ANNUAL REPORT 2021
LUNDBECK
ANNUAL REPORT 2021
= CONTENTS
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 19
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19 FINANCIAL INSTRUMENTS - CONTINUED
Estimated impact from financial instruments on profit for the year and equity from a 5% increase in
year-end exchange rates of the major currencies
CAD
DKKm
CNY
DKKm
USD
DKKm
2021
Profit for the year
Equity
2020
Profit for the year
Equity
3
3
9
(23)
(32)
(235)
4
(2)
(78)
(18)
(25)
(330)
The shown sensitivities only comprise impact from Lundbeck's financial instruments and reflect a relative
change of the exchange rates at 31 December 2021 and 2020.
The sensitivity analysis includes derivatives, bank loans, trade receivable, trade payables, intercompany
lending and borrowing as those are the financial instruments where the Group has the most currency
exposure.
The profit impact comprises financial instruments that remained open at the balance sheet date and which
have an impact on profit in the current financial year. It includes foreign exchange differences relating to intra-
group balances that are not eliminated in the consolidated financial statements. The calculation of the
estimated impact is based on the functional currency of the entities where the financial instruments are
located. The profit impact is limited as the largest liabilities are exchange rate adjusted in other
comprehensive income, being part of Lundbeck's hedging structure.
The equity impact includes financial instruments that remained open at the balance sheet date and which
are exchange rate adjusted in other comprehensive income. The equity effect in 2021 and 2020 primarily
consists of exchange rate adjustments on bank loans in USD (for 2020 also including cross-currency swaps)
that are designated as hedges of net investment and foreign exchange differences on outstanding cash flow
hedging contracts.
Due to Denmark's long-standing fixed exchange rate policy against the euro and the expected continuation
of this policy, the foreign currency risk for euro is considered immaterial, and euro is therefore not included
in the table above.
Interest rate risks
Lundbeck ensures that the interest rate risk is managed according to the Treasury Policy. Interest rate risk
relates mainly to outstanding interest-bearing debt with floating interest rates.
Interest rate risk management is handled centrally by the Parent company. Through the Group's Treasury
Policy, the Board of Directors has approved the limits for borrowing and investment. Loans secured by
property must be approved by the Board of Directors. Only a limited part of the total loan portfolio is allowed
to have floating interest rates, and to hedge the interest rate risk on loans, the Board of Directors has
approved the use of Interest Rate Swaps (IRS), Caps, Floors and Forward Rate Agreements (FRAs).
Lundbeck's exposure to interest rate risk is low, as the EUR 500 million bond has a fixed coupon and the
USD funding has been swapped into fixed interest through interest rate swaps. For more information about
interest rate swaps, see note 17 Bank debt, bond debt and borrowings.
An interest rate change on bank debt and bond debt, including interest rate swaps, of +/- 1 percentage point
would decrease/increase profit for the year before tax by DKK 2 million (DKK 15 million in 2020) and
increase/decrease equity by DKK 19 million at 31 December 2021 (DKK 56 million in 2020).
The below table includes undiscounted cash flows, including interest payments, and assumes that the
liabilities will be repaid at their contractual maturity dates.
See note 18 Other payables for details on the obligations relating to contingent consideration and
note 17 Bank debt, bond debt and borrowings for details on the bank debt and bond debt.View entire presentation