assets at FVOCI. The investments are measured at fair value. All fair value gains and losses are presented in OCI.
The additions to financial assets at FVOCI in the year include \u20ac 16 million investments made in UCB Ventures, UCB\u2019s corporate venture fund. The fair value gains and losses going through OCI resulted in a net loss of \u20ac 23 million.
The current financial assets at FVOCI (\u20ac 62 million in 2023 compared to \u20ac 47 million in 2022) relate to vested long term
incentives granted to employees. These are held in custody for the account of the relevant participants on a separate securities account of UCB. There is a corresponding liability which is recorded in Other Payables (Note 35). As these shares are held for the account of the relevant participants and not for UCB\u2019s account, these are not treated as treasury shares in accordance with IAS 32.33.
23.4 Investment in associates
The Group has no investments in associates.
23.5 Joint operations
No joint operations were entered into by the Group in 2023.
23.6 Subsidiaries with material non-controlling interests
As of December 31, 2023 and 2022 there is no accumulated non-controlling interest.
23.1 Non-current financial and other assets
\u20ac\u00a0million | Note | 2023 | 2022 |
Financial assets at FVOCI (excluding derivatives) | 128 | 134 | |
Cash deposits | 17 | 16 | |
Derivative financial instruments | 31 | 28 | |
Reimbursement rights with respect to German defined benefit plans | 24 | 24 | |
Other financial assets | 10 | 16 | |
Non-current financial and other assets | 210 | 218 |
23.2 Current financial and other assets
\u20ac\u00a0million | Note | 2023 | 2022 |
Clinical trial materials | 133 | 196 | |
Financial assets at FVOCI (excluding derivatives) | 62 | 47 | |
Loans granted to third parties | 0 | 3 | |
Derivative financial instruments\u00a0 | 46 | 123 | |
Current financial and other assets | 241 | 369 |
23.3 Financial assets at fair value through other comprehensive income (FVOCI) (excluding derivatives)
The current and non-current financial assets at FVOCI (excludingderivatives) comprise the following:
\u20ac\u00a0million | 2023 | 2022 |
Equity securities | 190 | 181 |
Financial assets at FVOCI (excluding derivatives) | 190 | 181 |
The movement in the carrying values of the financial assets at FVOCI (excludingderivatives) is as follows:
2023 | 2022 | |
\u20ac\u00a0million | Equity securities | Equity securities |
At\u00a0January 1 | 181 | 179 |
Additions | 35 | 22 |
Disposals | - 3 | - 20 |
Fair value gains/losses (-) going through OCI | - 23 | 0 |
At December 31 | 190 | 181 |
23.3 Financial assets at fair value through other comprehensive income (FVOCI) (excluding derivatives)
The current and non-current financial assets at FVOCI (excludingderivatives) comprise the following:
\u20ac\u00a0million | 2023 | 2022 |
Equity securities | 190 | 181 |
Financial assets at FVOCI (excluding derivatives) | 190 | 181 |
The movement in the carrying values of the financial assets at FVOCI (excludingderivatives) is as follows:
2023 | 2022 | |
\u20ac\u00a0million | Equity securities | Equity securities |
At\u00a0January 1 | 181 | 179 |
Additions | 35 | 22 |
Disposals | - 3 | - 20 |
Fair value gains/losses (-) going through OCI | - 23 | 0 |
At December 31 | 190 | 181 |
For more information on the derivatives of which fair value movements are accounted for through OCI, we refer to Note 39.
For the financial assets that are valued at amortized cost, the carrying amount approximates the fair value.
The Group does not have any investments in debt instruments.
The equity securities include investments in UCB Ventures as well as investments in companies where UCB does not have significant influence. These investments have been classified as financial assets at FVOCI. The investments are measured at fair value. All fair value gains and losses are presented in OCI.
The additions to financial assets at FVOCI in the year include \u20ac 16 million investments made in UCB Ventures, UCB\u2019s corporate venture fund. The fair value gains and losses going through OCI resulted in a net loss of \u20ac 23 million.
The current financial assets at FVOCI (\u20ac 62 million in 2023 compared to \u20ac 47 million in 2022) relate to vested long term
incentives granted to employees. These are held in custody for the account of the relevant participants on a separate securities account of UCB. There is a corresponding liability which is recorded in Other Payables (Note 35). As these shares are held for the account of the relevant participants and not for UCB\u2019s account, these are not treated as treasury shares in accordance with IAS 32.33.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f132459": { "value": "23.4 Investment in associates
The Group has no investments in associates.
", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f132534": { "value": "24. Inventories
\u20ac\u00a0million | 2023 | 2022 |
Raw materials and consumables | 161 | 121 |
Work in progress | 661 | 601 |
Finished goods | 209 | 184 |
Goods purchased for resale | 0 | 1 |
Inventories | 1 031 | 907 |
The cost of inventories recognized as an expense and included in \u201ccost of sales\u201d amounted to \u20ac 876 million (2022: \u20ac 859 million). There are no inventories pledged for security, nor is there any inventory stated at net realizable value. The write-down on inventories amounted to \u20ac 51 million in 2023
(2022: \u20ac 70 million) and has been included in cost of sales. Total inventory increased by \u20ac 124 million and includes among others the further build-up of Bimzelx\u00ae, Rystiggo\u00aeand Zilbrysq\u00ae.
25. Trade and other receivables
\u20ac\u00a0million | 2023 | 2022 |
Trade receivables | 763 | 702 |
Less: provision for impairment | - 13 | - 15 |
Trade receivables \u2013 net | 750 | 687 |
VAT receivable | 37 | 36 |
Interest receivables | 9 | 14 |
Prepaid expenses | 147 | 140 |
Accrued income | 2 | 1 |
Other receivables | 257 | 157 |
Royalty receivables | 18 | 17 |
Trade and other receivables | 1 220 | 1 051 |
The carrying amount of trade and other receivables approximates their fair values. With respect to trade receivables, the fair value is estimated to be the carrying amount less the provision for impairment and for all other receivables the carrying value approximates fair value, given the short-term maturity of these amounts.
There is some concentration of credit risk with respect to trade receivables. For some credit exposures in critical countries,
such as the Southern European countries, the Group obtained credit insurance. The Group co-operates with dedicated wholesalers in certain countries. The largest outstanding trade receivable in 2023 from a single customer is 16% (2022: 14%) from McKesson Corp. U.S.
The increase in other receivables is mainly due to milestones to be received and partnerships.
The aging analysis of the Group trade receivables at year-end is as follows:
2023 | 2022 | |||
\u20ac\u00a0million | Gross carrying amounts | |||
Impairment | Gross carrying amounts | |||
Impairment | ||||
Not past due | 721 | 0 | 671 | 0 |
Past due \u2013 less than one month | 23 | 0 | 15 | 0 |
Past due more than one month and not more than three months | 4 | 0 | 2 | 0 |
Past due more than three months and not more than six months | 5 | 0 | 6 | - 1 |
Past due more than six months and not more than one year | 0 | - 5 | 1 | - 6 |
Past due more than one year | 10 | - 8 | 7 | - 8 |
Total | 763 | - 13 | 702 | - 15 |
Based on historical default rates, the Group believes that no provision for impairment is necessary in respect of trade receivables not past due. This concerns 94% (2022: 96%) of the outstanding balance at the statement of financial position date.
The movement in the provision for impairment in respect of trade receivables is shown below:
\u20ac\u00a0million | 2023 | 2022 |
Balance at\u00a0January 1 | - 15 | - 18 |
Impairment charge recognized in the income statement | 0 | - 2 |
Utilization\u00a0/\u00a0reversal of provision for impairment | 1 | 5 |
Effects of movements in exchange rates | 1 | 0 |
Balance at\u00a0December 31 | - 13 | - 15 |
The other classes within trade and other receivables do not contain impaired assets.
The carrying amounts of the Group trade and other receivables are denominated in the following currencies:
\u20ac\u00a0million | 2023 | 2022 |
EUR | 381 | 337 |
USD | 508 | 413 |
JPY | 74 | 79 |
GBP | 57 | 48 |
CNY | 34 | 30 |
CHF | 18 | 19 |
KRW | 9 | 10 |
Other currencies | 139 | 115 |
Trade and other receivables | 1 220 | 1 051 |
The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above.
The Group does not hold any collateral as security.
26. Cash and cash equivalents
\u20ac\u00a0million | 2023 | 2022 |
\u00a0Short-term bank deposits\u00a0 | 681 | \u00a0696 |
\u00a0Cash at bank and on hand | 180 | \u00a0203 |
\u00a0Cash and cash equivalents (excluding bank overdrafts) | 861 | \u00a0899 |
Cash and short-term deposits of \u20ac 63 million are held mostly in countries with restrictive regulations on exporting capital from the country other than via normal dividends, such as Brazil, China, India, Korea, Russia, and Turkey.
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents comprise cash on hand
and demand deposits and other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.
\u20ac\u00a0million | Note | 2023 | 2022 |
\u00a0Cash and cash equivalents | 861 | \u00a0899 | |
\u00a0Bank overdrafts | 0 | - 40 | |
\u00a0Cash and cash equivalents (including bank overdrafts) | 861 | \u00a0859 |
26. Cash and cash equivalents
\u20ac\u00a0million | 2023 | 2022 |
\u00a0Short-term bank deposits\u00a0 | 681 | \u00a0696 |
\u00a0Cash at bank and on hand | 180 | \u00a0203 |
\u00a0Cash and cash equivalents (excluding bank overdrafts) | 861 | \u00a0899 |
Cash and short-term deposits of \u20ac 63 million are held mostly in countries with restrictive regulations on exporting capital from the country other than via normal dividends, such as Brazil, China, India, Korea, Russia, and Turkey.
For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents comprise cash on hand
and demand deposits and other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.
\u20ac\u00a0million | Note | 2023 | 2022 |
\u00a0Cash and cash equivalents | 861 | \u00a0899 | |
\u00a0Bank overdrafts | 0 | - 40 | |
\u00a0Cash and cash equivalents (including bank overdrafts) | 861 | \u00a0859 |
27. Capital and reserves
27.1 Share capital and share premium
The issued share capital of the Company amounted to \u20ac 584 million (2022: \u20ac 584 million), and is represented by 194 505 658 shares (2022: 194 505 658 shares). The Company\u2019s shares are without par value. At December 31, 2023, 70 909 344 shares were registered and 123 596 314 were dematerialized shares. The holders of UCB shares are entitled to receive dividends as declared and are also entitled to one vote per share at the shareholders\u2019 meeting of the Company. There is no authorized, unissued capital.
At December 31, 2023, the share premium reserves amounted to \u20ac 2 030 million (2022: \u20ac 2 030 million).
27.2 Treasury shares
The Group acquired, through UCB SA 500 000 treasury shares (2022: 500 000) for a total amount of \u20ac 40 million (2022: \u20ac 42 million) and transferred 681 671 treasury shares (2022: 921 021) for a total amount of \u20ac 56 million (2022: \u20ac 75 million). Net transfer of 181 671 treasury shares for a net amount of \u20ac 16 million.
During 2023, the Group did not acquire or dispose of any treasury shares as part of share swap transactions (2022: 0 acquired and 0 disposed). At December 31, 2023, the Group
retained 4 729 089 treasury shares of which none related to share swap deals (2022: 4 910 760). These treasury shares have been acquired in order to honor the exercise of stock options and share awards granted to the Executive Committee members and certain categories of employees.
In the current year, no call options on UCB shares have been acquired (2022: 0) nor have any call options been exercised (2022: 0). At December 31, 2023, the Group did not hold any options on UCB shares (December 31, 2022: 0).
27.3 Other reserves
Other reserves amount to \u20ac - 9 million (2022: \u20ac 76 million) with the movement related to the re-measurement of the defined benefit obligation for \u20ac 85 million bringing total remeasurement value at \u20ac - 205 million (2022: \u20ac - 120 million).
27.4 Cumulative translation adjustments
The cumulative translation adjustments reserve represents the cumulative currency translation differences relating to the consolidation of Group companies that use functional currencies other than the euro as well as any unrealized cumulative foreign exchange gains or losses resulting from net investment hedges.
27.1 Share capital and share premium
The issued share capital of the Company amounted to \u20ac 584 million (2022: \u20ac 584 million), and is represented by 194 505 658 shares (2022: 194 505 658 shares). The Company\u2019s shares are without par value. At December 31, 2023, 70 909 344 shares were registered and 123 596 314 were dematerialized shares. The holders of UCB shares are entitled to receive dividends as declared and are also entitled to one vote per share at the shareholders\u2019 meeting of the Company. There is no authorized, unissued capital.
At December 31, 2023, the share premium reserves amounted to \u20ac 2 030 million (2022: \u20ac 2 030 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f133938": { "value": "27.2 Treasury shares
The Group acquired, through UCB SA 500 000 treasury shares (2022: 500 000) for a total amount of \u20ac 40 million (2022: \u20ac 42 million) and transferred 681 671 treasury shares (2022: 921 021) for a total amount of \u20ac 56 million (2022: \u20ac 75 million). Net transfer of 181 671 treasury shares for a net amount of \u20ac 16 million.
During 2023, the Group did not acquire or dispose of any treasury shares as part of share swap transactions (2022: 0 acquired and 0 disposed). At December 31, 2023, the Group
retained 4 729 089 treasury shares of which none related to share swap deals (2022: 4 910 760). These treasury shares have been acquired in order to honor the exercise of stock options and share awards granted to the Executive Committee members and certain categories of employees.
In the current year, no call options on UCB shares have been acquired (2022: 0) nor have any call options been exercised (2022: 0). At December 31, 2023, the Group did not hold any options on UCB shares (December 31, 2022: 0).
", "dimensions": { "concept": "ifrs-full:DisclosureOfTreasurySharesExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f134131": { "value": "27.3 Other reserves
Other reserves amount to \u20ac - 9 million (2022: \u20ac 76 million) with the movement related to the re-measurement of the defined benefit obligation for \u20ac 85 million bringing total remeasurement value at \u20ac - 205 million (2022: \u20ac - 120 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f134247": { "value": "28. Share-based payments
The Group operates several equity-based and cash-based compensation plans, including a stock option plan, a stock appreciation rights plan, a stock award plan and a performance share plan to compensate employees for services rendered.
The stock option plan, the stock award plan and the performance share plan are equity-settled, whereas the stock appreciation rights plan is a cash-settled plan. Besides these plans, the Group also operates employee stock purchase plans in the U.K. and the U.S. and phantom share plans. The expenses incurred for these plans are immaterial.
28.1 Stock option plan and stock appreciation rights plan
The Governance, Nomination and Compensation Committee (GNCC) granted options on UCB SA shares to the Executive Committee members, the senior executives and the senior directors of the UCB Group. The exercise price of the granted options under these plans is equal to the lowest of the following two values:
the average of the closing price of the UCB shares on Euronext Brussels, during the 30 days preceding the offer; or
the closing price of the UCB shares on Euronext Brussels the day before the grant.
A different exercise price is determined for those eligible employees subject to legislation which requires a different exercise price in order to benefit from reduced taxation. The options become exercisable after a vesting period of three years, except for those eligible employees subject to legislation which requires a longer vesting period in order to benefit from reduced taxation. If an employee leaves the Group, his/her options usually lapse upon expiry of a period of six months. Options do not lapse in case of death or retirement and in case of involuntary termination when taxes have been paid upon grant. The Group has no obligation to repurchase or settle the options in cash.
The options are not transferable (except in case of death).
The Stock Appreciation Rights (SARs) plan has similar characteristics to the stock option plan, except that it is reserved for UCB employees in the U.S. This plan is cash-settled.
28.2 Stock award plan
The GNCC granted free UCB SA shares to the Executive Committee members, the senior executives and the senior and middle management of the UCB Group. The free shares have service conditions attached to them whereby beneficiaries are required to remain in service for three years post grant date. Stock awards lapse upon leaving the Group, except upon leaving on retirement or death in which case they vest immediately. The beneficiary is not entitled to dividends during the vesting period.
28.3 Performance share plan
The GNCC granted performance shares to senior executives for specific achievements aligned with company strategic priorities. The performance shares are conditional on the beneficiary completing three years of service (the vesting
period) and the number of shares award is adjusted at the end of the vesting period based on the company\u2019s performance against its goals.
Performance shares lapse upon leaving the Group, except upon leaving on retirement or death in which case they vest immediately. The beneficiary is not entitled to dividends during the vesting period.
28.4 Phantom stock option, stock award and performance share plans
The Group also has phantom stock option, phantom stock award and phantom performance share plans (collectively referred to as phantom plans). These phantom plans apply to certain employees who have an employment contract with certain affiliates of the Group and are governed under similar rules to the Group stock option, stock award and performance share plans except for their settlement. As of December 31, 2023, these plans had 450 participants (2022:\u00a0270) and the share-based payment expense incurred for these plans is immaterial.
28.5 North America employee stock purchase plan.
The plan is intended to provide employees of UCB affiliates in North America with an opportunity to purchase common stock of the Group. Shares are acquired at a discount of 15% which is funded by UCB. Employees save a defined percentage of their salary through payroll deduction and shares will be purchased with after-tax employee contributions. The shares are held by an independent third party banking institution in an account in the employee\u2019s name.
The limit placed on employees\u2019 participation in the plan is as follows:
between 1% and 10% of each participant\u2019s compensation;
US$ 25 000 per year per participant;
maximum of US$ 10 million total ownership by North America employees in all forms of share plans over a rolling period of 12 months.
As of December 31, 2023, the plan had 901 participants (2022:\u00a0811). There are no specific vesting conditions and the share-based payment expense incurred for this plan is immaterial.
28.6 Stock savings plan in the U.K.
The purpose of this plan is to encourage the holding of UCB shares by employees in the U.K. Participants save a certain portion of their salary through payroll deductions and UCB matches every 1 share bought by each participant with 1 free share. Shares are held in an account in the employee\u2019s name by an independent company that acts as a trustee. Employee contributions to the plan are limited to the lower of:
10% of each participant\u2019s compensation;
GBP 1 800 per year per participant.
As of December 31, 2023, the plan had 438 participants (2022:\u00a0438) and the share-based payment expense incurred for this plan is immaterial.
28.7 Share-based payment expense
The total share-based payment expense incurred for the Group amounted to \u20ac 104 million (2022: \u20ac 81 million), and has been
included in the relevant functional lines within the income statement as follows:
\u20ac million | 2023 | 2022 |
Cost of sales | 13 | 12 |
Marketing and selling expenses | 25 | 20 |
Research and development expenses | 40 | 32 |
General and administrative expenses | 26 | 17 |
Total operating expense | 104 | 81 |
Of which, equity-settled: | ||
Stock option plans | 6 | 5 |
Stock award plans | 77 | 71 |
Performance share plan | 15 | 9 |
Of which, cash-settled: | ||
Stock appreciation rights plan | 3 | - 5 |
Phantom stock option, stock award and performance share plans | 3 | 1 |
28.8 Stock option plans
The movements in the number of stock options outstanding and their related weighted average exercise prices as at December 31 are:
2023 | 2022 | |||||
Weighted average fair value (\u20ac) | Weighted average exercise price (\u20ac) | |||||
Number of stock options | ||||||
Weighted average fair value (\u20ac) | Weighted average exercise price (\u20ac) | |||||
Number of stock options | ||||||
Outstanding at January 1 | 14.83 | 73.30 | 2 955 603 | 13.16 | 67.35 | 3 146 115 |
+ New options granted | 20.69 | 80.02 | 344 421 | 25.96 | 102.17 | 312 253 |
(-) Options forfeited | 19.84 | 85.58 | 55 776 | 16.46 | 78.43 | 25 521 |
(-) Options exercised | 12.40 | 52.36 | 229 555 | 11.05 | 53.35 | 462 844 |
(-) Options expired | 12.21 | 48.70 | 21 611 | 8.82 | 32.36 | 14 400 |
(-) Options converted in other plans | 0.00 | 0.00 | 0 | 0.00 | 0.00 | 0 |
Outstanding at December 31 | 15.62 | 75.62 | 2 993 082 | 14.83 | 73.30 | 2 955 603 |
Number of options fully vested: | ||||||
At January 1 | 1 624 209 | 1 582 306 | ||||
At December 31 | 1 794 129 | 1 624 209 |
The stock options outstanding as at December 31, 2023 with the following last exercise dates and exercise prices are:
Last exercise date | Range of exercise prices (\u20ac) | Number of stock options |
March 31, 2024 | 58.12 | 120 597 |
March 31, 2025 | 67.35 | 230 540 |
March 31, 2026 | 67.24 | 238 787 |
March 31, 2027 | [70.26 - 72.71] | 299 752 |
March 31, 2028 | 66.18 | 361 641 |
March 31, 2029 | [76.09 - 76.56] | 416 366 |
March 31, 2030 | [76.21-79] | 397 865 |
March 31, 2031 | [79.99 - 81.12] | 301 123 |
March 31, 2032 | [102.04 - 108.45] | 294 363 |
March 31, 2033 | [79.97- 82.44] | 332 048 |
Total outstanding | 2 993 082 |
The fair value has been determined based on the \u201cBlack-Scholes\u201d valuation model.
The volatility was determined primarily by reference to historically observed share prices of UCB over the last five years. The probability of early exercise is reflected in the
expected life of the options. The expected forfeiture rate is based on actual turnover of employees for categories eligible for stock option compensation.
The significant assumptions used in the measurement of the fair value of the stock options granted in 2023 and 2022 are:
2023 | 2022 | ||
Share price at grant date | \u20ac | 82.20 | 108.40 |
Weighted average exercise price | \u20ac | 80.02 | 102.17 |
Expected volatility | % | 27.79 | 27.68 |
Expected option life | Years | 5.00 | 5.00 |
Expected dividend yield | % | 1.62 | 1.20 |
Risk free interest rate | % | 2.58 | 0.61 |
Expected annual forfeiture rate | % | 7.00 | 7.00 |
28.9 Stock appreciation rights (SARs) plan
The movements of the SARs and the model inputs as at December 31, 2023 can be found in the table below.
The fair value of the SARs at grant date is determined using the \u201cBlack-Scholes\u201d model. The fair value of the liability is remeasured at each reporting date.
2023 | 2022 | ||
Outstanding rights as at January 1 | 749 956 | 754 249 | |
+ New rights granted | 179 180 | 148 056 | |
+ Rights converted from other plans | 0 | 0 | |
(-) Rights forfeited | 28 804 | 44 029 | |
(-) Rights exercised | 65 151 | 97 320 | |
(-) Rights expired | 5 700 | 11 000 | |
Outstanding rights as at December 31 | 829 481 | 749 956 | |
The significant assumptions used in the measurement of the fair value of the stock appreciation rights are: | |||
Share price at year end | \u20ac | 78.90 | 73.56 |
Exercise price | \u20ac | 82.44 | 108.45 |
Expected volatility | % | 28.23 | 27.86 |
Expected option life | Years | 5.00 | 5.00 |
Expected dividend yield | % | 1.69 | 1.77 |
Risk free interest rate | % | 2.22 | 2.91 |
Expected annual forfeiture rate | % | 7.00 | 7.00 |
28.10 Stock award plans
The share-based payment expense related to these stock awards is spread over the vesting period of three years.
The beneficiaries are not entitled to dividends during the vesting period. The movement in the number of stock awards outstanding at December 31 is as follows:
2023 | 2022 | |||
Number of stock awards | Weighted averagefair value (\u20ac) | Number of stock awards | Weighted average fair value (\u20ac) | |
Outstanding at January 1 | 2 188 475 | 89.83 | 2 334 810 | 80.58 |
+ New stock awards granted | 1 102 456 | 82.19 | 763 466 | 106.95 |
(-) Awards forfeited | 135 125 | 89.67 | 223 810 | 87.31 |
(-) Awards converted in phantom plans | 6 413 | 81.46 | 0 | 0.00 |
(-) Awards vested and paid out | 751 294 | 82.06 | 685 991 | 78.21 |
Outstanding at December 31 | 2 398 099 | 88.78 | 2 188 475 | 89.83 |
28.11 Performance share plans
The movement in the number of performance shares outstanding at December 31 is as follows:
2023 | 2022 | |||
Number of stock awards | Weighted averagefair value (\u20ac) | Number of stock awards | Weighted average fair value (\u20ac) | |
Outstanding at January 1 | 356 223 | 92.50 | 467 843 | 81.02 |
+ New performance shares granted | 198 472 | 82.20 | 185 965 | 102.11 |
(-) Performance shares forfeited | 38 526 | 90.64 | 150 008 | 82.88 |
(-) Performance shares vested | 49 380 | 82.38 | 147 577 | 77.78 |
Outstanding at December 31 | 466 789 | 89.41 | 356 223 | 92.50 |
29. Borrowings
The carrying amounts and fair values of borrowings are as follows:
Cash Flows | Non-cash changes | ||||||
\u20ac\u00a0million | 2022 | From financing activities | Increase/ decrease in cash | Transfer Non-Current to Current | Foreign Exchange Movement | ||
Other | 2023 | ||||||
Non-current | |||||||
Bank borrowings | 1 989 | 58 | 0 | 0 | - 63 | - 3 | 1 981 |
Leases | 100 | - 51 | 0 | 0 | - 2 | 71 | 118 |
Total non-current borrowings | 2 089 | 7 | 0 | 0 | - 65 | 68 | 2 099 |
Current | |||||||
Bank overdrafts | 40 | 0 | - 40 | 0 | 0 | 0 | 0 |
Current portion of bank borrowings | - 1 | 0 | 0 | 0 | 0 | 0 | - 1 |
Debentures and other short-term loans | 9 | - 9 | 0 | 0 | 0 | 0 | 0 |
Leases | 40 | 6 | 0 | 0 | - 1 | - 2 | 43 |
Total current borrowings | 88 | - 3 | - 40 | 0 | - 1 | - 2 | 42 |
Total borrowings | 2 177 | 4 | - 40 | 0 | - 66 | 66 | 2 141 |
On December 31, 2023 the Group\u2019s weighted average interest rate (excluding leases) was 4.89% (2022: 4.05%) prior to hedging. The floating interest rate payments are subject to designated cash flow hedges and fixed interest rate payments are subject to designated fair value hedges, thereby fixing the weighted average interest rate for the Group at 5.10% (2022: 3.48%) post hedging. The fees paid for the arrangement of the bonds (Note 30), and the amended facilities agreement are amortized over the life of the instruments.
Where applicable under hedge accounting, the fair value of the non-current borrowings is determined based on the present value of the payments associated with the debt instruments, using the applicable yield curve and UCB credit spread for the various different currencies.
Since the bank borrowings are at a floating interest rate that is reset minimally on a daily, up to on a semi-annual basis, the carrying amount of the bank borrowings equates to its fair value.
With respect to the current borrowings, the carrying amounts approximate their fair values as the effect of discounting is considered to be insignificant.
On March 27, 2023 the Group signed a \u20ac 1 billion sustainability-linked revolving credit facility agreement with maturity in 2028 (including the option to request further extensions of the maturity date by two additional years). This new facility was replacing the \u20ac 1 billion revolving credit facility that was maturing on January 9, 2025 and that was subsequently cancelled. Following the first extension request, in February 2024, the maturity date of commitments aggregating \u20ac 928 million under the revolving credit facility was extended to 2029. Per December 31, 2023 there were no outstanding amounts under the revolving credit facility (2022: \u20ac 0 million).
On October 10, 2019 the Group entered into a US$ 2.1 billion bullet term loan facility agreement, maturing in 2025, to finance the Ra Pharma acquisition. In 2022, this agreement has been amended in order to replace references to USD-libor by references to SOFR (Secured Overnight Financing Rate). Per December 31, 2023 there was US$ 605 million outstanding under this term loan facility (2022: US$ 1.060 billion), excluding any incremental facility established under this term loan facility.
On November 18, 2022 the Group entered into a \u20ac 350 million bilateral committed bullet loan agreement, with availability period until November 2023 and with maximum tenor of 8\u00a0years as from the date of drawing. On September 8, 2023, the Group fully drew for an equivalent amount of US$ 378 million under this agreement. The maturity of this bilateral loan agreement is in 2031.
On January 19, 2022 the Group entered into a US$ 800 million bullet term loan facility agreement, maturing in 2027, to finance the Zogenix, Inc. acquisition. Per December 31, 2023 there was US$ 800 million outstanding under this term loan facility (2022: US$ 800 million).
On July 8, 2022 the Group signed a \u20ac 90 million bilateral loan, established as a first incremental facility under the US$2.1 billion loan facility agreement which was drawn on October 3, 2022 and with maturity in 2029.
On January 26, 2023 the Group signed a \u20ac 90 million bilateral loan, established as a second incremental facility under the US$2.1 billion loan facility agreement which was drawn on January 26, 2023 and with maturity in 2028.
On November 2, 2022 the Group entered into a multi-tranche Schuldscheindarlehen (SSD) transaction for an aggregate amount of \u20ac 144 million and US$20 million.
On August 24, 2023 the Group entered into a Schuldscheindarlehen (SSD) transaction for an amount of \u20ac 30 million.
The Group has access to certain further committed and non-committed bilateral credit facilities. In this respect, per end of 2023 an aggregated amount of \u20ac 21 million was undrawn on the committed bilateral facility (2022: \u20ac 30 million, available and undrawn), which will remain available until March 31, 2024. The Group also has access to the Belgian commercial paper market. \u20ac 0 million was outstanding as per December 31, 2023 (2022: \u20ac 8.5 million).
The Group designates derivative financial instruments under cash flow hedges to the floating rate loan agreements. Under cash flow hedges, changes in fair value resulting from interest rate derivatives designated to the floating rate liabilities of the Group are accounted for through equity.
Please refer to Note 5.3for the maturity analysis of the Group borrowings (excluding other financial liabilities).
The carrying amounts of the Group borrowings are denominated in the following currencies:
\u20ac\u00a0million | 2023 | 2022 |
USD | 1 699 | 1 867 |
EUR | 421 | 284 |
GBP | 3 | 6 |
CNY | 7 | 5 |
JPY | 2 | 3 |
Other | 9 | 12 |
Total borrowings | 2 141 | 2 177 |
29. Borrowings
The carrying amounts and fair values of borrowings are as follows:
Cash Flows | Non-cash changes | ||||||
\u20ac\u00a0million | 2022 | From financing activities | Increase/ decrease in cash | Transfer Non-Current to Current | Foreign Exchange Movement | ||
Other | 2023 | ||||||
Non-current | |||||||
Bank borrowings | 1 989 | 58 | 0 | 0 | - 63 | - 3 | 1 981 |
Leases | 100 | - 51 | 0 | 0 | - 2 | 71 | 118 |
Total non-current borrowings | 2 089 | 7 | 0 | 0 | - 65 | 68 | 2 099 |
Current | |||||||
Bank overdrafts | 40 | 0 | - 40 | 0 | 0 | 0 | 0 |
Current portion of bank borrowings | - 1 | 0 | 0 | 0 | 0 | 0 | - 1 |
Debentures and other short-term loans | 9 | - 9 | 0 | 0 | 0 | 0 | 0 |
Leases | 40 | 6 | 0 | 0 | - 1 | - 2 | 43 |
Total current borrowings | 88 | - 3 | - 40 | 0 | - 1 | - 2 | 42 |
Total borrowings | 2 177 | 4 | - 40 | 0 | - 66 | 66 | 2 141 |
On December 31, 2023 the Group\u2019s weighted average interest rate (excluding leases) was 4.89% (2022: 4.05%) prior to hedging. The floating interest rate payments are subject to designated cash flow hedges and fixed interest rate payments are subject to designated fair value hedges, thereby fixing the weighted average interest rate for the Group at 5.10% (2022: 3.48%) post hedging. The fees paid for the arrangement of the bonds (Note 30), and the amended facilities agreement are amortized over the life of the instruments.
Where applicable under hedge accounting, the fair value of the non-current borrowings is determined based on the present value of the payments associated with the debt instruments, using the applicable yield curve and UCB credit spread for the various different currencies.
Since the bank borrowings are at a floating interest rate that is reset minimally on a daily, up to on a semi-annual basis, the carrying amount of the bank borrowings equates to its fair value.
With respect to the current borrowings, the carrying amounts approximate their fair values as the effect of discounting is considered to be insignificant.
On March 27, 2023 the Group signed a \u20ac 1 billion sustainability-linked revolving credit facility agreement with maturity in 2028 (including the option to request further extensions of the maturity date by two additional years). This new facility was replacing the \u20ac 1 billion revolving credit facility that was maturing on January 9, 2025 and that was subsequently cancelled. Following the first extension request, in February 2024, the maturity date of commitments aggregating \u20ac 928 million under the revolving credit facility was extended to 2029. Per December 31, 2023 there were no outstanding amounts under the revolving credit facility (2022: \u20ac 0 million).
On October 10, 2019 the Group entered into a US$ 2.1 billion bullet term loan facility agreement, maturing in 2025, to finance the Ra Pharma acquisition. In 2022, this agreement has been amended in order to replace references to USD-libor by references to SOFR (Secured Overnight Financing Rate). Per December 31, 2023 there was US$ 605 million outstanding under this term loan facility (2022: US$ 1.060 billion), excluding any incremental facility established under this term loan facility.
On November 18, 2022 the Group entered into a \u20ac 350 million bilateral committed bullet loan agreement, with availability period until November 2023 and with maximum tenor of 8\u00a0years as from the date of drawing. On September 8, 2023, the Group fully drew for an equivalent amount of US$ 378 million under this agreement. The maturity of this bilateral loan agreement is in 2031.
On January 19, 2022 the Group entered into a US$ 800 million bullet term loan facility agreement, maturing in 2027, to finance the Zogenix, Inc. acquisition. Per December 31, 2023 there was US$ 800 million outstanding under this term loan facility (2022: US$ 800 million).
On July 8, 2022 the Group signed a \u20ac 90 million bilateral loan, established as a first incremental facility under the US$2.1 billion loan facility agreement which was drawn on October 3, 2022 and with maturity in 2029.
On January 26, 2023 the Group signed a \u20ac 90 million bilateral loan, established as a second incremental facility under the US$2.1 billion loan facility agreement which was drawn on January 26, 2023 and with maturity in 2028.
On November 2, 2022 the Group entered into a multi-tranche Schuldscheindarlehen (SSD) transaction for an aggregate amount of \u20ac 144 million and US$20 million.
On August 24, 2023 the Group entered into a Schuldscheindarlehen (SSD) transaction for an amount of \u20ac 30 million.
The Group has access to certain further committed and non-committed bilateral credit facilities. In this respect, per end of 2023 an aggregated amount of \u20ac 21 million was undrawn on the committed bilateral facility (2022: \u20ac 30 million, available and undrawn), which will remain available until March 31, 2024. The Group also has access to the Belgian commercial paper market. \u20ac 0 million was outstanding as per December 31, 2023 (2022: \u20ac 8.5 million).
The Group designates derivative financial instruments under cash flow hedges to the floating rate loan agreements. Under cash flow hedges, changes in fair value resulting from interest rate derivatives designated to the floating rate liabilities of the Group are accounted for through equity.
Please refer to Note 5.3for the maturity analysis of the Group borrowings (excluding other financial liabilities).
The carrying amounts of the Group borrowings are denominated in the following currencies:
\u20ac\u00a0million | 2023 | 2022 |
USD | 1 699 | 1 867 |
EUR | 421 | 284 |
GBP | 3 | 6 |
CNY | 7 | 5 |
JPY | 2 | 3 |
Other | 9 | 12 |
Total borrowings | 2 141 | 2 177 |
31. Other financial liabilities
Carrying amount | Fair value | ||||
\u20ac\u00a0million | Note | 2023 | 2022 | 2023 | 2022 |
Non-current | |||||
Derivative financial instruments | 64 | 99 | 64 | 99 | |
Other financial liabilities | 0 | 0 | 0 | 0 | |
Total non-current other financial liabilities | 64 | 99 | 64 | 99 | |
Current | |||||
Derivative financial instruments\u00a0 | 21 | 117 | 21 | 117 | |
Other financial liabilities | 0 | 0 | 0 | 0 | |
Total current other financial liabilities | 21 | 117 | 21 | 117 | |
Total other financial liabilities | 85 | 216 | 85 | 216 |
31. Other financial liabilities
Carrying amount | Fair value | ||||
\u20ac\u00a0million | Note | 2023 | 2022 | 2023 | 2022 |
Non-current | |||||
Derivative financial instruments | 64 | 99 | 64 | 99 | |
Other financial liabilities | 0 | 0 | 0 | 0 | |
Total non-current other financial liabilities | 64 | 99 | 64 | 99 | |
Current | |||||
Derivative financial instruments\u00a0 | 21 | 117 | 21 | 117 | |
Other financial liabilities | 0 | 0 | 0 | 0 | |
Total current other financial liabilities | 21 | 117 | 21 | 117 | |
Total other financial liabilities | 85 | 216 | 85 | 216 |
31. Other financial liabilities
Carrying amount | Fair value | ||||
\u20ac\u00a0million | Note | 2023 | 2022 | 2023 | 2022 |
Non-current | |||||
Derivative financial instruments | 64 | 99 | 64 | 99 | |
Other financial liabilities | 0 | 0 | 0 | 0 | |
Total non-current other financial liabilities | 64 | 99 | 64 | 99 | |
Current | |||||
Derivative financial instruments\u00a0 | 21 | 117 | 21 | 117 | |
Other financial liabilities | 0 | 0 | 0 | 0 | |
Total current other financial liabilities | 21 | 117 | 21 | 117 | |
Total other financial liabilities | 85 | 216 | 85 | 216 |
32. Deferred tax assets and liabilities
32.1 Recognized deferred tax assets and liabilities
\u20ac million | 2022 | Acquisition/disposals | FX acquisition | R&D adjustment | Current year movement | OCI \u2013 Cash flow hedges | OCI \u2013 Pensions | Effect of movements in exchange rate | 2023 |
Intangible assets | - 915 | 0 | 0 | 0 | 86 | 0 | 0 | 27 | - 802 |
Property, plant and\u00a0equipment | - 21 | 0 | 0 | 0 | 2 | 0 | 0 | - 1 | - 20 |
Inventories | 348 | 0 | 0 | 0 | - 24 | 0 | 0 | - 1 | 323 |
Trade and other receivables | 33 | 0 | 0 | 0 | - 19 | 0 | 0 | - 1 | 12 |
Employee benefits | 12 | 2 | 0 | 0 | 10 | 0 | 16 | - 1 | 39 |
Provisions | 2 | 1 | 0 | 0 | 2 | 0 | 0 | - 1 | 3 |
Other short-term liabilities | 124 | 0 | 0 | 0 | 27 | - 8 | 0 | - 3 | 141 |
Net lease assets/liabilities | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Unused tax losses | 176 | 2 | 0 | 0 | 23 | 0 | 0 | - 5 | 197 |
Unused tax credits | 620 | 0 | 0 | 54 | - 47 | 0 | 0 | - 2 | 625 |
Total net deferred tax assets/liabilities (-) | 379 | 5 | 0 | 54 | 60 | - 8 | 16 | 12 | 518 |
\u20ac million | 2021 | Acquisition/disposals | FX acquisition | R&D adjustment | Current year movement | OCI \u2013 Cash flow hedges | OCI \u2013 Pensions | ||
Effect of movements in exchange rate | 2022 | ||||||||
Intangible assets | - 531 | - 400 | 7 | 0 | 42 | 0 | 0 | - 33 | - 915 |
Property, plant and equipment | - 18 | 0 | 0 | 0 | - 2 | 0 | 0 | - 1 | - 21 |
Inventories | 367 | 3 | 0 | 0 | - 22 | 0 | 0 | 0 | 348 |
Trade and other receivables | 56 | 0 | 0 | 0 | - 19 | 0 | 0 | - 4 | 33 |
Employee benefits | 34 | 0 | 0 | 0 | - 8 | 0 | - 13 | - 1 | 12 |
Provisions | 4 | 0 | 0 | 0 | - 2 | 0 | 0 | 0 | 2 |
Other short-term liabilities | - 55 | 4 | 0 | 0 | 185 | - 13 | 0 | 3 | 124 |
Net lease assets/liabilities | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Unused tax losses | 166 | 183 | - 4 | 0 | - 170 | 0 | 0 | 1 | 176 |
Unused tax credits | 479 | 24 | 0 | 28 | 88 | 0 | 0 | 1 | 620 |
Total net deferred tax assets/liabilities (-) | 501 | - 186 | 3 | 28 | 92 | - 13 | - 13 | - 33 | 379 |
Total net deferred tax assets of \u20ac 518 million have been recognized on December 31, 2023. Based upon the level of past taxable income and projected future taxable profits over the periods in which the deductible temporary differences are estimated to reverse, the Group believes it is probable that the benefits of the recognized deferred tax assets will be realized. In line with applicable guidelines, a reasonable measurement period and approach (taking into account the function and the risk profile of the relevant taxable entity) has been evaluated in order to recognize deferred tax positions.
The Group saw an increase of the deferred tax asset combined with a decrease of the deferred tax liability balances resulting in a net deferred tax asset increase. This is driven by the following items:
Utilization and remeasurement:tax losses carried forward have been offset against taxable profit in key entities and additional tax attributes have been recognized based upon the level of projected future taxable profits. Additionally, a deferred tax liability on loss recapture was fully reversed.
R&D tax credit: refund received versus further build-up of R&D tax credit deferred tax assets following R&D investments. Additionally, tax credits have been recognized on tax attributes in Belgium, Germany, Switzerland and the U.S.
Other items are a result of the movements on UCB\u2019s statement of financial position items (such as inventory, financial instruments and intangibles), reassessment following tax law changes and reassessment of non-EUR denominated deferred tax balances.
Tax Reforms
Impact of tax rate changes, mainly in U.K., were assessed by management and remeasurement of the deferred tax balances took place as appropriate.
UCB is in scope of the Pillar 2 international tax reform, which has been enacted or substantively enacted in most jurisdictions the Group operates, for the Group\u2019s financial year beginning January 1, 2024. Reference is made to Note3.3, Summary of significant accounting policiesof UCB\u2019s annual accounts for further information on the impact of the Pillar 2 model rules.
Deferred tax assets on tax credits
The group recorded deferred tax assets on tax credits. The total deferred tax asset in respect of R&D tax credits at year end is \u20ac 538 million (2022: \u20ac 512 million) which will result in a cash tax benefit in the future. Other tax credits for \u20ac87 million relate to dividend received deduction available in Belgium, interest deduction in Germany, a one-off tax credit in Switzerland and the deferred tax asset resulting from the 2022 U.S. regulations on capitalization of R&D expenses.
Deferred tax assets on losses
UCB has seen a substantial utilization of tax losses carried forward, partially compensated by a decrease of deferred tax liabilities. A deferred tax asset of \u20ac 197 million
(2022:\u00a0\u20ac 176 million) was recognized in respect of tax losses carried forward totaling \u20ac 858 million (2022: \u20ac 798 million) as the Group has concluded that the relevant entities will generate taxable profits in the foreseeable future against which these losses can be used, and forecasts are deemed reliable taking into account the profile of the concerning entities and potential restrictions that could be available. These losses have arisen in jurisdictions in which UCB operates and do not expire.
In line with applicable guidance, the Group has recognized a deferred tax asset on part of the carry-forward tax losses and unused innovation income deduction in the hands of its main Group IP owner located in Belgium. Taking into account the function and risk profile of this entity, management engaged into in-depth qualitative and quantitative analysis to support a partial (risk-adjusted) deferred tax asset recognition. Based on the multitude of regulatory approvals in key markets for new launch assets, it\u2019s probable that taxable profit will be available as per UCB\u2019s long range forecast exercise to offset against the existing stock of tax attributes in the following 3 financial years.
This period has seen no further recognition of tax credits previously unrecognized. Undiscounted forecasts have been used to assess the availability of future taxable profits.
32.2 Unused tax losses
As of December 31, 2023, the Group also had \u20ac 5 078 million (2022: \u20ac 4 143 million) of gross unused tax losses and innovation income deduction for which no deferred tax asset is recognized in the statement of financial position. Based on the current legislation, these tax attributes do not expire.
Based on current forecasts and current legislation, the majority of these tax attributes is expected to be fully utilized within the next 10 years.
32.3 Temporary differences for which no deferred tax asset or deferred tax liability is recognized
Deferred tax assets are recognized on temporary differences carried forward that represent income likely to be realized in the foreseeable future. Deferred tax assets amounting to \u20ac 98 million gross / \u20ac 42 million net (2022: \u20ac 84 million gross/ \u20ac 21 million net) in respect of dividend received deduction and intangible assets have not been recognized in view of the uncertain character of the recovery.
No deferred tax liabilities are recognized for taxable temporary differences arising on investments in subsidiaries as 100% participation exemption is available for any future equity upstream.
There is an additional unrecognized deferred tax liability of \u20ac 15 million (2022: \u20ac 54 million) in respect of an internal reorganization which occurred in 2014. The tax liability will only materialize on disposal of the relevant asset, an event which is controlled by UCB and for which there are no concrete plans in the foreseeable future.
32.4 Deferred tax directly recognized in OCI
\u20ac million | 2023 | 2022 |
Deferred tax on pensions | 16 | - 13 |
Deferred tax on gains financial assets at FVOCI | 0 | 4 |
Deferred tax on effective portion of changes in fair value of cash flow hedges | - 8 | - 17 |
Deferred tax directly recognized in OCI | 8 | - 26 |
33. Employee benefits
Most employees are covered by retirement benefit plans sponsored by Group companies. The nature of such plans varies according to the legal regulations and fiscal requirements of the countries in which the employees are employed. The Group operates both defined contribution plans and defined benefit plans.
33.1 Defined contribution plans
Post-employment benefit plans are classified as \u201cdefined contribution\u201d plans if the Group pays fixed contributions into a separate fund or to a third party financial institution and has no further legal or constructive obligation to pay further contributions. Therefore no assets or liabilities are recognized in the Group statement of financial position in respect of such plans, apart from regular prepayments and accruals of contributions. For the Belgian defined contribution plans, UCB is required by law to guarantee a minimum return on employee and employer contributions. As a consequence, these plans are considered defined benefit plans. Where reliable estimates can be made for material plans, they are valued using the projected unit credit method under IAS 19. These plans are aggregated with the results for other defined benefit plans.
33.2 Defined benefit plans
The Group operates several defined benefit plans. The benefits granted include mainly pension benefits and jubilee premiums. The benefits are granted according to local market practice and regulations.
These plans are either unfunded or funded via outside pension funds or insurance companies. For (partially) funded plans, the assets of the plans are held separately in funds under the control of the trustees. Where a plan is unfunded, notably for the major defined benefit plans in Germany, a liability for the obligation is recorded in the Group statement of financial position. For funded plans, the Group is liable for the deficits
between the fair value of the plan assets and the present value of the benefit obligations. Accordingly, a liability (or an asset when the plan is over-funded) is recorded in the Group consolidated statement of financial position. Independent actuaries assess all main plans annually.
For UCB, the main risks linked to its defined benefit obligations are discount rate, inflation and longevity. The majority of the risks lies within Belgium, Switzerland, Germany and the U.K. It\u00a0 should be noted that longevity is not considered as a risk for the plans in Belgium as benefits are either paid as a lump sum or externalized before being paid as an annuity.
As part of its global risk management, UCB carries out an annual global risk analysis for the defined benefit plans located in its main countries (Belgium, Switzerland, Germany and the U.K.) and assesses the risk of deterioration of the financial position considering the Value-at-Risk.
In the U.K., for the Celltech Pension and Insurance Scheme, the focus is to de-risk the investment progressively in order to reach self-sufficiency. To better manage discount rate and inflation risks, the Scheme has also over the years gradually increased the hedging of both interest rates and inflation to around 90%.
In Belgium, UCB has closed all Belgian defined benefit and cash balance plans to new entrants as from December 31, 2019 and implemented a cash balance plan with an effective date of January 1, 2020 with the legally required guaranteed return. The focus remains on the diversification of the assets and investment managers while keeping a close control on risk.
The amount recognized in the consolidated statement of financial position arising from the Group\u2019s obligation in respect of its defined benefit plan is as follows:
\u20ac\u00a0million | Note | 2023 | 2022 |
Present value of defined benefit obligation | 1 100 | 906 | |
Fair value of plan assets | - 889 | - 759 | |
Funded status \u2013 Deficit | 211 | 147 | |
Net liability arising from defined benefit obligation | 211 | 147 | |
Add: Liability with respect to cash settled share based payments | 16 | 14 | |
Total employee benefit liabilities | 227 | 161 | |
Of which: | |||
Portion recognized in non-current liabilities | 227 | 162 | |
Portion recognized in non-current assets | 0 | 0 |
97% of the net liability arising from defined benefit obligations is related to defined benefit pension obligations in Belgium, Germany, Switzerland and the U.K.
Movements in the present value of the defined benefit obligation in the current year were as follows:
\u20ac\u00a0million | 2023 | 2022 |
At January 1 | 906 | 1 230 |
Current service cost | 47 | 66 |
Interest expense | 35 | 15 |
Remeasurement gain(-)/loss: | ||
Effect of changes in demographic assumptions | - 3 | -1 |
Effect of changes in financial assumptions | 100 | -404 |
Effect of experience adjustments | 34 | 48 |
Past service cost and gain(-)/loss on settlements | 0 | -1 |
Effect of change in foreign exchange rates | 14 | -5 |
Benefit payments from the plan | - 24 | -38 |
Benefit payments from the employer | - 5 | -4 |
Plan participants contributions | 5 | 4 |
Other | - 9 | -4 |
At December 31 | 1 100 | 906 |
Movements in the fair value of plan assets in the current year were as follows:
\u20ac\u00a0million | 2023 | 2022 |
At January 1 | 759 | 941 |
Interest income | 31 | 12 |
Remeasurement gain/loss(-) | ||
Return on plan assets (excluding interest income) | 29 | - 211 |
Effect of change in foreign exchange rates | 12 | - 5 |
Plan participants contributions | 5 | 4 |
Employer contributions | 93 | 67 |
Benefit payments from the plan | - 29 | - 42 |
Expenses, taxes and premiums paid | - 11 | - 7 |
At December 31 | 889 | 759 |
The fair value of plan assets amounts to \u20ac 889 million (2022: \u20ac 759 million), representing 81% (2022: 84%) of the defined benefit obligation. The total deficit of \u20ac 211 million (2022: \u20ac 147 million) is expected to be eliminated over the estimated remaining average service period of the current membership.
The amounts recognized in the consolidated income statement and in the consolidated statement of comprehensive income in respect of those defined benefit plans are as follows:
\u20ac\u00a0million | 2023 | 2022 |
Total service cost (including past service cost and gain (-)/loss from settlements) | 47 | 65 |
Net interest cost | 3 | 3 |
Remeasurement of other long term benefits | 1 | - 2 |
Administrative expenses and taxes | 2 | 2 |
Components of defined benefit costs recorded in income statement | 53 | 68 |
Remeasurements gain (-)/loss | ||
Effect of changes in demographic assumptions | - 3 | - 1 |
Effect of changes in financial assumptions | 99 | - 402 |
Effect of experience adjustments | 34 | 48 |
Return on plan assets (excluding interest income) | - 29 | 211 |
Components of defined benefit costs recorded in OCI | 101 | - 144 |
Total components of defined benefit cost | 154 | - 76 |
The total service cost, the net interest expense, the remeasurement of other long-term benefits, administrative expenses and taxes for the year are included in the employee benefit expenses in the consolidated income statement. 78% of the defined benefit costs recorded in the income statement are relating to defined benefit pension plans in Belgium and U.K. The remeasurement on the net defined benefit liability is included in the statement of comprehensive income as part of other comprehensive income. Total remeasurements amount to a loss of \u20ac 101 million in 2023 compared to a gain of
\u20ac 144 million in 2022. The loss in 2023 is mainly resulting from a decrease in discount rates partially offset by higher return on plan assets. The gain in 2022 is mainly resulting from a higher return on plan assets and increase in discount rates.
The actual return on plan assets is \u20ac 29 million (2022: \u20ac 211 million) and the actual return on reimbursement rights is \u20ac 0 million (2022: \u20ac 0 million).
The split of the recognized expense by functional line is as follows:
\u20ac\u00a0million | 2023 | 2022 |
Cost of sales | 17 | 21 |
Marketing and selling expenses | 6 | 7 |
Research and development expenses | 19 | 25 |
General and administrative expenses | 11 | 14 |
Other income and expenses | 0 | - 1 |
Total | 53 | 68 |
The major categories of plan assets at the end of the reporting period, are as follows:
\u20ac\u00a0million | 2023 | 2022 |
Cash and cash equivalent | 24 | 12 |
Equity instruments | 263 | 222 |
Europe | 58 | 50 |
U.S. | 61 | 55 |
Rest of the World | 144 | 117 |
Debt instruments | 296 | 273 |
Corporate bonds | 77 | 86 |
Government bonds | 45 | 42 |
Other | 174 | 145 |
Properties | 51 | 38 |
Qualifying insurance policies | 89 | 91 |
Investment funds | 159 | 119 |
Other | 7 | 2 |
Total | 889 | 757 |
Virtually all equity and debt instruments have quoted prices in active markets. Properties can be classified as Level 3 instruments based on the definitions in IFRS 13 Fair Value Measurement.
The assets held in the funds do not contain any direct investment in UCB Group shares, nor any property occupied
by, or other assets used by the Group, though this does not exclude UCB shares being included in mutual investment fund type investments. The principal weighted average actuarial assumptions used for the purposes of the actuarial valuations were as follows:
Eurozone | U.K. | Other | ||||
Percentage % | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
Discount rate | 3.33 | 4.15 | 4.65 | 4.90 | 1.30 | 2.01 |
Inflation | 2.00 | 2.00 | 2.90 | 3.00 | N/A | N/A |
Significant actuarial assumptions for the determination of the defined obligation are discount rate and inflation. The sensitivity analyses below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period.
If the discount rate would be 50 basis points higher (lower), the defined benefit obligation would decrease by \u20ac 69 million (increase by \u20ac 77 million) if all other assumptions were held constant.
If the inflation rate would increase (decrease) by 25 basis points, the defined benefit obligation would increase by \u20ac 18 million (decrease by \u20ac 34 million) if all other assumptions were held constant.
The figures above do not take account of any interrelationship between the assumptions, especially between the discount rate, expected salary increases and inflation rates.
The Group\u2019s subsidiaries should fund the entitlements expected to be earned on a yearly basis. Funding usually follows local actuarial requirements and in this framework, the discount rate is set on a risk-free rate.
Underfunding linked to past service are met by setting up recovery plans and investment strategies considering liability profiles, appropriate time periods for amortization of past service liability, local regulations and the affordability of the company.
The average duration of the benefit obligation at the end of the reporting period is 13.80 years (2022: 15.80 years). This number can be subdivided into the duration related to:
Eurozone: 12.20 years (2022: 11.60 years);
U.K.: 15.30 years (2022: 17.50 years);
Other: 17.70 years (2022: 15.60 years).
The Group expects to make a contribution of \u20ac 98 million to the defined benefit plans during the next financial year.
ALM (asset-liability management) studies are typically performed every 3 years. Within those studies, investment strategies are analyzed in terms of risk-and-return profiles in order to establish or validate a strategic investment allocation. An ALM study has been completed in Switzerland in 2023 which resulted in a slight adjustment of the assets portfolio. In\u00a0Belgium, an ALM study will be performed in 2024.
In setting up the long-term investment strategy of the scheme, the investment committee focuses on some key principles defined by the Group such as:
maintaining a balance between level of contributions acceptable to UCB and the level of investment risk relative to the liabilities;
reducing the volatility through investment diversification;
the degree of investment risk should depend on the financial state of the schemes and liability profiles; and
ensuring compliance with local funding regulations where applicable.
33. Employee benefits
Most employees are covered by retirement benefit plans sponsored by Group companies. The nature of such plans varies according to the legal regulations and fiscal requirements of the countries in which the employees are employed. The Group operates both defined contribution plans and defined benefit plans.
33.1 Defined contribution plans
Post-employment benefit plans are classified as \u201cdefined contribution\u201d plans if the Group pays fixed contributions into a separate fund or to a third party financial institution and has no further legal or constructive obligation to pay further contributions. Therefore no assets or liabilities are recognized in the Group statement of financial position in respect of such plans, apart from regular prepayments and accruals of contributions. For the Belgian defined contribution plans, UCB is required by law to guarantee a minimum return on employee and employer contributions. As a consequence, these plans are considered defined benefit plans. Where reliable estimates can be made for material plans, they are valued using the projected unit credit method under IAS 19. These plans are aggregated with the results for other defined benefit plans.
33.2 Defined benefit plans
The Group operates several defined benefit plans. The benefits granted include mainly pension benefits and jubilee premiums. The benefits are granted according to local market practice and regulations.
These plans are either unfunded or funded via outside pension funds or insurance companies. For (partially) funded plans, the assets of the plans are held separately in funds under the control of the trustees. Where a plan is unfunded, notably for the major defined benefit plans in Germany, a liability for the obligation is recorded in the Group statement of financial position. For funded plans, the Group is liable for the deficits
between the fair value of the plan assets and the present value of the benefit obligations. Accordingly, a liability (or an asset when the plan is over-funded) is recorded in the Group consolidated statement of financial position. Independent actuaries assess all main plans annually.
For UCB, the main risks linked to its defined benefit obligations are discount rate, inflation and longevity. The majority of the risks lies within Belgium, Switzerland, Germany and the U.K. It\u00a0 should be noted that longevity is not considered as a risk for the plans in Belgium as benefits are either paid as a lump sum or externalized before being paid as an annuity.
As part of its global risk management, UCB carries out an annual global risk analysis for the defined benefit plans located in its main countries (Belgium, Switzerland, Germany and the U.K.) and assesses the risk of deterioration of the financial position considering the Value-at-Risk.
In the U.K., for the Celltech Pension and Insurance Scheme, the focus is to de-risk the investment progressively in order to reach self-sufficiency. To better manage discount rate and inflation risks, the Scheme has also over the years gradually increased the hedging of both interest rates and inflation to around 90%.
In Belgium, UCB has closed all Belgian defined benefit and cash balance plans to new entrants as from December 31, 2019 and implemented a cash balance plan with an effective date of January 1, 2020 with the legally required guaranteed return. The focus remains on the diversification of the assets and investment managers while keeping a close control on risk.
The amount recognized in the consolidated statement of financial position arising from the Group\u2019s obligation in respect of its defined benefit plan is as follows:
\u20ac\u00a0million | Note | 2023 | 2022 |
Present value of defined benefit obligation | 1 100 | 906 | |
Fair value of plan assets | - 889 | - 759 | |
Funded status \u2013 Deficit | 211 | 147 | |
Net liability arising from defined benefit obligation | 211 | 147 | |
Add: Liability with respect to cash settled share based payments | 16 | 14 | |
Total employee benefit liabilities | 227 | 161 | |
Of which: | |||
Portion recognized in non-current liabilities | 227 | 162 | |
Portion recognized in non-current assets | 0 | 0 |
97% of the net liability arising from defined benefit obligations is related to defined benefit pension obligations in Belgium, Germany, Switzerland and the U.K.
Movements in the present value of the defined benefit obligation in the current year were as follows:
\u20ac\u00a0million | 2023 | 2022 |
At January 1 | 906 | 1 230 |
Current service cost | 47 | 66 |
Interest expense | 35 | 15 |
Remeasurement gain(-)/loss: | ||
Effect of changes in demographic assumptions | - 3 | -1 |
Effect of changes in financial assumptions | 100 | -404 |
Effect of experience adjustments | 34 | 48 |
Past service cost and gain(-)/loss on settlements | 0 | -1 |
Effect of change in foreign exchange rates | 14 | -5 |
Benefit payments from the plan | - 24 | -38 |
Benefit payments from the employer | - 5 | -4 |
Plan participants contributions | 5 | 4 |
Other | - 9 | -4 |
At December 31 | 1 100 | 906 |
Movements in the fair value of plan assets in the current year were as follows:
\u20ac\u00a0million | 2023 | 2022 |
At January 1 | 759 | 941 |
Interest income | 31 | 12 |
Remeasurement gain/loss(-) | ||
Return on plan assets (excluding interest income) | 29 | - 211 |
Effect of change in foreign exchange rates | 12 | - 5 |
Plan participants contributions | 5 | 4 |
Employer contributions | 93 | 67 |
Benefit payments from the plan | - 29 | - 42 |
Expenses, taxes and premiums paid | - 11 | - 7 |
At December 31 | 889 | 759 |
The fair value of plan assets amounts to \u20ac 889 million (2022: \u20ac 759 million), representing 81% (2022: 84%) of the defined benefit obligation. The total deficit of \u20ac 211 million (2022: \u20ac 147 million) is expected to be eliminated over the estimated remaining average service period of the current membership.
The amounts recognized in the consolidated income statement and in the consolidated statement of comprehensive income in respect of those defined benefit plans are as follows:
\u20ac\u00a0million | 2023 | 2022 |
Total service cost (including past service cost and gain (-)/loss from settlements) | 47 | 65 |
Net interest cost | 3 | 3 |
Remeasurement of other long term benefits | 1 | - 2 |
Administrative expenses and taxes | 2 | 2 |
Components of defined benefit costs recorded in income statement | 53 | 68 |
Remeasurements gain (-)/loss | ||
Effect of changes in demographic assumptions | - 3 | - 1 |
Effect of changes in financial assumptions | 99 | - 402 |
Effect of experience adjustments | 34 | 48 |
Return on plan assets (excluding interest income) | - 29 | 211 |
Components of defined benefit costs recorded in OCI | 101 | - 144 |
Total components of defined benefit cost | 154 | - 76 |
The total service cost, the net interest expense, the remeasurement of other long-term benefits, administrative expenses and taxes for the year are included in the employee benefit expenses in the consolidated income statement. 78% of the defined benefit costs recorded in the income statement are relating to defined benefit pension plans in Belgium and U.K. The remeasurement on the net defined benefit liability is included in the statement of comprehensive income as part of other comprehensive income. Total remeasurements amount to a loss of \u20ac 101 million in 2023 compared to a gain of
\u20ac 144 million in 2022. The loss in 2023 is mainly resulting from a decrease in discount rates partially offset by higher return on plan assets. The gain in 2022 is mainly resulting from a higher return on plan assets and increase in discount rates.
The actual return on plan assets is \u20ac 29 million (2022: \u20ac 211 million) and the actual return on reimbursement rights is \u20ac 0 million (2022: \u20ac 0 million).
The split of the recognized expense by functional line is as follows:
\u20ac\u00a0million | 2023 | 2022 |
Cost of sales | 17 | 21 |
Marketing and selling expenses | 6 | 7 |
Research and development expenses | 19 | 25 |
General and administrative expenses | 11 | 14 |
Other income and expenses | 0 | - 1 |
Total | 53 | 68 |
The major categories of plan assets at the end of the reporting period, are as follows:
\u20ac\u00a0million | 2023 | 2022 |
Cash and cash equivalent | 24 | 12 |
Equity instruments | 263 | 222 |
Europe | 58 | 50 |
U.S. | 61 | 55 |
Rest of the World | 144 | 117 |
Debt instruments | 296 | 273 |
Corporate bonds | 77 | 86 |
Government bonds | 45 | 42 |
Other | 174 | 145 |
Properties | 51 | 38 |
Qualifying insurance policies | 89 | 91 |
Investment funds | 159 | 119 |
Other | 7 | 2 |
Total | 889 | 757 |
Virtually all equity and debt instruments have quoted prices in active markets. Properties can be classified as Level 3 instruments based on the definitions in IFRS 13 Fair Value Measurement.
The assets held in the funds do not contain any direct investment in UCB Group shares, nor any property occupied
by, or other assets used by the Group, though this does not exclude UCB shares being included in mutual investment fund type investments. The principal weighted average actuarial assumptions used for the purposes of the actuarial valuations were as follows:
Eurozone | U.K. | Other | ||||
Percentage % | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
Discount rate | 3.33 | 4.15 | 4.65 | 4.90 | 1.30 | 2.01 |
Inflation | 2.00 | 2.00 | 2.90 | 3.00 | N/A | N/A |
Significant actuarial assumptions for the determination of the defined obligation are discount rate and inflation. The sensitivity analyses below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period.
If the discount rate would be 50 basis points higher (lower), the defined benefit obligation would decrease by \u20ac 69 million (increase by \u20ac 77 million) if all other assumptions were held constant.
If the inflation rate would increase (decrease) by 25 basis points, the defined benefit obligation would increase by \u20ac 18 million (decrease by \u20ac 34 million) if all other assumptions were held constant.
The figures above do not take account of any interrelationship between the assumptions, especially between the discount rate, expected salary increases and inflation rates.
The Group\u2019s subsidiaries should fund the entitlements expected to be earned on a yearly basis. Funding usually follows local actuarial requirements and in this framework, the discount rate is set on a risk-free rate.
Underfunding linked to past service are met by setting up recovery plans and investment strategies considering liability profiles, appropriate time periods for amortization of past service liability, local regulations and the affordability of the company.
The average duration of the benefit obligation at the end of the reporting period is 13.80 years (2022: 15.80 years). This number can be subdivided into the duration related to:
Eurozone: 12.20 years (2022: 11.60 years);
U.K.: 15.30 years (2022: 17.50 years);
Other: 17.70 years (2022: 15.60 years).
The Group expects to make a contribution of \u20ac 98 million to the defined benefit plans during the next financial year.
ALM (asset-liability management) studies are typically performed every 3 years. Within those studies, investment strategies are analyzed in terms of risk-and-return profiles in order to establish or validate a strategic investment allocation. An ALM study has been completed in Switzerland in 2023 which resulted in a slight adjustment of the assets portfolio. In\u00a0Belgium, an ALM study will be performed in 2024.
In setting up the long-term investment strategy of the scheme, the investment committee focuses on some key principles defined by the Group such as:
maintaining a balance between level of contributions acceptable to UCB and the level of investment risk relative to the liabilities;
reducing the volatility through investment diversification;
the degree of investment risk should depend on the financial state of the schemes and liability profiles; and
ensuring compliance with local funding regulations where applicable.
34. Provisions
The movements in provisions have been disclosed below:
\u20ac\u00a0million | Environment | Restructuring | Other | Total |
At January 1, 2023 | 15 | 14 | 332 | 361 |
Arising during the year | 8 | 4 | 86 | 98 |
Unused amounts reversed | 0 | - 1 | - 54 | - 55 |
Transfer from one heading to another | 0 | 0 | 4 | 4 |
Effect of movements in exchange rates | 0 | 0 | - 1 | - 1 |
Utilized during the year | - 1 | - 10 | - 11 | - 22 |
At December 31, 2023 | 22 | 7 | 356 | 385 |
Non-current portion | 22 | 0 | 190 | 212 |
Current portion | 0 | 7 | 166 | 173 |
Total provisions | 22 | 7 | 356 | 385 |
34.1 Environmental provisions
UCB has retained certain environmental liabilities related to the divestiture of Films (2004) divested sites on which UCB has retained full responsibility in accordance with contractual terms. The increase of the environmental provisions in 2023 mainly stems from additional amounts related to cleaning up ground in Belgium, linked to ceased activities. A part of the provisions was used to cover actual expenses incurred in 2023.
34.2 Restructuring provisions
The restructuring provisions arising during 2023 are related to further optimization of business models. The utilization is also mainly related to earlier reorganizations in Europe.
34.3 Other provisions
Other provisions relate mainly to:
provisions for litigations that comprise mainly provisions where UCB or a subsidiary is or might be a defendant against claims of previous employees;
product liability provisions that pertain to the risks related to the normal course of business and for which the Group might be liable by selling these kinds of drugs. UCB is currently a defendant in several product liability cases in France in respect of Distilb\u00e8ne, a former product of the UCB Group. The claimants in these actions claim that their mothers took
Distilb\u00e8ne during their pregnancy and that as a result of this they suffered bodily injuries (see Note 43.3). The provision in respect of Distilb\u00e8ne decreased by \u20ac 5 million to a total of \u20ac 113 million (2022: decreased by \u20ac 6 million to a total of \u20ac 118 million) to reflect the net estimated future cash outflows. The provision was discounted using a discount rate of 2.30% (2022: 2.96%). If the discount rate would be 25 basis points lower, the provision would increase by \u20ac 2 million, at 0% discount rate the provision would increase by \u20ac 20 million;
provisions for restoration costs for leased buildings due to the adoption of IFRS 16 (\u20ac 9 million) (2022: \u20ac 8 million) (see Note 40);
provisions in respect of the recoverability of non-income tax receivables;
Ongoing claims and disputes to the extend that at balance sheet date, a present obligation exists and could be reliably measured;
provision related to the strategic decision to terminate the development in ITP. The provision decreased by \u20ac 29 million to a total of \u20ac 4 million due to utilization and cancellation.
An assessment is performed with respect to the above-mentioned risks together with the Group legal advisers and experts in the different domains.
34. Provisions
The movements in provisions have been disclosed below:
\u20ac\u00a0million | Environment | Restructuring | Other | Total |
At January 1, 2023 | 15 | 14 | 332 | 361 |
Arising during the year | 8 | 4 | 86 | 98 |
Unused amounts reversed | 0 | - 1 | - 54 | - 55 |
Transfer from one heading to another | 0 | 0 | 4 | 4 |
Effect of movements in exchange rates | 0 | 0 | - 1 | - 1 |
Utilized during the year | - 1 | - 10 | - 11 | - 22 |
At December 31, 2023 | 22 | 7 | 356 | 385 |
Non-current portion | 22 | 0 | 190 | 212 |
Current portion | 0 | 7 | 166 | 173 |
Total provisions | 22 | 7 | 356 | 385 |
34.1 Environmental provisions
UCB has retained certain environmental liabilities related to the divestiture of Films (2004) divested sites on which UCB has retained full responsibility in accordance with contractual terms. The increase of the environmental provisions in 2023 mainly stems from additional amounts related to cleaning up ground in Belgium, linked to ceased activities. A part of the provisions was used to cover actual expenses incurred in 2023.
34.2 Restructuring provisions
The restructuring provisions arising during 2023 are related to further optimization of business models. The utilization is also mainly related to earlier reorganizations in Europe.
34.3 Other provisions
Other provisions relate mainly to:
provisions for litigations that comprise mainly provisions where UCB or a subsidiary is or might be a defendant against claims of previous employees;
product liability provisions that pertain to the risks related to the normal course of business and for which the Group might be liable by selling these kinds of drugs. UCB is currently a defendant in several product liability cases in France in respect of Distilb\u00e8ne, a former product of the UCB Group. The claimants in these actions claim that their mothers took
Distilb\u00e8ne during their pregnancy and that as a result of this they suffered bodily injuries (see Note 43.3). The provision in respect of Distilb\u00e8ne decreased by \u20ac 5 million to a total of \u20ac 113 million (2022: decreased by \u20ac 6 million to a total of \u20ac 118 million) to reflect the net estimated future cash outflows. The provision was discounted using a discount rate of 2.30% (2022: 2.96%). If the discount rate would be 25 basis points lower, the provision would increase by \u20ac 2 million, at 0% discount rate the provision would increase by \u20ac 20 million;
provisions for restoration costs for leased buildings due to the adoption of IFRS 16 (\u20ac 9 million) (2022: \u20ac 8 million) (see Note 40);
provisions in respect of the recoverability of non-income tax receivables;
Ongoing claims and disputes to the extend that at balance sheet date, a present obligation exists and could be reliably measured;
provision related to the strategic decision to terminate the development in ITP. The provision decreased by \u20ac 29 million to a total of \u20ac 4 million due to utilization and cancellation.
An assessment is performed with respect to the above-mentioned risks together with the Group legal advisers and experts in the different domains.
34. Provisions
The movements in provisions have been disclosed below:
\u20ac\u00a0million | Environment | Restructuring | Other | Total |
At January 1, 2023 | 15 | 14 | 332 | 361 |
Arising during the year | 8 | 4 | 86 | 98 |
Unused amounts reversed | 0 | - 1 | - 54 | - 55 |
Transfer from one heading to another | 0 | 0 | 4 | 4 |
Effect of movements in exchange rates | 0 | 0 | - 1 | - 1 |
Utilized during the year | - 1 | - 10 | - 11 | - 22 |
At December 31, 2023 | 22 | 7 | 356 | 385 |
Non-current portion | 22 | 0 | 190 | 212 |
Current portion | 0 | 7 | 166 | 173 |
Total provisions | 22 | 7 | 356 | 385 |
34.1 Environmental provisions
UCB has retained certain environmental liabilities related to the divestiture of Films (2004) divested sites on which UCB has retained full responsibility in accordance with contractual terms. The increase of the environmental provisions in 2023 mainly stems from additional amounts related to cleaning up ground in Belgium, linked to ceased activities. A part of the provisions was used to cover actual expenses incurred in 2023.
34.2 Restructuring provisions
The restructuring provisions arising during 2023 are related to further optimization of business models. The utilization is also mainly related to earlier reorganizations in Europe.
34.3 Other provisions
Other provisions relate mainly to:
provisions for litigations that comprise mainly provisions where UCB or a subsidiary is or might be a defendant against claims of previous employees;
product liability provisions that pertain to the risks related to the normal course of business and for which the Group might be liable by selling these kinds of drugs. UCB is currently a defendant in several product liability cases in France in respect of Distilb\u00e8ne, a former product of the UCB Group. The claimants in these actions claim that their mothers took
Distilb\u00e8ne during their pregnancy and that as a result of this they suffered bodily injuries (see Note 43.3). The provision in respect of Distilb\u00e8ne decreased by \u20ac 5 million to a total of \u20ac 113 million (2022: decreased by \u20ac 6 million to a total of \u20ac 118 million) to reflect the net estimated future cash outflows. The provision was discounted using a discount rate of 2.30% (2022: 2.96%). If the discount rate would be 25 basis points lower, the provision would increase by \u20ac 2 million, at 0% discount rate the provision would increase by \u20ac 20 million;
provisions for restoration costs for leased buildings due to the adoption of IFRS 16 (\u20ac 9 million) (2022: \u20ac 8 million) (see Note 40);
provisions in respect of the recoverability of non-income tax receivables;
Ongoing claims and disputes to the extend that at balance sheet date, a present obligation exists and could be reliably measured;
provision related to the strategic decision to terminate the development in ITP. The provision decreased by \u20ac 29 million to a total of \u20ac 4 million due to utilization and cancellation.
An assessment is performed with respect to the above-mentioned risks together with the Group legal advisers and experts in the different domains.
35. Trade and other liabilities
\u20ac\u00a0million | 2023 | 2022 |
Other payables | 98 | 119 |
Total non-current trade and other liabilities | 98 | 119 |
\u20ac\u00a0million | 2023 | 2022 |
Trade payables | 537 | 573 |
Invoices to receive | 49 | 50 |
Taxes payable, other than income tax | 20 | 15 |
Payroll and social security liabilities | 320 | 274 |
Other payables | 80 | 203 |
Deferred income linked to development agreements | 146 | 193 |
Other deferred income | 9 | 8 |
Royalties payables | 33 | 29 |
Rebates/discounts and other sales allowances payable | 873 | 899 |
Accrued interest | 37 | 34 |
Other accrued expenses | 209 | 214 |
Total current trade and other liabilities | 2 313 | 2 492 |
The vast majority of the trade and other liabilities are classified as current and consequently the carrying amounts of the total trade and other liabilities is assumed to be a reasonable approximation of fair value.
\u201cRebates/discounts and other sales allowances payable\u201d include rebates, chargebacks, discounts and accruals for product returns relating to products sold in the U.S. to various customers that are part of commercial and governmental contractual arrangements or other reimbursement programs, including the U.S. Medicaid Drug Rebate program, the U.S. Federal Medicare program and others. The sales returns and allowances are recorded in the same period as the underlying sales as a deduction to sales.
Per management assessment, the total accruals for these items are adequate, based upon currently available information and interpretation of relevant regulations.
As these deductions are based on management estimates, the actual deductions might differ from these estimates. Such differences could impact the accruals recognized in the statement of financial position in future periods and consequently the level of sales recognized in the income statement in future periods, as there is often a time lag of several months between the recording of the estimate and the final accounting of the sales deductions.
The accruals are reviewed and adjusted regularly in light of contractual and legal obligations, historical trends, past experience and projected market conditions.
All returns, chargebacks, rebates and discounts that are not mentioned on the invoice are estimated, deducted from sales and presented on the statement of financial position in the appropriate accrual account. The estimate for future product returns is based on several factors, including: historical return rates, expiration date by product, return rate by closed batches, actual returns processed among others, as well as any other specifically-identified anticipated returns due to known factors such as the loss of patent exclusivity, product recalls and discontinuances, or a changing competitive environment. Adjustments to these accruals may be required in the future based on revised estimates to our assumptions, which would have an impact on our consolidated results of operations. The U.S. sales return and allowance liability that is included as part of the rebates and discounts payable liability balance amounts to \u20ac 703 million as per December 31, 2023 (December 31, 2022: \u20ac 726 million).
In 2022, the other payables include an amount of \u20ac 135 million for the payment of the contingent value right of US$ 2 per share to the former shareholders of Zogenix, Inc, that was acquired by UCB on March 7, 2022, as well as to the holders of the convertible notes of Zogenix, Inc. as these were all converted after the closing of the acquisition (see Notes 8and 45).
35. Trade and other liabilities
\u20ac\u00a0million | 2023 | 2022 |
Other payables | 98 | 119 |
Total non-current trade and other liabilities | 98 | 119 |
\u20ac\u00a0million | 2023 | 2022 |
Trade payables | 537 | 573 |
Invoices to receive | 49 | 50 |
Taxes payable, other than income tax | 20 | 15 |
Payroll and social security liabilities | 320 | 274 |
Other payables | 80 | 203 |
Deferred income linked to development agreements | 146 | 193 |
Other deferred income | 9 | 8 |
Royalties payables | 33 | 29 |
Rebates/discounts and other sales allowances payable | 873 | 899 |
Accrued interest | 37 | 34 |
Other accrued expenses | 209 | 214 |
Total current trade and other liabilities | 2 313 | 2 492 |
The vast majority of the trade and other liabilities are classified as current and consequently the carrying amounts of the total trade and other liabilities is assumed to be a reasonable approximation of fair value.
\u201cRebates/discounts and other sales allowances payable\u201d include rebates, chargebacks, discounts and accruals for product returns relating to products sold in the U.S. to various customers that are part of commercial and governmental contractual arrangements or other reimbursement programs, including the U.S. Medicaid Drug Rebate program, the U.S. Federal Medicare program and others. The sales returns and allowances are recorded in the same period as the underlying sales as a deduction to sales.
Per management assessment, the total accruals for these items are adequate, based upon currently available information and interpretation of relevant regulations.
As these deductions are based on management estimates, the actual deductions might differ from these estimates. Such differences could impact the accruals recognized in the statement of financial position in future periods and consequently the level of sales recognized in the income statement in future periods, as there is often a time lag of several months between the recording of the estimate and the final accounting of the sales deductions.
The accruals are reviewed and adjusted regularly in light of contractual and legal obligations, historical trends, past experience and projected market conditions.
All returns, chargebacks, rebates and discounts that are not mentioned on the invoice are estimated, deducted from sales and presented on the statement of financial position in the appropriate accrual account. The estimate for future product returns is based on several factors, including: historical return rates, expiration date by product, return rate by closed batches, actual returns processed among others, as well as any other specifically-identified anticipated returns due to known factors such as the loss of patent exclusivity, product recalls and discontinuances, or a changing competitive environment. Adjustments to these accruals may be required in the future based on revised estimates to our assumptions, which would have an impact on our consolidated results of operations. The U.S. sales return and allowance liability that is included as part of the rebates and discounts payable liability balance amounts to \u20ac 703 million as per December 31, 2023 (December 31, 2022: \u20ac 726 million).
In 2022, the other payables include an amount of \u20ac 135 million for the payment of the contingent value right of US$ 2 per share to the former shareholders of Zogenix, Inc, that was acquired by UCB on March 7, 2022, as well as to the holders of the convertible notes of Zogenix, Inc. as these were all converted after the closing of the acquisition (see Notes 8and 45).
35. Trade and other liabilities
\u20ac\u00a0million | 2023 | 2022 |
Other payables | 98 | 119 |
Total non-current trade and other liabilities | 98 | 119 |
\u20ac\u00a0million | 2023 | 2022 |
Trade payables | 537 | 573 |
Invoices to receive | 49 | 50 |
Taxes payable, other than income tax | 20 | 15 |
Payroll and social security liabilities | 320 | 274 |
Other payables | 80 | 203 |
Deferred income linked to development agreements | 146 | 193 |
Other deferred income | 9 | 8 |
Royalties payables | 33 | 29 |
Rebates/discounts and other sales allowances payable | 873 | 899 |
Accrued interest | 37 | 34 |
Other accrued expenses | 209 | 214 |
Total current trade and other liabilities | 2 313 | 2 492 |
The vast majority of the trade and other liabilities are classified as current and consequently the carrying amounts of the total trade and other liabilities is assumed to be a reasonable approximation of fair value.
\u201cRebates/discounts and other sales allowances payable\u201d include rebates, chargebacks, discounts and accruals for product returns relating to products sold in the U.S. to various customers that are part of commercial and governmental contractual arrangements or other reimbursement programs, including the U.S. Medicaid Drug Rebate program, the U.S. Federal Medicare program and others. The sales returns and allowances are recorded in the same period as the underlying sales as a deduction to sales.
Per management assessment, the total accruals for these items are adequate, based upon currently available information and interpretation of relevant regulations.
As these deductions are based on management estimates, the actual deductions might differ from these estimates. Such differences could impact the accruals recognized in the statement of financial position in future periods and consequently the level of sales recognized in the income statement in future periods, as there is often a time lag of several months between the recording of the estimate and the final accounting of the sales deductions.
The accruals are reviewed and adjusted regularly in light of contractual and legal obligations, historical trends, past experience and projected market conditions.
All returns, chargebacks, rebates and discounts that are not mentioned on the invoice are estimated, deducted from sales and presented on the statement of financial position in the appropriate accrual account. The estimate for future product returns is based on several factors, including: historical return rates, expiration date by product, return rate by closed batches, actual returns processed among others, as well as any other specifically-identified anticipated returns due to known factors such as the loss of patent exclusivity, product recalls and discontinuances, or a changing competitive environment. Adjustments to these accruals may be required in the future based on revised estimates to our assumptions, which would have an impact on our consolidated results of operations. The U.S. sales return and allowance liability that is included as part of the rebates and discounts payable liability balance amounts to \u20ac 703 million as per December 31, 2023 (December 31, 2022: \u20ac 726 million).
In 2022, the other payables include an amount of \u20ac 135 million for the payment of the contingent value right of US$ 2 per share to the former shareholders of Zogenix, Inc, that was acquired by UCB on March 7, 2022, as well as to the holders of the convertible notes of Zogenix, Inc. as these were all converted after the closing of the acquisition (see Notes 8and 45).
36. Income tax payables
Income tax payables include liabilities for uncertain tax positions for an amount of \u20ac 91 million (2022: \u20ac 145 million). The uncertain tax positions balance has decreased over 2023 and is composed of (partial) reversal of some risks in key countries partially compensated by the remeasurement of existing and the setup of new uncertain tax positions. Liabilities for uncertain tax positions are recorded when the Group considers it probable that a tax position taken is unlikely to be sustained if challenged by the tax authorities and after exhausting all legal remedies.
The income tax receivable includes assets for tax relief following Mutual Agreement / Arbitration procedures for an amount of \u20ac 22 million (2022: \u20ac 27 million). Assets for relief following Mutual Agreement / Arbitration procedures are recorded when the Group considers it probable that a Mutual Agreement / Arbitration procedure may provide for a corresponding adjustment in one or more jurisdictions.
The assessment for both the uncertain tax positions and corresponding adjustments is calculated taking into account the most likely outcome (for corporate income tax related matters) or the expected value (for corporate tax or transfer pricing related matters), where appropriate and in line with IFRIC 23. See Note 4.2.5for more details on the Group\u2019s assessment of uncertain tax positions. On a net basis, the group has provided for a reserve of \u20ac 69 million (2022: \u20ac 119 million) to cover for uncertain tax positions and engages into the necessary procedures to secure tax relief where possible.
UCB faces tax audits in a number of countries where activities are deployed. The issues under discussion are in some cases complex and such audits can take a number of years to resolve. The Group strictly follows up on the liabilities for uncertain tax positions which are recorded per end 2023, also reflecting the status of the ongoing tax audits.
37. Note to the consolidated statement of cash flows
The cash flow statement identifies operating, investing and financing activities for the period.
UCB uses the indirect method for the operating cash flows. The net profit and loss is adjusted for:
the effects of non-cash transactions such as depreciation and amortization, impairment losses, provisions, mark-to-market, etc., and the variance in working capital;
items of income or expense associated with investing or financing cash flows.
Important non-cash transactions for 2023 mainly relate to tax credits (\u20ac 153 million) for which the cash benefit will be received in later years.
Important non-cash transactions for 2022 mainly relate to acquired working capital from acquisitions (\u20ac 65 million) and tax credits (\u20ac 117 million) for which the cash benefit will be received in later years.
\u20ac\u00a0million | Note | 2023 | 2022 |
Adjustment for non-cash transactions | 485 | 752 | |
Depreciation and amortization | 691 | 589 | |
Impairment / reversal (-) charges | 6 | 4 | |
Equity settled share based payment expense | 17 | - 20 | |
Other non-cash transactions in the income statement | - 153 | - 117 | |
Adjustment IFRS 9 | - 20 | 35 | |
(Un)realized exchange gain (-) / losses | - 7 | 124 | |
Change in provisions and employee benefits | - 20 | 73 | |
Change in inventories and bad debt provisions | - 29 | 64 | |
Adjustment for items to disclose separately under operating | 98 | 91 | |
Tax charge of the period from continuing operations | 98 | 91 | |
Adjustment for items to disclose under investing and financing | 143 | 58 | |
Gain (-) / loss on disposal of fixed assets | 26 | - 1 | |
Interest income (-) / expenses | 117 | 59 | |
Change in working capital | |||
Inventories movement per consolidated statement of financial position | - 124 | - 29 | |
Trade and other receivable and other assets movement per consolidated statement of financial position | - 96 | 162 | |
Trade and other payable movement per consolidated statement of financial position | - 88 | - 173 | |
As it appears in the consolidated statement of financial position and corrected by: | - 308 | - 40 | |
Non-cash items1 | 14 | 88 | |
Change in inventories and bad debt provisions disclosed separately under operating cash flow | 29 | - 64 | |
Currency translation adjustments | 38 | - 40 | |
As it appears in the consolidated cash flow statement | - 227 | - 56 |
1\tNon-cash items are mainly linked to transfers from one heading to another, non-cash movements linked to stock rewards.
38. Financial instruments by category
December 31, 2023 | ||||||
\u20ac\u00a0million | Note | Assets at amortized cost | ||||
Assets at fair value through the profit and loss (FVPL) | ||||||
Assets used for hedging | ||||||
Assets at fair value through other comprehensive income (FVOCI) | Total | |||||
Assets as per statement of financial position | ||||||
Financial assets and other assets (excluding derivative financial instruments and associates) | 184 | 0 | 0 | 190 | 374 | |
Derivative financial assets | 0 | 19 | 58 | 0 | 77 | |
Trade and other receivables (including prepaid expenses) | 1 220 | 0 | 0 | 0 | 1 220 | |
Cash and cash equivalents | 861 | 0 | 0 | 0 | 861 | |
Total | 2 265 | 19 | 58 | 190 | 2 532 | |
December 31, 2023 | ||||||
\u20ac\u00a0million | Note | Liabilities at fair value through the profit and loss (FVPL) | ||||
Liabilities used for hedging | Liabilities at amortized cost | Total | ||||
Liabilities as per statement of financial position | ||||||
Borrowings | 0 | 0 | 2 141 | 2 141 | ||
Bonds | - 50 | 0 | 947 | 897 | ||
Derivative financial liabilities | 62 | 23 | 0 | 85 | ||
Trade and other liabilities | 0 | 0 | 2 411 | 2 411 | ||
Other financial liabilities (excluding derivative financial instruments) | 0 | 0 | 0 | 0 | ||
Total | 12 | 23 | 5 499 | 5 534 |
December 31, 2022 | ||||||
\u20ac\u00a0million | Note | Assets at amortized cost | ||||
Assets at fair value through the profit and loss (FVPL) | ||||||
Assets used for hedging | ||||||
Assets at fair value through other comprehensive income (FVOCI) | Total | |||||
Assets as per statement of financial position | ||||||
Financial assets and other assets (excluding derivative financial instruments and associates) | 255 | 0 | 0 | 181 | 436 | |
Derivative financial assets | 0 | 29 | 123 | 0 | 152 | |
Trade and other receivables (including prepaid expenses) | 1 051 | 0 | 0 | 0 | 1 051 | |
Cash and cash equivalents | 899 | 0 | 0 | 0 | 899 | |
Total | 2 205 | 29 | 123 | 181 | 2 538 | |
December 31, 2022 | ||||||
\u20ac\u00a0million | Note | Liabilities at fair value through the profit and loss (FVPL) | ||||
Liabilities used for hedging | Liabilities at amortized cost | Total | ||||
Liabilities as per statement of financial position | ||||||
Borrowings | 0 | 0 | 2 177 | 2 177 | ||
Bonds | - 99 | 0 | 822 | 723 | ||
Derivative financial liabilities | 153 | 64 | 0 | 217 | ||
Trade and other liabilities | 0 | 0 | 2 611 | 2 611 | ||
Other financial liabilities (excluding derivative financial instruments) | - 1 | 0 | 0 | - 1 | ||
Total | 53 | 64 | 5 610 | 5 727 |
38. Financial instruments by category
December 31, 2023 | ||||||
\u20ac\u00a0million | Note | Assets at amortized cost | ||||
Assets at fair value through the profit and loss (FVPL) | ||||||
Assets used for hedging | ||||||
Assets at fair value through other comprehensive income (FVOCI) | Total | |||||
Assets as per statement of financial position | ||||||
Financial assets and other assets (excluding derivative financial instruments and associates) | 184 | 0 | 0 | 190 | 374 | |
Derivative financial assets | 0 | 19 | 58 | 0 | 77 | |
Trade and other receivables (including prepaid expenses) | 1 220 | 0 | 0 | 0 | 1 220 | |
Cash and cash equivalents | 861 | 0 | 0 | 0 | 861 | |
Total | 2 265 | 19 | 58 | 190 | 2 532 | |
December 31, 2023 | ||||||
\u20ac\u00a0million | Note | Liabilities at fair value through the profit and loss (FVPL) | ||||
Liabilities used for hedging | Liabilities at amortized cost | Total | ||||
Liabilities as per statement of financial position | ||||||
Borrowings | 0 | 0 | 2 141 | 2 141 | ||
Bonds | - 50 | 0 | 947 | 897 | ||
Derivative financial liabilities | 62 | 23 | 0 | 85 | ||
Trade and other liabilities | 0 | 0 | 2 411 | 2 411 | ||
Other financial liabilities (excluding derivative financial instruments) | 0 | 0 | 0 | 0 | ||
Total | 12 | 23 | 5 499 | 5 534 |
December 31, 2022 | ||||||
\u20ac\u00a0million | Note | Assets at amortized cost | ||||
Assets at fair value through the profit and loss (FVPL) | ||||||
Assets used for hedging | ||||||
Assets at fair value through other comprehensive income (FVOCI) | Total | |||||
Assets as per statement of financial position | ||||||
Financial assets and other assets (excluding derivative financial instruments and associates) | 255 | 0 | 0 | 181 | 436 | |
Derivative financial assets | 0 | 29 | 123 | 0 | 152 | |
Trade and other receivables (including prepaid expenses) | 1 051 | 0 | 0 | 0 | 1 051 | |
Cash and cash equivalents | 899 | 0 | 0 | 0 | 899 | |
Total | 2 205 | 29 | 123 | 181 | 2 538 | |
December 31, 2022 | ||||||
\u20ac\u00a0million | Note | Liabilities at fair value through the profit and loss (FVPL) | ||||
Liabilities used for hedging | Liabilities at amortized cost | Total | ||||
Liabilities as per statement of financial position | ||||||
Borrowings | 0 | 0 | 2 177 | 2 177 | ||
Bonds | - 99 | 0 | 822 | 723 | ||
Derivative financial liabilities | 153 | 64 | 0 | 217 | ||
Trade and other liabilities | 0 | 0 | 2 611 | 2 611 | ||
Other financial liabilities (excluding derivative financial instruments) | - 1 | 0 | 0 | - 1 | ||
Total | 53 | 64 | 5 610 | 5 727 |
39. Derivative financial instruments
Assets | Liabilities | ||||
\u20ac\u00a0million | Note | 2023 | 2022 | 2023 | 2022 |
Forward foreign exchange contracts \u2013 cash flow hedges | 38 | 31 | 4 | 36 | |
Forward foreign exchange contracts \u2013 fair value through profit and loss | 7 | 25 | 3 | 60 | |
Forward foreign exchange contracts \u2013 net investment hedges | 1 | 54 | 14 | 26 | |
Interest rate derivatives \u2013 cash flow hedges | 19 | 38 | 5 | 2 | |
Interest rate derivatives \u2013 fair value through profit and loss | 12 | 4 | 59 | 93 | |
Total | 77 | 152 | 85 | 217 | |
Of which: | |||||
\u00a0\u00a0\u00a0 Non-current | 31 | 28 | 64 | 99 | |
\u00a0\u00a0\u00a0 Current | 46 | 123 | 21 | 117 |
The full fair value of a hedging derivative is classified as a non-current asset or liability if its remaining maturity is more than 12\u00a0months, and as a current asset or liability if its maturity is less than 12 months.
The cash flow hedges entered into by the Group were assessed to be highly effective and over 2023, a net unrealized gain of \u20ac 63 million (2022: net unrealized gain of \u20ac 53 million)
after deferred taxes was included in equity in respect of these contracts. These gains/losses will be recycled to the profit or loss in the period during which the hedged forecast transactions affect the profit or loss.
The ineffective portion recognized in the profit or loss that arises from cash flow hedges amounts to \u20ac 0 million (in 2023 as well as in 2022).
39.1 Foreign currency derivatives
The Group policy with respect to the use of financial derivative contracts is described in Note 5Financial Risk Management.
The Group entered into several forward foreign exchange contracts in order to hedge a portion of highly probable future
sales and royalty income, expected to occur in 2022 and 2023.
The fair values of the foreign currency derivative contracts are as follows:
The net foreign currency derivatives maturity analysis is noted below:
Assets | Liabilities | |||
\u20ac\u00a0million | 2023 | 2022 | 2023 | 2022 |
USD | 25 | 63 | 3 | 52 |
GBP | 0 | 0 | 0 | 0 |
JPY | 7 | 6 | 1 | 6 |
CHF | 0 | 0 | 0 | 0 |
Other currencies | 14 | 41 | 18 | 64 |
Total foreign currency derivatives | 46 | 110 | 22 | 122 |
\u20ac\u00a0million | 2023 | 2022 | ||
1 year or less | 25 | - 11 | ||
1\u2013 5 years | 0 | 0 | ||
Beyond 5 years | 0 | 0 | ||
Total foreign currency derivatives \u2013 net asset/net liability (-) | 25 | - 11 |
The following table shows the split of foreign currency derivatives by currency of denomination (currencies sold view) as at December 31, 2023:
Notional amounts in \u20ac\u00a0million | USD | GBP | EUR | JPY | CHF | Other currencies | Total |
Forward contracts | 206 | 38 | 196 | 8 | 0 | 16 | 464 |
Currency swaps | 1 530 | 36 | 1 490 | 185 | 31 | 249 | 3 521 |
Option/collar | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Total | 1 736 | 74 | 1 686 | 193 | 31 | 265 | 3 985 |
39.2 Interest rate derivatives
The Group uses various interest rate derivative contracts to manage its exposure to interest rate movements on its borrowings. The re-pricing dates and amortization
characteristics are aligned with those of the fixed rate bonds and floating rate notes. The outstanding interest rate swaps (\u201cIRS\u201d) contracts are as follows:
Contract Type | For periods | Receivable Currency | Receivable Notional | Receivable Rate | Payable Currency | Payable Notional | Payable Rate | |
from | to | |||||||
IRS | Apr 1, 2021 | Oct 1, 2027 | EUR | 150 | - 0.25% | EUR | 150 | EURIBOR 6M |
IRS | Mar 30, 2021 | Mar 30, 2028 | EUR | 500 | - 0.22% | EUR | 500 | EURIBOR 6M |
IRS | Nov 21, 2023 | Nov 21, 2029 | EUR | 300 | 3.02% | EUR | 300 | EURIBOR 3M |
IRS | Jan 3, 2023 | Jan 2, 2025 | USD | 300 | SOFR | USD | 300 | 4.52% |
IRS | Jun 8, 2022 | Mar 10, 2025 | USD | 200 | SOFR | USD | 200 | 2.07% |
IRS | Dec 8, 2022 | Dec 8, 2025 | USD | 200 | SOFR | USD | 200 | 4.18% |
IRS | Jul 8, 2022 | Mar 9, 2026 | USD | 200 | SOFR | USD | 200 | 2.96% |
IRS | Dec 8, 2023 | Dec 8, 2026 | USD | 375 | SOFR | USD | 375 | 4.22% |
IRS | Jul 8, 2022 | Mar 8, 2027 | USD | 200 | SOFR | USD | 200 | 1.84% |
39.3 Hedge of net investment in a foreign entity
Any unrealized cumulative foreign exchange gains or losses resulting from net investment hedges are taken up under Cumulative Translation Adjustments. These unrealized gains
and losses will remain in equity and will only be recycled to profit or loss when the Group no longer holds the underlying assets
40. Leases
40.1 Amounts recognized in the statement of financial position
The statement of financial position shows the following amounts relating to leases:
\u20ac\u00a0million | Note | 2023 | 2022 |
Buildings | 107 | 118 | |
Plant and machinery | 15 | 1 | |
Office equipment and vehicles | 57 | 41 | |
Total right-of-use assets | 179 | 160 | |
Non-current | 118 | 100 | |
Current | 42 | 41 | |
Total lease liabilities | 160 | 141 |
Additions to the right-of-use assets during the 2023 financial year were \u20ac 68 million.
As per December 31, 2023, no residual value guarantees are included in the lease liabilities.
As per December 31, 2023, no lease commitments for leases not yet commenced.
40.2 Amounts recognized in the income statement
The income statement shows the following amounts relating to leases:
\u20ac\u00a0million | Note | 2023 | 2022 |
Depreciation charge of right-of-use assets | 52 | 48 | |
Buildings | 29 | 27 | |
Plant and machinery | 1 | 1 | |
Office equipment and vehicles | 22 | 21 | |
Interest expense (included in Financial expenses) | 5 | 4 | |
Expense relating to short-term leases | 3 | 3 | |
Expense relating to leases of low-value assets that are not short-term leases | 10 | 10 | |
Total expense related to leases | 70 | 65 |
The total cash outflow for leases in 2023 was \u20ac 45 million. In 2023 there was no material income from subleasing.
41. Earnings per share
41.1 Basic earnings per share
\u20ac | 2023 | 2022 |
From continuing operations | 1.81 | 2.21 |
From discontinued operations | 0.00 | - 0.01 |
Basic earnings per share | 1.81 | 2.20 |
Basic earnings per share is calculated by dividing the profit attributable to shareholders of the Company by the weighted average number of ordinary shares in issue during the year,
excluding ordinary shares purchased by the Company and held as treasury shares.
41.2 Diluted earnings per share
\u20ac | 2023 | 2022 |
From continuing operations | 1.76 | 2.15 |
From discontinued operations | 0.00 | - 0.01 |
Diluted earnings per share | 1.76 | 2.14 |
Diluted earnings per share is calculated by dividing the profit attributable to shareholders of the Company by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Company and held as treasury shares, adjusted by the number of dilutive potential ordinary shares attached to the issuance of stock options, stock awards and performance shares.
The number of dilutive potential ordinary shares is calculated based on the average number of stock options outstanding during the reporting period as the difference between the
average market price of ordinary shares during the reporting period and the weighted average exercise price of the stock options and on the average number of stock awards and performance shares outstanding during the reporting period. Stock options only have a dilutive effect when the average market price is above the exercise price (stock options are \u201cin the money\u201d).
For the purpose of calculating dilutive earnings per share, there were no adjusting elements to the profit attributable to shareholders of the Company.
41.3 Earnings
The calculation of the basic and diluted earnings per share attributable to the ordinary equity holders of the parent is based on the following data:
Basic | \u20ac\u00a0million | 2023 | 2022 |
Profit/loss (-) from continuing operations attributable to shareholders of UCB SA | 343 | 420 | |
Profit/loss (-) from discontinued operations | 0 | - 2 | |
Profit attributable to shareholders of UCB SA | 343 | 418 | |
Diluted | |||
\u20ac\u00a0million | 2023 | 2022 | |
Profit/loss (-) from continuing operations attributable to shareholders of UCB SA | 343 | 420 | |
Profit/loss (-) from discontinued operations | 0 | - 2 | |
Profit attributable to shareholders of UCB SA | 343 | 418 |
41.4 Number of shares
In thousands of shares | 2023 | 2022 |
Weighted average number of ordinary shares for basic earnings per share | 189 690 | 189 619 |
Weighted average number of ordinary shares for diluted earnings per share | 195 190 | 194 834 |
Basic earnings per share is calculated by dividing the profit attributable to shareholders of the Company by the weighted average number of ordinary shares in issue during the year,
excluding ordinary shares purchased by the Company and held as treasury shares.
42. Dividend per share
The gross dividends paid in 2023 (in respect of the year ended December 31, 2022) and 2022 (in respect of the year ended December 31, 2021) were \u20ac 252 million (\u20ac 1.33per share) and \u20ac 247 million (\u20ac1.30 per share) respectively.
A dividend in respect of the year ended December 31, 2023 of \u20ac 1.36per share, amounting to a total dividend of \u20ac 258million,
is to be proposed at the annual general meeting of the shareholders on April 25, 2024.
In accordance with IAS 10, events after the reporting period, the proposed dividend has not been recognized as a liability at year-end.
43.1 Capital and other commitments
At December 31, 2023, the Group has committed to spend \u20ac 146 million (2022: \u20ac 120 million) mainly with respect to expected capital expenditures for the new Gene-Therapy plant, the new biological production unit, new campus site in the U.K., lab and other equipment.
UCB Group has entered into long-term development agreements with various pharmaceutical enterprises,
universities and financial investors. Such collaboration agreements may include milestone payments which are dependent on successful clinical development or on meeting specified sales targets. On December 31, 2023, the maximum amount that would be paid out if all future milestones are achieved but excluding variable royalty payments based on unit sales and amounts accrued for milestones already achieved but not yet due, amounted to \u20ac 1\u00a0303 million on an undiscounted and non-risk adjusted basis.
\u20ac\u00a0million | 2023 | 2022 |
Less than 1 year | 18 | 43 |
Between 1 and 5 years | 485 | 508 |
More than 5 years | 799 | 852 |
Total | 1 303 | 1 404 |
UCB has concluded several agreements with Contract Manufacturing Organizations for the supply of its products. Total outstanding commitments towards these CMOs amount to \u20ac 991 million as per end of 2023 until 2033 (2022: \u20ac 589 million until 2032). Additionally, UCB has an outstanding commitment for production capacity reservation of \u20ac 25 million as per end of 2023.
As part of UCB\u2019s innovation strategy, UCB has established a corporate venture fund, UCB Ventures. The main objectives of the fund are to add breadth to UCB\u2019s innovation ecosystem, to create a window on new technologies, products, platforms and channels to augment or complement UCB\u2019s existing activities, to develop network and strategic relationships in the venture capital investor community to identify opportunities that UCB might not otherwise see. Within this framework UCB has outstanding commitments at the end of 2023 for a total amount of \u20ac 22 million relating to venture capital investments.
43.1 Capital and other commitments
At December 31, 2023, the Group has committed to spend \u20ac 146 million (2022: \u20ac 120 million) mainly with respect to expected capital expenditures for the new Gene-Therapy plant, the new biological production unit, new campus site in the U.K., lab and other equipment.
UCB Group has entered into long-term development agreements with various pharmaceutical enterprises,
universities and financial investors. Such collaboration agreements may include milestone payments which are dependent on successful clinical development or on meeting specified sales targets. On December 31, 2023, the maximum amount that would be paid out if all future milestones are achieved but excluding variable royalty payments based on unit sales and amounts accrued for milestones already achieved but not yet due, amounted to \u20ac 1\u00a0303 million on an undiscounted and non-risk adjusted basis.
\u20ac\u00a0million | 2023 | 2022 |
Less than 1 year | 18 | 43 |
Between 1 and 5 years | 485 | 508 |
More than 5 years | 799 | 852 |
Total | 1 303 | 1 404 |
UCB has concluded several agreements with Contract Manufacturing Organizations for the supply of its products. Total outstanding commitments towards these CMOs amount to \u20ac 991 million as per end of 2023 until 2033 (2022: \u20ac 589 million until 2032). Additionally, UCB has an outstanding commitment for production capacity reservation of \u20ac 25 million as per end of 2023.
As part of UCB\u2019s innovation strategy, UCB has established a corporate venture fund, UCB Ventures. The main objectives of the fund are to add breadth to UCB\u2019s innovation ecosystem, to create a window on new technologies, products, platforms and channels to augment or complement UCB\u2019s existing activities, to develop network and strategic relationships in the venture capital investor community to identify opportunities that UCB might not otherwise see. Within this framework UCB has outstanding commitments at the end of 2023 for a total amount of \u20ac 22 million relating to venture capital investments.
43.2 Guarantees
Guarantees arising in the normal course of business are not expected to result in any material financial loss.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCollateralExplanatory", "language": "en", "entity": "scheme:2138008J191VLSGY5A09", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f150049": { "value": "43.3 Contingencies
The Group continues to be actively involved in litigations, claims and investigations. The ongoing matters could result in liabilities, civil and criminal penalties, loss of product exclusivity and other costs, \ufb01nes and expenses associated with \ufb01ndings adverse to UCB\u2019s interests. Potential cash outflows reflected in a provision might be fully or partially off-set by insurance in certain circumstances. UCB has not established provisions for potential damage awards for certain additional legal claims against our subsidiaries if UCB currently believes that a payment is either not probable or cannot be reliably estimated.
1. Intellectual property matters (selected matters)
We vigorously protect our patent portfolio and our ability to bring medicines to patients as we deem necessary. Consequently, UCB is involved in various litigation matters as a plaintiff in various jurisdictions in the U.S. and Europe.
NEUPRO\u00ae
United States
In 2022, UCB filed a lawsuit against Mylan to enforce two patents for NEUPRO\u00ae, which triggered a 30-month stay. We expect the trial to take place sometime in Q2 2024.
Europe
In 2018, Mylan and Luye sought to invalidate the NEUPRO\u00aereformulation patent. The judge ruled in UCB\u2019s favor. Luye appealed. Mylan waived its right to appeal. In October 2022, the appellate court ruled in UCB\u2019s favor.
In late 2022, the European appeal board heard UCB\u2019s NEUPRO\u00aepolymorph patent case and invalidated the patent. UCB appealed the ruling.
Luye obtained national-level approval for its \u201cdesign-around\u201d product via the decentralized procedure in Germany, France, Netherlands and Spain. Luye launched its generic in Germany in December 2023. Luye is challenging UCB reformulation patent on a national level in Austria, U.K., Portugal and The Netherlands.
BRIVIACT\u00ae
United States
In 2021, 8 generic companies filed Abbreviated New Drug Applications (ANDAs) related to a BRIVIACT\u00aepatent. UCB filed complaints in Delaware federal court against all 8 companies. Subsequently, one of the companies discontinued its challenge of our patent and settlement agreements were reached with 4 defendants. After a November 2022 trial against the remaining 3 defendants, the court ruled UCB\u2019s patent is valid and infringed by the defendants. The ruling confirms the patent through its expiry of February 21, 2026
NAYZILAM\u00ae
United States
In 2021, Cipla filed an ANDA challenging the validity of certain NAYZILAM\u00aepatents. UCB filed a lawsuit against Cipla. Cipla has stipulated to infringement. The trial took place in October 2023. A ruling is expected in 2024.
FINTEPLA\u00ae
United States
In 2021, two generics companies (Apotex and Lupin) filed ANDAs challenging the validity of certain FINTEPLA\u00aepatents. Zogenix, Inc., which was acquired by UCB, filed lawsuits against both companies. Settlement agreements were reached with both defendants in November 2023.
EVENITY\u00ae
Germany
In 2023, OssiFi-Mab LLC filed a suit against UCB Pharma S.A., UCB Pharma GmbH and Amgen alleging EVENITY\u00aeinfringes a European patent. UCB is defending the lawsuit in Germany. UCB also filed oppositions with the European Patent Office to invalidate OssiFi-Mab\u2019s patent, and filed a nullity action in The Netherlands related to the Dutch part of OssiFi-Mab\u2019s patent.
2. Product liability matters
Distilb\u00e8ne product liability litigation \u2013 France
Entities of the UCB Group have been named as defendants in several product liability cases in France. The claimants in these actions claim their mothers took Distilb\u00e8ne, a former product of the UCB Group, during their pregnancy, and as a result they suffered bodily injuries. The Group has product liability insurance in place but the insurance coverage will likely not be sufficient. the Group has accounted for a provision (refer to Note 34in the 2023 Annual Report).
Opioid Litigation
UCB, Inc. (\u201cUCB\u201d) has been named as a defendant in 6 lawsuits in connection with the national opioid litigation in the United States. The plaintiffs are government municipalities, health care entities, and 1 individual plaintiff claiming damages related to the promotion, sale and distribution of opioids. UCB has 7\u00a0cases in the federal multi-district litigation (MDL) and 8 in Utah state court. In all cases, UCB is among numerous defendants.
Additionally, Zogenix, Inc., now owned by UCB, is a defendant in 3\u00a0opioid cases. Also, UCB is contractually obligated to indemnify one of its former contract manufacturers who is currently a defendant in 2 cases. UCB controls the defense of these cases.
3. Investigations
CIMZIA\u00aeInvestigation
In March 2019, UCB, Inc. received a Civil Investigative Demand (CID) from the U.S. Department of Justice (DOJ) and a subpoena from the Department of Health and Human Services (HHS) Office of Inspector General (OIG) both seeking information relating to the sales and marketing practices and pricing of CIMZIA\u00aefor the periods from 2011 and 2008, respectively, to date. In March 2020, UCB was informed that DOJ was suspending the inquiry initiated by its office in Georgia. The Company is cooperating fully with DOJ and OIG.
4. 340B Drug Pricing Program
In December 2021 and July 2023, UCB updated its Section 340B contract pharmacy policy, whereby UCB no longer provides 340B discounted products to certain pharmacies that contract with covered entities participating in the 340B Drug Pricing Program. UCB strongly supports the 340B program and is committed to ensuring access to UCB\u2019s medicines for vulnerable and underserved populations. UCB continues to provide products purchased at the 340B price to all covered entities and federal grantees. For non-federal grantees without an in-house pharmacy, UCB will allow the designation of a single contract pharmacy eligible to receive 340B discounted product.
In June 2022, UCB received a letter from the U.S. Department of Health and Human Services, Health Resources and Services
Administration (HRSA) noting UCB\u2019s updated 340B policy violates the statute, which may lead to civil monetary penalties if we did not make changes. If HRSA were to commence proceedings against UCB based on the letter, a negative outcome could have a material adverse effect on UCB\u2019s business, results of operations, cash flow, prospects and \ufb01nancial condition. However, consistent with the rulings of several federal district courts, as well as one appellate court, UCB believes its 340B policy is consistent with the law. To con\ufb01rm UCB\u2019s policy is in compliance with the 340B statute, UCB \ufb01led a lawsuit against HRSA in September 2022. The court stayed the case pending the outcome of an appeal of a federal district court ruling addressing two other manufacturers\u2019 challenges to HRSA\u2019s letters regarding the manufacturers\u2019 340B contract pharmacy policies.
44. Related party transactions
44.1 Intra-group sales and services
During the financial years ended December 31, 2023 and 2022, all intra-UCB Group transactions were carried out based on assessments of mutual economic benefit to the parties involved, and the applicable conditions were established in accordance with criteria of at arm\u2019s length negotiations and fair dealing, and with a view to creating value for the entire UCB Group. Conditions governing intra-UCB Group transactions were similar to conditions governing third-party transactions.
With regard to the sale of intermediary and finished products, these criteria were in most cases achieved by increasing each party\u2019s respective production cost by an at arm\u2019s length profit margin. With regard to intra-UCB Group services rendered, these criteria are accompanied by the principle of charging fees sufficient to cover each party\u2019s respective incurred costs and an at arm\u2019s length mark-up. Intra-Group transactions carried out within the UCB Group constitute standard transactions
for a biopharmaceutical Group. These transactions include the purchase and sale of intermediary and finished medical products, deposits and loans for UCB Group affiliates as well as functions and activities carried out by the UCB Group in order to optimize operations.
44.2 Financial transactions with related parties other than UCB SA affiliates
During 2023 there have been no financial transactions with related parties other than affiliates of UCB SA.
44.3 Key management compensation
Key management compensation as disclosed below comprises compensation recognized in the income statement for members of the Board of Directors and the Executive Committee, for the portion of the year where they exercised their mandate.
2023 | 2022 | |
Short-term employee benefits | 18 | 16 |
Post-employment benefits | 2 | 3 |
Share-based payments | 8 | 8 |
Total key management compensation | 28 | 27 |
Short-term employee benefits include salaries (including social security contributions), bonuses earned during the year, car leasing and other allowances where applicable. Share-based compensation includes the amortization over the vesting period of the fair value of equity instruments granted, and comprises share options, share awards and performance
shares further explained in Note 28. There have been no loans granted by the Company or a subsidiary of the Group to any Director or officer of the Group, nor any guarantees given with respect hereto.
44.4 Shareholders and shareholders structure
The main shareholder of UCB SA is Financi\u00e8re de Tubize SA (also referred to herein as the \u201cReference Shareholder\u201d or \u201cTubize\u201d); a Belgian company listed on Euronext Brussels.
Based on its most recent public disclosure, at December 31, 2023, Tubize was holding 70 090 611 UCB shares on a total number of 194 505 658 (i.e., 36.04%) and its shareholder structure was as follows:
Concert | Outside concert | Total | ||||
Voting rights | % | Voting rights | % | Voting rights | % | |
FEJ SRL | 8 525 014 | 19.15% | 1 988 800 | 4.47% | 10 513 814 | 23.62% |
Daniel Janssen | 5 881 677 | 13.21% | 0 | 0.00% | 5 881 677 | 13.21% |
Alta\u00ef Invest SA | 4 969 795 | 11.16% | 40 205 | 0.09% | 5 010 000 | 11.26% |
Barnfin SA | 3 903 835 | 8.77% | 0 | 0.00% | 3 903 835 | 8.77% |
Jean van Rijckevorsel | 11 744 | 0.03% | 0 | 0.00% | 11 744 | 0.03% |
Total voting rights held bythe reference shareholders | 23 292 065 | 52.33% | 2 029 005 | 4.56% | 25 321 070 | 56.89% |
Other shareholders | 0 | 0.00% | 19 191 528 | 43.11% | 19 191 528 | 43.11% |
Total voting rights | 23 292 065 | 52.33% | 21 220 533 | 47.67% | 44 512 598 | 100.00% |
Alta\u00ef Invest SA is controlled by Evelyn du Monceau, born Evelyn Janssen. Barnfin SA is controlled by Bridget van Rijckevorsel, born Paule Bridget Janssen.
The reference shareholders of Tubize, belonging to the Janssen family, act in concert, i.e. they have entered into a shareholders\u2019 agreement concerning the concerted exercise of their voting rights in order to pursue a sustainable common
policy with regard to Tubize and concerning the possession, acquisition or transfer of voting securities cf. article 3, \u00a71, 13\u00b0, a), b) and c) of the Law on the disclosure of large shareholdings and article 3, \u00a71, 5\u00b0, a) and b) of the Law on public takeover bids.
UCB also holds UCB shares (see below for an overview of its shareholdings at December 31, 2023). The remaining UCB shares are held by the public.
Please find below an overview of the large shareholdings of UCB (including assimilated financial instruments) on the basis of the transparency notifications received pursuant to the
law of May 2, 2007, on the disclosure of large shareholdings (situation as at December 31, 2023):
UCB Controlling and major shareholdings on December 31, 2023
Percentages are calculated on the basis of the current total number of voting rights.
Situation as per December 31, 2023 | |||
Share capital(\u20ac) | \u20ac 583 516 974 | March 13, 2014 | |
Total number of voting rights (= denominator) | 194 505 658 | March 13, 2014 | |
1 | Financi\u00e8re de Tubize SA (\u201cTubize\u201d) | ||
securities carrying voting rights (shares) | 70 090 611 | 36.04% | July 31, 2023 |
2 | UCB SA/NV | ||
securities carrying voting rights (shares) | 4 729 089 | 2.43% | December 31, 2023 |
assimilated financial instruments (options)1 | 0 | 0.00% | March 6, 2017 |
assimilated financial instruments (other)1 | 0 | 0.00% | December 18, 2015 |
Total | 4 729 089 | 2.43% | |
Free float2\u00a0(securities carrying voting rights (shares)) | 119 685 958 | 61.53% | |
3 | Wellington Management Group LLP | ||
securities carrying voting rights (shares) | 14 548 260 | 7.48% | November 17, 2023 |
4 | BlackRock, Inc. | ||
securities carrying voting rights (shares) | 9 412 691 | 4.84% | January 13, 2020 |
5 | FMR LLC | ||
securities carrying voting rights (shares) | 8 502 358 | 4.37% | May 19, 2023 |
44.3 Key management compensation
Key management compensation as disclosed below comprises compensation recognized in the income statement for members of the Board of Directors and the Executive Committee, for the portion of the year where they exercised their mandate.
2023 | 2022 | |
Short-term employee benefits | 18 | 16 |
Post-employment benefits | 2 | 3 |
Share-based payments | 8 | 8 |
Total key management compensation | 28 | 27 |
Short-term employee benefits include salaries (including social security contributions), bonuses earned during the year, car leasing and other allowances where applicable. Share-based compensation includes the amortization over the vesting period of the fair value of equity instruments granted, and comprises share options, share awards and performance
shares further explained in Note 28. There have been no loans granted by the Company or a subsidiary of the Group to any Director or officer of the Group, nor any guarantees given with respect hereto.
45. Events after the statement of financial position date
No material events occurred after the end of the reporting period which could have an impact on UCB\u2019s consolidated financial statements.
46. UCB Companies (fully consolidated)
Name and office | Holding | Majority controlling shareholder |
Armenia | ||
Nile AI LLC2\u00a0\u00a0\u2013 15 Nar Dos, 1st Lane \u2013 Yerevan | 100% | Nile AI, Inc.4 |
Australia | ||
UCB Australia Pty. Ltd. \u2013 Level 1, 1155 Malvern Road \u2013 3144 Malvern, Victoria | 100% | UCB SA |
Engage Therapeutics Australia Pty. Ltd., Level 1, 1155 Malvern Road \u2013 3144 Malvern, Victoria | 100% | Engage Therapeutics, Inc. |
Austria | ||
UCB Pharma Gesellschaft m.b.H. \u2013 Twin Tower, Wienerbergstrasse 11/12a \u2013 1100\u00a0Wien | 100% | UCB Pharma SA |
Belgium | ||
UCB Fipar SA \u2013 All\u00e9e de la Recherche, 60 \u2013 1070 Brussels (BE0403.198.811) | 100% | UCB Belgium SA |
UCB Biopharma SRL \u2013 All\u00e9e de la Recherche, 60 \u2013 1070 Brussels (BE0543.573.053) | 100% | UCB Pharma SA |
UCB Belgium SA \u2013 All\u00e9e de la Recherche, 60 \u2013 1070 Brussels (BE0402.040.254) | 100% | UCB Pharma SA |
UCB Pharma SA \u2013 All\u00e9e de la Recherche, 60 \u2013 1070 Brussels (BE0403.096.168) | 100% | UCB SA |
Sifar SA \u2013 All\u00e9e de la Recherche, 60 \u2013 1070 Brussels (BE0453.612.580) | 100% | UCB Pharma SA |
UCB Ventures SA \u2013 All\u00e9e de la Recherche, 60 \u2013 1070 Brussels (BE0667 816 096) | 100% | UCB SA |
UCB Ventures Belgium SA \u2013 All\u00e9e de la Recherche, 60 \u2013 1070 Brussels (BE0668 388 891) | 100% | UCB Ventures SA |
Brazil | ||
UCB Biopharma Ltda \u2013 Av. Presidente Juscelino Kubitschek, n\u00ba 1327, 5\u00b0 andar, Condominio Edificio Intemacional Plaza II \u2013 CEP:\u00a004543 \u2013 011 S\u00e3o Paulo | 100% | UCB SA |
Bulgaria | ||
UCB Bulgaria EOOD \u2013 2B Srebarna street, fl. 9, office 8B, Lozenetz, Sofia 1407 | 100% | UCB SA |
Canada | ||
UCB Canada Inc. \u2013 2201 Bristol Circle, Suite 602 \u2013 ON L6H0J8 Oakville | 100% | UCB Holdings, Inc. |
China | ||
UCB Trading (Shanghai) Co Ltd \u2013 Suite 317, 439 No.1 Fu Te Road West, Shanghai (Pilot Free Trade Zone) | 100% | UCB SA |
UCB Pharma (Hong Kong) Ltd \u2013 Rooms 156 and 157, 20/F, Cityplaza Three, 14\u00a0Taikoo Wan Road \u2013 Tai Koo, Hong Kong | 100% | UCB Pharma GmbH |
UCB Pharma (Zhuhai) Company Ltd \u2013 Section A., Workshop, No.3 Science and Technology 05th\u00a0Road, Innovation Coast, National Hi-Tech Industrial Development Zone \u2013 Zhuhai Guangdong Province | 100% | UCB Pharma GmbH |
Czech Republic | ||
UCB S.R.O. \u2013 Jankovcova 1518/2 \u2013 170 00 Praha 7 | 100% | UCB SA |
Denmark | ||
UCB Nordic AS \u2013 Edvard Thomsens Vej 14, 7 \u2013 2300 Copenhagen | 100% | UCB Pharma SA |
Name and office | Holding | Majority controlling shareholder |
Finland | ||
UCB Pharma Oy Finland \u2013 Bertel Jungin aukio 5 , 6.krs \u2013 02600 Espoo | 100% | UCB Pharma SA |
France | ||
UCB Pharma SA \u2013 D\u00e9fense Ouest 420, rue d\u2019Estienne d\u2019Orves \u2013 92700 Colombes | 100% | UCB SA |
Germany | ||
UCB Pharma GmbH \u2013 Rolf-Schwarz-Sch\u00fctte Platz 1 \u2013 40789 Monheim am Rhein | 100% | UCB GmbH |
UCB GmbH \u2013 Rolf-Schwarz-Sch\u00fctte Platz 1 \u2013 40789 Monheim am Rhein | 100% | UCB Pharma SA |
UCB BioSciences GmbH \u2013 Rolf-Schwarz-Sch\u00fctte Platz 1 \u2013 40789 Monheim am Rhein | 100% | UCB Pharma GmbH |
Cosmix Verwaltungs GmbH, in liquidation1\u2013 Alfred-Nobel-Strasse 10 \u2013 40789 Monheim am Rhein | 100% | Ra Pharmaceuticals, Inc. |
Zogenix GmbH3 \u2013 Altheimer Eck 6 \u2013 80331 Munich | 100% | UCB Pharma GmbH |
Greece | ||
UCB A.E. \u2013 63 Agiou Dimitriou Street \u2013 17456 Alimos \u2013 Athens | 100% | UCB SA |
Hungary | ||
UCB Hungary Ltd \u2013 Obuda Gate Building Arp\u00e1d Fejedelem \u00f9tja 26 \u2013 28 \u2013 1023\u00a0Budapest | 100% | UCB SA |
India | ||
UCB India Private Ltd \u2013 Building No. \u2013 P3, Unit No. \u2013 103, 1st Floor, Prithvi Complex, Kalher Pipe Line, Kalher, Bhiwandi, Thane \u2013 421302 Maharashtra | 100% | UCB SA |
Ireland | ||
UCB (Pharma) Ireland Ltd \u2013 United Drug House Magna Drive, Magna Business Park, City West Road \u2013 Dublin 24 | 100% | UCB SA |
UCB Manufacturing Ireland Ltd \u2013 United Drug House Magna Drive, Magna Business Park, City West Road \u2013 Dublin 24 | 100% | UCB SA |
Zogenix ROI Limited \u2013 Trinity House, Charleston Road \u2013 Ranelagh, Dublin 6, D06 C8X4 | 100% | Zogenix International Limited |
Italy | ||
UCB Pharma SpA \u2013 Via Varesina 162 \u2013 20156 Milano | 100% | UCB SA |
Zogenix S.r.l.1\u2013 Via Varesina 162 \u2013 20156 Milano | 100% | Zogenix International Limited |
Japan | ||
UCB Japan Co Ltd \u2013 Shinjuku Grand Tower, 8-17-1 Nishi-Shinjuku 160-0023 Shinjuku, Tokyo | 100% | UCB SA |
Mexico | ||
UCB de Mexico SA de C.V. \u2013 Calzada Mariano Escobedo 595, Piso 3, Oficina 03/100, Colonia Rinc\u00f3n del Bosque, Bosque de Chapultepec I secci\u00f3n, Alcald\u00eda Miguel Hidalgo, 11589 Mexico D.F. | 100% | UCB SA |
Netherlands | ||
UCB Pharma B.V. (Netherlands) \u2013 Hoge Mosten 2 \u2013 4822 NH Breda | 100% | UCB Pharma SA |
Name and office | Holding | Majority controlling shareholder |
Norway | ||
UCB Pharma A.S. \u2013 Haakon VIIs gate 6 \u2013 0161 Oslo | 100% | UCB Pharma SA |
Poland | ||
Vedim Sp. z.o.o. \u2013 Ul. L. Kruczkowskiego, 8, 00 \u2013 380 Warszawa | 100% | UCB SA |
UCB Pharma Sp. z.o.o. \u2013 Ul. L. Kruczkowskiego, 8, 00 \u2013 380 Warszawa | 100% | UCB SA |
Portugal | ||
UCB Pharma (Produtos Farmaceuticos) Lda \u2013 Rua do Silval, n\u00ba 37, piso 1, S1.3, 2780-373 Oeiras | 100% | UCB SA |
Romania | ||
UCB Pharma Romania S.R.L. \u2013 165 Calea Floreasca, One Tower Building, 3rd Floor, 1st district \u2013 Bucharest 14459 | 100% | UCB SA |
Russia | ||
UCB Pharma LLC \u2013 Shturvaluaya 5 bldg 1 \u2013 125364 Moscow | 100% | UCB SA |
UCB Pharma Logistics LLC \u2013 1st Krasnogvardeyskiy proezd 15, floor 13, office 2, room 35, premises 1 \u2013 123100 Moscow | 100% | UCB SA |
South Korea | ||
UCB Korea Co Ltd. \u2013 4th Fl., A+ Asset Tower, 369 Gangnam-daero, Seocho-gu \u2013 06621 Seoul | 100% | UCB SA |
Spain | ||
UCB Pharma SA \u2013 Plaza de Manuel G\u00f3mez Moreno, s/n, Edificio Bronce, 5th\u00a0floor \u2013 28020 Madrid | 100% | UCB SA |
Zogenix Espana S.L3 \u2013 Calle Jose Ortega y Gasset 22-24, 3rd Floor \u2013 28006 Madrid | 100% | UCB Pharma SA (ES) |
Sweden | ||
UCB Pharma AB (Sweden) \u2013 M\u00e4ster Samuelsgatan 60 \u2013 111 21 Stockholm | 100% | UCB Pharma SA |
Switzerland | ||
UCB Farchim SA (A.G.\u2013 Ltd.) \u2013 ZI de Planchy, Chemin de Croix Blanche 10 \u2013 1630 Bulle | 100% | UCB Pharma SA |
Doutors R\u00e9assurance SA \u2013 ZI de Planchy, Chemin de Croix Blanche 10 \u2013 1630 Bulle | 100% | UCB Farchim SA |
UCB-Pharma AG \u2013 ZI de Planchy, Chemin de Croix Blanche 10 \u2013 1630 Bulle | 100% | UCB Farchim SA |
UCB Medical Devices SA \u2013 ZI de Planchy, Chemin de Croix Blanche 10 \u2013 1630 Bulle | 100% | UCB Farchim SA |
Taiwan | ||
UCB Pharmaceuticals (Taiwan) Ltd \u2013 12F.-2, No.88, Dunhua N. Rd., Songshan Dist \u2013 10551 Taipei | 100% | UCB SA |
Turkey | ||
UCB Pharma A.S. \u2013 Palladium Tower, Barbaros Mah., Kardelen Sok. No.2, Kat.24/80 \u201334746 Istanbul | 100% | UCB SA |
Name and office | Holding | Majority controlling shareholder |
U.K. | ||
UCB (Investments) Ltd \u2013 208 Bath Road, Slough, Berkshire SL1 3WE | 100% | UCB SA |
Celltech Group Ltd \u2013 208 Bath Road, Slough, Berkshire SL1 3WE | 100% | UCB (Investments) Ltd |
Celltech R&D Ltd \u2013 208 Bath Road, Slough, Berkshire SL1 3WE | 100% | Celltech Group Ltd |
Darwin Discovery Ltd 2\u2013 208 Bath Road, Slough, Berkshire SL1 3WE | 100% | Celltech Group Ltd |
UCB Pharma Ltd \u2013 208 Bath Road, Slough, Berkshire SL1 3WE | 100% | Celltech Group Ltd |
Zogenix Europe Limited\u2013 208 Bath Road, Slough, Berkshire SL1 3WE | 100% | Zogenix, Inc. |
Zogenix International Limited \u2013 The Pearce Building West Street, Maidenhead, Berkshire SL6 1RL | 100% | Zogenix Europe Limited |
Ukraine | ||
UCB Ukraine LLC \u2013 19 Grygoriya Skovorody Str., Business \u2013 center \u201dPodol Plaza\u201d \u2013 04070 Kiyv | 100% | UCB Pharma GmbH |
U.S. | ||
UCB Holdings, Inc. \u2013 Corporation Trust Center, 1209 Orange Street \u2013 19801 Wilmington, Delaware | 100% | UCB Pharma SA |
UCB, Inc. \u2013 Corporation Trust Center, 1209 Orange Street \u2013 19801 Wilmington, Delaware | 100% | UCB Holdings, Inc. |
UCB Biosciences, Inc. \u2013 Corporation Trust Center, 1209 Orange Street \u2013 19801 Wilmington, Delaware | 100% | UCB, Inc. |
UCB Manufacturing, Inc. \u2013 Corporation Trust Center, 1209 Orange Street \u2013 19801 Wilmington, Delaware | 100% | UCB, Inc. |
Ra Pharmaceuticals, Inc. \u2013 Corporation Trust Center, 1209 Orange Street \u2013 19801 Wilmington, Delaware | 100% | UCB Holdings, Inc. |
Engage Therapeutics, Inc.\u00a0\u2013 Corporation Trust Center, 1209 Orange Street \u2013 19801 Wilmington, Delaware | 100% | UCB Holdings, Inc. |
Nile Al, Inc.4\u2013 Corporation Trust Center, 1209 Orange Street \u2013 19801 Wilmington, Delaware | 100% | UCB Holdings, Inc. |
Zogenix, Inc. \u2013 Corporation Trust Center, 1209 Orange Street \u2013 19801 Wilmington, Delaware | 100% | UCB Biosciences, Inc. |
Zogenix MDS, Inc.3\u2013 Corporation Trust Center, 1209 Orange Street \u2013 19801 Wilmington, Delaware | 100% | Zogenix, Inc. |
1\tCosmix Verwaltungs GmbH has been put in liquidation effective as from January 1, 2022.
2\tNile AI, LLC and Darwin Discovery Ltd have been respectively dissolved on August 29, 2023 and on 2 January 2024 and are included in the Consolidated Income Statement for 2023 respectively until the dissolution.
3\tZogenix Espana S.L., Zogenix GmbH, Zogenix MDS, Inc and Nile AI, Inc. have merged respectively with UCB Pharma S.A. in Spain on 5 October 2023, UCB Pharma GmbH on October 31, 2023, Zogenix, Inc. on November 1, 2023 and NAI Acquisition Corp. on December 6, 2023 and are included in Consolidation Income Statement for 2023 until the merger took place
4\tNile AI, Inc. (U.S.) has been sold on December 6, 2023 and is included in Consolidation Income Statement for 2022 and 2023 until the sale took place.
4. Responsibility statement
We hereby confirm that, to the best of our knowledge, the consolidated financial statements as of December 31, 2023, prepared in accordance with International Financial Reporting standards (IFRS), as adopted by the European Union, and with the legal requirements applicable in Belgium, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation as a whole, and that the management report includes a fair review of the development and performance of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
Signed by Jean-Christophe Tellier(CEO) and Sandrine Dufour(CFO)
on behalf of the Board of Directors