ALK - 2023

Annual report 2023

Allergy

solutions

for life

ALK-Abelló A/S

Bøge Allé 6-8, DK-2970 Hørsholm, Denmark,

CVR no. 63 71 79 16

Management's review

ALK Annual report 2023

2

Contents

Management's review

Financial statements

3

Letter from the Chair and CEO

55 Statement by Management on the annual report

7

ALK at a glance:

56 Independent auditor’s report

World leader in allergy immunotherapy (AIT)

60 Consolidated financial statements

8

9

2023 performance highlights

2024 outlook

65 Notes to the consolidated financial statements

102 Parent company financial statements

106 Notes to the parent company financial statements

11 Financial highlights and key ratios

for the ALK Group

12 Sales and market trends

15 Financial review

17 Q4 review

19 Introduction to strategy framework and

ALK’s growth formula

21 Strategy progress including

2023 results and 2024 targets

35 Sustainability

Find out more on

our website

ALK has been a pioneer in fighting

40 Risk management

45 Governance and ownership

50 Board of Directors

53 Board of Management

allergies for 100 years. Its purpose

is to continue helping people with

allergies for many years to come.

Find more information about

ALK at www.alk.net

X

Management's review

ALK Annual report 2023

3

Peter Halling,

President & CEO

Anders Hedegaard,

Chair of the Board

Letter from the Chair and CEO

In 2023, ALK made

financial and strategic

progress with further

growth expected in

2024 and beyond

In 2023, ALK delivered financial results in

line with the outlook. We treated 2.4 million

people and remain committed to delivering

best in class treatments to improve the lives

of the many people living with moderate

to severe allergies, as we have done

consistently over the past 100 years.

Management's review

ALK Annual report 2023

4

During the year, ALK faced a challenging market envi-

ronment, including a mandated increase in rebates in

our largest market, Germany, stagnating tablet sales in

Europe during the first half of the year, supply chain issues

affecting the adrenaline auto-injector Jext^®, continued

inflation, and a complex geopolitical situation.

tegic initiatives to safeguard, and potentially accelerate,

ALK’s long-term growth. These initiatives are aimed at

expanding the reach of ALK’s respiratory tablets to new

geographies and additional patient groups and strength-

ening ALK’s relevance in the wider allergy market.

While we remain committed

“

to delivering on our short-

term promises, we are equally

focused on pursuing strategic

initiatives to safeguard, and

potentially accelerate, ALK’s

long-term growth.”

In 2023, we obtained robust data from our two large-scale

Phase 3 trials involving the house dust mite and tree pollen

tablets in children. Both trials confirmed the benefits of

treating allergies with ALK’s tablets from early childhood.

We are presently handling the regulatory processes for

paediatric approvals with the authorities in Europe and

North America, and we are committed to seizing these

opportunities to substantially broaden both patient and

prescriber bases.

ALK navigated these challenges and the leadership

changes, delivering both strategic and financial progress.

Revenue increased by 9% based on organic growth in all

sales regions. Earnings (EBIT) increased by 50% to DKK

666 million, driven by top-line growth, margin expansion

and efficiencies.

Anders Hedegaard,

Chair of the Board

ALK is targeting strong results in 2024, building on the

momentum which we established during the second half

of 2023. Growth in tablet sales in our main region, Europe,

is rebounding and is expected at a level well above that

of 2023, fuelled by a higher inflow of new patients. The

supply chain for Jext^®is also being restored. We expect

revenue in 2024 to grow by 9-12% in local currencies, while

EBIT margin (earnings) is expected to increase to 17-19%

(14% in 2023).

The commercial potential in treating children is evident, as

evidenced in Japan where most tablet users are under 18

years old. Market research shows that parents, caregivers

and healthcare professionals recognise the urgency from

first-hand observations of allergy-related consequences,

including sleep and cognitive impairments and limitations

on activities. Treating children's allergies is also important

in preventing progression to allergic asthma and other

serious comorbidities.

We therefore expect 2024 to mark the sixth consecutive

year of revenue growth and improved earnings in ALK.

We will continue to drive growth in tablet sales in our key

region of Europe. In response to a soft 2022 initiation

season, where we enrolled fewer new patients than

expected, we have worked to deepen and broaden the

Extending the reach of tablets

While we remain committed to delivering on our short-

term promises, we are equally focused on pursuing stra-

Management's review

ALK Annual report 2023

5

prescriber base, engage relevant patients, capture

market share, and expand the overall allergy immuno-

therapy markets. These initiatives showed their effective-

ness in the latter half of 2023, and we intend to leverage

the insights gained as we move forward.

Advancing into food allergies

also have promising early-stage R&D projects addressing

both respiratory allergies and associated disease areas.

Work on ALK’s initiatives beyond respiratory allergies

continues. We have recently made progress with our

programme to develop new mainstream treatments for

potentially life-threatening food allergies, leveraging

ALK’s existing tablet technology. Encouraged by the initial

safety results for the peanut tablet, we have made a provi-

sional decision to extend the trial, allowing us to explore

the efficacy of the tablet as well.

It is, however, crucial that we pursue opportunities in the

right order, at an appropriate pace, and with the correct

allocation of capital and resources.

In Japan, we expanded our partnership with Torii to

include ALK’s grass allergy tablet. This comes in parallel

with the ongoing work to further expand the supply chain

and manufacturing capacity to meet the demand for

Japanese cedar pollen tablets in Japan.

We have therefore initiated a review of ALK’s business

strategy. While the overall strategic direction remains

unchanged, the review will ensure careful prioritisation of

ALK’s many business opportunities and identify ways to

free up resources to fund growth initiatives, for example

within R&D or sales and marketing, without compromising

profitability improvements. Optimising cost structures and

making well-founded choices will be key to these efforts.

We see acute treatment of life-threatening allergic reac-

tions (anaphylaxis) as relevant for ALK, as it suppports

our offerings in respiratory allergies and, moving forward,

in food allergies. The anaphylaxis market is likely to

change, driven by new product innovations. In response,

we are currently reviewing our anaphylaxis strategy to

adapt to the changing dynamics.

In China, we continued to expand our organisation and

established a broader allergy immunotherapy prescriber

network in preparation for the planned launch of our house

dust mite tablet following the approval currently expected

in 2024. China is rapidly progressing to become the world’s

largest market for house dust mite allergy immunotherapy.

We expect to share the results of the strategic review at a

Capital Markets Day during the second quarter of 2024,

where we also intend to share long-term strategic aspira-

tions towards 2030.

Strategy review to support ambitions

Establishing new prescriber networks for tablets is also

a priority in the USA, where we are increasingly reaching

out to new prescribers, particularly paediatricians.

This approach aims to address the well-known barriers

among US allergists. We are currently piloting various

approaches, recognising that success with tablets in the

USA – unlike in Europe and Japan – is a long-haul effort,

but the potential rewards are attractive. Meanwhile, we

were pleased to see double digit growth in tablet sales in

both the USA and Canada.

There are ample opportunities to further strengthen ALK’s

market position and sustain annual revenue growth of

10% while also improving earnings.

The ambition of achieving an EBIT margin of approxi-

mately 25% in 2025 remains unchanged. The fulfilment of

this ambition is contingent on average revenue growth in

2024-25 of 10% or more, and modest average growth in

total production and capacity costs. The strategy review

is expected to identify relevant business optimisations and

cost-savings in support of the EBIT aspirations.

Alongside the focus areas of children, geographic expan-

sion, and food allergy, there is untapped potential in our

core markets including Germany and the Nordics. Other

European markets such as Spain, the UK, and parts of

Central and Eastern Europe have the potential to become

meaningful contributors to growth in the medium term. We

Management's review

ALK Annual report 2023

6

Long-term commitment

10-point scale, solidifying its top 5% position in the inter-

national healthcare industry.

At ALK, we recognise our responsibility to people and

the environment. In 2023, we set new science-based

CO₂reduction targets in line with the Paris Agreement. This

means that by 2030, we plan to reduce CO₂emissions by

42% at our own facilities, with further reductions coming

from our suppliers’ commitment to reducing their emis-

sions. We are continuing to strengthen our overall sustain-

ability efforts.

The ambition of achieving

“

We wish to thank our partners, whose collaboration is part

of our success. We also appreciate the growing number of

patients and prescribers who are placing their trust in our

products and services – a trust we never take for granted

and work hard to maintain.

an EBIT margin of

approximately 25% in 2025

remains unchanged. The

fulfilment of this ambition

is contingent on average

revenue growth in 2024-25

of 10% or more, and

Last, but not least, we would like to thank our shareholders

for their patience and support. As ALK’s performance

continues to strengthen, we look forward to rewarding

them through sustainable, long-term value creation.

In June of 2023, we celebrated ALK’s 100-year anniver-

sary. For a century, ALK has been at the forefront of allergy

care. While the tools at our disposal today are signifi-

cantly more advanced than they were 100 years ago, the

demand for skilled individuals to drive further research

and innovation has never been greater.

modest growth in cost”

Peter Halling ,

President & CEO

Anders Hedegaard

Peter Halling

We would like to thank our leaders and employees for

their commitment to ALK and their endeavours to help

more people with allergy live better lives. ALK’s success

is only possible through their dedication and efforts,

and we are pleased to see the positive results from the

annual engagement survey. ALK’s score reached 8.4 on a

Chair of the Board

President & CEO

Management's review

ALK Annual report 2023

7

ALK at a glance

World leader in allergy

immunotherapy (AIT)

Evidence-based portfolio

Fastest growing product range

Committed to growth

~40%

ALK produces and markets a diversi-

fied portfolio of products spanning the

diagnosis and treatment of allergies and

allergic asthma as well as acute treat-

ment of life-threatening allergic reactions

(anaphylaxis).

ALK’s tablets cover five of the most impor-

tant respiratory allergies: Grass, house

dust mite, tree pollen, ragweed, and

Japanese cedar. Based on unprecedented

clinical evidence, tablets have been the

fastest growing product range over the

past decade.

ALK is dedicated to growing revenue and

earnings. The primary emphasis is on

broadening ALK’s core business in respira-

tory allergies and progressively expanding

into the broader allergy domain.

global market share in AIT

2.4 million

patients treated in 2023

(AIT and anaphylaxis)

ALK is a world leader in evidence-based

allergy immunotherapy (AIT), which treats

the underlying cause of allergy, reduces or

eliminates symptoms and provides long-

lasting disease improvement. AIT works

by giving repeated standardised doses of

an allergen as tablets, injections (SCIT) or

drops, thereby rebalancing the patient’s

immune system to gradually build up an

immunological tolerance. ALK focuses

on treating moderate to severe allergies

caused by around 20 different sources.

Global reach

ALK employs 2,900 people, is present in 46

markets and partners with pharmaceu-

tical companies to commercialise tablets,

including Torii (Japan), Abbott (South-

East Asia), and Dr. Reddy’s (India). ALK’s

business model is centred around strong

R&D skills, insight into immunology, unique

manufacturing processes, and a desire

to bring the best of modern science to the

allergy field.

Sustained market exclusivity

29% growth

Proteins derived from natural allergenic

source materials, serve as key active

pharmaceutical ingredients in ALK's

core products. Intricate manufacturing

processes present significant barriers

to entry and ensure a sustained market

exclusivit y.

CAGR in tablet sales 2018-23

100 years

experience in allergy and AIT

Management's review

ALK Annual report 2023

8

2023 performance highlights

Financial

Non-financial

Revenue, DKK

Gross profit, DKK

Patients in treatment

CO₂emissions

GHG intensity

4,824 million

9% organic growth in local currencies,

in line with guidance

3,035 million

63% gross margin, driven by benefits of

scale and efficiencies

2.4 million

300,000 net increase in patients

in treatment with AIT and

anaphylaxis since 2021

5,488 tonnes CO₂eq

Increase in total CO₂emissions from

own operations (scope 1 and 2) due to

enhanced reporting and higher activity.

14.4

Lower emissions relative

to revenue

4,824

4,511

3,035

2,791

2.4

8,634

16.8

14.4

2.1

3,916

2,396

3,491

3,274

2,028

1,892

5,488

5,271

N/A

2019 2020 2021 2022 2023

2021 2022 2023

Employee headcount

and turnover

Earnings (EBIT), DKK

Free cashflow, DKK

Underrepresented gender

Injury frequency

666 million

292 million

Impact of higher earnings offset

by inventory build-up

42%

42% of the underrepresented

gender in the Board of

0.8%

3 occupational accidents with

an injury frequency rate of 0.8

2,889/12%

Continued high demand for

skilled labour in key locations

14% EBIT margin,

in line with guidance

Management and direct reports

666

447

292

42%

2,889

1.7

2,731

13%

2,593

13%

202

0.8

292

12%

(14)

150

(25)

N/A

2021 2022 2023

65

56

0.3

2019 2020 2021 2022 2023

2021 2022 2023

Management's review

ALK Annual report 2023

9

2024 outlook

ALK expects to continue its

trajectory of organic growth and

earnings improvement in 2024.

Growth in European tablet sales is set to

rebound to a level well above the growth in

2023, driven by an increased inflow of new

patients in the recent initiation season.

Similarly, North America and International

markets are expected to see continued

sales growth for tablets. However, the

anticipated growth in revenue from Japan

is expected to be somewhat lower than

in 2023, mainly attributable to certain

intermittent capacity limitations in our

partner’s manufacturing of the active

ingredient for the cedar tablet.

2024 targets

Revenue growth

Higher EBIT margin

(Revenue growth rates are stated as

organic growth in local currencies, unless

otherwise indicated)

9-12%

17-19%

(up from DKKm 4,824 in 2023)

(up from 14% in 2023)

ALK expects broad-based growth across

sales regions and product groups in 2024.

Revenue is projected to grow by 9-12% in

local currencies.

Sales of Other products and services are

expected to resume growth, particularly

as the supply of Jext^®normalises.

The gross margin is expected to be

on a par with or slightly above that for

2023. The gross margin will benefit from

increased sales volumes, enhanced

efficiencies in product supply, and the

reversal of mandatory rebate adjust-

ments in Germany. These positive factors

will be somewhat counteracted by

inflationary pressures on the cost base

in ALK's product supply. The capacity

cost-to-revenue ratio is expected to see

further improvements as ALK capitalises

on existing platforms to enhance effi-

Tablets continue to be key in driving

growth. Global tablet sales are expected

to show a double-digit increase. This

growth is fuelled by the expansion of both

patient and prescriber bases, gains in

market share, and the favourable shift

towards evidence-based medicines in

key markets. Consistent with past trends,

some fluctuations in quarterly tablet sales

are expected, primarily influenced by the

timing of product supply to ALK’s partner

in Japan.

The combined sales of SCIT/SLIT-drops

are projected to see continued growth.

This growth will primarily be driven by

SCIT across regions, although at a some-

what lower rate compared to the notable

growth seen in 2023, which was influ-

enced by improved pricing and extraor-

dinary rebate adjustments in Europe.

Conversely, sales of SLIT-drops are

Improved EBIT margin

ALK expects the operating profit to

further improve in 2024, driven by revenue

growth, benefits of scale, and a signifi-

cant reduction in external costs for clinical

trials. The EBIT margin is expected to be

17-19% against 14% in 2023, corre-

sponding to a 20-35% improvement in the

EBIT margin.

expected to show a slight decline because

of the ongoing market transition in France.

Management's review

ALK Annual report 2023

10

ciencies and reduces R&D expenditure.

R&D expenses are expected to decline

to around 10% of the expected revenue.

This reduction reflects the comple-

tion of two large-scale clinical Phase 3

programmes for tablets in 2023, enabling

ALK to progressively reallocate resources

to areas such as food allergies and

other innovations. Sales and marketing

expenses are expected to see single

digits increases, fuelled by investments in

the growth of European tablet sales and

including preparations for the planned

paediatric tablet launches and the organ-

isational build-up in China. Administrative

expenses are expected to see a slight

decline from 2023, where there were

extraordinary costs related to manage-

ment changes.

Key assumptions

Forward-looking

statements

• The European AIT markets are

generally expected to be stable.

Exceptions include the reversal

of the 2023 mandatory rebate

increase in Germany and the

possibility of minor adjustments

in selected Southern European

markets.

• When excluding the effect of the

recent acquisition, free cash flow

is projected to increase, driven by

higher earnings. CAPEX invest-

ments are projected at around DKK

400 million, and ALK expects to see

a continued inventory build-up in

support of revenue growth.

This report contains forward-looking

statements, including forecasts of future

revenue, operating profit, and cash flows

as well as expected business-related

events. Such statements are, by their very

nature, subject to risks and uncertainties,

as various factors, some of which are

beyond the control of ALK, may cause

actual results and performance to differ

materially from the forecasts made.

Without being exhaustive, such factors

include consequences of COVID and other

pandemics, general economic and busi-

ness-related conditions including: legal

issues, uncertainty relating to demand,

pricing, reimbursement rules, partners’

plans and forecasts, fluctuations in

exchange rates, competitive factors and

reliance on suppliers. Additional factors

include the risks associated with the

sourcing and manufacturing of ALK’s

products, as well as the potential for side

effects from the use of ALK’s products,

as allergy immunotherapy may be asso-

ciated with allergic reactions of differing

extents, durations, and severities.

• The current waves of respiratory

infection across ALK's markets

are not expected to materially

affect capacity at allergy clinics

or patient behaviour, nor are they

likely to impact ALK’s clinical and

commercial activities, sales, and

investments.

• The outlook does not include

potential one-off costs associated

with optimisation and prioritisa-

tion initiatives. Furthermore, the

outlook is based on ALK’s current

portfolio and does not include

revenue from new acquisitions,

new partnerships, or in-licensing

of products, nor does it include

payments related to M&A or

in-licensing activities.

Throughout the year, particular attention

will be given to optimisation and prioriti-

sation initiatives, enabling ALK to strate-

gically allocate resources to fund future

growth initiatives.

• Changes in consumers’ spending

power, amid higher living costs

and challenging macroeconomic

conditions in some markets, are

not expected to materially affect

demand for AIT, as the majority of

ALK’s sales involve products with

insignificant co-payments (if any)

by patients.

• The outlook is based on current

exchange rates, resulting in an

immaterial currency effect on

reported revenue and EBIT.

Management's review

ALK Annual report 2023

11

Financial highlights and key ratios

for the ALK Group*

DKK

2023

DKK

2022

DKK

2021

DKK

2020

DKK

2019

EUR

2023

EUR

2022

DKK

2023

DKK

2022

DKK

2021

DKK

2020

DKK

2019

EUR

2023

EUR

2022

Amounts in DKKm/EURm**

Income statement

Revenue

Information on shares

Proposed dividend

4,824

911

4,511

708

3,916

534

3,491

395

3,274

241

647

122

89

607

95

-

111

-

111

-

111

-

111

-

111

-

14.9

-

14.9

EBITDA

Share capital

Operating profit (EBIT)

Net financial items

Profit before tax (EBT)

Net profit

666

470

292

150

(14)

63

Shares in thousands of DKK 0.5 each

Share price, at year end

Net asset value per share

222,824

101

222,824

96

222,824

172

222,824

125

222,824

82

222,824

13.6

222,824

12.9

(19)

647

(23)

447

(13)

279

(49)

101

(17)

(3)

(31)

86

65

60

45

20

18

16

14

2.7

2.4

486

335

219

25

(50)

2,385

Key figures

Gross margin – %

Average number of employees (FTE)

2,752

2,609

2,492

2,419

2,752

2,609

62.9

13.8

11.5

18.6

-

61.9

10.4

9.0

14.8

-

61.2

7. 5

6.6

10.2

-

58.1

4.3

0.8

5.5

-

57.8

(0.4)

(1.6)

(0.5)

-

62.9

13.8

11.5

18.7

-

61.9

10.4

9.0

14.8

-

EBIT margin – %

Return on equity (ROE) – %

ROIC incl. goodwill – %

Pay-out ratio – %

Balance sheet

Total assets

Invested capital

Equity

6,726

3,765

4,447

6,308

3,400

3,988

5,830

2,931

3,480

5,563

2,807

3,153

5,495

2,759

3,176

902

502

597

848

457

536

Earnings per share (EPS)

Earnings per share (DEPS), diluted

Cash flow per share (CFPS)

Price earnings ratio (PE)

Share price/Net asset value

2.2

3.0

46

1.5

1.9

63

1.0

2.1

172

11.0

0.1

(0.2)

0.6

0.3

0.4

46

0.2

0.3

63

0.1

1.4

Cash flow and investments

Cash flow from operating activities

Cash flow from investing activities

– of which investment in intangible assets

– of which investment in tangible assetss

1,092

8.8

N/a)

5.7

667

(375)

(69)

416

(351)

(55)

468

(266)

(45)

301

(245)

(26)

132

(157)

(20)

89

(50)

(9)

56

(47)

(7)

5.1

5.4

5.1

5.4

Revenue growth – %

Organic growth

9

13

2

12

-

8

11

1

9

13

2

(310)

(298)

(218)

(196)

(147)

(42)

(40)

Exchange rate differences

Acquisitions/divestments

Total growth revenue

(2)

(1)

(2)

– of which acquisitions of

companies and operations

-

(20)

(25)

-

Free cash flow

292

65

202

56

39

9

7

15

12

7

12

7

15

*

Management’s review comprises pages 1-53 as well as ‘Financial highlights and key ratios by quarter for the ALK Group’ on

page 115

** Financial highlights and key ratios stated in EUR constitute supplementary information to the Management’s review. The

exchange rate used in translating from DKK to EUR is the exchange rate prevailing on 31 December 2023 (EUR 100 = DKK 745)

(31 December 2022: EUR 100 = DKK 744)

For definitions and reconciliation of alternative performance measures, see page 101

Management's review

ALK Annual report 2023

12

Sales and market trends

in the second half of the year. A decline

ALK’s full-year revenue for 2023

was DKK 4,824 million (4,511)

after 9% organic growth in local

currencies, reflecting continued

German one-year

mandatory rebate

increase

in Jext^®sales lowered overall revenue

growth by 2.5 p.p. Jext^®sales were

impacted by intermittent supply short-

ages from ALK's contract manufacturer

growth across all sales regions.

Exchange rates reduced

reported revenue growth by 2

percentage points. SCIT and

tablets were the main growth

drivers globally with double-

digit growth for both product

segments.

of adrenaline-filled cartridges which are

being resolved as expected.

In Germany, ALK's largest market, a

one-year mandatory rebate increase

of 5 percentage points was imple-

mented in 2023 for all prescription

drugs, including AIT products.

This rebate increase resulted in a

1 percentage point reduction in

ALK's overall revenue growth and

a 2 percentage point decrease in

European tablet sales growth in

2023. The rebate increase will have

no impact on revenue in 2024, as

confirmed by the German authorities

at the end of 2023.

The European AIT market showed a

gradual recovery from its weakened state

in the second half of 2022, primarily due to

a surge in respiratory infections that led to

a reduction in AIT patient visits to clinics.

This resulted in fewer patient initiations,

particularly in key markets like Germany

and the Nordics, where the number of new

patients introduced to tablets fell below

ALK's expectations. However, in 2023,

the demand for AIT regained strength,

and market conditions remained rela-

tively stable, with no significant changes

in pricing and reimbursement for AIT

products, except for the mandatory

rebate increase in Germany, see box to

the right. ALK delivered sales growth in

(Comparative figures for 2022 are shown

in brackets. Revenue growth rates are

organic and stated in local currencies,

unless otherwise indicated)

Europe

European revenue increased by 6% in local

currencies reaching DKK 3,216 million

(3,058), with growth fuelled by SCIT sales,

while tablet sales regained momentum

Management's review

ALK Annual report 2023

13

Revenue by geography

Revenue by product line

most markets, including Germany, the

Nordic countries, Benelux, Switzerland,

Austria, Slovakia, Poland, and Italy. Sales

remained largely unchanged in France,

while there was a decline in the UK and

Spain mainly related to the adrenaline

auto-injector Jext^®.

implemented by ALK to provide sufficient

momentum in the second half of the year.

These activities included digital mobilisa-

tion of patients, initiatives to broaden the

prescriber base and enhance prescrip-

tion depth, efforts to reinforce advocacy

among key opinion leaders and payers,

and work to extend the initiation season

to mitigate conflicts with external factors

such as common respiratory infections.

Leading indicators showed encouraging

results with regards to disease burden,

patient mobilisations and confirmed

doctor visits, treatment initiations and

improved market access.

Growth

(l.c.)

Growth

(l.c.)

Amounts in DKKm

2023

2022

Amounts in DKKm

2023

2022

Europe

3,216

908

6%

9%

3,058

857

SCIT/SLIT-drops

SLIT-tablets

1,939

2,296

12%

11%

1,748

2,102

North America

International

markets

Other products

and services

700

23%

596

589

-9%

661

Total revenue

4,824

9%

4, 511

Total revenue

4,824

9%

4, 511

With gains in market share across key

markets, ALK solidified its position as the

market leader in European AIT in 2023.

European tablet sales saw an increase of

6% or 8% on a like-for-like basis, excluding

the impact of the mandatory rebate

increase in Germany. Growth stagnated

during the first half of the year. This period

was still affected by the trailing impact of

lower new patient intake from the previous

initiation season in key markets. However,

growth then regained momentum,

reaching 13% in the second half of the

year. This acceleration was particularly

attributable to a higher inflow of new

patients during the most recent initiation

season.

Revenue by geography

Revenue by product line

Europe

North America

SCIT/SLIT-drops

Other

SLIT-tablets

International markets

The estimated increase of more than 10%

in the number of new patients initiated on

tablets during the 2023 initiation season

indicates promising growth prospects for

2024.

2023

40%

48%

46%

12%

15%

67%

19%

14%

13%

2022

The combined sales of SCIT and SLIT-drops

increased by 13%. Sales of SLIT-drops

increased slightly, despite the ongoing

market transition in France, while SCIT

sales saw a double-digit increase. The

growth in SCIT sales was attributable to

improved pricing, gains in market share,

39%

68%

Markets responded well to the series of

intensified sales activities strategically

Management's review

ALK Annual report 2023

14

especially in the venom sub-segment, and

specific rebate adjustments.

adrenaline-filled cartridges from ALK's

contract manufacturer.

increased by 4%, driven by growth in sales

of diagnostics and life science products,

including vials and diluents.

In Japan, in-market sales of tablets

rebounded following the challenges posed

by COVID-19 in 2022. ALK's partner, Torii,

strengthened its position as the market

leader in AIT amid increasing public and

political attention to pollen allergy, espe-

cially related to Japanese cedar trees.

Sales of Other products and services

decreased by 26%, owing to a significant

reduction in sales of Jext^®. Over and above

the expected decline in sales associated

with relatively low organic replacement

rates in 2023, Jext^®sales in the second

half of the year were further affected by

intermittent supply shortages in selected

markets. These shortages were a result

of temporary restrictions on the supply of

North America

Revenue in North America increased by

9% in local currencies, reaching DKK 908

million (857) on growth across all product

lines in the USA and Canada.

Tablet sales increased by 26% as planned.

Canada saw robust, double-digit sales

growth consistently throughout the year,

while sales growth in the USA picked up in

the second half. The US sales organisa-

tion continued its initiatives to establish

new channels, as outlined in the strategy

section on page 22.

In China, ALK's expanded organisa-

tion steadily broadened the prescriber

network in preparation for the anticipated

future launch of ACARIZAX^®. In-market

sales of SCIT products experienced

double-digit growth, solidifying and

expanding ALK's position as the second-

largest player in the rapidly growing

Chinese AIT market.

Sales of the region's largest product

group, SCIT bulk allergen extracts,

primarily for US allergists, increased by

7%, falling slightly short of expectations.

Revenue from Other products and services

ALK is the market leader in Canada and

among the leaders in the US AIT market.

International markets

5-year total revenue by geography

5-year total revenue by product line

Revenue from International markets

increased by 23% in local currencies to

reach DKK 700 million (596). This progress

was driven by double-digit growth in ALK's

product shipments to the region's largest

markets, Japan and China, which together

account for approximately 90% of revenue

in this region.

While still at a modest level, tablet sales

showed encouraging growth in the South-

east Asian markets operated by ALK's

partner, Abbott.

Europe

North America

SCIT/SLIT-drops

Other

SLIT-tablets

International markets

DKK million

5,000

4,000

3,000

2,000

1,000

0

5,000

4,000

3,000

2,000

1,000

0

2019 2020 2021 2022 2023

Management's review

ALK Annual report 2023

15

Financial review

ALK’s full-year operating profit

(Comparative figures for 2022 are shown

impacted reported revenue growth nega-

tively by 2 p.p.

sales and production efficiencies, partly

offset by increasing tablet shipments to

Torii at lower margins. ALK continued to

implement its product and site strategy,

involving investments in upgrading prod-

ucts and associated manufacturing facil-

ities to secure quality and robustness in

product supply.

(EBIT) increased by 50% in

local currencies to DKK 666

million (470) which was in-line

with the latest outlook issued

in November 2023.

in brackets. Revenue growth rates are

stated in local currencies, unless other-

wise indicated)

Cost of sales increased 5% in local

currencies to DKK 1,789 million (1,720).

Revenue was up 9% in local currencies at

DKK 4,824 million (4,511) which was in line

with the latest outlook. Exchange rates

The gross profit of DKK 3,035 million

(2,791) yielded an improved gross margin

of 63% (62%), mainly reflecting higher

Revenue

Gross margin

2023 guidance history

2023E

17 Apr outlook

2023E

24 Aug outlook

2023

actual

Revenue

Gross profit

Cost of sales

DKK

3 Feb outlook

Revenue growth

Gross margin

Revenue

7-11% (l.c.)

13-15%

7-11% (l.c.)

13-15%

8-10% (l.c.)

13-15%

9% (l.c.)

14%

DKK million

5,000

%

DKK million

%

EBIT margin

18

5,000

4,000

3,000

2,000

1,000

0

80

4,000

3,000

2,000

1,000

0

15

12

9

72

64

56

48

40

6

3

2019 2020 2021 2022 2023

Management's review

ALK Annual report 2023

16

Capacity costs increased by 3% in local

currencies to DKK 2,371 million (2,322).

As planned, R&D expenses decreased

7% in local currencies to DKK 618 million

(665) reflecting the recent completion of

late-stage clinical trials of the respiratory

tablet portfolio. Sales and marketing

expenses were up 5% in local currencies,

in support of continued growth. Adminis-

trative expenses increased 20% in local

currencies, mainly reflecting one-off costs

in Q2 associated with the leadership

changes as well as increased activity

levels.

EBIT (operating profit) increased by

50% in local currencies to DKK 666 million

(470), improving the EBIT margin from

10% to 14%. Progress was due to higher

sales, improved gross margin and a lower

capacity cost-to-revenue ratio. Exchange

rates impacted growth in reported EBIT

negatively by 8 p.p.

and the net profit increased to DKK 486

million (335).

positive at DKK 292 million (positive at 65),

as planned.

Cash flow from operating activities

was DKK 667 million (416), as higher

earnings were offset by changes in

Cash flow from financing activities

was DKK minus 31 million (minus 42).

working capital, mainly related to inven-

tory build-up. Cash flow from invest-

ment activities was DKK minus 375

million (minus 351), mainly reflecting the

build-up of capacity for tablet production,

upgrades for legacy production, and

investments in the next generation adren-

aline auto-injector. Free cash flow was

At the end of the year, ALK held 1,634,673

of its own shares, or 0.7% of the share

capital, against 0.8% at the end of 2022.

Net financials showed a loss of DKK

19 million (loss of 23) related to interest

expenses and currency losses. Tax on

the profit totalled DKK 161 million (112),

Equity totalled DKK 4,447 million (3,988)

at the end of the year, and the equity ratio

was 66% (63%).

Research and development

Sales, marketing and administration

EBIT

Free cashflow

Research and development expenses

Percentage of revenue

Administrative expenses

Sales and marketing expenses

Percentage of revenue

EBIT

Free cashflow

EBIT margin

DKK million

400

DKK million

1,000

%

DKK million

2,000

%

DKK million

800

%

20

50

20

300

200

100

0

800

600

400

200

0

17

14

11

8

1,600

1,200

800

400

0

46

42

38

34

30

600

400

200

0

15

10

5

0

-100

5

-200

-5

2019 2020 2021 2022 2023

Management's review

ALK Annual report 2023

17

Q4 review

(Comparative figures for Q4 2022 are

shown in brackets. Revenue growth rates

are stated in local currencies, unless

otherwise indicated).

Q4 highlights

Combined SCIT and

SLIT-drops sales

increased

Sales of Other products,

including the adrenaline

auto-injector, Jext®

ALK delivered 2023 full-year results in line

with the most recent financial outlook,

following a Q4 which saw revenue growth

of 10% based on growth in all regions and

across all AIT product groups.This was

negatively impacted by exchange rate

fluctuations, so the reported growth in

DKK was 8%.

Total revenue

increased

Tablet sales

increased

10%

19%

3%

-3%

in local currencies

to DKK 677 million

(581)

to DKK 522 million

(512)

to DKK 146 million

(156)

to DKK 1,345 million (1,249)

Revenue in Europe was up 7% on growth

in SCIT/SLIT-drops sales which benefitted

from the ongoing development in the

venom AIT sub-segment. Sales of Jext^®

continued to be impacted by the intermit-

tent supply shortages caused by ALK’s

contract manufacturer. The supply is

currently improving and the issue is being

resolved as expected.

Tablet sales in Europe were up 12%,

driven mainly by new patient initiations

in the main markets of Germany and the

Nordics which led to a slightly better than

expected performance. ALK also saw

double-digit sales growth in the majority

of other markets in Europe.

Revenue in North America increased by

16%, driven by broad-based sales growth.

Tablets sales increased by 38%.

The gross margin was 63% (62%). The

margin development reflected large

shipments to Torii at lower margins, and

continued investment in the implementa-

tion of the product and site strategy.

Revenue from International markets

increased by 15%, powered by growth in

tablet shipments to Torii in Japan, while

revenue from China was down because of

the timing of SCIT product shipments.

Capacity costs amounted to DKK 651

million (633). R&D expenses were slightly

below those for Q4 2022 due to the recent

Management's review

ALK Annual report 2023

18

Income statement

Revenue by geography

Revenue by product line

Amounts in DKKm

Q4 2023

Q4 2022

1,249

Q4 Growth

(l.c.)

Q4

2022

Q4 Growth

(l.c.)

Q4

2022

Amounts in DKKm

2023

Amounts in DKKm

2023

Revenue

1,345

501

844

63%

151

Cost of sales

478

771

62%

185

372

76

Europe

928

249

7%

871

226

SCIT/SLIT-drops

SLIT-tablets

522

677

3%

512

581

Gross profit

North America

16%

19%

Gross margin

International

markets

Other products

and services

Research and development expenses

Sales and marketing expenses

Administrative expenses

Operating profit (EBIT)

EBIT margin

168

15%

152

146

-3%

156

407

93

Total revenue

1,345

10%

1,249

Total revenue

1,345

10%

1,249

194

14%

138

11%

(34)

104

Net financials

(8)

Profit before tax (EBT)

186

Revenue by geography

Revenue by product line

Europe

North America

SCIT/SLIT-drops

Other

SLIT-tablets

Tax on profit

(46)

(26)

International markets

Net profit

140

78

Operating profit before depreciation and amortisation

(EBITDA)

2023

258

201

39%

50%

47%

11%

12%

69%

19%

18%

12%

2022

EBIT increased by 37% in local currencies

to DKK 194 million (138) which was in line

with the most recent outlook, mirroring

higher sales and efficiencies across the

business.

completion of two large-scale clinical

trials. Sales and marketing expenses

increased 12%. The development

reflected investments in market expansion

in China and a generally high activity level

in markets with positive momentum. The

capacity costs to revenue ratio was down

at 48% (51%).

41%

70%

Management's review

ALK Annual report 2023

19

Introduction to

strategy framework and ALK’s growth formula

Outcome

Initiative

Grow the patient base

Broaden and deepen

the prescriber base

Gain market shares

Paediatric launches of

HDM and tree pollen

tablets

Prepare for HDM tablet

launch in China

2023 achievements

~2.4 million people on treatment

with ALK’s products (unchanged).

Net increase of ~200,000 AIT

patients offset by fewer Jext^®

patients due to intermittent supply

shortages. ALK’s AIT products

were introduced in 9 new markets

13,254 healthcare professionals

were trained in allergies and AIT

Gains in market share in

Germany and other key Euro-

pean markets, China

Successful completion of paedi-

atric Phase 3 trials with HDM

and tree pollen tablets. Prepa-

rations for regulatory filings and

launches

Double-digit growth in ship-

ments to China and in-market

sales. Expansion of organisation

and market coverage. Regula-

tory review of HDM tablet

Trend

2024 ambitions

Grow the number of AIT patients,

particularly in Europe. Restore

growth in Jext^®patient base after

restoration of supply chain

Continue to broaden and deepen

prescriber bases. Leverage

children indication for tablets to

expand position with paediatri-

cians

Continued gains in market share

in key markets as well as newer

AIT markets

Succeed with regulatory filings

to authorities in Europe and

North America. Continued

market build-up ahead of paedi-

atric launches

Continue to prepare for HDM

tablet launch, extend organisa-

tional capabilities, and expand

prescriber network

Management's review

ALK Annual report 2023

20

Introduction to

strategy framework and ALK’s growth formula

Initiative

Expand partnership

for Japan

Implement new business

model for tablets in

the USA

Improve market access

in current and new

markets

Extend digital

platforms

Enter wider

allergy sphere

2023 achievements

Double-digit growth in revenue

from tablet shipments to Japan.

Partnership with Torii extended

to include grass tablets

Initial prescriber base among

paediatricians established

after the inclusion of tablets in

Medicaid. Test of commercial

partnership projects

Tablets launched in six new

European markets. Improved

public reimbursement in certain

Eastern European and Middle

Eastern markets

Over 960,000 consumers

– a more than 35% increase –

connected with HCPs via klarify

Positive interim findings from

Phase 1 trial of tablet against

peanut allergy. Acquisition of

PRE-PEN^®for diagnosis of peni-

cillin allergy (early 2024). Anaphy-

laxis strategy under review

Trend

2024 ambitions

Sustained growth in revenue

from shipments and sales royal-

ties. Initiation of development

and approval process for grass

tablet. Potential expansion of

capacity to meet demand

Leverage paediatric and adoles-

cent indications to establish

scalable approach to paedi-

atricians and further cultivate

commercial partnerships

Consolidate position in new

markets. Improve market access

in the UK, Spain and Eastern

Europe. Selective approach to

new markets

Expansion of digital engage-

ment tools and further moves

towards multichannel marketing

Integrate PRE-PEN^®operation.

Decide on next steps for food

allergy and anaphylaxis. Evolve

early stage R&D pipeline

Management's review

ALK Annual report 2023

21

Optimise for excellence – continued to

provide the framework for ALK’s strategic

development in 2023, underpinned by a

company-wide ambition to advance its

sustainability efforts.

improved from minus 3% in 2018 to an

expected level of 17-19% in 2024, while

annual, organic revenue growth in this

period averages 10% (CAGR) in local

currencies.

Strategy progress

including 2023 results

and 2024 targets

ALK made progress with all four of its stra-

tegic focus areas, see growth framework

on pages 19-20 and the detailed review

of each strategic priority on pages 22-34,

outlining both 2023 achievements and key

priorities for 2024.

Strategy review to support ambitions

The strategy is currently the subject of a

routine review. There will be no changes to

ALK’s overall ambition of growing revenue

by becoming relevant to more people with

moderate to severe allergies, and ALK

will also continue to work on improving its

earnings towards an approximate 25%

EBIT margin and on positive cash flow

generation. The review will enable ALK

to carefully prioritise its many strategic

options and pursue relevant opportuni-

ties in the right order, at an appropriate

pace, and with the correct allocation of

resources.

ALK continued to execute its business strategy in 2023,

making progress with its four focus areas. A routine

review of the strategy is ongoing.

Unchanged framework since 2017

The current strategy framework was

launched in December 2017 with a view

to transforming the company. The frame-

work with its four priorities has remained

largely unchanged ever since, except

for the addition of new long-term initia-

tives – expansion in China, food allergy,

anaphylaxis, and new innovations through

research – in February 2021.

Consumer

Succeed in

engagement and

Optimise for

excellence

Complete and

commercialise

tablet portfolio

North

new horizons

America

The strategy review will also focus on

pathways to free up resources to fund

long-term growth initiatives without

compromising profitability improvements.

Optimising cost structures and making

well-founded choices will be key to these

efforts.

Sustainability

Serving ALK well, the strategy frame-

work has contributed to a consolidation

of the company’s global leadership in

respiratory allergy, while also delivering

sustained growth and earnings improve-

ments. The EBIT margin has been

The four strategic focus areas – Succeed

in North America, Complete and commer-

cialise the tablet portfolio, Consumer

engagement and new horizons, and

Management's review

ALK Annual report 2023

22

Succeed in North America

The business in North America

delivered 9% growth in 2023.

The business model for tablets

was adjusted to increase the

focus on new prescribers and

new sales channels.

In 2023, a primary strategic objective

for the US tablet organisation was to

initiate the establishment of new sales

and prescription channels, with particular

emphasis on paediatricians and exploring

commercial partnerships with retail phar-

macies, urgent care clinics and on-demand

virtual care providers. Many paediatri-

cians manage a sizeable inflow of patients

with uncontrolled allergies and possess a

good understanding of immunology and

allergy, mirroring the dynamics observed

among allergists. A noteworthy distinction

lies in the fact that paediatricians do not

face the same financial disincentives as

allergists when it comes to prescribing

tablets. According to plan, ALK established

an initial, though modest, prescriber base

amongst US paediatricians.

to engaging paediatricians effectively. At

the same time, efforts will be maintained

to cultivate commercial partnerships in

the USA. In Canada, the emphasis remains

on delivering sustained sales growth.

Key priorities

for 2024

The legacy business

In 2023, ALK’s legacy business in the USA,

encompassing SCIT bulk extracts, diag-

nostics, and life science products, showed

overall progress. Although there was

some volatility in the sales of life science

products, the focus for the upcoming

year remains on targeting sustainable

and profitable growth. Particularly, SCIT

bulk extracts continue to be important

for the business in North America, with

ALK supplying these extracts to allergists

nationwide in the USA.

• Continue to build new prescription

and sales channels and grow US

tablet sales

The tablet business

Tablet sales in North America saw growth

of 26% in local currencies in 2023 and

ALK expects continued growth in 2024.

The sales and marketing organisation in

Canada achieved consistent double-digit

growth throughout the year. Meanwhile,

tablet sales in the USA gained momentum

in the second half, driven by increased

volumes from established prescribers

and improved average selling prices. The

increased volume from existing US tablet

prescribers, primarily allergists, was

particularly influenced by the introduction

of a new adolescent indication for the

ODACTRA^®house dust mite tablet.

• Maintain strong tablet sales

growth in Canada

• Secure continued value growth

in SCIT bulk and other life science

businesses

Leveraging the current paediatric and

adolescent indications for its pollen

tablets, and in anticipation of the

upcoming paediatric indication for

ODACTRA^®, ALK will in 2024 continue its

efforts to establish a scalable approach

At the beginning of 2024, ALK took steps to

enhance the robustness of its portfolio by

acquiring PRE-PEN^®, a product approved

by the US FDA for diagnosing penicillin

allergy. Previously, ALK held exclusive

distribution rights for the product in North

America, but the acquisition secured

global rights to all assets, encompassing

the production facility and the entire value

chain. ALK remains committed to pursuing

further initiatives aimed at bolstering the

long-term resilience of its legacy business.

Management's review

ALK Annual report 2023

23

Complete and commercialise

the tablet portfolio

In 2023, efforts were made to

advance the tablet portfolio,

with the overarching goal of

expanding the use of tablets

to new patient groups and

geographical markets.

the typical timeline. The number of new

and North America, encompassing

1,458 children aged five to 11, met its

primary endpoint. The results demon-

strated that the HDM tablet effec-

tively reduced allergy symptoms and

decreased the need for allergy pharma-

cotherapy in the participating children.

patient initiations in key markets exceeded

last year’s numbers by more than 10%,

and ALK recorded a noteworthy 13%

increase in European tablet sales during

the second half of the year.

Key priorities for

2024

• Support upcoming paediatric

tablet launches

• Secure approval of ACARIZAX^®

Children indications

Restore growth in Europe

Progress was also achieved in supporting

the long-term commercial potential of the

respiratory tablet portfolio. Two pivotal

Phase 3 clinical trials were successfully

completed, both demonstrating the

advantages of initiating allergy treatment

with ALK's tablets from early childhood.

These outcomes are crucial to ALK's aspi-

rations to introduce tablets to patients at

an earlier stage in life, thus facilitating the

expansion of both patient and prescriber

demographics.

• Similarly, a Phase 3 trial involving the

tree pollen tablet, which included 952

children aged five to 17 in Europe and

Canada, successfully met its primary

endpoint.

in China

A key strategic focus in 2023 was to

restore the growth in tablet sales in

Europe, primarily by increasing the

• Improve market access in

existing EU markets

number of new patients undergoing treat-

ment, particularly in key markets such as

Germany and the Nordics. Addressing

the previous year's lower-than-expected

enrolment of new patients onto tablets

during the initiation season, ALK under-

took further initiatives to actively engage

people with allergies, capture a larger

share of the market, broaden prescriber

bases, and encourage healthcare profes-

sionals to initiate patients earlier than

ALK is currently working to gain approval

for the use of tablets in young children - an

essential catalyst for sustainable long-

term growth, as detailed in the corre-

sponding section on page 27-28.

In Europe in 2023, tablets were launched

in Croatia, Greece, Serbia, and Slovenia,

while launch preparations were made in

Hungary and Romania.

Geographic expansion

• A Phase 3 clinical trial involving the

house dust mite (HDM) tablet in Europe

Expanding both patient and prescriber

demographics remained a priority in 2023,

also via geographic expansion.

In Japan, ALK and Torii Pharmaceu-

tical Co., Ltd. entered into an additional

Management's review

ALK Annual report 2023

24

agreement, granting Torii exclusive rights

to develop and market ALK's tablet for

treating grass pollen allergy. The part-

nership with Torii – the most important

contributor to ALK’s tablet sales outside

Europe – currently includes CEDARCURE™

for Japanese cedar pollen allergy and

MITICURE™ for HDM allergy.

Improving

market access

ALK’s Biologics License Application for

ACARIZAX^®was accepted for review by

the authorities in China and the review

is ongoing. Approval is still expected

in 2024. Ahead of the planned launch,

ACARIZAX^®was made available in a

medical pilot zone.

In 2023, ACARIZAX^®became

the first respiratory AIT tablet

product to be submitted for

assessment by the National

Institute for Health and Care

Excellence (NICE) in the UK.

Meanwhile, preparations for a regulatory

filing of ACARIZAX^®continued in India,

another emerging allergy market, where

Dr. Reddy’s is responsible for registration

and commercialisation under an exclusive

licensing agreement with ALK.

The institute conducts reviews to assess the clinical bene-

fits and cost-effectiveness of healthcare interventions,

treatments, and technologies. These reviews aim to

provide evidence-based guidance to the national health

system on the adoption of specific medical interventions.

The UK stands out among European markets as one of

the few where ACARIZAX^®, ITULAZAX^®, and GRAZAX^®have

received approval but lack public national reimbursement.

The ongoing assessment represents a potential advance

towards national reimbursement, with anticipated results

expected during 2024.

2023 saw progress in market access for tablets in other

markets: Poland granted reimbursement for ACARIZAX^®in

adolescents. Reimbursement for ACARIZAX^®in adults and

adolescents was re-gained in the Czech Republic, where

reimbursement of ITULAZAX^®is expected to be re-gained

shortly. Finally, in the newer Middle Eastern markets,

ALK also secured progress on reimbursements for tablets.

Finally, in the USA, ALK continued to

establish new sales channels, especially

paediatricians (cf. page 22).

Management's review

ALK Annual report 2023

25

ALK’s clinical R&D portfolio

Over the past decades, ALK has pioneered the development of standardised allergen extracts, formulated as rapidly dissolving

SLIT-tablets. ALK is now expanding its leadership and targeting new geographies and patient groups while also leveraging its

technology and capabilities within food allergy and other related disease areas.

Global availability

of tablets

The tablet for grass pollen allergy (GRAZAX^®

or GRASTEK^®) is approved in 34 countries in

Europe, North America, and the Asia Pacific

region. Clinical development will be initiated

in Japan in 2024.

Ongoing clinical trials and regulatory approvals

Pre-

Product

Age groups and indications

clinical Phase1 Phase 2 Phase 3 Filing

ACARIZAX^®China

Adults – Allergic rhinitis (HDM)

ACARIZAX^®/ ODACTRA^®Europe & North America

ITULAZAX^®/ ITULATEK™ Europe & Canada

Children – Allergic rhinitis (HDM)

Children – Allergic rhinitis (tree: birch family)

The tablet for house dust mite allergy

(ACARIZAX^®, ODACTRA^®or MITICURE™) is

approved in 43 countries in Europe, North

America, the Middle East, and the Asia

Pacific region. Regulatory filing processes

are ongoing in China and India.

Adults, adolescents, and children

– Food allergy (accidental peanut exposure)

Peanut SLIT-tablet North America & Europe

Early stage R&D projects

Non-disclosed

Product approvals

Product

Age groups and indications

Marketed

GRAZAX^®/ GRASTEK^®

Europe, North America & International markets

RAGWIZAX^®/ RAGWITEK^®

Europe, North America & International markets

The tablet for tree pollen allergy (ITULAZAX^®

or ITULATEK^®) is approved in 22 countries in

Europe and Canada.

2007-17

Adults and children – Allergic rhinitis (grass)

Adults and children – Allergic rhinitis (ragweed)

2014-21

2016-21

Adults – Allergic rhinitis and allergic asthma (HDM)

Adolescents – Allergic rhinitis (HDM)

ACARIZAX^®Europe & International markets

The tablet for ragweed pollen allergy

(RAGWIZAK^®or RAGWITEK^®) is approved in

15 countries in Europe and North America.

ACARIZAX^®/ ODACTRA^®North America

MITICURE™ Japan*

Adults and adolescents – Allergic rhinitis (HDM)

Adults and children – Allergic rhinitis (HDM)

Adolescents – Allergic rhinitis (HDM)

2017-18

2015-18

2023

ODACTRA^®North America

2018

CEDARCURE™ Japan*

Adults and children – Allergic rhinitis (Japanese cedar)

Adults – Allergic rhinitis (tree: birch family)

The tablet for Japanese cedar pollen allergy

(CEDARCURE™) is approved in Japan.

ITULAZAX^®/ ITULATEK™ Europe & Canada

2019-20

* Licensed to Torii for Japan

Management's review

ALK Annual report 2023

26

Maintain momentum in 2024

In 2024, ALK is targeting additional

growth in global tablet sales. The

company will persist with market expan-

sions, employing targeted initiatives

across various markets to expand tablet

prescriber and patient bases, not least

by leveraging the planned paediatric

launches. These efforts include activities

such as expansion of sales channels,

digital engagement and mobilisations,

disease awareness programmes, advo-

cacy for evidence-based medicines, and

exploration of new business models.

~10 million

eligible patients

Around 1.5 million children aged five to

11 are receiving AIT but more than 10

million are eligible for treatment.

The number of children with moderate to severe

respiratory allergies is growing, as is the acknow-

ledgement by healthcare professionals that early

intervention and adequate control are crucial to

halting the allergy’s progression to asthma and other

comorbidities.

Preparations for the planned launch of

ACARIZAX^®in China will continue. In Europe

and North America, sales and marketing

resources will be strategically reallocated

to support the upcoming launches of

paediatric indications for the house dust

mite and tree pollen tablets.

Market research shows that children are more likely

to stay on AIT treatment – their adherence rate

exceeds that of adults in core European markets,

as parents are likely to be more vigilant about their

children’s health than their own. Children also have a

shorter journey to AIT compared to adults. Children

typically need fewer visits to their doctors before

being referred to specialists, and their waiting time

at specialists is also shorter.

Management's review

ALK Annual report 2023

27

Helping

children to

a better life

Securing full approval for the tablet portfolio

across all relevant age groups is expected

to be a key catalyst for future growth.

Based on the successful paediatric trials with the house

dust mite (HDM) and tree pollen allergy tablets, ALK is now

in the process of securing regulatory approvals from the

authorities to expand the product indications to include

children. The timetable for the planned submissions is as

follows:

To pave the way for the launches, ALK is in advanced plan-

ning and execution of a multitude of sales and marketing

activities, including digital awareness campaigns, web-

inars, conferences, and work with medical associations.

This work is focused on building awareness of child-

hood allergies among both existing and potential new

prescribers. Overall, in 2023 alone, ALK trained 13,254

healthcare professionals in allergies and allergy immuno-

therapy treatment across the globe. 52,673 healthcare

professionals were also trained in advances in allergic

disease management.

• The application for the HDM tablet (ODACTRA^®) in the

USA will be submitted in the first half of 2024, so that,

subject to approval, the tablet could become available

for children aged five to 11 in the USA in 2025.

• The application for the HDM tablet (ACARIZAX^®) in

Europe was accepted for review in January 2024.

Subject to approval, the tablet could become available

for children, aged five to 11, in Europe in 2024/25.

• Regulatory submissions for the tree pollen tablet (ITULAZAX^®

/ ITULATEK^®) in Europe and Canada are planned for

mid-2024, so that this tablet could become available for

children and adolescents aged five to 17 in 2025.

Management's review

ALK Annual report 2023

28

A recently published health economic analysis demon-

strates that early initiation of AIT in children reduces the

risk of developing asthma and is costsaving for the health

care system. The real world evidence study, REACT, also

showed that AIT reduces the burden of asthma compared

to a control group among the subjects who had asthma

before starting AIT.

All relevant ages

ALK stands as the sole AIT company with a comprehen-

sive clinical development programme aimed at securing

paediatric and adolescent indications for its tablet port-

folio across the spectrum of main respiratory allergies.

The grass allergy tablet has already gained approval for

children, adolescents, and adults in Europe and North

America. The ragweed allergy tablet is also approved for

all age groups in North America and Europe, and both the

Japanese cedar tablet and the HDM allergy tablet are

approved for all age groups in Japan. With the intended

paediatric indications for the HDM and tree pollen allergy

tablets, these two treatments will receive approval for all

relevant age groups in all pertinent markets.

In addition to the clinical trial data, benefits of AIT have

also been confirmed via real world evidence studies. The

large REACT study, based on >90,000 German subjects,

demonstrated the long-term effectiveness of AIT. In a 2023

publication based on the same cohort it was also shown

that the burden of allergy among children at the time when

they initiate AIT is higher than in adults. This indicates that

there is a significant unmet need for better AIT options for

children.

cations for children, and knowing when and how to seek

medical advice.

Increased risk of allergic asthma

In the absence of appropriate treatment, the allergic

disease in children with a respiratory allergy can escalate,

potentially resulting in other conditions such as conjunc-

tivitis, dermatitis and asthma. Research indicates a

significant association between childhood allergic rhinitis

and a several-fold increase in the risk of allergic asthma

later in life. Beyond the health repercussions, children may

experience adverse effects in other aspects of their lives,

including compromised academic performance, as symp-

toms deplete their mental and physical energy.

Children constitute the vast majority of new tablet patients

in Japan.

ALK also plans to intensify engagement with parents and

other caregivers through the klarify digital platforms, as

well as through partnerships with patient associations.

These initiatives are designed to empower caregivers in

recognising allergy symptoms, understanding the impli-

Management's review

ALK Annual report 2023

29

The market transition in

favour of evidence-based AIT

for major allergens currently constitute around 20% of the

market in Germany.

Germany, Europe’s largest allergy

immunotherapy (AIT) market, is

transitioning towards evidence-based

AIT, while Spain has taken the first steps

ALK is working with healthcare professionals, medical

associations and other stakeholders to ensure that rele-

towards focusing on registered AIT

products.

vant patients get access to an effective treatment.

More than 6,000 products phased out

A German health insurance society has recently engaged

in a series of lawsuits aimed at contesting the reimburse-

ment of non-registered AIT products, thereby supporting

the market transition towards documented and registered

AIT products. These court rulings suggest that insurance

companies and other private payers may reject reim-

bursement for non-registered AIT products. If established,

this legal practice may exert additional pressure on

non-registered AIT products. Non-registered AIT products

The German AIT market has witnessed substantial

changes in the last decade. Before 2008, there were over

6,500 individual AIT products available in Germany, many

lacking sufficient data on quality, safety or efficacy. The

introduction of the Therapieallergeneverordnung (Therapy

Allergen Ordinance (TAO)) in 2008 kickstarted the phasing

out of undocumented, unregistered products from the

market. The regulatory authority has announced that the

transition period will end in 2026, meaning that from 2024,

Management's review

ALK Annual report 2023

30

only patients initiated on registered products can be sure

of finishing their treatment.

Other countries

At the EU level, the shift from undocumented legacy prod-

ucts to documented and authorised AIT products was

supported by the adoption of guidelines in 2020. These

guidelines aim to enhance the availability of evidence-

based, safe, and effective allergen treatments and diag-

nostics across Europe.

The push from allergy experts, regulators, and payers has

expedited the transition, leading to updates in reimburse-

ment and prescription guidelines favouring evidence-

based, registered AIT products.

Gains in market share

Within the Nordic countries of Denmark, Sweden, Norway,

and Finland – collectively ALK's third-largest market in

Europe – marketing and sales are exclusively permitted for

documented, registered AIT products. The same require-

ment applies in the Netherlands, the UK, and Eastern Euro-

pean countries such as Slovakia and the Czech Republic.

The market transition has caused some disruptions both

for traditional AIT manufacturers, some of whom strug-

gled to meet elevated documentation standards, and for

the more than 10,000 physicians traditionally involved in

AIT. While the recent court cases might introduce short-

term uncertainty and could lead to disengagement from

AIT among some healthcare professionals, the emerging

legal practice presents an opportunity for ALK and other

providers of registered AIT products.

In 2023, Spain, a top-5 AIT market in Europe, initiated the

transition towards registered, evidence-based AIT. The

Ministry of Health published new orders requiring compa-

nies to submit applications for marketing authorisations

for already marketed AIT products. Timelines for these

applications should be established in 2024.

In 2019, ALK became the first AIT company in Germany to

offer a comprehensive product range for major allergens,

exclusively featuring registered AIT tablets and SCIT prod-

ucts. Since then, ALK has significantly expanded its market

share, and Germany has become the company's largest

market, with an estimated market share of around 38% in

2023, up from 23% in 2018.

Management's review

ALK Annual report 2023

31

Consumer engagement and new horizons

guidance on allergy symptoms, the diag-

nostic journey, and AIT treatment. Note-

worthy features include monitoring of pollen

flights, a symptom-tracking diary, a suit-

ability test for AIT treatment, and a doctor

finder for relevant healthcare professionals

(HCPs) close to where the patient lives.

Operating in a mutually beneficial manner,

klarify also provides ALK with insights into

the behaviours and priorities of individuals

living with allergies which were published at

the EAACI medical congress in 2023.

New horizons

The digital platforms for patients

and healthcare professionals

were expanded in 2023, while

ALK also advanced its peanut

AIT development programme.

The 'new horizons' priority covers innova-

tions aimed at securing and potentially

accelerating ALK's long-term growth by

establishing a more extensive presence

in the broader allergy space, including a

focus on food allergy.

Key priorities for

2024

In 2023, the digital mobilisation of indi-

viduals living with allergies saw further

progress, with over 960,000 users

• Further expand ALK’s digital

engagement capabilities

with patients and healthcare

professionals

In early 2024, ALK announced that it had

successfully completed the first part of

the Phase 1 clinical trial with its novel

once-daily SLIT-tablet for peanut allergy

treatment. This part showed that for all

investigated doses, the tablet was safe

and tolerable. The trial now progresses

into its second part, which is expected to

complete later in 2024. Furthermore, ALK

has made a provisional decision to extend

the trial with a third part allowing it to

explore efficacy of the tablet as well.

connecting with doctors through the tools

within ALK's online klarify universe. This

marked an increase from approximately

700,000 users in 2022. The digitally-driven

patient journey proved particularly valu-

able in key European markets, where

ALK’s digital platforms played an impor-

tant role in mobilising AIT-eligible patients

towards relevant doctors ahead of the

latest initiation season.

• Progress clinical development of

peanut tablet

In 2024, ALK will further expand its digital

engagement, while also using its digital

capabilities to deliver education and

training to HCPs. In 2023, ALK trained

13,254 HCPs (2022: 4,258) in allergies

and AIT, while 52,673 HCPs (2022: 25,185)

were trained in allergic disease aware-

ness. This training will continue in 2024.

In addition, ALK is increasingly leveraging

emerging technologies such as AI and

machine learning to improve outcomes for

people with allergy.

• Decide on future anaphylaxis

strategy

ALK is initially focusing on the most crit-

ical unmet need among children with

food allergies, namely peanut allergy.

This condition affects approximately

Currently available in 12 countries across

Europe and North America, klarify is a

comprehensive suite of websites, apps,

and tools designed to offer education and

Management's review

ALK Annual report 2023

32

2.5 million children and adolescents in the

USA and Europe.

Working digitally with new sales channels

Other innovations

trained healthcare professional. Relevant patients are

directed to one of the provider’s physical health centres

To streamline the pathway to AIT for

patients and alleviate the pressure on

conventional allergy clinics, ALK is working

to expand the prescriber base by educating

more healthcare professionals in the

potential benefits of AIT treatment.

ALK's two concurrent projects aimed at

developing a next-generation adrena-

line auto-injector (AAI) – the in-house

Genesis project and a collaboration with

the company Windgap – continued in

2023. Due to recent developments in this

domain, ALK’s anaphylaxis strategy is

currently under review. Meanwhile, China-

based Grandpharma continues to work

toward the registration and launch of

ALK's existing AAI, Jext^®, aiming to make it

the first AAI available in mainland China.

for a comprehensive assessment and diagnosis. AIT-eli-

gible patients with moderate to severe allergies may then

be approved for the prescription-based AIT tablets. The

healthcare provider also conducts regular follow-ups with

patients undergoing treatment.

A Nordic digital healthcare provider has recently emerged

as a novel prescription channel for ALK's tablets. Through

its mobile or web app, consumers can access a dedicated

symptom form, followed by a video consultation with a

ALK’s early-stage R&D activities include

programmes for respiratory allergies and

other adjacent disease areas. The R&D

organisation was restructured in late

2023 to ensure a future-proof set-up and

the right capabilities to strengthen drug

discovery, advancing the pipeline, and

facilitating expansion into new, adjacent

therapy areas.

ALK’s digital allergy universe, klarify,

was launched in Germany in April

2018, and has since been extended

to a number of other markets.

Management's review

ALK Annual report 2023

33

Optimise for excellence

ALK and Torii are also evaluating the

ALK to consolidate production around

fewer production lines and so reduce

complexit y.

In 2023, ALK continued to

possibility of expanding the supply chain

for the Japanese cedar pollen allergy

tablet, which could include options for

pollen sourcing and scaling up production

for both active pharmaceutical ingredi-

ents and finished products.

expand its capacity for tablets

and other products, while

simultaneously ensuring the

robustness and efficacy of the

portfolio of legacy products.

Key priorities

for 2024

Furthermore, to support ALK’s market

access in France, a clinical study involving

445 patients was completed in 2023. The

study aimed to document the safety and

• Continue to expand production

capacity

Optimisations

efficacy of ALK’s OSIRIS

^®SLIT-drops. It

Upscaling tablet capacity

In 2023, to support the planned growth in

tablet volumes, ALK invested in expanding

tablet manufacturing capacity. ALK’s

ongoing investment programme seeks to

increase current tablet capacity by up to

300% by 2030, compared to the capacity

in 2022. In 2023, the emphasis was on

the production of house dust mite source

materials in the USA and manufacturing

active pharmaceutical ingredients (APIs)

for house dust mite and pollen tablets

in Denmark. ALK's tablet formulation

contract manufacturer is also working to

increase its capacity allocated to ALK.

Under the Portfolio and Site Strategy

('PASS’) programme, ALK continued

to upgrade production facilities and

processes to ensure that legacy products

remain viable in the longer term. As part of

this work, ALK submitted a total of 1,494

regulatory variations covering 98 prod-

ucts to 46 authorities around the world.

achieved its primary endpoint by signifi-

cantly reducing the combined impact on

symptoms and the use of symptomatic

medication use, with a 27% reduction

(p<0.005). The study also showed that the

treatment was well-tolerated.

• Progress PASS strategy and

enhance manufacturing

excellence

• Optimise costs to mitigate

inflationary effects on input costs

A key element in the PASS programme

is to simplify ALK’s production set-up

by reducing the number of different API

processes across the product portfolio.

Streamlining the portfolio will allow

Management's review

ALK Annual report 2023

34

Mitigate cost inflation

In 2024, ALK plans to establish additional

documentation for its legacy portfolio

to support the consolidation efforts

while also driving efficiencies across its

product supply chain to mitigate infla-

tionary effects on input costs and wages.

Although this was generally successful

in 2023, the cost base is expected to be

impacted in 2024 by inflationary pres-

sures, particularly in ALK’s product supply.

Employees at work at

ALK’s production site in

Hørsholm, Denmark.

Operational excellence

in Product Supply

The PASS programme will continue with a

particular emphasis on robustness, effi-

ciency and profitability, preventing major

quality-related interruptions to product

supply.

ALK is conducting extensive training in

operational excellence across its global

manufacturing sites, aiming to continuously

enhance work routines for maximum

efficiency.

Since the introduction of the training programme in 2022,

more than 100 improvement ideas have been generated

each month, with around one-third of them being imple-

mented. Many of these changes, although small, have

produced noticeable improvements in company efficiency.

mite AIT tablet) with ethanol. To achieve this improve-

ment, multiple analyses were conducted to determine the

optimum volumes of ethanol for the process. With these

new analyses and processes in place, productivity and

output have increased, human errors have been reduced,

and overall efficiency has improved. The training initiatives

also yield benefits for employees, contributing to increased

job satisfaction and improved teamwork. This, in turn, frees

up resources for new activities within the organisation.

A specific example comes from ALK’s production site in

Idaho, USA. They enhanced the process of rinsing house

dust mite source materials (utilised in the house dust

Management's review

ALK Annual report 2023

35

ESG Key figures overviewⁱ

Unit

2023

2022

2021

2020

2019

Sustainability

Environmental data

Scope 1 emissions

Scope 2 emissionsⁱⁱ

Tonnes CO₂eq

Tonnes CO₂eq/DKKm

MWh

5,128

360

4,924

347

5,801

2,833

N/A

5,521

3,020

N/A

5,479

3,003

N/A

ALK continues to expand its sustainability

initiatives, including setting science-

based CO₂reduction targets, enhancing

biodiversity reporting, fostering a diverse

and engaged workforce, engaging both

healthcare professionals and people

with allergies, and training employees in

business ethics.

Scope 3 emissions

64,067

69,555

14.4

70,475

75,746

16.8

Total emissions

N/A

GHG intensity per net revenue

Energy consumption

Energy intensity per net revenue

Renewable energy consumption

Water consumption

N/A

49,626

10.3

48,251

10.7

46,827

12.0

44,923

12.9

46,766

14.3

(MWh/DKKm)

%

m³

48%

45%

33%

N/A

128,087

26.6

119,395

26.5

127, 8 2 3

32.6

110,530

31.7

122,461

3 7.4

Water intensity

Total waste generatedⁱⁱⁱ

m³/DKKm

Tonnes

1,939

2,194

809

851

572

Social data

Workforce

Headcount

% female

# Men

2,889

2,731

2,593

2,486

2,406

Gender diversity (total workforce)

62%

63%

62%

64%

62%

In 2023 ALK carried out a double materiality assessment in

line with the European Sustainability Reporting Standards.

The material sustainability matters identified largely align

with the topics ALK has previously identified and reported

progress on, with the addition of pollution prevention

control and biodiversity.

5

2

7

5

2

7

4

2

6

4

1

5

1

6

# Women

Total

Gender diversity Board of Directors

% underrepresented

gender

29

33

20

17

# Men

25

18

43

25

18

43

N/A

# Women

Total

Gender diversity in Board of Management and

their direct reportsⁱⁱⁱⁱ

% underrepresented

gender

42

N/A

i

See Definitions of ESG calculations on pages 38-39

Calculated using a market-based methodology which considers emissions from

ii

Gender Pay Ratio^v

Times

%

1.19

12%

0.8

1.14

13%

1.7

1.18

13%

0.3

1.14

10%

2.9

1.13

11%

3.5

specific energy purchase contracts

Increase in 2022 is related to improved and expanded documentation of waste

iii

Employee turnover

fractions

Lost time due to work-related accidents

LTIF

iiii

New definition of underrepresented gender in management ref. §99b

Gender pay ratio from 2022 and earlier report on median earnings, while 2023

v

Governance data

reports on average

vi

For 2023, CEO total compensation includes compensation for the previous CEO and

Board meeting attendance rate

CEO annual compensation ratio^vi

%

97

30

97

33

94

34

98

34

97

29

the new CEO for their period of employment respectively and includes all compen-

sation elements except for termination payments and sign-on compensation

Times

Management's review

ALK Annual report 2023

36

Setting science-based CO₂

reduction targets

projects, electrification of equipment and

replacing the company fleet with electric

vehicles.

least two years of pollen safety stock and

distributing pollen collection operations

across a diverse range of ecosystems,

climates and micro-climates across the

USA and Europe. ALK's commitment to

sustainable farming practices, including

crop diversity and soil management, also

ensures resilience to provide a steady and

high-quality supply of pollen.

impacts on nature, including crop species

diversity, minimising the use of fertiliser and

pesticides, minimising soil disturbance and

protecting native flora and fauna.

In 2023, ALK set absolute CO₂reduction

targets which were confirmed by the

Science Based Targets initiative (SBTi) in

January 2024 to be in line with what the

latest climate science deems necessary

to meet the goals of the Paris Agreement:

limiting global warming to 1.5°C above

pre-industrial levels.

In 2023, ALK’s scope 1 and 2 CO₂emis-

sions increased 4% from a 2022 baseline.

ALK recognizes that the rise in CO₂emis-

sions resulting from own operations is

unfavourable. The elements contributing

to this can be attributed to enhanced

reporting of refrigerant chemical usage

and increased business activities.

Employee engagement

and development

In 2023, ALK’s employee engagement

score reached 8.4 on a 10-point scale

(2022: 8.3), positioning ALK in the top

5% within the healthcare industry. The

employee engagement survey, which saw

an impressive 95% participation rate for

the second consecutive year, facilitates

direct communication between employees

and their managers, fostering a culture of

openness and constructive dialogue.

From farm to pharma

ALK has committed to reducing CO₂emis-

sions from scope 1 and 2 by 42% by 2030

and to ensuring that 80% of emissions

come from suppliers with science-based

targets by 2028¹. The CO₂reduction plan

includes increasing the share of renewable

energy use as well as energy efficiency

Most of ALK’s allergen source materials,

including tree pollen, ragweed, grass,

house dust mites and insect venom, are

cultivated on ALK’s farm in Post Falls, Idaho,

USA. Here, systemic sustainable agricul-

tural practices are implemented to minimise

Climate risk

ALK has developed strategies to mitigate

and adapt to pollen supply risks brought by

climate change. These include reserving at

Scope emissions

Energy consumption

Water consumption

Workforce

Scope 1

Scope 2

Energy consumption

Water consumption

Headcount

% female

No. of people

3,000

%

Tonnes CO₂eq

10,000

MWh

m³

68

50,000

150,000

2,400

1,800

1,200

600

66

64

62

60

58

8000

6000

4000

2000

0

40,000

30,000

20,000

10,000

120,000

90,000

60,000

30,000

0

2019 2020 2021 2022 2023

1

Covering purchased goods and services, capital goods, upstream and downstream transportation and distribution, and business travel.

Management's review

ALK Annual report 2023

37

99b of the Danish Financial Statements

Act. ALK’s Board of Management and their

direct reports with managerial responsibility

currently comprise 42% women and 58%

men, thus reaching the target to maintain a

minimum of 40% for the underrepresented

gender. At Board of Directors level, two

of the shareholder-elected members are

women (29%), meeting the Danish Business

Authority guidelines for equal representa-

tion with a minimum of two members of

the underrepresented gender out of a total

of seven shareholder-elected members.

Including employee-elected members, five

of the 11 members of the Board are women.

Please refer to table on page 35.

anaphylaxis through ALK’s product port-

folio (2022: 2.4 million).

able Development Goals. ALK’s sustain-

ability efforts are governed by a wide

ALK invests significantly to ensure that all

employees are enabled to realise their full

potential, and development opportunities

continue to be one of the major drivers of

engagement and a key to ALK's success.

ALK continued the rollout of its leadership

programme called "Leading with Impact".

This initiative provided training in agile

and inclusive leadership to 120 leaders

across the organisation in 2023. Annual

development agreements were drawn

up for all employees, and ALK continued

to work with and refine its ASPIRE talent

programme. In addition, ALK also

range of policies and guidelines including

specific policies on sustainability as well

as the environment, health and safety,

access to medicine, diversity and inclu-

sion, remuneration, data ethics, tax,

stakeholder communications, investor

relations, anti-corruption and bribery,

whistleblowing, and the third-party code

of conduct. ALK’s code of conduct also

details the company’s expectations for

professionalism, honesty and integrity. In

2023, 98% of employees completed and

signed off on the annual online code of

conduct training.

Expanding our product reach

In the past year, ALK’s products were

introduced in a number of countries. ALK is

also actively engaged in clinical trials and

studies across the globe to demonstrate

the safety and efficacy of allergy immuno-

therapy in children and adolescents with

respiratory allergies.

Business conduct

All ALK suppliers are expected to comply

with the Third-party Code of Conduct,

which is aligned with the Ten Principles of

the United Nations Global Compact, as

well as all applicable laws, regulations,

standards and labour agreements. To

address supplier risk, ALK utilises the

EcoVadis supplier evaluation platform to

identify potential environmenal, labour

& human rights and procurement risks.

Out of our total of +7,000 suppliers, over

400 of the suppliers approved for our GxP

processes have been screened. None of

those suppliers have been identified as

high-risk suppliers.

continued to host learning events on it’s

internal online platform, ALK Learn, which

is available to all employees globally.

Reaching more patients through

digital engagement

Although employee engagement was high,

employee turnover was 12% (2022: 13%),

reflecting the persistent high demand for

skilled labour in key locations within the

healthcare industry. This underscores the

ongoing challenges ALK faces in retaining

employees and emphasises the impor-

tance of the continued efforts to create a

supportive and fulfilling workplace.

To help elevate the standard of care in

allergy diagnosis and treatment, ALK

engages systematically in educational

activities, training and dialogue with

healthcare professionals. In 2023, ALK

trained 13,254 healthcare professionals

in allergies and allergy immunotherapy

treatment across the globe. 52,673 health-

care professionals were also educated

in advancements in allergic disease

management. A total of 2.4 million patients

were undergoing treatment for allergy and

Find out more

ALK’s statutory annual report on sustainability,

data ethics and gender diversity (as required

by sections 99a, 99d and 107d of the Danish

Financial Statements Act as well as Article 8 of the

EU Taxonomy) is available in the sustainability

report at https://www.alk.net/sustainability

Find out more

Ensuring diversity

ALK meets the targets for the underrrepre-

sented gender in accordance with section

Reporting practices for ESG key figures can

to be found in the 2023 sustainability report,

https://www.alk.net/sustainability

ALK remains a signatory of the UN Global

Compact and supports the UN Sustain-

Management's review

ALK Annual report 2023

38

Definitions and calculations

Scope 2 emissions include electricity and

district heating, where emission values for sites

in the USA are taken from the United States Envi-

ronmental Protection Agency (US EPA) eGRID, and

emission values for sites in Europe are taken from

the International Energy Agency (IEA). For elec-

tric company vehicle, emission factors have been

obtained from DEFRA. Scope 2 location-based

emissions are calculated based on average

energy generation emission factors for defined

locations, while scope 2 market-based emissions

are calculated based on emissions calculated

from specific energy purchase contracts, and

therefore consider renewable energy purchase

certificates.

Fuel and energy related activities (Category 3):

Calculated for upstream transmission & distribu-

tion losses of fuels, electricity and district heating

consumed by ALK in scope 1 and 2 using emission

factors from DEFRA.

Reporting scope

Environment

The reporting period covered by this report

extends from 1 January 2023 to 31 December

2023. Environmental data collected in this report

covers ALK’s production sites in the USA (Post

Falls, Port Washington, Oklahoma City and

Luther), Denmark (Hørsholm), Spain (Madrid),

and France (Vandeuil and Varennes). Our 23

sales offices located across the globe have been

excluded from reporting on environmental data,

due to being less than 2.5% of our scope 1 and 2

footprint. All other information covers the entire

ALK group, unless otherwise stated.

Intensity calculations are reported as unit/

annual revenue in million DKK.

CO₂emissions

Upstream transportation and distribution (Cate-

gory 4): Calculated using a mix of spend-based

emission factors from CEDA and primary emis-

sions from certain distribution providers. Well-

to-tank emission factors are provided by DEFRA.

Waste generated in operations (Category 5):

Calculated using emission factors from DEFRA

dependent on material type, treatment type,

material location and material weight

Carbon emissions are reported in metric tonnes

of carbon dioxide equivalents according to global

warming potential values published by the Inter-

governmental Panel on Climate Change (IPCC)

based on a 100-year time horizon.

Scope 1 emissions include direct fuel consump-

tion (natural gas, gas oil, diesel and petrol), which

is calculated using emission factors provided by

the UK's Department for Environment, Food and

Rural Affairs (DEFRA). Also included in scope 1

is our company fleet, where average passenger

vehicle emission factors have been taken from

DEFRA to calculate emission based on either on

litres of fuel consumed, KWh used, actual mileage,

or contracted annual mileage. Fuel consumption

and mileage were estimated for the months of

November and December based on average

monthly consumption over the year. Finally, scope

1 also includes emissions of refrigerant chemicals

which are defined as those listed in the Montreal

Protocol on Substances that Deplete the Ozone

Layer. Emission factors are taken from IPCC for

global warming potential 4 (GWP4) and GWP6

chemicals.

We seek to align our reporting with the draft

EFRAG standards, and follow the Danish Financial

Statements Act sections 99a, 99b, 99d and 107d.

All Scope 3 emissions, except category 3, 5 and

7, are calculated based on data covering January

– October 2023. The months of November and

December are estimated based on average

consumption in the reporting year. Category

3, 5 and 7 cover actual values from January -

December.

Business travel (Category 6): Calculated using

well-to-wheel flight emissions from DEFRA

including radiative force emissions. A small

amount of business travel is also calculated using

spend-based emission factors from CEDA, and

well-to-tank emission factors from DEFRA.

Employee commuting (Category 7): Estimated

using Quantis emission factors based on the

average number of FTEs in the reporting year,

with well-to-tank emission factors from DEFRA.

Purchased goods and services (Category 1):

Calculated using spend-based emission factors

from the Comprehensive Environmental Data

Archive (CEDA).

Downstream transportation and distribution

(Category 9): Calculated using spend-based

emission factors from CEDA for warehousing and

storage.

Capital goods (Category 2): Calculated using

spend-based emission factors from CEDA for

upstream emissions of industrial machinery

owned and operated by ALK.

Management's review

ALK Annual report 2023

39

End-of-life treatment of sold products (Category

12): Estimated for materials used in ALK products

using DEFRA emission factors for material type,

country of distribution, assumed treatment type

and weight.

ances, pension and all one-time payments over

the course of a year.

Social

Governance

Employee engagement

Cases related to discrimination are all cases

that have been reported and investigated in the

reporting year, and includes discrimination on

the grounds of an individual’s uniqueness such

as perspectives, work and life experiences, age,

gender, race, ethnicity, religion, sexual orienta-

tion, ability, or any other characteristics. Discrim-

ination concerns can be raised through several

channels such as our whistle-blower hotline,

Alertline, through direct managers or through

Employee Representative Groups, P&O, EHS and

direct managers.

Alertline cases are all cases from our external

system that have been reported and investigated

in the reporting year.

Participation rate and engagement score are

collected from a survey conducted by a third

party.

Energy

Energy consumption is based on meter readings

and/or invoices at individual production sites and

reported in MWh. Conversion factors for each

energy source are taken from the local supplier

or a unit converter. While invoice service periods

do not correspond with calendar months, they

are approximately one month long. Reporting

time periods will correspond to the invoice period

ending in that month.

When reporting on bribery, cases that have been

reported and investigated in the reporting year

are included. Bribes can take the form of money,

gifts, loans, fees, hospitality, services, discounts,

the award of a contract or any other advantage

or benefit, and it comprises any financial or other

inducement or reward for an action which is

illegal or unethical. When reporting on corrup-

tion, this is defined as ´abuse of entrusted power

by someone for personal gain´.

Characteristics of employees

All employee-related data is downloaded from

our internal HR-system, Workday, and is relevant

as of 31 December 2023.

Workforce headcount is broken down for coun-

tries with more than 50 employees.

The employee turnover ratio is calculated by

dividing the number of employees who left the

company by the average number of employees in

the reporting year.

Health & safety

Water

Work-related accidents are reported to our EHS

department and are defined as occurrences

arising out of or in the course of work that result

in injury.

Water consumption is reported in m³based on

meter readings and/or invoices at individual

production sites.

Board diversity is measured by the percentage of

female shareholder-elected members.

Diversity indicators

Code of Conduct training is calculated by the

percentage of employees completing the training

based on internal registrations.

Waste

The gender diversity figures from 2021 and

earlier do not include Germany, as job grades

were not yet approved by the works council in that

region.

Work-related accidents with absense is defined

as work-related injuries resulting in an individual

being physically or mentally unable, as deter-

mined by a competent medical person, to work on

the next scheduled day or shift.

Waste is reported in metric tonnes at all sites.

For compacted mixed municipal solid waste at

production sites in the USA, we use the volume-to-

weight conversion factors provided by the United

States Environmental Protection Agencies (EPA).

At one site where the area and waste container

are shared with another entity, waste is estimated

based on proportion of occupied square footage.

The gender pay ratio is presented as the average

gross hourly earnings of male employees

compared to female employees. Figures from

2022 and earlier report on the median earnings.

Lost time due to work-related accidents is

determined by dividing the number of work-re-

lated accidents with absense by the total hours

worked, multiplied by 1,000,000 to give the

number of cases per one million hours worked.

The CEO annual compensation ratio is deter-

mined by the annual total compensation of the

CEO against the median annual total compen-

sation for all active (permanent and temporary)

employees, excluding the CEO. Annual total

compensation includes salary, bonus, allow-

Absense due to illness is calculated as the

number of total working days with absence due to

any illness, work related or otherwise, divided by

total working days to give a percentage.

Management's review

ALK Annual report 2023

40

Risk management

potential impact and probability of each

ALK’s Board of Management

is responsible for the ongoing

management of risks

throughout the value chain,

including risk identification, the

assessment of probabilities and

potential consequences, and

the introduction of risk-reducing

measures.

risk. A risk management report with key

enterprise risks and recommended miti-

gation plans is presented to the Board

of Management before it is submitted to

the Board of Directors each year for their

review and approval as part of ALK’s long-

term strategic planning process.

The following is a description of ALK’s key

enterprise risks, and the main initiatives

taken to mitigate these risks. The risk

movements compared to the previous

year are indicated.

The Board of Management has a risk

committee to assist it in meeting its overall

responsibility for risk management. The

Risk Committee comprises representa-

tives from each functional area relevant

to ALK’s risk profile. The Risk Committee

meets twice a year or more, as and when

required to perform its tasks. Risks are

systematically assessed according to

a two-dimensional matrix, rating the

Risk impact

The impact of the risk has increased

compared to the year before

The impact of the risk is stable and has

not changed from the year before

The impact of the risk has decreased

compared to the year before

Management's review

ALK Annual report 2023

41

Commercial risks impacting revenue growth

Severe IT security breaches

Description

Risk mitigation

Description

The degree of market approval and acceptance for a

new product, or a new indication for an existing product,

depends on several factors, including the demonstra-

tion of clinical efficacy and safety, cost-effectiveness,

reimbursement/market access, convenience and ease

of administration, potential advantages over alternative

treatment methods, competition, and marketing and

distribution support. If ALK’s products, primarily tablets,

fail to achieve acceptance in major markets, this could

have a significant impact on the company’s ability to

generate revenue.

ALK closely monitors economic, market and regulatory

developments as they relate to product pricing, along

with the competitive situation and initiatives in all impor-

tant markets. ALK regularly conducts surveys of market

conditions and commits significant resources to providing

information on allergy treatment to doctors and patients.

ALK continues its focus on market access strategies,

especially in the USA, China, Spain, and UK.

The threat of cyberattacks continues to intensify globally

and ALK is no exception. Disruption to IT systems, such

as severe breaches of data security, may occur across

the global value chain, where well-functioning IT systems

and infrastructure are critical for the company’s ability to

operate effectively.

Risk mitigation

ALK has an IT and cybersecurity strategy in place to prevent

intruders from causing damage to systems or gaining

access to critical data and systems. ALK continuously

invests in upgrading IT security. Awareness campaigns,

access controls, intrusion detection and prevention

systems have all been implemented. Further initiatives are

planned, and systems are regularly upgraded to increase

network security.

ALK actively engages in dialogue with authorities with the

aim of securing fair pricing and reimbursement agreements

and maintains a strong focus on its market access strategy.

ALK is strongly committed to evidenced-based medicine,

based on strong clinical and health economic evidence as

the basis for pricing and reimbursement.

Price pressures mandated by authorities can have a

significant impact on the company’s earning capacity.

In most of the countries in which ALK operates, prescrip-

tion drugs are subject to reimbursement from, and price

controls by, national authorities and healthcare providers.

This often results in significant price differences between

individual markets. Exceptionally, governments and

national authorities may introduce permanent or tempo-

rary economic measures that also affect the pricing and

reimbursement of medicines, for example, because of a

major economic downturn.

2023 movement:

Management's review

ALK Annual report 2023

42

Production and quality issues impacting product supply and patient safety

Description

Risk mitigation

ALK manages key third-party dependency risks through

long-term contracts, diligent production forecasting,

monitoring, and joint steering committees. ALK continu-

ously monitors its dependencies on key third parties and

considers relevant risk mitigation measures including alter-

native supply setups.

ALK’s products are subject to many statutory and regula-

tory requirements with respect to issues such as safety,

efficacy and quality. The products may be associated with

side-effects such as allergic reactions of varying extent,

duration, and severity. Meeting pharmaceutical quality

standards is a prerequisite for the company’s ability to

supply products and hence its competitive strength, and

for the company’s earnings and sales.

ALK stringently monitors product and manufacturing

quality compliance and safety via quality assurance,

pharmacovigilance and sales and marketing activities.

If, despite the high levels of quality and safety, a situation

should occur in which it is necessary to recall a product, ALK

has procedures in place to ensure that this can be managed

swiftly and effectively and in accordance with regulatory

requirements. Production and manufacturing processes

are subject to periodic and routine inspections by regu-

latory authorities as a regular part of their monitoring to

ensure that ALK observes the prescribed requirements and

standards.

2023 movement:

As ALK continues to rationalise its product portfolio, there

may be risks associated with the discontinuation of its

products. Among others, these may include potential

production interruptions at manufacturing sites during

decommissioning and change-over work, loss of sales

from products for which no suitable ALK substitute product

exists, or inability to meet sudden spikes in demand for

other products due to patients switching from discon-

tinued products.

ALK has invested significantly in recent years to increase

the robustness and compliance of the legacy business by

reducing manufacturing complexity, and all possible steps

are taken during portfolio rationalisation work to mitigate

any potential impact on other areas of manufacturing or the

wider business. ALK conducts risk planning including the

prevention of unwanted events, and preventive inventory

management.

As part of its supply chain, ALK is dependent on selected

key third parties for key production processes and

supplies, which poses a risk for ALK’s ability to deliver

products, especially tablets, to the markets.

Management's review

ALK Annual report 2023

43

Lack of critical competencies due to

competitive employment market

Breaches of legal or

ethical standards

Description

Risk mitigation

ALK strives to act professionally, honestly and with high

The employment market continues to be very competi-

tive. ALK is dependent on being able to attract and retain

employees across all key functions and markets to deliver

on its strategy. Failure to attract, develop and retain the

right talents may have a material impact on the compa-

ny’s market and research efforts.

Compliance requirements are generally increasing in

many areas, and as ALK expands into more markets, the

company is exposed to more complex compliance require-

ments. Non-compliance with applicable regulations and

legislation, or ALK’s Code of Conduct, could negatively

impact the company’s good reputation which is essential

to operating within the pharmaceutical industry. Patents

and other intellectual property rights are important for

developing and retaining ALK’s competitive strength.

integrity throughout the company in its dealings with stake-

holders. ALK’s Code of Conduct defines the company’s high

standards of ethical behaviour in relation to customers,

employees, shareholders, society, suppliers and partners.

Each year, all employees are asked to sign and confirm

their knowledge of the Code of Conduct and to take an

online test. ALK has established a whistleblower scheme

which allows for confidential and anonymous internal and

external reporting of potential or suspected wrongdoing.

Immediate action is taken on substantiated non-compli-

ance.

Risk mitigation

Among other things ALK manages this risk by continuously

monitoring and improving employee engagement, offering

its staff opportunities to develop their professional

competencies, and by continuously monitoring the total

reward packages against the market. ALK is also focusing

increasingly on how to position itself as an attractive

employer, and how best to identify, attract and recruit

future global and local talents with the skills and capabili-

ties that will be required in the future.

Internal controls and policies are in place to safeguard

ALK’s intellectual property rights. The risk that ALK might

infringe patents or trademark rights held by other compa-

nies, along with the risk that other companies might

attempt to infringe ALK’s own patents and/or trademark

rights, are monitored and, if necessary, suitable measures

are taken.

2023 movement:

Management's review

ALK Annual report 2023

44

Failures or delays in product development

Description

Risk mitigation

The future success of ALK depends on the company’s

ability to maintain current products and to successfully

identify, develop and market new, innovative drugs.

ALK and its collaboration partners carry out thorough

risk assessments of their research and development

programmes throughout the development and registration

processes, in the interests of risk mitigation to maximise the

likelihood of the products reaching the market.

A pharmaceutical product must be subjected to exten-

sive and lengthy clinical trials to document qualities

such as safety and efficacy before it can be approved

for marketing. During the development process, the

outcomes of these trials are subject to significant risks.

Even though substantial resources are invested in the

development process, the trials may produce negative

results. The risk fluctuates over time in line with the extent

and nature of ALK’s product development activities.

ALK’s Scientific Committee is responsible for other patient/

product-related innovation activities. The committee

provides instrumental strategic sparring on matters

relating to R&D activities and other patient/product-related

innovation, including reviewing R&D programmes and the

overall R&D pipeline.

2023 movement:

Failures or delays in the development process, or in

obtaining regulatory approvals, may have a major impact

on patients who are not able to benefit from the products,

and on ALK’s ability to achieve its long-term goals.

Management's review

ALK Annual report 2023

45

Governance and ownership

Corporate governance

The statement provides an account of

ALK’s two-tier management structure,

including the composition, competencies,

activities, self-assessment, and remuner-

ation of the Board of Directors. The state-

ment also describes key elements of ALK’s

internal control and risk management

systems related to financial reporting

processes.

Board composition

Following the election of Jesper Høiland,

five out of the seven shareholder-elected

members are independent, according

to the definitions set by the Danish

Committee on Corporate Governance. This

reflects the Board’s efforts to achieve a

preponderance of independent members

on the Board and its committees. The

Board is considered to have the right

ALK’s statutory corporate governance

statement for 2023, pursuant to section

107b of the Danish Financial Statements

Act, is available at https://ir.alk.net/

financial-reporting/risk-management

At the Annual General Meeting (AGM) in

2023, Anders Hedegaard (Chair), Lene

Skole (Vice Chair), Gitte Aabo, Lars Holm-

qvist, Bertil Lindmark and Alan Main were

all re-elected to the Board of Directors,

while Jesper Høiland was elected as a

new, independent member of the Board.

Jakob Riis did not seek re-election.

Attendance at meetings

Audit

Commitee

meetings

Remuneration

& Nomination

Committee meetings meetings

Scientific

Committee

Meeting attendance

Attended

Absent

Board

meetings

Name (male/female)

Competencies

Anders Hedegaard¹

Lene Skole (f)

Competencies

Core competencies

Executive experience in a global company

Life science industry

Consumer healthcare / OTC

Financial / Risk

Commercial

Digitalisation

Experience with US market

Research & Development

Gitte Aabo (f)

Lars Holmqvist (m)²

Bertil Lindmark (m)

Jesper Høiland (m)^2,3

Alan Main(m)

Jakob Riis (m)^1,4

Katja Barnkob (f)⁵

Nanna Rassov Carlson (f)⁵

Lise Lund Mærkedahl (f)^3,5

Johan Smedsrud (m)³

Role competencies: Chair & Vice Chair

Experience at CEO level

Board experience from other companies

1

2

3

stepped down from the Audit Committee (AC)on 23 March 2023

stepped down at the AGM on 23 March 2023

elected to the AC on 23 March 2023

elected at the AGM on 23 March 2023

4

5

employee-elected

Management's review

ALK Annual report 2023

46

competencies to support ALK's long-term

value creation and strategic process.

ensure continued alignment with ALK's

long-term strategy. To assess whether

all core competencies are adequately

represented, each shareholder-elected

member of the Board has been asked

to identify a maximum of four primary

competencies they bring to the Board,

considering ALK’s long-term strategy.

They may also have knowledge or

experience in areas other than the four

primary competencies. The matrix shows

the responses to the self-assessment

process. Employee-elected members

are not part of the competency self-

assessment. For the Chair and Vice Chair,

two additional competencies specific to

these roles have been identified.

Remuneration

Remuneration of the Board of Directors

and the Board of Management is deter-

mined in accordance with ALK’s remu-

neration policy as adopted by the AGM

in March 2023. The policy is prepared in

accordance with sections 139 and 139a of

the Danish Companies Act as well as items

4.1.1-4.1.6 of the latest Danish Corporate

Governance Recommendations.

Board of Director’s

annual cycle

All shareholder-elected Board members

are elected for a term of one year. The

Board also includes four employee-

elected members, all elected for a term

of four years in March 2023. All Board

members are presented on pages 50-52

of this annual report, while the Board of

Management is presented on page 53.

There were the following changes to the

Board of Management in 2023: on 1 March

2023, Henriette Mersebach joined ALK as

EVP R&D, replacing Henrik Jacobi; Claus

Steensen Sølje joined ALK on 1 June 2023

as CFO & EVP, replacing Søren Jelert; while

Peter Halling joined ALK on 1 November

2023 as President & CEO, replacing

Carsten Hellmann.

Highlights of remuneration report

Remuneration of the Board of Directors

and Board of Management is reported

separately in ALK’s remuneration report.

The report is prepared in accordance with

section 139b of the Danish Companies Act.

Governance recommendations

The report provides an overview of remu-

neration components, actual remunera-

tion in 2023, its development over the past

five years, as well as the shareholdings of

Board of Directors and Board of Manage-

ment members.

The Danish Committee on Corporate

Governance has set out a series of recom-

mendations on corporate governance

which have been adopted by Nasdaq

Copenhagen. ALK complies with all

recommendations and the Board of Direc-

tors uses these recommendations as

inspiration in setting up structures, tasks

and procedures. ALK accounts for its

compliance with the recommendations in

an annual ‘comply-or-explain’ review.

Board meetings

Monthly reports

Competency matrix for the

Board of Directors

Annual General Meeting

Strategy work

Based on its long-term strategy, ALK has

identified the core competencies which

must be represented in the Board of Direc-

tors for the Board to be able to support

the strategy. These are reviewed annu-

ally by the Remuneration & Nomination

Committee and the Board of Directors to

Review of finacial performance

Evaluation of collaboration between

the Board of Directors and Board of

Management

All remuneration of the Board of Direc-

tors and Board of Management in 2023

followed the principles and framework

outlined in ALK’s remuneration policy.

Organisational performance review

and succession planning

Next year’s budget

Management's review

ALK Annual report 2023

47

Members of the Board of Directors each

received a fixed annual fee, with the Vice

Chair and Chair receiving double and triple

the annual fee respectively. Members

also received an additional fee for serving

on the Board’s committees. Their fees

for serving on the Board and the Board’s

committees remained unchanged in 2023.

Remuneration

Growing shareholder base

2023 saw further growth in ALK’s investor

base. On 31 December 2023, ALK had

39,766 registered shareholders, against

27,960 at the end of 2022. The registered

shareholders owned 97.3% of the share

c a p i ta l (97.2 %).

It is ALK’s objective to have a diversified

shareholder base in terms of geography,

investment profile and time horizon that

shares the company’s vision and supports

its long-term strategy.

Amounts in DKKt

2023

2022

Board of Directors

Base fee

4,820

1,137

5,957

4,477

1,117

5,593

Committee fees

Total

Board of Management*

In order to enable both a fair valuation and

regular trading of its shares, ALK provides

relevant, accurate, and timely information

on its strategy, operations, performance,

expectations, goals, pipeline, market

development, and other matters relevant

to assessing the share.

Two shareholders have reported to ALK

that they held 5% or more of the shares on

31 December 2023:

Base salary

18,249

18,16 4

Short-term incentives

(cash bonus)

The remuneration of the Board of Manage-

ment consisted of both fixed pay elements

(base pay and benefits) and variable pay

elements in the form of short-term incentive

(STI) and long-term incentive (LTI) plans.

The variable pay elements reflected a year

with solid performance; the STI plan settled

close to target and the LTI plan above

target. The general increase in base salary

for members of the Board of Management

was 3.5%, in line with the general increase

for ALK employees in Denmark. The CFO

and EVP of Research and Development,

who joined ALK in 2023, did not get an

increase in their base salary in 2023.

7, 8 52

2,434

11,652

2,204

Pension & benefits

• The Lundbeck Foundation

(Copenhagen, Denmark): 40.3%

incl. A and AA shares

Long-term incentives

(grant value)

3,940

6,692

Total

32,475 38,712

• ATP (Hillerød, Denmark): 5.0%

*

Excluding sign-on and severance payments.

ALK also works to strengthen its dialogue

with all financial stakeholders.

Shareholders as at 31 December 2023

The ALK share in 2023

Lundbeck Foundation

ALK

OMXC25 (indexed)

Pharma, biotech and life sciences (NBI-NAS, indexed)

ATP

Index

ALK

130

120

110

100

90

Other

40.3%

54.0%

The remuneration report for 2023 will

be presented for an advisory vote at the

AGM on 14 March 2024. The remuneration

report is available at https://ir.alk.net/

corporate-governance

80

5.0%

0.7%

70

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Management's review

ALK Annual report 2023

48

The vast majority of the largest registered

shareholders were institutional investors,

largely from Europe and North America.

The international registered ownership

was estimated at approximately 28%

(33%).

when ALK’s strategy was announced,

share price increases have yielded an

average annual return of 18% to share-

holders.

11,141,196, with or without pre-emption

rights for existing shareholders.

Core data for the share

The Board of Directors is authorised for

the period until 22 March 2028 to let the

company acquire its own B shares for a

nominal value of up to DKK 11,141,196. The

consideration for such shares may not

deviate by more than 10% from the official

quoted price of the B shares on the date of

acquisition.

Share capital

Nominal value

No of A shares

DK K 111,411,960

Dividend and capital structure

The Board of Directors considers that

ALK’s financial resources, including credit

facilities, continue to form a sufficient

basis for executing ALK’s strategy and

funding investments. At the end of 2023,

net interest-bearing debt amounted to

DKK 291 million (475) and leverage stood

at 0.3 EBITDA (0.7).

DKK 0.50 per share

18,415,200 units

with 10 votes per share

To meet obligations to deliver shares

under management incentive

No of AA shares

No of B shares

1,841,520 units

with 10 votes per share

programmes, ALK held 1,634,673 of its

own shares, or 0.7% of the share capital,

against 0.8% at the end of 2022. The

holding was reduced following the settle-

ment of share option and performance

share programmes.

202,567,200 units

with 1 vote per share

Stock exchange

Ticker symbol

Indices

Nasdaq Copenhagen

ALK B

X4500 (healthcare),

OMXCLCPI (LargeCap)

and OMXCPI (all)

In support of ALK’s growth strategy, the

Board of Directors is extending its recom-

mendation that dividend payments be

suspended until ALK’s profitability further

improves. Accordingly, the Board of

Directors will propose to the AGM that no

dividends be declared for 2023. The Board

of Directors revisits the dividend policy

and ALK’s capital structure on an ongoing

basis.

Find out more

The Board of Directors and Board of

Management held a total of 92,531 shares

at year-end, corresponding to less than

0.1% of the share capital (0.1%).

ALK’s statutory corporate governance statement:

https://ir.alk.net/financial-reporting/risk-

management

ISIN

DK0061802139

ALKB.DC

Blomberg code

Reuters code

LEI code

ALKB_CO

529900SGCREUZCZ7P020

Return to shareholders

Find out more

At year-end, the closing price of ALK B

shares was DKK 101 compared to DKK 96

at the end of 2022.

The Board of Directors’ comply-or-explain review:

https://ir.alk.net/corporate-governance

Find out more

Trading information and core data

on ALK’s share: https://ir.alk.net/

share-information

The total market value of ALK’s B shares,

excluding treasury shares, was DKK 20.3

billion at year-end, against DKK 19.3 billion

at the end of 2022. Since end of 2017,

Up to and including 15 March 2027,

the Board of Directors is authorised to

increase the share capital by up to DKK

Find out more

ALK’s remuneration policy:

https://ir.alk.net/corporate-governance

Management's review

ALK Annual report 2023

49

Investor relations

by managerial staff. All announcements

are available on ALK’s main corporate

website, together with reports, presenta-

tions, recordings of telephone confer-

ences, share price information, analysts’

estimates, and related information. Regis-

tered shareholders are encouraged to

sign up at the InvestorPortal.

Contact Investor Relations

Per Plotnikof, Head of IR

Tel. +45 45747527

During 2023, besides hosting regular tele-

phone conferences, ALK representatives

participated in many individual meetings

and briefing calls with analysts and inves-

tors as well as conferences and seminars

targeting various audiences.

Find out more

Visit Investor Relations:

https://ir.alk.net/investors

A total of 21 announcements were

published in 2023 (2022: 24), including

investor news and reports on transactions

The Lundbeck

Foundation

The Lundbeck Foundation, one of

Denmark’s largest enterprise founda-

tions, is the controlling shareholder of ALK,

holding 67% of the votes and 40% of the

capital. The Foundation grants a minimum

of DKK 500 million each year to public

biomedical and health science research

with a particular focus on neuroscience.

Its business activities encompass majority

shareholdings in two other healthcare

companies, H. Lundbeck and Falck,

a significant shareholding in Ferrosan

Medical Devices and Ellab, and an inter-

national portfolio of early-stage biotech

companies, as well as management of

a DKK 20+ billion portfolio of financial

investments, primarily in listed securities.

Shareholder overview as at 31 December 2023

Financial calendar 2024

Shareholder

Registered office

No of shares

Interest

Votes

Annual General Meeting

14 March

Lundbeck Foundation

Copenhagen,

Denmark

18,414,400 A shares

1,841,440 AA shares

69,496,540 B shares

40.3%

67. 2%

Three-month interim report

(Q1)

3 May

ATP

Hillerød,

Denmark

11,226,329 B shares

5.0%

0.7%

2.8%

-

Six-month interim report

(Q2)

23 August

ALK (treasury shares)

Hørsholm,

Denmark

1,634,673 B shares

Other

800 A shares

80 AA shares

54.0%

29.7%

Nine-month interim report

(Q3)

14 November

120,209,658 B shares

Management's review

ALK Annual report 2023

50

Board of Directors

Anders Hedegaard

Lene Skole¹

Gitte Aabo

Lars Holmqvist¹

(1960, Danish)

(1959, Danish)

(1967, Danish)

(1959, Swedish)

Professional board member

The Lundbeck Foundation, CEO

Professional board member

and directorships at two other subsidiaries

Chair

Vice Chair

Board member since 2021²

Chair of the Audit Committee

Board member since 2015²

Member of the Audit Committee

Board member since 2020²

Chair of the Remuneration & Nomination Committee

Member of the Scientific Committee

Board member since 2014²

Member of the Remuneration & Nomination Committee

Member of the Scientific Committee

Competencies

Specific expertise within management and sales &

marketing in international life science companies.

Experience in management, financial and economic

expertise, experience in strategy and communication

in international companies.

Extensive global leadership experience and deep

understanding of international management, finance,

IT, and sales & marketing, as well as considerable

insights into building digital communities.

Experience in management, finance and sales &

marketing in international life science companies,

including med tech and pharmaceutical companies.

Directorships³

Danmarks Nationalbank: Member of the Committee of

Directors

UNION therapeutics A/S: Board member

The Danish Chamber of Commerce: Board member and

member of the Executive Committee

Directorships³

Biovica International AB, Sweden: Chair and member of

the Audit Committee

H. Lundbeck A/S: Board member and member of

the Audit Committee

The Lundbeck Foundation: Board member and Chair of

the Investment Committee

Vitrolife AB, Sweden: Board member and member of

the Audit Committee

Life Healthcare Group Holdings, Ltd, South Africa:

Board member and member of the Audit and

Investment Committees

Ellab: Chair and member of

the Remuneration Committee

Rodenstock Group, Germany: Member of

the Advisory Board

Falck A/S⁴: Vice Chair and member of the Audit and

Remuneration and Nomination Committees

H. Lundbeck A/S⁴: Vice Chair and member of the

Remuneration & Nomination and the Scientific

Committees

Nordea Bank Abp, Finland: Vice Chair and member of

the Audit Committee

Ørsted A/S: Vice Chair and member of the Nomination

& Remuneration Committee

The Committee on Foundation Governance: Vice Chair

1

These board members are not regarded as independent in meaning of the Danish recommendations on corporate governance because of their affiliation with the Lundbeck Foundation, which owns 40.3% of ALK’s shares.

2

4

3

All members elected by the annual general meeting are up for re-election each year.

Board positions included in the position as CEO of the Lundbeck Foundation

Directorships do not include those for companies that are privately owned, wholly or in part, by members of the Board of Directors.

Management's review

ALK Annual report 2023

51

Jesper Høiland

Bertil Lindmark

Alan Main

(1960, Danish)

(1955, Swedish)

(1963, British)

Strategic adviser,

Chief Medical Officer,

Senior Adviser,

PharmaCo Consult ApS

Vicore Pharma Holding AB

Canson Capital Partners

Board member since 2023¹

Board member since 2021¹

Board member since 2022¹

Member of the Audit Committee

Chair of the Scientific Committee

Member of the Remuneration & Nomination Committee

Competencies

Extensive managerial and commercial experience

from 35 years with global pharmaceutical companies,

including roles at Ascendis Pharma, Inc., Radius

Health, Inc. and Novo Nordisk Inc., USA. Unique

expertise in establishing and expanding commercial

activities in North America, including product

launches.

More than 30 years' experience of global executive

R&D leadership in pharmaceuticals (Astra,

AstraZeneca, Almirall) and biotech (ASLAN

Pharmaceuticals, eTheRNA Immunotherapies, Galecto

Inc.). Multi therapy area experience and brought

blockbuster therapeutics to market globally. Served

on the Research Board of AstraZeneca. Participated

in a range of IPOs, acquisitions, and debt-financing

activities.

More than 30 years of experience from the consumer

healthcare industry in roles at amongst others Sanofi,

Bayer and Roche.

Directorships²

Diætklinikken Holding ApS: Partner and board member

Aqilion AB, Sweden: Chair of the Board and member of

the Remuneration Committee

Cellevate, Sweden: Director of the Board

1

All members elected by the annual general meeting are up for re-election each year.

Directorships do not include those for companies that are privately owned, wholly or in part, by members of the Board of Directors.

2

Management's review

ALK Annual report 2023

52

Katja Barnkob

Nanna Rassov Carlson

Lise Lund Mærkedahl

Johan Smedsrud

(1969, Danish)

(1976, Danish)

(1967, Danish)

(1972, Danish)

Project Director,

Global Clinical Development,

ALK-Abello A/S

Senior Manager,

QA Release,

ALK-Abelló A/S

Project Director,

Global Research & Drug Discovery,

ALK-Abelló A/S

Senior Maintenance Supporter,

Process & Production Support,

ALK-Abelló A/S

Board member since 2011

Employee-elected

Board member since 2019

Employee-elected

Board member since 2023

Employee-elected

Board member since 2019

Employee-elected

Competencies

Experience in project management of global drug

development projects in the pharmaceutical industry.

Expertise in production and release of ALK’s

active pharmaceutical ingredients for sublingual

immunotherapy products.

Experience within development of new vaccines,

including development of immunochemical methods

and in vivo studies, and latest within project

management of drug discovery projects.

Experience in HVAC systems, cleanroom

testing, utensil washing and sterilisation for

the pharmaceutical industry.

Directorships³

The Lundbeck Foundation: Board member, employee-

elected

Management's review

ALK Annual report 2023

53

Board of Management

Peter Halling

Claus Steensen Sølje

Søren Niegel

Henriette Mersebach

(1977, Danish)

(1972, Danish)

(1971, Danish)

President & CEO

Executive Vice President

& CFO

Executive Vice President,

Commercial Operations

Executive Vice President,

Research & Development, MD

Competencies

Executive management experience with a commercial

and strategic background from pharmaceutical,

ingredient and biotech industries.

International experience in management, finance, and

other CFO-related areas in the pharmaceutical/med

tech industry.

Experience in management, as well as global

production and sales & marketing within the

pharmaceutical industry.

International experience in management, innovation,

and research & development in the pharmaceutical

industry.

Peter Halling holds a master's degree in International

Marketing & Management from Copenhagen Business

School from 2003.

Claus Steensen Sølje holds a master's degree in

Economics from the University of Copenhagen from

1999.

Søren Niegel holds a master's degree in Economics

and Business Administration from Copenhagen

Business School from 1996.

Henriette Mersebach holds a master's degree in

Medicine from 1998 and a PhD in Medicine from 2004.

Directorships¹

Sonion A/S: Board member and member of the

Remuneration & Nomination Committee

1

Directorships do not include those for companies that are privately owned, wholly or in part, by members of the Board of Directors.

Financial statements

ALK Annual report 2023

54

Financial

statements

55 Statement by Management on the annual report

56 Independent auditor’s reports

60 Consolidated financial statements

65 Notes to the consolidated financial statements

102 Parent company financial statements

106 Notes to the parent company financial statements

Financial statements

ALK Annual report 2023

55

Statement by Management on the annual report

The Board of Directors and the Board of

Management have today considered and

adopted the annual report of ALK-Abelló

A/S for the financial year 1 January to 31

December 2023.

and consolidated cash flows for the finan-

cial year 1 January to 31 December 2023.

Hørsholm, 8 February 2024

In our opinion, Management’s review

includes a true and fair account of the

development in the operations and finan-

cial circumstances of the group and the

parent company, of the results for the

year, and of the financial position of the

group and the parent company, as well as

a description of the most significant risks

and elements of uncertainty facing the

group and the parent company.

Board of Management

Peter Halling

The consolidated financial statements

have been prepared in accordance with

IFRS accounting standards as adopted

by the EU and further requirements in the

Danish Financial Statements Act. The

parent company financial statements

have been prepared in accordance with

the Danish Financial Statements Act.

Management's review has been prepared

in accordance with the Danish Financial

Statements Act and Article 8 of Regulation

(EU) 2020/852 (EU Taxonomy Regulation).

President & CEO

Claus Steensen Sølje

Executive Vice President

& CFO

Søren Niegel

Henriette Mersebach

Executive Vice President,

Research & Development

Executive Vice President,

Commercial Operations

Board of Directors

In our opinion, the annual report of

ALK-Abelló A/S for the financial year

1 January to 31 December 2023 with

the file name alk-2023-12-31-en.zip is

prepared, in all material respects, in

compliance with the ESEF Regulation.

Anders Hedegaard

Lene Skole

Chair

Vice Chair

Gitte Aabo

Lars Holmqvist

Alan Main

Jesper Høiland

Katja Barnkob

Johan Smedsrud

In our opinion, the consolidated financial

statements and the parent company

financial statements give a true and

fair view of the financial position at 31

December 2023 of the group and the

parent company and of the results of the

group and parent company operations

Bertil Lindmark

Nanna Rassov Carlson

We recommend that the annual report be

adopted at the annual general meeting.

Lise Lund Mærkedahl

Financial statements

ALK Annual report 2023

56

Independent Auditor’s Reports

To the shareholders of ALK-Abelló A/S

operations for the financial year 1 January

to 31 December 2023 in accordance with

the Danish Financial Statements Act.

Basis for opinion

ethical responsibilities in accordance with

these requirements and the IESBA Code.

We conducted our audit in accordance

with International Standards on Auditing

(ISAs) and the additional requirements

applicable in Denmark. Our responsibili-

ties under those standards and require-

ments are further described in the Audi-

tor’s responsibilities for the audit of the

Financial Statements section of our report.

Report on the audit of

the Financial Statements

To the best of our knowledge and belief,

prohibited non-audit services referred

to in Article 5(1) of Regulation (EU) No

537/2014 were not provided.

Our opinion is consistent with our Auditor’s

Long-form Report to the Audit Committee

and the Board of Directors.

Our opinion

In our opinion, the Consolidated Financial

Statements give a true and fair view of the

Group’s financial position at 31 December

2023 and of the results of the Group’s

operations and cash flows for the financial

year 1 January to 31 December 2023 in

accordance with IFRS Accounting Stand-

ards as adopted by the EU and further

requirements in the Danish Financial

Statements Act.

What we have audited

Appointment

The Consolidated Financial Statements

(pp 60-101) and the Parent Company

Financial Statements (pp 102-114) of

ALK-Abelló A/S for the financial year 1

January to 31 December 2023 comprise

income statement, balance sheet, state-

ment of changes in equity and notes,

including material accounting policy

information for the Group as well as for

the Parent Company, and statement of

comprehensive income and cash flow

statement for the Group. Collectively

referred to as the “Financial Statements”.

We were first appointed auditors of

ALK-Abelló A/S on 11 March 2020 for the

financial year 2020. We have been reap-

pointed annually by shareholder reso-

lution for a total period of uninterrupted

engagement of 4 years including the

financial year 2023.

We believe that the audit evidence we

have obtained is sufficient and appro-

priate to provide a basis for our opinion.

Independence

We are independent of the Group in

accordance with the International Ethics

Standards Board for Accountants’ Inter-

national Code of Ethics for Professional

Accountants (IESBA Code) and the addi-

tional ethical requirements applicable in

Denmark. We have also fulfilled our other

Moreover, in our opinion, the Parent

Company Financial Statements give a true

and fair view of the Parent Company’s

financial position at 31 December 2023

and of the results of the Parent Company’s

Financial statements

ALK Annual report 2023

57

Statement on Management’s Review

Management is responsible for Manage-

ment’s Review (pp 1-53 and 115).

prepared in accordance with the require-

ments of the Danish Financial Statements

Act and the disclosure requirements of

Article 8 of Regulation (EU) 2020/852 (EU

Taxonomy Regulation). We did not identify

any material misstatement in Manage-

ment’s Review.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were

of most significance in our audit of the Financial Statements for 2023. These

matters were addressed in the context of our audit of the Financial Statements

as a whole, and in forming our opinion thereon, and we do not provide a sepa-

rate opinion on these matters.

Our opinion on the Financial Statements

does not cover Management’s Review,

and we do not express any form of assur-

ance conclusion thereon.

Management’s responsibilities

for the Financial Statements

How our audit addressed

In connection with our audit of the Finan-

cial Statements, our responsibility is to

read Management’s Review and, in doing

so, consider whether Management’s

Review is materially inconsistent with

the Financial Statements or our know-

ledge obtained in the audit, or otherwise

appears to be materially misstated.

Key audit matter

the key audit matter

Management is responsible for the

preparation of Consolidated Financial

Statements that give a true and fair view in

accordance with IFRS Accounting Stand-

ards as adopted by the EU and further

requirements in the Danish Financial

Statements Act and for the preparation

of Parent Company Financial Statements

that give a true and fair view in accord-

ance with the Danish Financial State-

ments Act, and for such internal control

as Management determines is necessary

to enable the preparation of Financial

Statements that are free from material

misstatement, whether due to fraud or

er ror.

Revenue recognition and related sales

deductions

The Group sells products in certain markets

subject to various rebate and discount

arrangements and mandated price adjust-

ments schemes. These arrangements

and schemes result in deductions to gross

revenue in arriving at net revenue and in

accruals for estimated sales deductions.

We discussed the policies for accounting

for rebates, discounts and mandated price

adjustments with Management.

We performed risk assessment procedures

to obtain an understanding of the IT systems,

business processes and relevant controls for

revenue recognition and related sales deduc-

tions. We assessed whether the controls were

designed and implemented to effectively

address the risk of material misstatement.

Moreover, we considered whether

Management’s Review includes the

disclosures required by the Danish

Financial Statements Act and Article 8 of

Regulation (EU) 2020/852 (EU Taxonomy

Regulation).

We focused on these areas as accounting

for rebates, discounts and mandated price

adjustments is complex and requires a

high degree of estimation by Management.

This includes the estimation uncertainty

regarding accruals for estimated sales

deductions.

We evaluated and challenged the assump-

tions and estimates, including models and

data used for calculating rebates, discounts

and mandated price adjustments and

accruals for sales deductions.

Based on the work we have performed,

in our view, Management’s Review is in

accordance with the Consolidated Finan-

cial Statements and the Parent Company

Financial Statements and has been

We refer to note 2.1 in the consolidated

financial statements.

We assessed the appropriateness of the

related disclosure provided in the consoli-

dated financial statements.

In preparing the Financial Statements,

Management is responsible for assessing

the Group’s and the Parent Company’s

Financial statements

ALK Annual report 2023

58

As part of an audit in accordance with ISAs

and the additional requirements appli-

cable in Denmark, we exercise professional

judgement and maintain professional

scepticism throughout the audit. We also:

reasonableness of accounting esti-

mates and related disclosures made by

Management.

and events in a manner that gives a true

and fair view.

ability to continue as a going concern,

disclosing, as applicable, matters related

to going concern and using the going

concern basis of accounting unless

Management either intends to liquidate

the Group or the Parent Company or to

cease operations, or has no realistic alter-

native but to do so.

• Obtain sufficient appropriate audit

evidence regarding the financial

• Conclude on the appropriateness of

Management’s use of the going concern

basis of accounting and based on the

audit evidence obtained, whether a

material uncertainty exists related to

events or conditions that may cast

significant doubt on the Group’s and the

Parent Company’s ability to continue

as a going concern. If we conclude that

a material uncertainty exists, we are

required to draw attention in our audi-

tor’s report to the related disclosures

in the Financial Statements or, if such

disclosures are inadequate, to modify

our opinion. Our conclusions are based

on the audit evidence obtained up to the

date of our auditor’s report. However,

future events or conditions may cause

the Group or the Parent Company to

cease to continue as a going concern.

information of the entities or business

activities within the Group to express an

opinion on the Consolidated Financial

Statements. We are responsible for the

direction, supervision and performance

of the group audit. We remain solely

responsible for our audit opinion.

• Identify and assess the risks of material

misstatement of the Financial State-

ments, whether due to fraud or error,

design and perform audit procedures

responsive to those risks, and obtain

audit evidence that is sufficient and

appropriate to provide a basis for our

opinion. The risk of not detecting a mate-

rial misstatement resulting from fraud is

higher than for one resulting from error,

as fraud may involve collusion, forgery,

intentional omissions, misrepresenta-

tions, or the override of internal control.

Auditor’s responsibilities for the

audit of the Financial Statements

Our objectives are to obtain reasonable

assurance about whether the Financial

Statements as a whole are free from

material misstatement, whether due to

fraud or error, and to issue an auditor’s

report that includes our opinion. Reason-

able assurance is a high level of assur-

ance, but is not a guarantee that an audit

conducted in accordance with ISAs and

the additional requirements applicable

in Denmark will always detect a material

misstatement when it exists. Misstate-

ments can arise from fraud or error and

are considered material if, individually or

in the aggregate, they could reasonably

be expected to influence the economic

decisions of users taken on the basis of

these Financial Statements.

We communicate with those charged

with governance regarding, among other

matters, the planned scope and timing of

the audit and significant audit findings,

including any significant deficiencies in

internal control that we identify during our

audit.

• Obtain an understanding of internal

control relevant to the audit in order to

design audit procedures that are appro-

priate in the circumstances, but not for

the purpose of expressing an opinion on

the effectiveness of the Group’s and the

Parent Company’s internal control.

We also provide those charged with

governance with a statement that we have

complied with relevant ethical require-

ments regarding independence, and to

communicate with them all relationships

and other matters that may reasonably be

thought to bear on our independence and,

where applicable, actions taken to elimi-

nate threats or safeguards applied.

• Evaluate the overall presentation,

structure and content of the Financial

Statements, including the disclosures,

and whether the Financial Statements

represent the underlying transactions

• Evaluate the appropriateness of

accounting policies used and the

Financial statements

ALK Annual report 2023

59

Management is responsible for preparing

an annual report that complies with

the ESEF Regulation. This responsibility

includes:

based on the evidence we have obtained,

and to issue a report that includes our

opinion. The nature, timing and extent of

procedures selected depend on the audi-

tor’s judgement, including the assessment

of the risks of material departures from

the requirements set out in the ESEF Regu-

lation, whether due to fraud or error. The

procedures include:

• Evaluating the use of anchoring of

extension elements to elements in the

ESEF taxonomy; and

From the matters communicated with

those charged with governance, we

determine those matters that were of

most significance in the audit of the Finan-

cial Statements of the current period and

are therefore the key audit matters. We

describe these matters in our auditor’s

report unless law or regulation precludes

public disclosure about the matter.

• Reconciling the iXBRL tagged data with

the audited Consolidated Financial

Statements including notes.

• The preparing of the annual report in

XHTML format;

• The selection and application of appro-

priate iXBRL tags, including extensions

to the ESEF taxonomy and the anchoring

thereof to elements in the taxonomy, for

all financial information required to be

tagged using judgement where neces-

sary;

In our opinion, the annual report of

ALK-Abelló A/S for the financial year 1

January to 31 December 2023 with the file

name alk-2023-12-31-en.zip is prepared,

in all material respects, in compliance with

the ESEF Regulation.

• Testing whether the annual report is

prepared in XHTML format;

Report on compliance with

the ESEF Regulation

• Obtaining an understanding of the

company’s iXBRL tagging process and

of internal control over the tagging

process;

As part of our audit of the Financial State-

ments we performed procedures to express

an opinion on whether the annual report

of ALK-Abelló A/S for the financial year 1

January to 31 December 2023 with the

filename alk-2023-12-31-en.zip is prepared,

in all material respects, in compliance with

the Commission Delegated Regulation (EU)

2019/815 on the European Single Electronic

Format (ESEF Regulation) which includes

requirements related to the preparation

of the annual report in XHTML format and

iXBRL tagging of the Consolidated Financial

Statements including notes.

• Ensuring consistency between iXBRL

tagged data and the Consolidated

Financial Statements presented in

human-readable format; and

Hellerup, 8 February 2024

• Evaluating the completeness of the

iXBRL tagging of the Consolidated

Financial Statements including notes;

PricewaterhouseCoopers

Statsautoriseret Revisionspartnerselskab

CVR No 33 77 12 31

• For such internal control as Manage-

ment determines necessary to enable

the preparation of an annual report that

is compliant with the ESEF Regulation.

• Evaluating the appropriateness of

the company’s use of iXBRL elements

selected from the ESEF taxonomy and

the creation of extension elements

where no suitable element in the ESEF

taxonomy has been identified;

Lars Baungaard

State Authorised Public Accountant

mne23331

Our responsibility is to obtain reasonable

assurance on whether the annual report

is prepared, in all material respects, in

compliance with the ESEF Regulation

Kim Tromholt

State Authorised Public Accountant

mne33251

Consolidated financial statements

ALK Annual report 2023

60

Consolidated

financial statements

Financial statements

Notes

Income statement

61

62

63

64

65

Section 1

Basis of reporting

Section 3

Operating assets and liabilities

Section 5

Other disclosures

Statement of comprehensive income

Cash flow statement

Balance sheet

1.1

1.2

Accounting policy information

65

67

3.1

Intangible assets

75

78

80

82

83

84

86

5.1

Share-based payments

94

97

98

99

Significant accounting

3.2 Property, plant and equipment

3.3 Leases

5.2 Cash flow

estimates and judgements

5.3 Business combinations

5.4 Related parties

Statement of changes in equity

Notes

3.4 Inventories

Section 2

Results for the year

3.5 Trade receivables

3.6 Prepayments

5.5 Events after the reporting period

5.6 Approval of financial statements

Definitions

101

2.1

Revenue and segment information 68

3.7

Pensions and similar liabilities

5.7

List of companies in the ALK Group 100

2.2 Expenses

69

3.8 Provisions

2.3 Depreciation, amortisation

and impairment

3.9

Other payables

70

71

72

3.10 Contingent liabilities

and commitments

2.4 Staff costs

87

2.5 Fees to the ALK Group’s auditors

2.6 Financial income and expenses

2.7 Income tax and deferred tax

Section 4

Capital structure and financing

4.1

Share capital and earnings

per share

88

89

4.2 Financial risks and

financial instruments

Consolidated financial statements

ALK Annual report 2023

61

Income statement

Statement of comprehensive income

Amounts in DKKm

Note

2023

2022

Amounts in DKKm

Note

2023

486

2022

Revenue

2.1

4,824

1,789

3,035

4,511

1,720

2,791

Net profit

335

Cost of sales

Gross profit

2.2-2.4, 3.4, 5.1

Items that will subsequently not be reclassified

to the income statement:

Actuarial gains/(losses) on pension plans

3.7

2.7

(1)

96

(30)

66

Research and development expenses

Sales and marketing expenses

Administrative expenses

2.2-2.4, 5.1

618

1,422

331

2

665

1,381

276

1

Tax related to actuarial gains/(losses) on pension plans

1

-

Other operating income

Items that will subsequently be reclassified to

the income statement, when specific conditions are met:

Operating profit (EBIT)

666

470

Foreign currency translation adjustment of foreign affiliates

(38)

61

Financial income

2.6

12

31

4

27

Tax related to other comprehensive income, that will

subsequently be reclassified to the income statement

Financial expenses

Profit before tax (EBT)

2.7

-

4

647

447

(38)

65

Tax on profit

2.7

4.1

161

112

Other comprehensive income

Total comprehensive income

(38)

448

131

466

Net profit

486

335

Earnings per share (EPS)

2.20

1.52

1.51

Earnings per share (DEPS), diluted

Consolidated financial statements

ALK Annual report 2023

62

Cash flow statement

Amounts in DKKm

Note

2023

486

2022

335

Net profit

Adjustments

Adjustments for non-cash items

Changes in working capital

Financial income, received

Financial expenses, paid

Income tax, paid (net)

5.2

458

(203)

9

406

(235)

2

(23)

(60)

667

(14)

(78)

416

Cash flow from operating activities

Purchase of intangible assets

3.1

(69)

(310)

4

(55)

(298)

2

Purchase of tangible assets

3.2-3.3

Investments in other financial assets

Cash flow from investing activities

(375)

(351)

Free cash flow

292

65

Sale of treasury shares

-

(20)

671

42

(11)

60

Exercised share options, paid

Proceeds from borrowings

Repayment of borrowings

5.2

(636)

(46)

(31)

(94)

(39)

(42)

Repayment of lease liabilities

Cash flow from financing activities

Net cash flow

261

23

Cash beginning of year

221

194

Unrealised gain/(loss) on cash held in foreign currency and

financial assets carried as cash

(8)

261

474

4

23

Net cash flow

Cash year end

221

The consolidated statement of cash flow is compiled using the indirect method. As a result, the individual figures in the cash flow

statement cannot be reconciled directly to the income statement and the balance sheet.

Consolidated financial statements

ALK Annual report 2023

63

Balance sheet – Assets

Balance sheet – Equity and liabilities

31 Dec.

2023

31 Dec.

2022

31 Dec.

2023

31 Dec.

2022

Amounts in DKKm

Note

Amounts in DKKm

Note

Non-current assets

Equity

Intangible assets

Goodwill

Share capital

4.1

111

(18)

111

20

3.1

459

212

671

460

182

642

Currency translation adjustment

Retained earnings

Total equity

Other intangible assets

4,354

4,447

3,857

3,988

Tangible assets

Land and buildings

3.2-3.3

3.2

994

511

991

440

Liabilities

Plant and machinery

Non-current liabilities

Mortgage debt

Other fixtures and equipment

Property, plant and equipment in progress

3.2-3.3

3.2

80

76

4.2

3.7

4.2

184

245

255

46

203

236

226

49

596

511

Pensions and similar liabilities

Lease liabilities

2,181

2,018

Other non-current assets

Prepayments

Deferred income

49

659

198

906

94

716

Provisions

3.8

2.7

1

-

Deferred tax assets

Income tax receivables

2.7

Deferred tax liabilities

Income tax payables

4

193

230

965

203

921

1,003

Total non-current assets

Current assets

3,758

3,663

Current liabilities

Mortgage debt

Bank loans

4.2

19

261

128

46

18

208

131

41

Trade payables

Lease liabilities

Deferred income

Provisions

Inventories

3.4

3.5

5.4

1,423

816

-

1,297

764

18

4.2

3.8

3.9

Trade receivables

Receivables from group companies

Income tax receivables

Other receivables

Prepayments

4

2

3

34

24

Income tax payables

Other payables

17

16

74

82

837

1,314

978

1,399

3.6

147

474

2,968

239

221

2,645

Cash

Total current assets

Total liabilities

2,279

6,726

2,320

6,308

Total assets

6,726

6,308

Total equity and liabilities

Consolidated financial statements

ALK Annual report 2023

64

Statement of changes in equity

Currency

translation

adjust-

Currency

translation

adjust-

ment

Share

capital

Retained

earnings

Total

equity

Share

capital

Retained

earnings

Total

equity

Amounts in DKKm

ment

Amounts in DKKm

2023

2022

Equity at 1 January

111

20

3,857

3,988

Equity at 1 January

111

(41)

3,410

3,480

Net profit

-

486

-

486

(38)

448

Net profit

-

61

335

70

335

131

466

Other comprehensive income/(loss)

Total comprehensive income

(38)

Other comprehensive income

Total comprehensive income

486

405

Share-based payments

-

30

(20)

-

30

(20)

-

Share-based payments

-

27

(11)

42

27

(11)

42

Share options settled

Sale of treasury shares

Tax related to items recognised directly in equity

Other transactions

1

Tax related to items recognised directly in equity

Other transactions

(16)

42

(16)

42

11

Equity at 31 December

111

(18)

4,354

4,447

Equity at 31 December

111

20

3,857

3,988

Consolidated financial statements

ALK Annual report 2023

65

Section 1 – Basis of reporting

1.1 Accounting policy information

New standards effective from

1 January 2023

The ALK Group has implemented all new and

amended standards and IFRIC interpretations

which are effective for the financial year 2023.

This has not resulted in any changes to the

accounting policies of the ALK Group.

nature. The financial statements used for conso-

lidation are prepared in accordance with the ALK

Group’s accounting policies.

On consolidation, intra-group income and

expenses, intra-group balances and dividends,

and gains and losses arising on intra-group

transactions are eliminated.

months, unless these deviate materially from

the actual exchange rates at the transaction

dates. In that case, the actual exchange rates

are used. Balance sheet items are translated at

the exchange rates at the balance sheet date.

Goodwill is considered to belong to the acquired

company in question and is translated at the

exchange rate at the balance sheet date.

Exchange rate differences arising on the trans-

lation of foreign subsidiaries’ opening balance

sheet items to the exchange rates at the balance

sheet date and on the translation of the income

statements from average exchange rates to

exchange rates at the balance sheet date are

recognised in other comprehensive income.

Foreign exchange rate adjustment of receivables

or debt to subsidiaries which are considered part

of the parent company’s overall investment in

the subsidiary in question are also recognised in

other comprehensive income in the consolidated

financial statements.

The consolidated financial statements for the

period 1 January to 31 December 2023 have been

prepared in accordance with the IFRS accounting

standards as adopted by the EU and in accor-

dance with Danish disclosure requirements for

listed companies. Additional Danish disclosure

requirements for annual reports are imposed by

the Statutory Order on Adoption of IFRS issued

under the Danish Financial Statements Act.

New standards effective on or after

1 January 2024

A number of IFRS standards, amended standards

and IFRIC interpretations, which are effective on

or after 1 January 2024, have not been imple-

mented. Based on a preliminary assessment it is

estimated that these standards and interpreta-

tions will have no material impact on the consoli-

dated financial statements.

The ALK Group has adopted the International Tax

Reform - Pillar Two Model Rules (Amendments to

IAS 12) upon their release on 23 May 2023. The

amendments provide a temporary mandatory

exception from deferred tax accounting for the

top-up tax, which is effective immediately, and

require new disclosures about Pillar Two exposure.

Foreign currency translation

On initial recognition, transactions denominated

in currencies other than DKK are translated at

average exchange rates, which are an approxi-

mation of the exchange rates at the transaction

date. Receivables and debt and other monetary

items not settled at the balance sheet date are

translated at the closing rate.

Exchange rate differences between the exchange

rate at the date of the transaction and the

exchange rate at the date of payment or the

balance sheet date, respectively, are recognised

in the income statement under financial items.

Tangible assets and intangible assets, invento-

ries and other nonmonetary assets acquired in

foreign currency and measured based on histo-

rical cost are translated at the exchange rates at

the transaction date.

On recognition in the consolidated financial state-

ments of subsidiaries whose financial statements

are presented in a functional currency other

than DKK, the income statements are translated

at average exchange rates for the respective

The consolidated financial statements are

presented in Danish kroner (DKK), which is consi-

dered the primary currency of the ALK Group’s

activities and the functional currency of the

parent company.

The consolidated financial statements are

presented on a historical cost basis, apart

from certain financial instruments, which are

measured at fair value.

The general accounting policies described below

apply to the consolidated financial statements

as a whole. To enhance understanding, specific

accounting policies are described in the notes

to which they relate. The description of accoun-

ting policies in the notes form part of the overall

description of accounting policies.

The accounting policies are unchanged from last

year except for the below mentioned impacts of

new standards.

Definitions and ratios

The key ratios have been calculated in accor-

dance with generally accepted financial ratios

applied by financial analysts. Definitions are

shown on page 101.

Reporting under the ESEF regulation

The Commission Delegated Regulation (EU)

2019/815 on the European Single Electronic

Format (ESEF) (ESEF Regulation) has introduced

Basis of consolidation

The consolidated financial statements comprise

the financial statements of ALK-Abelló A/S (the

parent company) and companies (subsidiaries)

controlled by the parent company.

The consolidated financial statements are

prepared as a consolidation of items of a uniform

Consolidated financial statements

ALK Annual report 2023

66

Section 1 – Basis of reporting

1.1 Accounting policy information – continued

a single electronic reporting format for the

annual financial reports of issuers with securities

listed on the EU regulated markets.

The ESEF Regulation sets out the following main

requirements: (1) Issuers shall draw up and

disclose their annual financial reports using the

XHTML format; and (2) issuers that draw-up

their primary consolidated financial statements

in accordance with IFRS as endorsed by the EU

shall tag those consolidated financial state-

ments using inline eXtensible Business Reporting

Language (iXBRL) including block-tag of the notes

to the consolidated financial statements.

The annual report 2023 for the ALK Group

submitted to the Danish Financial Supervisory

Authority and Nasdaq consists of the XHTML docu-

ment together with some technical files all included

in a ZIP file named alk-2023-12-31-en.zip.

ESEF data

Name of reporting entity or other means of

identification

ALK-Abelló A/S

Key definitions

XHTML (eXtensible HyperText Markup Language)

is a text-based markup language used to struc-

ture and mark up content such as text, images,

and hyperlinks in documents that are displayed

as Web pages in an updated standard Web

browser like Chrome or Edge.

Domicile of entity

Denmark

Legal form of entity

A/S

Country of incorporation

Denmark

iXBRL tags (or Inline XBRL tags) are hidden

meta-information embedded in the source code

of an XHTML document in accordance with the

Inline XBRL 1.1 specification, which enables the

conversion of XHTML-formatted information into

a machine-readable XBRL data record by appro-

priate software.

The tagging process is a process where iXBRL

tags are applied to financial statement line items,

notes etc.

The combination of the XHTML format with the

iXBRL tags makes the annual financial reports

both human-readable and machine-readable,

thus enhancing accessibility, analysis and

comparability of the information included in the

annual financial reports.

iXBRL tags shall comply with the ESEF taxonomy,

which is included in the ESEF Regulation and

developed based on the IFRS taxonomy published

by the IFRS Foundation.

As part of the tagging process financial state-

ment line items are marked up to elements in the

ESEF taxonomy. If a financial statement line item

is not defined in the ESEF taxonomy, an extension

to the taxonomy is created. Extensions have to

be anchored to elements in the ESEF taxonomy,

except for elements corresponding to subtotals.

Address of entity’s registered office

Bøge Allé 6-8, DK-2970 Hørsholm

Principal place of business

Global

Description of nature of entity’s

operations and principal activities

ALK is a global allergy solutions company

Name of parent entity

Taxonomy is an electronic dictionary of business

reporting elements used to report business data.

A taxonomy element is an element defined in a

taxonomy that is used for the machine-readable

labeling of information in an XBRL data record.

Lundbeckfond Invest A/S

Name of ultimate parent of group

Lundbeck Foundation

Consolidated financial statements

ALK Annual report 2023

67

Section 1 – Basis of reporting

1.2 Significant accounting estimates and judgements

In the preparation of the consolidated financial

statements according to IFRS, Management is

required to make certain estimates as many

financial statement items cannot be reliably

measured, but must be estimated. Such esti-

mates comprise judgements made on the basis

of the most recent information available at the

reporting date.

of assets and liabilities often depends on future

events that are somewhat uncertain. In that

connection, it is necessary to set out e.g. a course

of events that reflects Management’s assess-

ment of the most probable course of events.

Management considers those listed below as

the key accounting estimates and related judge-

ments used in the preparation of the consolidated

financial statements.

It may be necessary to change previous esti-

mates as a result of changes to the assumptions

on which the estimates were based or due to

supplementary information, additional experi-

ence or subsequent events. Similarly, the value

A description of significant accounting estimates

and judgements as well as assumptions applied

is included in the relevant notes.

Estimate/

Note

Key accounting estimates and judgements

judgement

Sales deductions comprising rebates, discounts, and mandated

2.1 Revenue and segment information

Estimate

price adjustments

2.2 Expenses

Recognition of costs for outsourced clinical trials

Estimate

Provision for uncertain tax positions and measurement of

Estimate/

2.7 Income tax and deferred tax

deferred tax assets

judgement

3.1 Intangible assets

Recoverable amount of goodwill

Estimate

Valuation of inventories and capitalisation of indirect production

3.4 Inventories

Estimate

costs

Consolidated financial statements

ALK Annual report 2023

68

Section 2 – Results for the year

2.1 Revenue and segment information

International

Europe

North America

markets

Total

Amounts in DKKm

2023

2022

2023

2022

2023

2022

2023

2022

SCIT/SLIT-drops

1,424

1,266

362

349

153

133

1,939

1,748

SLIT-tablets

1,592

1,519

184

151

520

432

2,296

2,102

Other products and services

200

273

362

357

27

31

589

661

Total revenue

3,216

3,058

908

857

700

596

4,824

4, 511

Sale of goods

4,723

4,411

Royalties

99

93

Services

2

7

Total revenue

4,824

4, 511

Of total revenue, DKK 104 million (2022: DKK 119 million) is derived from Denmark. The ALK Group had

more than 10% of its total revenue from Germany 22% (2022: 20%), France 17% (2022: 18%), the USA

16% (2022: 17%), and Japan 10% (2022: 9%) based on the location of the customers.

The ALK Group’s non-current tangible and intangible assets are distributed among the following

geographical markets:

International

Europe

North America

markets

Total

Amounts in DKKm

2023

2022

2023

2022

2023 2022

2023

2022

Non-current tangible and

intangible assets

1,953

1,754

895

899

4

7

2,852

2,660

Of total non-current tangible and intangible assets, DKK 1,536 million relates to assets in Denmark

(2022: DKK 1,356 million). The USA accounts for 31% (2022: 34%) of total non-current tangible and intan-

gible assets.

Accounting policies

Segment information

Based on the internal reporting used by the Board of Management to assess the results of operations and

allocation of resources, the ALK Group has identified one operating segment ‘Allergy treatment’, which

is in accordance with the way the activities are organised and managed. Even though revenue within

the operating segment “Allergy treatment” can be divided by product lines and market, the main part

of the activities within production, research and development, sales and marketing and administration

are shared by the ALK Group as a whole. The disclosures in the financial statements include a break-

down of revenue by product line and a geographical breakdown of revenue and non-current assets. The

geographical information on markets is based on customer and asset location.

Revenue

The primary performance obligation of the ALK Group is the sale and delivery of own-manufactured

goods and goods for resale for allergy treatment. Revenue from the sale of goods is recognised in the

income statement upon the control of the goods being transferred to the customer, i.e. when goods are

delivered. Revenue is recognised by the ALK Group at a point in time.

Revenue by product line 2023

Revenue by geography 2023

SCIT/SLIT-drops

SLIT-tablets

Europe

North America

12%

14%

Other

International

markets

40%

19%

67%

48%

Consolidated financial statements

ALK Annual report 2023

69

Section 2 – Results for the year

2.1 Revenue and segment information - continued

2.2 Expenses

Accounting policies

Cost of sales

The item comprises cost of sales and production costs incurred in generating the revenue for the year.

Costs for raw materials, consumables, goods for resale, production staff and a proportion of production

overheads, including maintenance and depreciation, amortisation and impairment of tangible assets

and intangible assets used in production as well as operation, administration and management of facto-

ries are recognised in cost of sales and production costs. In addition, the costs and write-down to net

realisable value of obsolete and slow-moving goods are recognised.

The ALK Group’s products are sold primarily to distributors of pharmaceuticals, pharmacies, and hospitals.

The payment conditions for the customers vary, and are based on industry practice in the relevant markets.

As a result of special trading conditions in specific markets, the credit period may be up to 180 days.

Revenue is measured as the fair value of the consideration received or receivable.

Revenue is measured exclusive of VAT, taxes etc. charged on behalf of third parties and less any commis-

sions and discounts in connection with sales.

Furthermore, revenue includes licence income and royalties from outlicensed products as well as

up-front payments, milestone payments and services in connection with partnerships. These revenues

are recognised in the income statement in accordance with the agreements and when the ALK Group

obtains the right to the payments, which is when services have been delivered to the customer or at the

point in time the subsequent sales occur.

When combined contracts are entered, the elements of the contracts are identified and assessed sepa-

rately for accounting purposes.

Research and development expenses

The item comprises research and development expenses, including expenses incurred for wages and

salaries, amortisation, impairment of capitalised development projects in progress, and other over-

heads as well as costs relating to research partnerships. Research expenses are recognised in the

income statement when incurred. Due to the long development periods and significant uncertainties

in relation to the development of new products, including risks regarding clinical trials and regulatory

approvals, it is the assessment that most of the ALK Group’s development expenses do not meet the

capitalisation criteria in IAS 38, Intangible Assets. Consequently, development expenses are generally

recognised in the income statement when incurred. Development expenses relating to individual minor

development projects running for short-term periods and subject to limited risk are capitalised under

other intangible assets.

Significant accounting estimates and judgements

Sales deductions comprising rebates, discounts, and mandated price adjustments are estimated and

accrued for at the time when the related sales are recorded. Management is required to make significant

estimates in the revenue recognition relating to the accruals for sales deductions as not all conditions

are known at the time of sale and as revenue can only be recognised to the extent that it is probable that a

significant reversal of the recognised revenue will not occur.

Management’s estimate of accruals for sales deductions is based on a calculation taking into consider-

ation among other factors, existing contractual obligations, the extent of predictability, historical expe-

rience with similar transactions and whether the consideration is highly susceptible to factors outside

ALK’s influence.

ALK considers the accruals established for sales deductions to be reasonable and appropriate based on

currently available information. The accruals for sales deductions are adjusted regularly as new or more

detailed information becomes available and when actual amounts are processed.

Sales and marketing expenses

The item comprises selling and marketing expenses, including salaries and expenses relating to sales

staff, advertising and exhibitions, depreciation, amortisation and impairment losses on tangible assets

and intangible assets used in the sales and marketing process as well as other indirect costs.

Administrative expenses

The item comprises expenses incurred for management and administration, including expenses for

administrative staff and management, office expenses and depreciation, amortisation and impairment

losses on tangible assets and intangible assets used in administration.

Consolidated financial statements

ALK Annual report 2023

70

Section 2 – Results for the year

2.2 Expenses - continued

2.4 Staff costs

Amounts in DKKm

2023

2022

Wages and salaries

1,708

1,584

Pensions, cf. note 3.7

145

131

Other social security costs, etc.

223

207

Share-based payments, cf. note 5.1

30

27

Total

2,106

1,949

Staff costs are allocated as follows:

Cost of sales

799

747

Research and development expenses

308

279

Sales and marketing expenses

696

673

Administrative expenses

222

187

Included in the cost of assets

81

63

Total

2,106

1,949

Remuneration to Management:

Remuneration to Board of Management:*

Salaries and other benefits

19

Short-term incentive (cash bonus)

9

12

Pensions

2

1

Termination benefits

23

-

Long-term incentives (share-based) based on expensed accounting value, cf.

note 5.1**

5

7

Total remuneration to Board of Management

58

39

Remuneration to Board of Directors

6

Total remuneration to Board of Management and Board of Directors

64

45

Employees

Average number (FTE)

2,752

2,609

Number year end (FTE)

2,824

2,680

*

In 2023, total remuneration to Board of Management included sign-on payments for the new members including a cash bonus

of DKK 0.75 million and three share-based payment plans with a total grant value of DKK 23 million.

** The expensed costs include DKK 1 million (2022: DKK 0) related to adjustment in the share options and performance share

units expected to vest.

Significant accounting estimates and judgements

Clinical trials, which are outsourced to Clinical Research Organisations (“CROs”), take several years to

complete. As such, Management is required to make estimates based on the progress and costs incurred

to-date for the ongoing trials. Estimates are made in determining the amount of costs to be expensed

during the period or recognised as prepayments or accruals on the balance sheet.

At 31 December 2023, DKK 26 million is recognised as accrued expenses (2022: DKK 114 million) and DKK

21 million as prepayments in the balance sheet (2022: DKK 130 million). In 2023, external expenses for

clinical trials of DKK 150 million have been recognised in the income statement (2022: DKK 240 million).

2.3 Depreciation, amortisation and impairment

Amounts in DKKm

2023

2022

Depreciation, amortisation and impairment allocation:

Cost of sales

163

Research and development expenses

11

9

Sales and marketing expenses

20

23

Administrative expenses

51

43

Total

245

238

Impairment amounts to DKK 1 million (2022: DKK 2 million), of which DKK 1 million relates to impairment

of tangible assets (2022: DKK 1 million). No impairment of intangible assets was made (2022: DKK 1

million).

The impairment of tangible assets is related to impairment of production equipment of DKK 1 million with

no recoverable amount after impairment (2022: DKK 1 million). The impairment is recognised as cost of

sales.

The impairment of intangible assets in 2022 was related to impairment of goodwill of DKK 1 million with

no recoverable amount after impairment. The impairment was associated with closing down activities in

Turkey and was recognised as sales and marketing expenses.

Consolidated financial statements

ALK Annual report 2023

71

Section 2 – Results for the year

2.5 Fees to the ALK Group’s auditors

Amounts in DKKm

2023

2022

Fees to the auditors appointed at the annual general meeting:

Audit services

4

3

Other opinions

-

Tax advisory services

1

-

Other services

1

Total

6

4

The fee for non-audit services provided by PricewaterhouseCoopers Statsautoriseret Revisionspartner-

selskab (Denmark) of DKK 2 million (2022: DKK 1 million) relates to HR consulting, tax advisory, and other

general financial accounting matters. .

2.6 Financial income and expenses

Amounts in DKKm

2023

2022

Interest income

12

4

Financial income from financial assets measured at amortised cost

12

4

Currency gains, net

-

Total financial income

12

4

Interest expenses*

22

Financial expenses from financial liabilities measured at amortised cost

22

Interest expenses on uncertain tax positions, net

-

2

Currency losses, net

9

3

Total financial expenses

31

27

*

Includes interest expenses related to leasing of DKK 7 million (2022: DKK 6 million).

Accounting policies

Financial items comprise interest receivable and interest payable, the interest element of lease

payments, realised and unrealised gains and losses on securities, cash, liabilities and foreign currency

transactions, mortgage amortisation premium/allowance etc. and provisions for uncertain tax position.

Interest expenses and income related to uncertain tax position are recognised on the balance sheet as

tax liabilities and tax assets respectively upon the receipt of ruling from the tax authorities and corre-

spondingly reflected in the income statement as financial items net.

Interest income and expenses are accrued based on the principal and the effective rate of interest. The

effective rate of interest is the discount rate to be used on discounting expected future payments in rela-

tion to the financial asset or the financial liability so that their present value corresponds to the carrying

amount of the asset or liability, respectively.

Consolidated financial statements

ALK Annual report 2023

72

Section 2 – Results for the year

2.7 Income tax and deferred tax

Amounts in DKKm

2023

2022

Tax on profit

Current income tax

84

91

Adjustment of deferred tax

74

20

Prior years adjustments, income tax

10

3

Prior years adjustments, deferred tax

(7)

(2)

Tax on profit for the year

161

112

Profit before tax

647

447

Income tax, tax rate of 22% (2022: 22%)

142

98

Effect of deviation of foreign subsidiaries’ tax rate

relative to Danish tax rate

24

14

Permanent differences

(5)

(10)

Other taxes and adjustments

(7)

11

Change in valuation of net tax assets

4

(2)

Prior years adjustments, income tax

10

3

Prior years adjustments, deferred tax

(7)

(2)

Tax on profit for the year

161

112

Tax related to equity comprises an income of DKK 1 million (2022: expense of DKK 16 million) and other

comprehensive income comprises an income of DKK 1 million (2022: expense of DKK 26 million).

Pillar Two

The ALK Group is within the scope of the OECD Pillar Two model rules due to being included in a joint

Danish taxation scheme with the Lundbeck Foundation (Lundbeckfond Invest A/S). Pillar Two legislation

was in 2023 enacted in Denmark, the jurisdiction in which the ALK Group is incorporated, and will come

into effect from 1 January 2024. The ALK Group applies the exception to recognising and disclosing infor-

mation about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the

amendments to IAS 12 issued in May 2023.

Under the legislation, the ALK Group is liable to pay a top-up tax for the difference between its GloBE

effective tax rate per jurisdiction and the 15% minimum rate. All entities within the group have an effec-

tive tax rate that exceeds 15%, except for one minor subsidiary. Any potential impact is considered to be

immaterial.

Consolidated financial statements

ALK Annual report 2023

73

Section 2 – Results for the year

2.7 Income tax and deferred tax – continued

Intangible

Tangible

Current and

Tax losses

Amounts in DKKm

assets

other assets

Liabilities

carried forward

Total

2023

Deferred tax

Carrying amount beginning of year

(24)

(107)

370

106

367

712

Adjustment to prior years’ deferred tax

-

1

(2)

1

7

Adjustment of receivables from group companies

-

7

Currency adjustments

-

2

-

(1)

-

1

Adjustment of deferred tax due to coming year change of tax rates

-

1

(1)

-

(1)

Recognised in the income statement, net

(3)

(17)

(86)

21

16

(69)

Change in valuation of net tax assets

-

(4)

-

(4)

Recognised in other comprehensive income, net

-

1

-

1

Recognised in equity, net (share-based payments)

-

(2)

-

3

1

Carrying amount year end

(27)

(120)

279

124

399

655

2022

Deferred tax

Carrying amount beginning of year

(20)

(98)

438

129

340

789

Adjustment to prior years’ deferred tax

-

(3)

1

2

Adjustment of receivables from group companies

-

(17)

Currency adjustments

-

(3)

-

2

1

-

Adjustment of deferred tax due to coming year change of tax rates

-

(1)

-

1

-

Recognised in the income statement, net

(4)

(2)

(37)

-

21

(22)

Change in valuation of net tax assets

-

2

-

2

Recognised in other comprehensive income, net

-

(30)

4

(26)

Recognised in equity, net (share-based payments)

-

(32)

-

16

(16)

Carrying amount year end

(24)

(107)

370

106

367

712

Deferred tax consists of deferred tax assets of DKK 659 million (2022: DKK 716 million) and deferred tax liabilities of DKK 4 million (2022: DKK 4 million).

In 2023, the US entities have released a valuation allowance and has no further unrecognised deferred tax assets (2022: DKK 11 million).

Consolidated financial statements

ALK Annual report 2023

74

Section 2 – Results for the year

2.7 Income tax and deferred tax – continued

tax liabilities or as net assets to be offset against future positive taxable income. Deferred tax assets

including the tax value of tax losses are recognised if it is probable that it can be utilised against future

taxable income within a foreseeable future. This includes an assessment of the possibilities to utilise tax

losses in the joint Danish taxation scheme with the Lundbeck Foundation (Lundbeckfond Invest A/S).

At each balance sheet date, it is reassessed whether it is likely that there will be sufficient future taxable

income for the deferred tax asset to be utilised.

The parent company is included in a joint Danish taxation scheme with the Lundbeck Foundation (Lund-

beckfond Invest A/S) and its Danish subsidiaries. The tax charge for the year is allocated among the

jointly taxed companies in proportion to the taxable incomes of individual companies, taking into account

taxes paid.

Accounting policies

Tax on the profit for the year comprises the year’s current tax and changes in deferred tax. The tax

expense relating to the profit/loss for the year is recognised in the income statement, and the tax

expense relating to items recognised in other comprehensive income and directly in equity, respectively,

is recognised in other comprehensive income or directly in equity. Exchange rate adjustments of deferred

tax are recognised as part of the adjustment of deferred tax for the year.

Current tax payable and receivable is recognised in the balance sheet as the expected tax on the taxable

income for the year, adjusted for tax paid on account.

The current tax charge for the year is calculated based on the tax rates and rules enacted at the balance

sheet date.

Uncertain tax position is recognised for those matters for which the tax determination is uncertain but it

is considered probable that there will be a future outflow of funds to a tax authority (and a future inflow

of funds from a tax authority). The uncertain tax position is measured at the best estimate of the amount

expected to become payable (and receivable).

Deferred tax is measured using the balance sheet liability method on all temporary differences between

the carrying amount and the tax base of assets and liabilities. However, deferred tax is not recognised on

temporary differences relating to the initial recognition of goodwill or the initial recognition of a transac-

tion, apart from business combinations, and where the temporary difference existing at the date of initial

recognition affects neither profit/loss for the year nor taxable income.

Deferred tax is calculated based on the planned use of each asset and settlement of each liability,

respectively. Deferred tax is measured using the tax rates and tax rules that, based on legislation

enacted or in reality enacted at the balance sheet date, are expected to apply in the respective countries

when the deferred tax is expected to crystallise as current tax. Changes in deferred tax as a result of

changed tax rates or rules are recognised in the income statement, in other comprehensive income or in

equity, depending on where the deferred tax was originally recognised. Deferred tax related to equity

transactions is recognised in equity.

Deferred tax assets, including the tax value of tax loss carry-forwards, are recognised in the balance

sheet at the value at which the asset is expected to be realised, either through a set-off against deferred

Significant accounting estimates and judgements

Management is required to make an estimate in the recognition of deferred tax assets. This assessment

includes estimates of future taxable income in ALK and other members of the joint Danish taxation scheme

with the Lundbeck Foundation. The forecasts for ALK-Abelló A/S with increased positive results (EBT) is

based on growth in revenue and earnings driven by SLIT-tablets.

At 31 December 2023, the value of the total net deferred tax asset is DKK 655 million (2022: DKK 712

million). It includes a net deferred tax asset in Denmark related to tax losses carried forward of DKK 369

million (2022: DKK 343 million).

Complying with tax rules, when conducting business globally, can be complex as the interpretation of

legislation and case law may change over time or may not always be clear. Management’s judgements

are applied to assess the possible effect of exposures and the possible outcome of disputes or interpre-

tational uncertainties when transfer pricing disputes with local tax authorities may occur. Dialogue with

local tax authorities, tax advisors, business plans and knowledge of the business are key parameters for

Management to estimate the tax assets and liabilities.

At 31 December 2023, the ALK Group recognises uncertain tax position as part of non-current tax. The

actual outcome may deviate and depends on the result of litigation and settlements with the relevant

local tax authorities.

Consolidated financial statements

ALK Annual report 2023

75

Section 3 – Operating assets and liabilities

3.1 Intangible assets

Patents,

Other

trademarks

intangible

Amounts in DKKm

Goodwill

Software

and rights

assets*

Total

2023

Cost beginning of year

482

459

207

263

1,411

Currency adjustments

(1)

-

(3)

1

(3)

Additions

-

12

-

57

69

Disposals

-

(9)

-

(9)

Transfer to/from other groups

-

17

-

(17)

-

Cost year end

481

479

204

304

1,468

Amortisation and impairment

beginning of year

22

357

202

188

769

Currency adjustments

-

(3)

2

(1)

Amortisation for the year

-

30

4

38

Disposals during the year

-

(9)

-

(9)

Amortisation and

impairment year end

22

378

203

194

797

Carrying amount year end

459

101

1

110

671

* Other intangible assets includes individual development projects running for short-term periods.

Patents,

Other

trademarks

intangible

Amounts in DKKm

Goodwill

Software

and rights

assets*

Total

2022

Cost beginning of year

479

420

236

249

1,384

Currency adjustments

4

-

3

2

9

Additions

-

8

-

47

55

Disposals

(1)

(4)

(32)

-

(37)

Transfer to/from other groups

-

35

-

(35)

-

Cost year end

482

459

207

263

1,411

Amortisation and impairment

beginning of year

22

332

225

183

762

Currency adjustments

-

1

3

1

5

Amortisation for the year

-

28

6

4

38

Disposals during the year

(1)

(4)

(32)

-

(37)

Impairment during the year,

cf. note 2.3

1

-

1

Amortisation and

impairment year end

22

357

202

188

769

Carrying amount year end

460

102

5

75

642

* Other intangible assets includes individual development projects running for short-term periods.

Consolidated financial statements

ALK Annual report 2023

76

Section 3 – Operating assets and liabilities

3.1 Intangible assets – continued

Goodwill

Goodwill is related to acquisition of companies in previous years and has been subject to an impairment

test, which has been submitted to the Audit Committee for subsequent approval by the Board of Directors.

The impairment test performed in 2023 revealed no need for impairment of goodwill.

Impairment of goodwill in 2022 of DKK 1 million was associated with closing down activities in Turkey.

Goodwill has been tested at an aggregated level for ALK as one cash-generating unit. In the calculation of

the value in use of the cash-generating unit, future free net cash flow is estimated based on Board of Direc-

tors-approved budget (2024) and financial forecasts (2025-2027) in line with the ALK Group’s strategy.

The budget and the forecast plans are based on specific future business initiatives for which the risks

relating to key parameters have been assessed and recognised in estimated future free cash flows.

The key parameters in the calculation of the value in use are revenue, earnings, working capital, capital

expenditure, discount rate and the preconditions for the terminal value. Estimates are based on histor-

ical data and expectations on future changes in the markets and products. These expectations are based

on a number of assumptions including expected product launches, volume forecasts, price information

and profitability of both the ALK Group’s business as well as geographical expansions.

For financial years after the four year forecast period (2024-2027), the cash flows in the most recent

period have been extrapolated adjusted for a growth factor of 1.5% (2022: 1.5%) during the terminal

period. The discount rate used is 10.9% pre-tax and 8.5% after tax (2022: 9.6% pre-tax and 7.5% after

tax).

The calculated value in use shows that future earnings and cash flows fully support the carrying amount

of total net assets, including goodwill.

Accounting policies

Goodwill

On initial recognition, goodwill is measured and recognised as the excess of the cost of the acquired

company over the fair value of the acquired assets, liabilities and contingent liabilities.

On recognition of goodwill, the goodwill amount is allocated to the ALK Group’s cash-generating unit. The

ALK Group is considered as one cash-generating unit as the individual companies and business units in

the ALK Group cannot be evaluated separately due to the value-adding processes are generated across

corporations and entities.

Goodwill is not amortised, but is tested for impairment at least once a year. To the extent that the carrying

amount of goodwill exceeds the recoverable amount, goodwill is written down to this lower amount.

Impairment of goodwill is not reversed.

Software, patents, trademarks and rights

Acquired intellectual property rights in the form of software, patents, trademarks, licenses, customer

base, and similar rights are measured at cost less accumulated amortisation and impairment.

The cost of software includes costs of installation and direct salaries.

Intangible assets with determinable useful lives are amortised on a straight-line basis over the expected

useful lives of the assets, typically not exceeding 10 years. If the actual useful life is shorter than either

the remaining life or the contract period, the asset is amortised over this shorter useful life. The carrying

amounts are reviewed at the balance sheet date to determine whether there are any indications of

Intangible assets 2023

Goodwill

Software

Patents, trademarks and rights

Other intangible assets

2023

68%

15%

1%

16%

Consolidated financial statements

ALK Annual report 2023

77

Section 3 – Operating assets and liabilities

3.1 Intangible assets – continued

impairment. If such indications are identified, the recoverable amount of the asset is calculated to deter-

mine any need for an impairment write-down and, if so, the amount of the write-down.

Intangible assets with indeterminable useful lives are not amortised, but are tested for impairment at

least once a year. To the extent that the carrying amount of the assets exceeds the recoverable amount,

the assets are written down to this lower amount.

See note 3.2 for more information on assessment, recognition and reversal of impairment.

Other intangible assets

Other intangible assets includes individual minor development projects running for short-term periods,

including software development projects, which fulfil the requirements in IFRS. The measurement and

impairment follow the same rules as described above for software, patents, trademarks, and rights.

Significant accounting estimates and judgements

The assessment of whether goodwill is impaired requires a determination of the value in use of the

cash-generating unit. The determination of the value in use requires estimates of the expected future

cash flow of the cash-generating unit and a reasonable discount rate.

At 31 December 2023, the carrying amount of goodwill is DKK 459 million (2022: DKK 460 million).

Consolidated financial statements

ALK Annual report 2023

78

Section 3 – Operating assets and liabilities

3.2 Property, plant and equipment

Other Property,

fixtures

plant and

Land and

Plant and

and equipment

Land and

Plant and

and equipment

Amounts in DKKm

buildings* machinery equipment in progress

Total

Amounts in DKKm

buildings* machinery equipment in progress

Total

2023

2022

Cost beginning of year

1,743

1,048

278

511

3,580

Cost beginning of year

1,623

1,028

272

325

3,248

Currency adjustments

(19)

(10)

(1)

(6)

(36)

Currency adjustments

35

19

2

5

61

Additions

99

22

16

248

385

Additions

83

23

11

260

377

Remeasurement of lease obligations

8

-

8

Remeasurement of lease obligations

(17)

-

(17)

Disposals

(27)

(20)

(2)

(1)

(50)

Disposals

(11)

(67)

(11)

-

(89)

Transfer to/from other groups

7

142

7

(156)

-

Transfer to/from other groups

30

45

4

(79)

-

Cost year end

1,811

1,182

298

596

3,887

Cost year end

1,743

1,048

278

511

3,580

Depreciation and impairment

beginning of year

752

608

202

-

1,562

beginning of year

665

577

192

-

1,434

Currency adjustments

(4)

(8)

(1)

-

(13)

Currency adjustments

7

9

1

-

17

Depreciation for the year

96

91

19

-

206

Depreciation for the year

91

87

20

-

198

Disposals during the year

(27)

(20)

(2)

(1)

(50)

Disposals during the year

(11)

(66)

(11)

-

(88)

Impairment during the year,

cf. note 2.3

-

1

cf. note 2.3

-

1

-

1

Depreciation and impairment

year end

817

671

218

-

1,706

year end

752

608

202

-

1,562

Carrying amount year end

994

511

80

596

2,181

Carrying amount year end

991

440

76

511

2,018

of which financing costs

-

of which financing costs

-

Value of land and buildings

subject to mortgages

164

subject to mortgages

176

*

Land and buildings include buildings on land leased from Scion DTU A/S, Hørsholm in Denmark. The estimated lease terms are

*

Land and buildings include buildings on land leased from Scion DTU A/S, Hørsholm in Denmark. The estimated lease terms are

10 years. See also note 3.3.

11 years. See also note 3.3.

Consolidated financial statements

ALK Annual report 2023

79

Section 3 – Operating assets and liabilities

3.2 Property, plant and equipment – continued

Accounting policies

Impairment

The carrying amounts of tangible assets are reviewed at the balance sheet date to determine whether

there are any indications of impairment. If such indications are found, the recoverable amount of the

asset is calculated to determine any need for an impairment write-down and, if so, the amount of the

write-down.

Land and buildings, plant and machinery, and other fixtures and equipment are measured at cost less

accumulated depreciation and impairment. Land is not depreciated. Cost comprises the purchase price

and any costs directly attributable to the acquisition and any preparation costs incurred until the date

when the asset is available for use.

The depreciation base is cost less the estimated residual value at the end of the useful life. The residual

value is determined as the amount the company expects to obtain for the asset less costs of disposal.

The cost of an asset is divided into smaller components that are depreciated separately if such compo-

nents have different useful lives.

Tangible assets are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings

25-50 years

Plant and machinery

5-10 years

Other fixtures and equipment

5-10 years

Depreciation methods, useful lives and residual values are reassessed once a year.

If the asset does not generate any cash flows independently of other assets, the recoverable amount is

calculated for the smallest cash-generating unit that includes the asset.

The recoverable amount is calculated as the higher of the fair value less costs to sell and the value in use

of the asset or the cash-generating unit, respectively. In determining the value in use, the estimated

future cash flows are discounted to their present value, using a discount rate reflecting current market

assessments of the time value of money as well as risks that are specific to the asset or the cash-gener-

ating unit and which have not been taken into account in the estimated future cash flows.

If the recoverable amount of the asset or the cash-generating unit is lower than the carrying amount,

the carrying amount is written down to the recoverable amount. For the cash-generating unit, the write-

down is allocated in such a way that goodwill amounts are written down first, and any remaining need

for write-down is allocated to other assets in the unit, although no individual assets are written down to a

value lower than their fair value less costs to sell.

Impairment write-downs are recognised in the income statement. If write-downs are subsequently

reversed as a result of changes in the assumptions on which the calculation of the recoverable amount is

based, the carrying amount of the asset or the cash-generating unit is increased to the adjusted recover-

able amount, not, however, exceeding the carrying amount that the asset or cash-generating unit would

have had, had the write-down not been made.

Property, plant and equipment 2023

Land and buildings

Plant and machinery

Other fixtures and equipment

Property, plant and equipment in progress

2023

46%

23%

4%

27%

Consolidated financial statements

ALK Annual report 2023

80

Section 3 – Operating assets and liabilities

3.3 Leases

Specification of right-of-use assets:

Other

Land and fixtures and

Amounts in DKKm

buildings* equipment

Total

2023

Cost beginning of year

395

3

398

Currency adjustments

(4)

-

(4)

Additions

75

-

75

Remeasurement of lease obligations

8

-

8

Disposals

(22)

-

(22)

Cost year end

452

3

455

Depreciation beginning of year

147

1

148

Currency adjustments

(1)

-

(1)

Depreciation for the year

46

1

47

Disposals

(22)

-

(22)

Depreciation year end

170

2

172

Carrying amount year end

282

1

283

*

Land and buildings include buildings on land leased from Scion DTU A/S, Hørsholm in Denmark. The estimated lease terms are

10 years.

Specification of right-of-use assets:

Other

Land and fixtures and

Amounts in DKKm

buildings* equipment

Total

2022

Cost beginning of year

335

2

337

Currency adjustments

5

-

5

Additions

78

1

79

Remeasurement of lease obligations

(17)

-

(17)

Disposals

(6)

-

(6)

Cost year end

395

3

398

Depreciation beginning of year

109

1

110

Currency adjustments

1

-

1

Depreciation for the year

43

-

43

Disposals

(6)

-

(6)

Depreciation year end

147

1

148

Carrying amount year end

248

2

250

*

Land and buildings include buildings on land leased from Scion DTU A/S, Hørsholm in Denmark. The estimated lease terms are

11 years.

Consolidated financial statements

ALK Annual report 2023

81

Section 3 – Operating assets and liabilities

3.3 Leases – continued

Leases in the income statement

Amounts in DKKm

2023

2022

Expenses from short-term leases

4

2

Expenses from low-value assets (including cars)

19

18

Depreciation of right-of-use assets

47

43

Interest expenses on lease liabilities

7

6

Total

77

69

Cash outflow related to lease agreements was DKK 53 million (2022: DKK 45 million).

Lease liabilities are disclosed in note 4.2.

Accounting policies

Lease liabilities

Lease assets are recognised at the commencement date of the contract if it is or contains a lease. Lease

assets are recognised at cost less accumulated depreciation and impairment. Cost is defined as the

lease liability adjusted for any lease payments made at or before the commencement date. Lease assets

are depreciated on a straight-line basis over the lease term.

Lease assets are remeasured when the lease liability is impacted by reassessment of lease terms, modi-

fications to lease agreements, and when applying indexation or a rate.

On initial recognition, lease liabilities are measured as the present value of future payments. The lease

payments contain fixed payments less any lease incentives receivable and variable lease payments that

depend on an index or a rate.

On subsequent recognition, lease liabilities are measured at amortised cost. The difference between the

present value and the nominal value of lease payments is recognised in the income statement over the

term of the lease as a finance charge.

If the interest rate cannot be determined in the agreement, the lease payments are discounted using

the ALK Group’s incremental borrowing rate adjusted for the functional currency and length of the lease

term. The lease liability is remeasured if or when the future payment or lease term changes.

Short term lease expenses and low value assets are not recognised as part of lease liabilities. They are

recognised in the income statement when incurred as an operating expense.

Consolidated financial statements

ALK Annual report 2023

82

Section 3 – Operating assets and liabilities

3.4 Inventories

Amounts in DKKm

2023

2022

Raw materials

307

265

Work in progress

637

507

Manufactured goods and goods for resale

479

525

Total

1,423

1,297

Amount of write-down of inventories during the year

41

50

Amount of reversal of write-down of inventories during the year*

16

19

Total cost of materials included in cost of sales

569

490

Net carrying amount of inventory not expected to be sold in following year

447

333

*

Reversal of provision for slow moving items, sold in 2023.

the machines, factory buildings and equipment used in the manufacturing process as well as the cost of

factory management and administration. Fixed production overheads are allocated based on the normal

capacity of the production plant.

The net realisable value of inventories is calculated as the expected selling price less completion costs

and costs incurred in making the sale.

A minor part of ALK’s raw materials inventory contains biological assets from agricultural activities. Due

to missing market on which a fair value can be established these products are not valuated.

Significant accounting estimates and judgements

The valuation of inventories includes Management’s assessment of the saleability of the finished goods,

and the quality of raw materials to be used in the production process. If the expected sales price less

any completion costs and costs to execute sales (net realisable value) of inventories is lower than the

carrying amount, the inventories are written down to net realisable value. When assessing salability and

net realisable value, Management uses estimates for future sales and related costs.

End of 2023, the write-down of inventories to net realisable value amounted to DKK 90 million (2022: DKK

85 million).

Further, work in progress and manufactured goods and goods for resale are measured at cost including

indirect production costs. The indirect production costs are measured using a standard cost method.

This is reviewed regularly to ensure reliable measurement of employee costs, capacity utilisation, cost

drivers and other relevant factors. When including the indirect productions costs for capitalisation,

Management makes estimates about cost of production, standard cost variances, cost drivers and

capacity utilisation. Changes in these parameters may have a significant impact on the gross margin and

the overall valuation of work in progress and manufactured goods and goods for resale.

End of 2023, the indirect production costs capitalised under inventories amounted to DKK 483 million

(2022: DKK 442 million).

Inventories 2023

Accounting policies

Raw materials

Work in progress

Manufactured

goods and

Inventories are measured at cost determined

under the FIFO method or net realisable value

where this is lower.

Cost comprises raw materials, goods for

resale, and direct payroll costs as well as fixed

and variable production overheads. Vari-

able production overheads comprise indirect

materials and payroll costs and are allocated

based on predetermined costs of the goods

actually produced. Fixed production overheads

comprise maintenance of and depreciation on

21%

34%

goods for

resale

45%

Consolidated financial statements

ALK Annual report 2023

83

Section 3 – Operating assets and liabilities

3.5 Trade receivables

Days past due

Amounts in DKKm

Not due <180 days

180-360 >360 days

Total

2023

Average expected credit loss rate

1%

3%

0%

33%

Trade receivables (gross)

744

74

2

3

823

Loss allowance

4

2

-

1

7

Trade receivables (net)

740

72

2

816

Loss allowance:

Balance beginning of year

8

Change in allowances during the year

-

Realised losses during the year

(1)

Loss allowance, year end

7

2022

Average expected credit loss rate

1%

2%

8%

50%

Trade receivables (gross)

671

86

13

2

772

Loss allowance

4

2

1

8

Trade receivables (net)

667

84

12

1

764

Loss allowance:

Balance beginning of year

11

Change in allowances during the year

2

Realised losses during the year

(5)

Loss allowance, year end

8

Accounting policies

On initial recognition, receivables are measured at fair value, subsequently at amortised cost.

Expected credit losses are measured based on historical data adjusted by forward-looking information.

Forward-looking information includes assessment of the probability of default as well as consideration of

various external sources of actual and economic information that is reasonable and supportable without

undue cost or effort.

ALK recognises expected credit losses that result from default events possible within the whole asset life.

Risk related to trade receivables is managed in ALK locally by entities, based on an individual assess-

ment. Loss allowance for doubtful trade receivables is also based on an individual assessment of the

receivables. ALK has not implemented a global provision matrix due to different characteristics related

to receivables across the ALK Group. Loss allowance are calculated based on variables, e.g. probabili-

ty-weighted amount (based on historical realised losses), the time value of money, additional support-

able information, including an individual assessment of each customer/customer group.

An impairment loss or reversal of prior impairment loss is recognised in the income statement.

Receivables are written down when information indicates severe financial difficulties and that there is

no reasonable expectation of recovery. Financial assets written off may still be subject to enforcement

activities. Any recoveries made are recognised in the income statement.

3.6 Prepayments

Amounts in DKKm

2023

2022

Clinical trials, cf. note 2.2

21

130

Royalties

46

39

Other

80

70

Total

147

239

Accounting policies

Prepayments are recognised as an asset and comprise incurred costs relating to subsequent financial

years. Prepayments are measured at cost.

Consolidated financial statements

ALK Annual report 2023

84

Section 3 – Operating assets and liabilities

3.7 Pensions and similar liabilities

The ALK Group has entered into defined contribution plans as well as defined benefit plans.

In defined contribution plans, the ALK Group is obliged to pay a certain contribution to a pension fund or

the like but bears no risks regarding the future development in interest, inflation, mortality, disability

rates etc. regarding the amount to be paid to the employee.

The ALK Group sponsors defined benefit plans for qualifying employees of its subsidiaries in Germany,

France and Switzerland. The defined benefit plans guarantee employees a certain level of pension bene-

fits for life. The pension is based on seniority and salary at the time of retirement. The ALK Group bears

the risks regarding the future development in interest, inflation, mortality, disability rates etc. regarding

the amount to be paid to the employee.

Amounts in DKKm

2023

2022

Costs related to defined contribution plans

119

107

Costs related to defined benefit plans

26

24

Total

145

131

Present value of funded pension obligations

24

Fair value of plan assets (100% insurance contract)

(22)

(21)

Funded pension obligations, net

2

3

Present value of unfunded pension obligations

171

161

Pension obligations

173

164

Anniversary liabilities

10

Other liabilities*

62

Pension obligations and similar liabilities, year end

245

236

*

Other liabilities include liability related to the transition period for the Danish Holiday Act of DKK 61 million (2022: DKK 60 million).

Plan assets consist of assets placed in pension companies. Assets are placed in investments classified

as other assets than shares, bonds and property by the pension companies, and are not measured at

quoted prices.

The weighted average duration of the pension obligations is 16.37 years (2022: 16.58 years).

Amounts in DKKm

2023

2022

The principal assumptions used for the actuarial valuations

Discount rate range of 2% - 3.4% (weighted average rate)

3.4%

3.8%

Expected future rate of salary increase range of 1% - 2.5%

(weighted average rate)

2.4%

Assumed life expectations on retirement age for current pensioners

(years based on weighted average)*:

Males

20.0

21.1

Females

23.1

24.3

Assumed life expectations on retirement age for current employees

(future pensioners) (years based on weighted average)*:

Males

21.1

22.4

Females

24.8

26.3

Sensitivity analysis:

Significant actuarial assumptions for determining the

defined benefit obligation

Discount rate, effect in case of increase in range of 0.25% - 1%**

(22)

(21)

Discount rate, effect in case of decrease in range of 0.25% - 1%**

27

Salary, effect in case of 0.25% - 0.5% increase**

3

2

Salary, effect in case of 0.25% - 0.5% decrease**

(3)

(2)

Life expectancy, effect in case of increase by 1 year*

7

6

Life expectancy, effect in case of decrease by 1 year*

(7)

(6)

Movements in the present value of the funded defined benefit obligation

in the current year

Opening funded defined benefit obligation

24

25

Current service costs

2

Actuarial (gains)/losses arising from changes in financial assumptions

(3)

(5)

Contribution from plan participants

1

-

Benefits paid

(2)

1

Currency translation adjustment

2

1

Closing funded defined benefit obligation

24

*

Based on national statistics for mortality.

** Based on actuarial reports with different rates.

Consolidated financial statements

ALK Annual report 2023

85

Section 3 – Operating assets and liabilities

3.7 Pensions and similar liabilities – continued

Amounts in DKKm

2023

2022

Movements in the fair value of the plan assets in the current year

Opening fair value of plan assets

21

17

Contribution from plan participants

2

Benefits paid

(2)

1

Currency translation adjustment

2

1

Return on plan assets

(1)

-

Closing fair value of plan assets (fully invested in insurance contracts)

22

21

Movements in present value of unfunded pension obligations

in the current year

Opening present value of unfunded pension obligations

161

246

Current service costs

4

7

Interest costs

6

3

Actuarial (gains)/losses from changes in financial assumptions

13

(87)

Actuarial (gains)/losses arising from experience adjustments

-

(4)

Actuarial (gains)/losses arising from demographic adjustments

(9)

-

Benefits paid

(4)

Closing present value of unfunded pension obligations

171

161

Amount recognised as staff expenses in the income statement

Current service costs

6

9

Net interest expense

6

3

Total

12

Amount recognised in comprehensive income in respect

of defined benefit plans

Actuarial (gains)/losses

1

(96)

Total

1

(96)

The expected contribution for 2024 for the defined benefit plans is DKK 12 million (2023: DKK 13 million).

The most recent actuarial valuations of the defined benefit liability were carried out by external inde-

pendent actuary agents at 31 December 2023.

Accounting policies

The ALK Group has entered into pension agreements and similar agreements with some of the ALK

Group’s employees.

In respect of defined contribution plans, the ALK Group pays in fixed contributions to independent pension

funds etc. The contributions are recognised in the income statement during the period in which the

employee renders the related service. Payments due are recognised as a liability in the balance sheet.

In respect of defined benefit plans, the ALK Group is required to pay an agreed benefit in connection with

the retirement of the employees covered by the plan, e.g. in the form of a fixed amount or a percentage of

the salary at retirement.

For defined benefit plans, an annual actuarial assessment is made of the net present value of future

benefits to which the employees have earned the right through their past service for the ALK Group and

which will have to be paid under the plan. The Projected Unit Credit Method is applied to determine net

present value.

The net present value is calculated based on assumptions of the future development of salary, interest,

inflation, mortality and disability rates.

The net present value of pension liabilities is recognised in the balance sheet, after deduction of the

fair value of any assets attached to the plan, as either plan assets or pension liabilities, depending on

whether the net amount is an asset or a liability, as described below.

If the assumptions made with respect to discount factor, inflation, mortality and disability are changed,

or if there is a discrepancy between the expected and realised return on plan assets, actuarial gains

or losses occur. These gains and losses concerning previous financial years are recognised in other

comprehensive income.

Consolidated financial statements

ALK Annual report 2023

86

Section 3 – Operating assets and liabilities

3.8 Provisions

Restructuring

Other

Amounts in DKKm

programs

provisions*

Total

2023

Provisions beginning of year

-

3

Provisions made during the year

-

3

Used during the year

-

(2)

Reversals during the year

-

(1)

Provisions, year end

-

3

Provisions are recognised as follows:

Non-current liabilities

-

1

Current liabilities

-

2

Provisions, year end

-

3

2022

Provisions beginning of year

10

2

12

Provisions made during the year

-

1

Used during the year

(10)

-

(10)

Provisions, year end

-

3

Provisions are recognised as follows:

Current liabilities

-

3

Provisions, year end

-

3

*

Other provisions in 2023 include a provision for sales in Italy of DKK 2 million (2022: DKK 3 million) and provisions for minor legal

proceedings of DKK 1 million (2022: DKK 0).

3.9 Other payables

Amounts in DKKm

2023

2022

Rebates and commissions, cf. note 2.1

241

274

Salaries, holiday payments etc.

307

270

Clinical trials, cf. note 2.2

26

114

VAT and other taxes

96

81

Other

167

239

Total

837

978

Accounting policies

Other payables are recognised as a current liability and comprise costs due in the subsequent financial

year. Other payables are measured at amortised cost.

Other payables 2023

Rebates and commissions

Salaries, holiday payments etc.

Clinical trials

24%

VAT and other taxes

Other

12%

3%

37%

Accounting policies

Provisions are recognised when, as a consequence of a past event during the financial year or previous

years, the ALK Group has a legal or constructive obligation, and it is likely that settlement of the obliga-

tion will require an outflow of the ALK Group’s financial resources. Provisions are measured as the best

estimate of the costs required to settle the obligations at the balance sheet date. Provisions with an

expected term of more than a year after the balance sheet date are measured at present value.

Consolidated financial statements

ALK Annual report 2023

87

Section 3 – Operating assets and liabilities

3.10 Contingent liabilities and commitments

Security in assets

Land and buildings provided as security vis-à-vis for mortgage debt amount to DKK 164 million

(2022: DKK 176 million) out of mortgage debt of DKK 203 million (2022: DKK 221 million).

Contingent liabilities

In the ordinary course of business, the ALK Group is involved in certain claims, disputes etc. In the opinion

of Management, settlement or continuation of pending claims and other disputes will have no material

impact on the ALK Group’s financial position.

The ALK Group operates in a wide variety of jurisdictions, in some of which the tax law is subject to varying

interpretations and potentially inconsistent enforcement. As a result, there can be practical uncertainties

in applying tax legislation to the ALK Group’s activities. Whilst the ALK Group considers that it operates

in accordance with applicable tax law, there are potential tax exposures in respect of its operations, the

impact of which cannot be reliably estimated, but could be material.

Joint taxation scheme

ALK-Abelló A/S is included in a joint Danish taxation scheme with the Lundbeck Foundation (Lundbeck-

fond Invest A/S) and its Danish subsidiaries. The Danish companies are joint and several liable for the

joint taxation liability. The joint taxation liability covers income taxes and withholding taxes on dividends,

royalties and interest. The joint taxation liability is capped at an amount equal to the share of the capital

of the company directly or indirectly owned by the ultimate parent company. The total tax obligation

under the joint Danish taxation scheme is shown in the financial statements of the Lundbeck Foundation

(Lundbeckfond Invest A/S).

Change of control

The ALK Group’s credit facilities and drawn loans are subject to standard change of control clauses

according to which the lender has the right to cancel the commitment and demand repayment of

outstandings.

Commitments

Amounts in DKKm

2023

2022

Bank guarantees*

80

76

Other guarantees

12

11

Total

92

87

*

Bank guarantees include DKK 78 million related to ongoing tax audits (2022: DKK 75 million).

Consolidated financial statements

ALK Annual report 2023

88

Section 4 – Capital structure and financing

4.1 Share capital and earnings per share

2023

2022

Nominal

value

Units

(DKKm)

Units

(DKKm)

Share capital

The share capital consists of:

A shares (nominal value of DKK 0.5)

18,415,200

9

18,415,200

9

AA shares (nominal value of DKK 0.5)

1,841,520

1

1,841,520

1

B shares (nominal value of DKK 0.5)

202,567,200

101

202,567,200

101

Total

222,823,920

111 222,823,920

111

2023

2022

Treasury shares

Treasury shares beginning of year (B-shares), units

1,824,975

2,970,560

Sale of treasury shares, units

(190,302)

(1,145, 58 5)

Treasury shares year end (B-shares), units

1,634,673

1,824,975

Proportion of share capital year end

0.7%

0.8%

Nominal value year end

0.8

0.9

Market value year end

165

175

Earnings per share

The calculation of earnings per share is based on the following:

Net profit (DKKm)

486

335

Number in units:

Average number of issued shares

222,823,920

Average number of treasury shares

(1,678,589)

(2,321,447)

Average number of shares used for calculation

of earnings per share

221,145,331 220,502,473

Average dilutive effect of outstanding share options

130,812

870,206

Average number of shares used for calculation

of diluted earnings per share

221,276,143

221,372,679

Earnings per share (EPS) (DKK)

2.20

1.52

Earnings per share, diluted (DEPS) (DKK)

2.20

1.51

Each A and AA share carries 10 votes, whereas each B share carries 1 vote. AA shares no longer held by

individuals or legal entities other than the Lundbeck Foundation or companies which are group affiliated

with the Lundbeck Foundation, cf. the definition of groups in section 6 of the Danish Companies Act, or in

the event that a company which holds AA shares is no longer group affiliated with the Lundbeck Founda-

tion, such AA shares shall be transferred to the B share capital.

According to a resolution passed by the parent company at the annual general meeting, the parent

company is allowed to purchase treasury shares, up to 10% of the share capital. The parent company has

purchased treasury shares in connection with the issuance of share-based incentive plans. All shares are

paid in.

Accounting policies

Acquisition and sales sums arising on the purchase and sale of treasury shares and dividends on

treasury shares are recognised directly in retained earnings under equity.

Consolidated financial statements

ALK Annual report 2023

89

Section 4 – Capital structure and financing

4.2 Financial risks and financial instruments

The greatest exposure is to USD and in 2023, 16% (2022: 17%) of the revenue was denominated in USD.

The sales are not deemed to be exposed to EUR due to Denmark’s participation in the European Exchange

Rate Mechanism.

The ALK Group is exposed to exchange rate risks when intercompany balances and net assets of foreign

subsidiaries are translated into DKK. In accordance with the ALK Group’s accounting policies, such

currency translation adjustments are recognised in the income statement and in other comprehensive

income, respectively.

No exchange rate hedge contracts were open at 31 December 2023 or 31 December 2022.

Financial risk management policy

As a result of operations, investments and financing, the ALK Group is exposed to exchange and interest

rate changes. ALK-Abelló A/S manages the ALK Group’s financial risks centrally and coordinates the ALK

Group’s cash management, including the raising of capital and investment of excess cash. The ALK Group

complies with a policy, approved by the Board of Directors, to maintain a low risk profile, ensuring that

the ALK Group is only exposed to foreign exchange rate risk, liquidity risk, interest rate risk, and credit

risk in connection with its commercial activities.

Capital structure

The ALK Group manages its capital to ensure that all entities will be able to continue as going concern

while maximising the return to stakeholders through the optimisation of the debt and equity balances.

The capital structure of the ALK Group consists of net debt and equity. The dividend policy of the ALK

Group is to distribute maximum possible dividend to ALK-Abelló A/S.

The ALK Group’s Risk Committee reviews the capital structure annually. As a part of this review, the

committee considers the cost of capital and the risks associated with each class of capital.

Sensitivity to a 10% increase in USD exchange rate

The table below shows the estimated effect of a 10% increase in the USD exchange rate on revenue, EBIT

and equity levels, respectively. A decrease in the exchange rates will have a corresponding adverse

effect. In the sensitivity analysis, data for revenue and EBIT are based on current short-term expecta-

tions and data for equity are based on actual equity at 31 December 2023.

Amounts in DKKm

Revenue

EBIT

Net profit

Equity

31 December 2023

USD

approx. +95

approx. +20

approx. +15

approx. +55

31 December 2022

USD

approx. +80

approx. +5

approx. +15

Foreign exchange rate risk

Foreign exchange rate risk arises due to imbalances between revenue and expenses in each individual

currency. Foreign exchange rate exposure relating to future transactions and assets and liabilities is

evaluated and hedged through matching of payments received and paid in the same currency. This

serves to limit the impact on the financial results of any exchange rate fluctuations. The exchange

rate exposure relating to net investments in foreign subsidiaries is not hedged by forward exchange

contracts. In case it is evaluated to be relevant, the ALK Group hedges significant exchange rate expo-

sures regarding future sales and purchase of goods in the coming six months in accordance with the ALK

Group’s policy.

The general objective of the ALK Group’s foreign exchange risk management is to limit and delay any

adverse impact of exchange rate fluctuations on earnings and cash flows and thus increase the predict-

ability of the financial results. The most significant financial risk relates to exchange rate fluctuations.

Consolidated financial statements

ALK Annual report 2023

90

Section 4 – Capital structure and financing

4.2 Financial risks and financial instruments – continued

Liquidity risk

In connection with the ALK Group’s ongoing financing of operations, including refinancing, efforts are

made to ensure adequate and flexible liquidity. This is guaranteed by placing free funds in credit-worthy,

liquid, interest bearing instruments of relatively short durations in accordance with the ALK Group’s

policy.

The liquidity risk is considered to be minimal due to the ALK Group’s current capital structure.

Net positions

Amount

Net

Amounts in DKKm

Cash Receivables

Liabilities

hedged

position

31 December 2023

DKK

5

59

(873)

-

(809)

USD

262

214

(222)

-

254

EUR

100

437

(1,017)

-

(480)

GBP

3

17

(11)

-

9

SEK

6

41

(19)

-

28

Other

98

206

(138)

-

166

Total

474

974

(2,280)

-

(832)

31 December 2022

DKK

(12)

89

(909)

-

(832)

USD

111

228

(328)

-

11

EUR

48

433

(956)

-

(475)

GBP

2

18

(21)

-

(1)

SEK

2

34

(16)

-

20

Other

70

180

(90)

-

160

Total

221

982

(2,320)

-

(1,117)

Liquidity exposure

Revaluation/payment date

Carrying

Total

Within

From

After

Amounts in DKKm

amount cash flow*

1 year

1-5 years

5 years

31 December 2023

Mortgage debt and bank loans

464

466

282

74

110

Trade payables

128

-

Lease liabilities

301

337

54

143

140

Other financial liabilities

854

-

Financial liabilities

1,747

1,785

1,318

217

250

31 December 2022

Mortgage debt and bank loans

429

432

229

73

130

Trade payables

131

-

Lease liabilities

267

292

46

167

79

Other financial liabilities

994

-

Financial liabilities

1,821

1,849

1,400

240

209

*

Total cash flow includes interest.

Consolidated financial statements

ALK Annual report 2023

91

Section 4 – Capital structure and financing

4.2 Financial risks and financial instruments – continued

Interest rate risk

The ALK Group does not hedge its interest rate exposure, as this is not considered to be financially viable.

Concerning the ALK Group’s financial assets and financial liabilities, the earlier of the contractual reval-

uation and redemption date is applied. Effective interest rates are stated on the basis of the current level

of interest rates on the balance sheet date.

An increase in the interest rate of 1 percentage point on mortgage debt and bank loans would decrease

net profit and equity by approximately DKK 5 million (2022: decrease of DKK 4 million). An increase in

the interest of 1 percentage point on cash would increase net profit and equity by approximately DKK 5

million (2022: increase of DKK 2 million).

Credit risk

The ALK Group’s primary credit exposure is related to trade receivables and cash. The ALK Group has

no major exposure relating to one single customer or business partner. According to the ALK Group’s

policy for assuming credit exposure, all customers and business partners are credit rated regularly.

Trade receivables are monitored at the local level and are distributed across a number of markets and

customers. Therefore, the credit risk is considered to be low. For more information, see note 3.5.

Interest rate exposure

Carrying

Fixed/

Effective

Amounts in DKKm

amount

Currency Expiry date

floating interest rate

31 December 2023

Cash

474

Various

Floating (1.25)-5.05

Interestbearing assets

474

Mortgage debt

203

DKK

2035

Floating

0.2

Lease liabilities

301

Various

2024-2036

Fixed

2.0

Bank loans

261

Various

2024

Fixed

4.5

Interestbearing liabilities

765

31 December 2022

Cash

221

Various

Floating

(0.6)-4.75

Interestbearing assets

221

Mortgage debt

221

DKK

2035

Floating

0.2

Lease liabilities

267

Various

2023-2036

Fixed

2.0

Bank loans

208

Various

2023

Fixed

2.8-3.3

Interestbearing liabilities

696

Embedded derivative financial instruments

The ALK Group has made a systematic review of contracts that might contain terms that would make the

contract or parts thereof a derivative financial instrument. The review did not lead to recognition of deriv-

ative financial instruments relating to the contracts.

Consolidated financial statements

ALK Annual report 2023

92

Section 4 – Capital structure and financing

4.2 Financial risks and financial instruments – continued

Measurement and fair value hierarchy

Revaluation/payment date

Fair

Within

From

After

Amounts in DKKm

value

1 year

1-5 years

5 years

31 December 2023

Mortgage debt

206

19

75

112

Bank loans

261

-

Total

467

280

75

112

31 December 2022

Mortgage debt

225

18

74

133

Bank loans

208

-

Total

433

226

74

133

All financial assets and liabilities are measured at cost or amortised cost. The carrying amounts for these

approximate fair value.

Fair value for mortgage debt is measured by level 1 input (quoted prices in active markets) from the

fair value hierarchy and fair value for bank loans is measured by level 2 input (inputs other than quoted

markets that are observable) from the fair value hierarchy.

No financial derivatives were used in 2023 or 2022.

Financial resources

The ALK Group has a DKK 1,500 million credit facility which runs until the end of 2026. By the end of 2023,

DKK 261 million was drawn.

Categories of financial instruments

Amounts in DKKm

2023

2022

Financial assets

Financial assets measured at

amortised cost

Impairment method

Receivables from group companies

12m ECL

-

18

Prepayments

12m ECL

49

94

Trade receivables

Lifetime ECL (simplified approach)

816

764

Other receivables

12m ECL

74

82

Cash

474

221

Total

1,413

1,179

Financial liabilities

Financial liabilities measured at

amortised cost

Mortgage debt

203

221

Bank loans

261

208

Lease liabilities

301

267

Trade payables

128

131

Other payables

837

978

Total

1,730

1,805

Consolidated financial statements

ALK Annual report 2023

93

Section 4 – Capital structure and financing

4.2 Financial risks and financial instruments – continued

Accounting policies

Financial assets

On initial recognition, investments and other financial assets are measured at cost, corresponding to

fair value. They are subsequently measured at fair value either through the income statement or through

comprehensive income.

Financial liabilities

Other financial liabilities, including bank loans, lease liabilities, trade payables, and other payables,

are on initial recognition measured at fair value. The liabilities are subsequently measured at amortised

cost.

Debt

Trade payables, other payables, including sales discounts and rebates as well as debt to public authori-

ties etc., are measured at amortised cost.

Mortgage debt

Mortgage debt is recognised on the raising of a loan at cost, equalling fair value of the proceeds received,

and net of transaction costs incurred. Subsequently, mortgage debt is measured at amortised cost.

Consolidated financial statements

ALK Annual report 2023

94

Section 5 – Other disclosures

5.1 Share-based payments

The ALK Group has established long-term equity-based incentive plans linked to the creation of share-

holder value and the fulfilment of strategic goals. The plans are established for the members of Board

of Management and other key employees, reward long-term value creation and align to interests of the

shareholders.

The incentive plans consist of share options, performance share units, and restricted stock units that are

considered sufficiently covered by treasury shares.

The share options entitle the holder to acquire one existing B share of DKK 0.5 nominal value in the

company per share option. The performance share units and restricted stock units entitle the holder to

receive one existing B share per performance share unit or restricted stock unit free of charge.

The vesting period for both share options, performance share units, and restricted stock units is three

years after grant. Vesting of share options and performance share units is conditional upon certain

targets being met and upon the participant not having resigned. Target achievement is met upon fulfil-

ment of strategic key performance indicators. In case performance is below the threshold there will be

no units vesting, and if above target, a multiplier is applied that can increase the vesting by up to 100%.

Vesting of restricted stock units is conditional upon continued employment.

The exercise of share options is possible in the trading windows following the release of annual and

interim reports conditional upon the share option holder not having resigned at the time of exercise. For

performance share units and restricted stock units, the final transfer of ownership takes place at vesting

three years after the grant.

For the 2023 plans, a cap applies to the maximum total value gain from share options, performance

shares, and restricted stock units at exercise and/or vesting, respectively, granted in a calendar year.

The cap is four times the annual base salary at the time of award of the share options, performance share

units, and restricted stock units concerned.

Expensed in the income statement:

Amounts in DKKm

2023

2022

Cost for the year regarding share-based payments is recognised as follows:

Cost of sales

6

4

Research and development expenses

6

7

Sales and marketing expenses

9

8

Administrative expenses

9

8

Total

30

27

In 2023, the total cost of share-based payments included a financial income of DKK 0.1 million due to the

exercise and cash settlement of share options (2022: DKK 0). The total cost included DKK 8 million related

to adjustment in the share options and performance share units expected to vest (2022: DKK 3 million).

Consolidated financial statements

ALK Annual report 2023

95

Section 5 – Other disclosures

5.1 Share-based payments – continued

Specification of outstanding share options and performance share units:

Share options

Performance share units

Restricted stock units

Weighted

Board of

Other key

average

Board of

Other key

Board of

Management

employees

Total

exercise price

Management

employees

Total

Management

units

DKK

units

2023

Outstanding at 1 January

590,120

638,740

1,228,860

82

79,020

423,920

502,940

-

Additions

397,6 61

86,657

484,318

86

25,358

165,452

190,810

151,997

Exercised/settled

(192,320)

(241,899)

(434,219)

48

(42,895)

(202,216)

(245,111)

-

Change in Board of Management*

( 3 07,6 5 0)

3 07,6 5 0

-

(8,240)

8,240

-

Cancellations

-

(24,880)

106

(24,980)

(8,280)

(33,260)

-

Outstanding at 31 December

487,811

766,268

1,254,079

95

28,263

387,116

415,379

151,997

Total number of vested share options

451,150

Average remaining life at year end (years)

2.6

Exercise prices at year end (DKK)

59-144

2022

Outstanding at 1 January

1,285,800

768,18 0

2,053,980

59

130,220

518,180

648,400

-

Additions

261,420

2 27,4 20

488,840

108

58,860

244,980

303,840

-

Exercised/settled

(851,200)

(356,860)

(1,208,060)

48

(92,720)

(328,540)

(421,260)

-

Cancellations

(105,900)

-

(105,900)

90

(17, 3 4 0)

(10,700)

(28,040)

-

Outstanding at 31 December

590,120

638,740

1,228,860

82

79,020

423,920

502,940

-

Total number of vested share options

5 07,18 0

Average remaining life at year end (years)

2.0

Exercise prices at year end (DKK)

41-141

The Board of Directors decided for two trading windows in 2023 to settle share options by cash and a total of 434,219 share options were exercised and total cash payments amounted to DKK 14 million. The Board of

Directors decided not to open two trading windows for exercises in 2023.

The Board of Directors decided for four trading windows in 2022 to settle share options by shares and a total of 1,208,060 share options were exercised.

* In relation to the resignation of the previous CEO, it was agreed that he kept his outstanding share options and the related outstanding costs were accelerated, while outstanding performance share units were cancelled.

Consolidated financial statements

ALK Annual report 2023

96

Section 5 – Other disclosures

5.1 Share-based payments – continued

Performance share units

Performance share units have been granted at DKK 104 per share (2022: DKK 141 per share).

Outstanding share options and performance share units have the following characteristics:

Performance

Restricted

Share options

share units

stock units

Average

exercise

Exercise

price

Vested

period

Vested

Plan

Units

DKK

as per

(years)

Units

as per

Units

as per

2019 Plan

106,380

59 1 Mar 2022

2

2020 Plan

344,770

75 1 Mar 2023

2

2021 Plan

193,560

125 1 Mar 2024

2

131,860 1 Mar 2024

2022 Plan

174,380

150 1 Mar 2025

2

124,680 1 Mar 2025

2023 Plan

111,470

104 1 Apr 2026

4

158,839 1 Apr 2026

2023 Plan, special

323,519

82 1 Jun 2026

4

2023 Plan, special

21,925 1 Mar 2026

2023 Plan, special

130,072 1 Nov 2026

Outstanding at

31 December

1,254,079

415,379

151,997

Restricted stock units

Restricted stock units have been granted at DKK 105 and DKK 77 per share for the respective 2023 plans.

No restricted stock units were granted in 2022.

Accounting policies

Share-based incentive plans (equity-settled share-based payments), which comprise share options,

performance share units, and restricted stock units are measured at the grant date at fair value and

recognised in the income statement under the respective functions over the vesting period and offset in

equity.

The fair value of share options is determined using the Black & Scholes model. The exercise price is equi-

valent to the average market price of the share for the five trading days immediately preceeding the date

of grant. For 2023 share option plans the exercise price is reduced by dividends paid. For share option

plans before 2023 the exercise price is increased by 2.5% p.a. and reduced by dividends paid.

The fair value of performance share units and restricted stock units is determined using the average share

price (closing) five days after annual general meeting.

The ALK Group settles the equity-settled share-based incentive plans in shares. However, the share

option agreement entitles the ALK Group to demand cash settlement of the options. The ALK Group

recognises share options, in case of cash settlement, as other liabilities and adjusts to fair value as from

the time when the ALK Group has an obligation to settle in cash. The ALK Group recognises subsequent

adjustment to fair value in the income statement under financial income or financial expenses.

Fair value of share options, performance share units, and restricted stock units granted:

Share options

Fair value at grant date is measured in accordance with the Black & Scholes model for valuation of share

options, using the following assumptions:

2023

2022

Plan

Special plan

Plan

Average share price (DKK)

104

82

141

Expected exercise price (DKK)

104

82

152

Expected volatility rate, based on the historical volatility

36% p.a.

38% p.a.

35% p.a.

Expected option life

5 years

4 years

Expected dividend per share

-

Risk-free interest rate

2.57% p.a.

2.73% p.a.

0.14% p.a.

Calculated fair value of granted share options (DKK)

37

31

33

Consolidated financial statements

ALK Annual report 2023

97

Section 5 – Other disclosures

5.2 Cash flow

Adjustment for non-cash items

Amounts in DKKm

2023

2022

Tax on profit

161

112

Financial income and expenses

19

23

Share-based payments

30

27

Depreciation, amortisation and impairment

245

238

Other adjustments

3

6

Total

458

406

Changes in working capital

Amounts in DKKm

2023

2022

Change in inventories

(132)

(74)

Change in receivables and prepayments

(69)

(172)

Change in short-term payables

(2)

11

Total

(203)

(235)

Reconciliation of liabilities arising from financing activities

Amounts in DKKm

2023

2022

Liabilities from financing activities at 1 January

696

710

Proceeds from borrowings

671

60

Repayment of borrowings

(636)

(94)

Lease additions and modifications

83

56

Instalments of lease liabilities

(46)

(39)

Exchange rate adjustments

(3)

3

Liabilities from financing activities at 31 December

765

696

Financial reserves

Amounts in DKKm

2023

2022

Cash

474

221

Undrawn facilities

1,239

1,292

Total

1,713

1,513

ALK has a DKK 1,500 million credit facility which runs until the end of 2026. By the end of 2023, DKK 261

million was drawn.

Accounting policies

Cash flow

The cash flow statement of the ALK Group is presented using the indirect method and shows cash flows

from operating, investing and financing activities as well as cash at the beginning and at the end of the

financial year.

The cash effect of acquisitions and divestments is shown separately under cash flows from investing activi-

ties. In the cash flow statement, cash flows concerning acquired companies are recognised from the date of

acquisition, while cash flows concerning divested companies are recognised until the date of divestment.

Cash flows from operating activities are stated as net profit, adjusted for non-cash operating items and

changes in working capital, less the income tax paid and plus net financial items.

Cash flows from investing activities comprise payments in connection with acquisition and divestment of

companies and financial assets as well as purchase, development, improvement and sale of intangible

and tangible assets.

Cash flows from financing activities comprise changes to the parent company’s share capital and related

costs as well as the raising and repayment of loans, instalments on interest-bearing debt, lease liabili-

ties, purchase of treasury shares, and settlement of share options and payment of dividends.

Cash flows in currencies other than the functional currency are recognised in the cash flow statement

using average exchange rates for the individual months if these are a reasonable approximation of the

Consolidated financial statements

ALK Annual report 2023

98

Section 5 – Other disclosures

5.2 Cash flow – continued

5.3 Business combinations – continued

actual exchange rates at the transaction dates. If this is not the case, the actual exchange rates for the

specific days in questions are used.

Cash comprise cash subject to an insignificant risk of changes in value less any overdraft facilities that

are an integral part of the ALK Group’s cash management.

If the fair value of the acquired assets or liabilities subsequently proves different from the values calcu-

lated at the acquisition date, cost is adjusted for up to 12 months after the date of acquisition.

Any excess of the cost of an acquired company over the fair value of the acquired assets, liabilities and

contingent liabilities (goodwill) is recognised as an asset under intangible assets and tested for impair-

ment at least once a year.

5.3 Business combinations

The ALK Group had no acquisitions of companies or operations in 2023, however the company acquired

the operating assets in AllerQuest as of 2 January 2024. See note 5.5.

No companies or operations were acquired in 2022.

5.4 Related parties

Related party exercising control

ALK-Abelló A/S is controlled by the Lundbeck Foundation (Lundbeckfond Invest A/S) domiciled in Copen-

hagen, Denmark, which holds 67.2% of the total number of votes in ALK Abelló A/S. The remaining shares

are widely held. ALK-Abelló A/S is parent company, and ultimate parent for the ALK Group is the Lund-

beck Foundation (Lundbeckfond Invest A/S, incorporated in Denmark).

Other related parties comprise ALK’s Board of Management and Board of Directors, companies in which

the majority shareholder exercises control, and such companies’ subsidiaries, in this case e.g, H. Lund-

beck A/S and Falck A/S and their subsidiaries.

Transactions and balances

Transactions and balances with the parent company’s majority shareholder:

• ALK-Abelló A/S received DKK 14 million (2022: DKK 52 million) concerning outstanding company tax

from the Lundbeck Foundation (Lundbeckfond Invest A/S). The company tax relates to ALK-Abelló A/S

and ALK-Abelló Nordic A/S.

• End of 2023 there are no receivables from group companies to ALK-Abelló A/S related to outstanding

company tax (2022: DKK 18 million) covering ALK-Abelló A/S and ALK-Abelló Nordic A/S.

Transactions with key management personnel consist of remuneration and exercise of share options, see

notes 2.4 and 5.1 of the consolidated financial statements.

No other transactions have taken place during the year with Board of Directors, Board of Management,

major shareholders or other related parties.

Accounting policies

Newly acquired or newly established companies or operations are recognised in the consolidated finan-

cial statements from the date of acquisition or establishment. The date of acquisition is the date when

control of the company actually passes to the ALK group.

Acquisitions are accounted for using the purchase method, according to which the identifiable assets,

liabilities and contingent liabilities of companies acquired are measured at fair value at the date of

acquisition.

Restructuring costs are only recognised in the takeover balance sheet if they represent a liability to the

acquired company. The tax effect of revaluations is taken into account.

The cost of a company is the fair value of the consideration paid. If the final determination of the conside-

ration is conditional on one or more future events, these are recognised at their fair value as of the acqui-

sition date.

Costs that can be attributed directly to the transfer of ownership are recognised in the income statement

when they are incurred. As a general rule, adjustments to estimates of conditional consideration are

recognised directly to the income statement.

Consolidated financial statements

ALK Annual report 2023

99

Section 5 – Other disclosures

5.5 Events after the reporting period

On 2 January 2024, the ALK Group acquired the operating assets of AllerQuest for a total cash consider-

ation of DKK 125 million. The consideration amount includes an escrow amount of DKK 10 million which

serves as reserve for potential indemnifications over 18 months from acquisition date.

AllerQuest was a U.S.-based company dedicated to manufacturing PRE-PEN^®Skin Antigen Test. This

acquisition makes ALK the sole manufacturer and distributor of PRE-PEN in the U.S. and Canada, with

global ownership rights to all assets of AllerQuest. PRE-PEN is the only FDA-approved diagnostic skin test

for the evaluation of penicillin allergy and is indicated for the assessment of sensitization to penicillin in

patients suspected to have clinical penicillin hypersensitivity. AllerQuest was previously a supplier of the

ALK Group and will be fully integrated into ALK during 2024.

The transaction is on a debt and cash free basis. At the time the financial statements were authorised for

issue, the ALK Group had not yet completed the accounting for the acquisition as the transaction has just

happened. In particular, the fair values of the assets disclosed above have only been determined provi-

sionally as the independent valuations have not been finalised. A preliminary purchase price allocation

has been prepared. Operating tangible assets and inventories amount to DKK 7 million. Product rights,

including production processes, formulations, approvals and trademarks, amount to DKK 118 million. No

liabilities were transferred.

No other events have occured after the reporting period, that influence the evaluation of the consolidated

financial statements.

5.6 Approval of financial statements

The financial statements were approved by the Board of Directors and authorised for issue on 8 February

2024.

Consolidated financial statements

ALK Annual report 2023

100

Section 5 – Other disclosures

5.7 List of companies in the ALK Group

Activity

Production

Sales and distribution

Research and development

Services

Percentage of

Entity

Country shares owned

Activity

Parent company

ALK-Abelló A/S

Denmark

Subsidiaries by geographical area

Europe

ALK-Abelló Allergie-Service GmbH

Austria

100%

ALK-Abelló Nordic A/S

Denmark

100%

ALK-Abelló Nordic A/S (branch)

Finland

100%

ALK-Abelló Nordic A/S (branch)

Norway

100%

ALK-Abelló Nordic A/S (branch)

Sweden

100%

ALK S.A.S.

France

100%

ALK-Abelló Arzneimittel GmbH

Germany

100%

ALK-Abelló B.V.*

Netherlands

100%

ALK-Abelló Sp. z o.o.

Poland

100%

ALK Slovakia s.r.o.

Slovakia

100%

ALK Slovakia s.r.o. – odšteˇpny´ závod (branch)

Czech Republic

100%

ALK Slovakia s.r.o. Magyarországi Fióktelepe (branch)

Hungary

100%

ALK-Abelló S.A.

Spain

100%

ALK-Abelló S.p.A.

Italy

100%

ALK AG (in liquidation)

Switzerland

100%

ALK-Abelló AG

Switzerland

100%

ALK-Abelló Ltd.

United Kingdom

100%

*

Exemption for local audit of the 2023 accounts under the ruling of the Article 2:403 of the Dutch Civil Code is intended -

Btw-nr. NL005302766B01.

Percentage of

Entity

Country shares owned

Activity

North America

ALK-Abelló Pharmaceuticals, Inc.

Canada

100%

ALK-Abelló, Inc.

USA

100%

OKC Allergy Supplies, Inc.

USA

100%

ALK-Abelló Source Materials, Inc.

USA

100%

OKC Crystal Laboratory, Inc.

USA

100%

International markets

ALK-Abelló A/S (branch)

China

100%

ALK (Shanghai) Medical Technology Co., Ltd.

China

100%

ALK (Shanghai) Medical Technology Co., Ltd. Beijing (branch)

China

100%

ALK (Shanghai) Medical Technology Co., Ltd. Guangzhou (branch)

China

100%

ALK (Guangzhou) Medical Technology Co., Ltd.

China

100%

Tasfiye Halinde ALK Ilac ve Alerji Ürünleri Ticaret Anonim Sirketi

(in liquidation)

Turkey

100%

Consolidated financial statements

ALK Annual report 2023

101

Definitions

Term

Definitions

Alternative Performance Measures

Gross margin – %

Gross profit x 100 / Revenue

Amounts in DKKm

2023

2022

EBIT margin – %

EBIT x 100 / Revenue

EBITDA reconciliation to net profit

Net profit

Tax on profit

486

161

(12)

31

335

112

(4)

Return on equity (ROE) – %

ROIC incl. goodwill – %

Pay-out ratio – %

Net profit/(loss) for the period x 100 / Average equity

Operating profit x 100 / Average invested capital incl. goodwill

Proposed dividend x 100 / Net profit/(loss) for the year

Financial income

Financial expenses

Depreciation, amortisation and impairment

EBITDA

27

245

911

238

708

Earnings/(loss) per share

(EPS)

Net profit/(loss) for the period / Average number of

outstanding shares

Net asset value

Equity

Net asset value

4,447

3,988

Earnings/(loss) per share

diluted (DEPS)

Net profit/(loss) for the period / Average number of

outstanding shares diluted

4,447

3,988

Invested capital reconciliation

Intangible assets

Tangible assets

Inventories

Trade receivables

Receivables from group companies

Income tax receivables

Other receivables

Cash flow per share (CFPS)

Cash flow from operating activities / Average number of outstanding

shares

671

2,181

1,423

816

-

34

74

147

(245)

(255)

(46)

(1)

(128)

(46)

(4)

642

2,018

1,297

764

Price earnings ratio (PE)

Net asset value per share

Invested capital

Share price / Earnings per share

Net asset value / Number of shares end of period

18

24

82

Intangible assets, tangible assets, inventories and current

receivables reduced by liabilities except for mortgage debt and bank

loans

Prepayments

239

(236)

(226)

(49)

-

(131)

(41)

(4)

Pensions and similar liabilities

Lease liabilities (non-current)

Deferred income (non-current)

Provisions (non-current)

Trade payables

Lease liabilities (current)

Deferred income (current)

Provisions (current)

Markets

Geographical markets (based on customer location):

• Europe comprises the EU, UK, Norway and Switzerland

• North America comprises the USA and Canada

• International markets comprise Japan, China and all other coun-

tries

The definitions are aligned with generally accepted financial ratios applied by financial analysts.

The definitions are part of the Management’s review.

(2)

(3)

Income tax payables (current)

Other payables

Invested capital

(17)

(837)

3,765

(16)

(978)

3,400

Parent company financial statements

ALK Annual report 2023

102

Parent company

financial statements

Financial statements

Notes

Income statement

Balance sheet

103

104

105

106

1

2

Accounting policies

106

12 Pensions and similar liabilities

13 Lease liabilities

113

Revenue and segment

information

107

108

109

110

111

112

Statement of changes in equity

Notes

14 Income tax payables to

group companies

3

4

5

6

7

8

9

Staff costs

113

Financial income and expenses

Income tax

15 Contingent liabilities

and commitments

113

16 Related parties

Intangible assets

17 Fees to ALK-Abelló A/S’ auditors 114

18 Proposed appropriation

Property, plant and equipment

Deferred tax

of net profit

114

Investments in subsidiaries

19 Events after the reporting period 114

10 Inventories

11 Mortgage debt and bank loans

Parent company financial statements

ALK Annual report 2023

103

Income statement

Amounts in DKKm

Note

2023

2022

Revenue

2

3

2,171

1,061

1,110

2,114

1,044

1,070

Cost of sales

Gross profit

Research and development expenses

Sales and marketing expenses

Administrative expenses

3

544

371

170

25

622

341

124

(17)

3, 17

Operating profit/(loss) (EBIT)

Income from investments in subsidiaries

Financial income

9

4

152

29

427

24

Financial expenses

36

20

Profit before tax (EBT)

170

414

Tax on profit/(loss)

5

(19)

(40)

Net profit

18

189

454

Parent company financial statements

ALK Annual report 2023

104

Balance sheet – Assets

Balance sheet – Equity and liabilities

31 Dec.

2023

31 Dec.

2022

31 Dec.

2023

31 Dec.

2022

Amounts in DKKm

Note

Amounts in DKKm

Note

Non-current assets

Equity

Intangible assets

Share capital

111

3,688

2

111

3,490

2

6

187

146

Retained earnings

Capitalised development costs

Total equity

Tangible assets

3,801

3,603

Land and buildings

Plant and machinery

Other fixtures and equipment

Property, plant and equipment in progress

7

311

244

52

389

996

273

233

47

303

856

Liabilities

Non-current liabilities

Mortgage debt

Pensions and similar liabilities

Lease liabilities

11

184

61

141

46

203

60

93

12

13

Other non-current assets

Investments in subsidiaries

Receivables from group companies

Prepayments

9

8

1,058

1,754

45

1,058

1,780

88

Deferred income

49

Income tax payables to group companies

14

120

552

120

525

Deferred tax assets

289

282

Income tax receivables

149

3,295

146

3,354

Current liabilities

Mortgage debt

11

19

261

52

18

208

48

Bank loans

Trade payables

Total non-current assets

4,478

4,356

Payables to group companies

Lease liabilities

Deferred income

Other payables

882

14

3

212

1,443

974

11

3

318

1,580

Current assets

Inventories

13

10

689

45

245

2

53

110

1,144

526

79

451

-

60

205

1,321

Trade receivables

Receivables from group companies

Income tax receivables

Other receivables

Prepayments

Total liabilities

1,995

5,796

2,105

5,708

Total equity and liabilities

Cash

174

31

Total current assets

1,318

1,352

Total assets

5,796

5,708

Parent company financial statements

ALK Annual report 2023

105

Statement of changes in equity

Reserve for

capitalised

Retained development

Share

capital

Proposed

dividend

Total

equity

Amounts in DKKm

2023

earnings

costs

Equity at 1 January

111

3,490

2

-

3,603

Appropriated from net profit

Share-based payments

Share options settled

Other adjustments

-

189

30

-

189

30

(20)

(1)

(20)

(1)

Other transactions

198

Equity at 31 December

111

3,688

2

-

3,801

Parent company financial statements

ALK Annual report 2023

106

Notes

1

Accounting policies

General

Balance sheet

Capitalisation of development costs

A reserve for capitalisation of development costs

less deferred tax is recognised in the statement of

equity. The reserve contains development costs,

less amortisation/impairment losses, and less

deferred tax, capitalised since 1 January 2016.

The financial statements of the parent company

ALK-Abelló A/S for the period 1 January to

31 December 2023 have been prepared in

accordance with the Danish Financial Statements

Act for large reporting class D enterprises.

Acquisition of activities from subsidiaries

Acquisition of activities from subsidiaries is

accounted for using the purchase method. On

initial recognition, goodwill is measured and

recognised as the excess of the consideration

transferred exceeding the fair value of the net

assets acquired at the acquisition date.

The financial statements are presented in

Danish kroner (DKK), which is also the functional

currency of the company.

Other accounting information

Goodwill

Goodwill is measured at cost less accumulated

amortisation and impairment. Amortisation is

calculated using the straight-line method over the

expected useful life, estimated at 10 years. This

estimate was made based on estimated useful

lives of the assets acquired.

Cash flow statement

The accounting policies are unchanged from last

year.

As allowed under section 86 (4) of the Danish

Financial Statements Act, no cash flow statement

is presented, as this is included in the consoli-

dated cash flow statement.

The parent company’s accounting policies for

recognition and measurement are in accordance

with the ALK Group’s accounting policies with the

following exceptions:

Investments in subsidiaries

Investments in subsidiaries are measured at

cost.

Income statement

Where the recoverable amount of the investments

is lower than cost, the investments are written

down to this lower value.

Results of investments in subsidiaries

Dividends from investments in subsidiaries are

recognised in the parent company’s financial

statements when the right to the dividend finally

vests, typically at the date of the company’s

approval in general meeting of the dividend of the

company in question less any write-downs at the

investments.

In addition, cost is written down to the extent that

dividends distributed exceed the accumulated

earnings in the company since the acquisition

date. In the event of indications of impairment, an

impairment test is performed of investments in

subsidiaries.

Parent company financial statements

ALK Annual report 2023

107

Notes

2

Revenue and segment information

3

Staff costs

Amounts in DKKm

2023

2022

Amounts in DKKm

2023

2022

Sale of goods

Royalties

2,070

99

2,014

93

Wages and salaries

Pensions

744

68

667

63

Services

2

7

Other social security costs, etc.

Share-based payments

Total

16

13

Total revenue

2,171

2 ,114

21

18

849

761

Europe

1,657

514

1,682

432

International markets

Total revenue

Staff costs are allocated as follows:

Cost of sales

2,171

2 ,114

326

267

69

307

240

66

Research and development expenses

Sales and marketing expenses

Administrative expenses

Included in the cost of assets

Total

120

67

99

49

849

761

Remuneration to Board of Management and Board of Directors:

See note 2.4 and 5.1 in the consolidated financial statements.

Employees

Average number (FTE)

Number year end (FTE)

926

950

928

901

Parent company financial statements

ALK Annual report 2023

108

Notes

4

Financial income and expenses

5

Income tax

Amounts in DKKm

2023

2022

Amounts in DKKm

2023

2022

Interest on receivables from group companies

Other interest income

20

9

17

6

Current income tax

(21)

(36)

Adjustment of deferred tax

Prior years adjustments, income tax

Prior years adjustments, deferred tax

Total

1

2

-

Currency gain, net

-

1

Total financial income

29

24

(1)

(19)

(6)

(40)

Interest on payables to group companies

Other interest expenses*

7

28

1

-

20

-

Profit before tax

170

414

Currency loss, net

Total financial expenses

36

20

Income tax, tax rate of 22%

37

(37)

2

91

(108)

-

*

In 2023, other interest expenses include IFRS 16 interest expenses of DKK 3 million (2022: DKK 2 million).

Permanent differences

Prior years adjustments, income tax

Prior years adjustments, deferred tax

Other taxes and adjustments

Tax on profit for the year

(1)

(6)

(20)

(19)

(17)

(40)

Parent company financial statements

ALK Annual report 2023

109

Notes

6

Intangible assets

Patents,

trademarks

and rights

Development

cost*

Assets in

progress

Amounts in DKKm

Goodwill

Software

2023

2022

Cost beginning of year

Additions

867

69

-

42

17

-

338

13

28

40

-

1,344

70

1,302

54

-

Disposals

-

(9)

(12)

-

Transfer to/from other groups

Cost year end

-

17

(17)

51

-

867

69

59

359

1,405

1,344

Amortisation and impairment beginning of year

Amortisation for the year

867

-

68

1

10

1

253

27

-

1,198

29

1,175

27

Disposals during the year

-

(9)

(4)

Amortisation and impairment year end

867

69

11

271

1,218

1,198

Carrying amount year end

-

48

88

51

187

146

*

The capitalised development cost relates to development of medical device products where the individual minor development projects are running for short-term periods and are subject to limited risk. The development projects are generating economic benefits in the

form of sale of goods. At 31 December 2023, the capitalised development cost relates to the development of the adrenaline auto-injector for the European and US markets.

Parent company financial statements

ALK Annual report 2023

110

Notes

7

Property, plant and equipment

Property, plant

and equipment

in progress

Land and

buildings

Plant and

machinery

Other fixtures

and equipment

Amounts in DKKm

2023

2022

Cost beginning of year

Additions

605

54

515

7

65

9

303

141

-

1,488

211

10

1,414

156

Remeasurement of lease obligations

Disposals

10

-

(18)

(64)

-

(4)

(8)

-

(12)

-

Transfer to/from other groups

Cost year end

2

46

7

(55)

389

667

560

81

1,697

1,488

Depreciation and impairment beginning of year

Depreciation for the year

332

28

282

42

18

11

-

632

81

617

75

Disposals during the year

(4)

(8)

(12)

701

(60)

632

Depreciation and impairment year end

356

311

146

316

244

-

29

Carrying amount year end

52

389

996

147

164

856

98

of which assets held under leases*

Value of land and buildings subject to mortgages

1

-

176

*

Land and buildings in Denmark include buildings on land leased from Scion DTU A/S, Hørsholm. The estimated lease terms are 15 years.

Parent company financial statements

ALK Annual report 2023

111

Notes

8

Deferred tax

Intangible

assets

Tangible

assets

Current and

other assets

Tax losses

carried forward

Amounts in DKKm

Liabilities

Total

2023

Carrying amount beginning of year

Adjustment to prior years

(19)

(61)

(19)

-

36

-

345

1

282

1

-

Adjustment of receivables from group companies

Recognised in the income statement, net

Recognised in equity, net (share-based payments)

Carrying amount year end

-

7

-

(12)

-

(10)

(2)

(31)

8

13

2

(1)

-

(19)

(73)

44

368

289

2022

Carrying amount beginning of year

Adjustment to prior years

(17)

(64)

(1)

-

24

-

40

1

328

6

311

6

-

Adjustment of receivables from group companies

Recognised in the income statement, net

Recognised in equity, net (share-based payments)

Carrying amount year end

-

(17)

12

(17)

(2)

-

4

(11)

(32)

(19)

(5)

-

16

(16)

282

(19)

(61)

36

345

ALK-Abelló A/S is included in a joint Danish taxation scheme with the Lundbeck Foundation (Lundbeckfond Invest A/S) and its Danish subsidiaries.

ALK-Abelló A/S recognises deferred tax assets including the tax value of tax losses if it is probable that it can be utilised against future taxable income within a foreseeable future. This includes an assessment of the

possibilities to utilise tax losses in the joint Danish taxation scheme with the Lundbeck Foundation (Lundbeckfond Invest A/S).

Parent company financial statements

ALK Annual report 2023

112

Notes

9

Investments in subsidiaries

11 Mortgage debt and bank loans

Amounts in DKKm

2023

2022

Amounts in DKKm

2023

2022

Cost beginning of year

1,470

-

1,469

1

Debt to mortgage credit institutions secured by buildings

Capital contribution in subsidiaries during the year

Cost year end

Mortgage debt is due as follows:

Within 1 year

1,470

19

74

18

73

From 1-5 years

After 5 years

Write-down beginning of year

412

110

203

130

221

Write-down year end

412

Total

Carrying amount year end

1,058

Bank loans

Bank loans are due as follows:

Within 1 year

In the income statement, income from investments in subsidiaries is dividends, which amounts to DKK 152

million (2022: DKK 427 million).

261

-

208

From 1-5 years

After 5 years

-

For an overview of all subsidiaries see note 5.7 in the consolidated financial statements.

Total

261

208

10 Inventories

Amounts in DKKm

2023

2022

Raw materials

109

513

67

115

372

39

Work in progress

Manufactured goods and goods for resale

Total

689

526

Amount of write-down of inventories during the year

18

8

18

2

Amount of reversal of write-down of inventories during the year

Parent company financial statements

ALK Annual report 2023

113

Notes

12 Pensions and similar liabilities

15 Contingent liabilities and commitments

Amounts in DKKm

2023

2022

In December 2023, ALK-Abelló A/S issued a hold-harmless letter to ALK -Abelló Arzneimittel GmbH

regarding costs under the ongoing tax audits in Germany (unlimited guarantee). The hold-harmless

letter replaces the letter issued in December 2022.

Pensions and similar liabilities expire as follows:*

Within 1 year

From 1-5 years

After 5 years

Total

1

3

-

3

Provisions recognised as debt to affiliates have been made to cover such exposures and the mentioned

possible uncertainties are in addition to what is already provided for.

57

61

57

60

For more information on contingent liabilities and commitments, see note 3.10 in the consolidated finan-

cial statements.

*

Pensions and similiar liabilities relate to the provision for transition period for the Danish Holiday Act.

16 Related parties

13 Lease liabilities

ALK-Abelló A/S is included in the consolidated financial statements of the Lundbeck Foundation (Lund-

beckfond Invest A/S, incorporated in Denmark).

Amounts in DKKm

2023

2022

Lease liabilities expire as follows:

Within 1 year

ALK-Abelló A/S has had transactions with subsidiaries during 2023. All subsidiaries are owned 100%.

The transactions are eliminated in the consolidated financial statements.

14

58

11

35

From 1-5 years

After 5 years

83

58

Transactions with the majority shareholder are disclosed in note 5.4 in the consolidated financial state-

ments. Apart from remuneration, no other transactions have taken place during the year with Board of

Directors, Board of Management, major shareholders or other related parties.

Total

155

104

Remuneration etc. to Board of Directors and Board of Management

For information on remuneration and exercise of share options for the ALK Group’s Board of Directors and

Board of Management, see note 2.4 and 5.1 in the consolidated financial statements.

14 Income tax payables to group companies

Non-current income tax payables to group companies of DKK 120 million (2022: DKK 120 million) is

expected to expire between 1 to 5 years.

Parent company financial statements

ALK Annual report 2023

114

Notes

17 Fees to ALK-Abelló A/S’ auditors

18 Proposed appropriation of net profit

Amounts in DKKm

2023

2022

Amounts in DKKm

2023

2022

Fees to the auditors appointed at the annual general meeting:

Proposed dividend

Retained earnings

Net profit

-

189

-

454

Audit services

Tax advisory services

Other services

Total

2

1

4

2

-

1

3

19 Events after the reporting period

No events have occured after the reporting period, that influence the evaluation of the parent company

financial statements.

Consolidated financial statements

ALK Annual report 2023

115

Financial highlights and key ratios by quarter for the ALK Group*

(unaudited)

Q4

Q3

Q2

Q1

Q4

Q3

Q2

Q1

Amounts in DKKm

2023

unaudited

Amounts in DKKm

2023

unaudited

Income statement

Revenue

Balance sheet

Total assets

Invested capital

Equity

4,824

1,789

618

1,345

501

151

407

93

1,110

425

149

321

69

1,135

428

160

351

99

1,234

435

158

343

70

6,726

3,765

4,447

6,726

3,765

4,447

6,568

3,771

4,341

6,457

3,691

4,184

6,356

3,486

4,118

Cost of sales

Research and development expenses

Sales and marketing expenses

Administrative expenses

Other operating items, net

Operating profit (EBIT)

Net financial items

Profit before tax (EBT)

Net profit

1,422

331

2

Cash flow and investments

Cash flow from operating activities

Cash flow from investing activities

– of which investment in intangible assets

– of which investment in tangible assets

Free cash flow

1

-

667

(375)

(69)

326

(85)

(17)

(71)

241

178

(79)

(15)

(63)

99

9

(120)

(20)

154

(91)

(17)

(74)

63

666

(19)

647

486

911

194

147

8

97

228

(11)

217

163

288

(8)

186

140

258

155

117

208

89

66

(310)

292

(102)

(111)

EBITDA

157

Information on shares

Dividend

Average number of employees (FTE)

2,752

2,812

2,787

2,759

2,712

-

111

-

111

-

111

-

111

-

111

Share capital

Revenue

(Growth in revenue in local currency %)

Shares in thousands of DKK 0.50 each

Share price, end period – DKK

Net asset value per share – DKK

222,824

101

222,824

101

222,824

79

222,824

74

222,824

106

Europe

3,216

1,424

1,592

(6)

(13)

(6)

928

423

465

(7)

730

335

352

(8)

721

300

361

(2)

837

366

414

57

(7)

(13)

-

20

19

18

– SCIT/SLIT-drops

– SLIT-tablets

(7)

(21)

(14)

(13)

-

(12)

Key figures

– Other products and services

200 (-26)

40 (-29)

43 (-53)

60 (-24)

(25)

Gross margin – %

63

14

63

14

62

13

62

9

65

18

North America

908

362

184

362

(9)

(7)

249

(16)

(12)

(38)

(10)

218

(2)

(3)

232

(10)

(5)

209

87

(9)

(6)

EBIT margin - %

– SCIT/SLIT-drops

– SLIT-tablets

100

49

87

43

88

47

97

Earnings per share (EPS) – DKK

Earnings per share diluted (DEPS) – DKK

Cash flow per share (CFPS)– DKK

Share price/Net asset value

2.2

0.7

0.5

0.3

0.7

(26)

(4)

(26)

(-7)

(20)

(10)

45

(23)

(5)

2.2

3.0

5.1

0.7

1.5

5.1

0.5

0.8

4.1

0.3

-

0.7

5.7

– Other products and services

100

77

4.0

International markets

– SCIT/SLIT-drops

700

153

520

(23)

(25)

(24)

168

(15)

162

62

96

4

(17)

(87)

(-5)

182

35

(64)

(38)

(97)

188

57

(8)

(35)

(-4)

(45)

-1 (-102)

*

Management’s review comprises this page as well as pages 1-53 and Financial highlights and key ratios for the ALK Group on page 11.

– SLIT-tablets

163

(37)

(47)

139

8

122

9

Definitions: see page 101.

– Other products and services

27 (-10)

6

(-21)

(-40)

Total revenue

4,824

1,939

2,296

589

(9) 1,345

(10)

(3)

1,110

484

(8)

(23)

(10)

1,135

423

547

(11) 1,234

(7)

(13)

(1)

– SCIT/SLIT-drops

– SLIT-tablets

(12)

522

677

146

(13)

(17)

(-8)

510

581

143

(11)

(-9)

(19)

(-3)

491

– Other products and services

135 (-28)

165

(14)

ALK-Abelló A/S

Bøge Allé 6-8

DK-2970 Hørsholm

Denmark

CVR no. 63 71 79 16