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Welcome to our Integrated Annual Report 2021
Our Integrated Annual Report 2021 – Innovating for Better Health Together – aims to provide all interested
stakeholders with the best possible information on how UCB is creating value for patients with severe
diseases, for our employees, for communities, for the planet and for our shareholders, now and into the
future.
About this report
This Integrated Annual Report 2021 includes the management report in accordance with article 12 of the Royal
Decree of 14 November 2007 relating to the obligations of issuers of financial instruments admitted to trading
on a regulated market. All information required to be included in such management report pursuant to articles
3:6 and 3:32 of the Belgian Code of Companies and Associations (i.e. Corporate Governance Statement –
Remuneration Report included -, Business Performance Review and UCB’s Statement on extra-financial
information) is reported throughout all different sections of this Integrated Annual Report. This Integrated
Annual Report together with the materiality assessment have been prepared in accordance with the Global
Reporting Standards core option and extra-financial information is audited by a third party. SASB Standards
provided by the Value Reporting Foundation were also used as reference. In addition, we support the
recommendation of the
Task Force Climate-Related Financial Disclosure
can be found in the Data & Reporting chapter of this report.
UCB is in scope of the EU Taxonomy Regulation, as a listed company with more than 500 employees. We have
examined the Taxonomy -eligible economic activities listed in the Climate Delegated Act and after review, we
currently consider that our core economic activities are not covered by the EU Taxonomy Regulation’s
technical annexes on climate change mitigation and climate change adaptation. We will continue to monitor
any future reporting obligations and its impact.
This document contains information on investigational drug products that have not been approved for any use by any authority in
the world or new indications for approved products. The safety and efficacy of these investigational drug products or new
indications has yet to be established.
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Contents
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Key figures
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UCB At a Glance
We want to give people with severe diseases the freedom to live the best life they can - as free as possible
from the challenges and uncertainty of diseases. We aspire to work in a way that is sustainable for our
business, our employees, the communities around us, and the planet.
Letter to our stakeholders
Dear patients, colleagues, shareholders, and
representatives from communities where we work
and live,
If there’s one lesson to take away from 2021 – a
year in which the world continued to navigate the
ongoing COVID-19 pandemic – it is that
events
that compromise our health and wellbeing impact
every sector and segment of society.
health to make progress towards a healthier and
more equitable society and a healthier planet for
future generations is therefore an investment into
a better future for all.
At UCB, making a positive impact on society is part
of our core mission. That’s why we look to drive
sustainable growth with solutions that make real
improvements to people’s lives. This year’s
Integrated Annual Report theme –
Innovating for
Better Health Together
to working together with partners across the
healthcare value chain to deliver these innovative
solutions to people living with severe diseases,
anchored in a strong sense of purpose.
It also speaks to our belief that as well as creating
value for patients, we need to create value for our
employees, our shareholders, and our
communities, all while respecting the planet.
This is how we work to enable people living with
severe diseases to live the best life they can – a life
that is as free as possible from the challenges and
uncertainty of diseases.
By the numbers
In 2021, we touched on the lives of over 3.7 million
patients around the world by ensuring continuity
9
of supply and distribution chains, despite the
ongoing COVID-19 pandemic. We continued to
expand access to our solutions, and track progress
through our Access Performance Index. Most
notably, our new solution BIMZELX®
▼
(
bimekizumab
) was approved was approved in
the EU
1
2
of moderate to severe plaque psoriasis in adults
who are candidates for systemic therapy–
connecting the unmet needs of patients with
innovative biological research and cutting-edge
science. In Japan, BIMZELX® was approved for the
treatment of plaque psoriasis, generalized pustular
psoriasis and psoriatic erythroderma in patients
who are not sufficiently responding to existing
treatments.
This translated into another year of strong
financial growth for UCB, with revenue reaching
€5.78 billion (+8%; +10% at CER
3
) and net sales
going up by 8% to €5.47 billion (+11% CER), driven
by continued growth of our product portfolio.
Underlying profitability (adjusted EBITDA) reached
€1.64 billion (+14%; +21% CER), driven by
continued revenue growth and moderately
growing operating expenses, reflecting the
investments into the future of UCB, namely into
product launches and clinical development. In line
with this performance, the Board of Directors of
UCB proposes a dividend of €1.30 per share
(gross), +2%.
▼
This medicinal product is subject to additional monitoring.
This will allow quick identification of new safety information.
Healthcare professionals are asked to report any
suspected adverse reactions
What’s more, we continued to integrate
sustainability for business and societal impact,
resulting in steadily improving our environmental,
social and governance (ESG) ratings with ISS ESG,
WDI and CDP. Sustainalytics upgraded UCB’s ESG
risk rating score from medium - to low-risk level
(16.8), sending a clear external validation of our
progress in creating more sustainable value for
stakeholders.
Our pipeline, products and partnerships
When it comes to our solutions for patients,
several exciting achievements came to fruition
over the past months. Crucially, adult patients with
moderate to severe plaque psoriasis
Europe now have further treatment options
available, with the approval in the EU
4
Britain
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BIMZELX
®
(
bimekizumab
) in those who are candidates for
systemic therapy. In addition, phase 3 studies
6,7,8,9
evaluating
bimekizumab
psoriatic arthritis and across the spectrum of axial
spondyloarthritis (nr-axSpA; r-axSpA) are ongoing
and have reported positive topline results.
*
Efforts to offer new treatment options to
patients
with generalized myasthenia gravis
continued at pace, with positive top line results
from our MycarinG
10
*
Is an investigational drug product that has not been approved
for any use by any authority in the world for PsA and axSpA.
1
https://www.ema.europa.eu/en
2
https://products.mhra.gov.uk/
3
Constant exchange rates
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ClinicalTrials.gov. A Study to Test the Efficacy and Safety of
Bimekizumab
in the Treatment of Subjects With Active Psoriatic
Arthritis (BE OPTIMAL). Available at:
https://clinicaltrials.gov/ct2/show/NCT03895203
. Accessed 11
February 2022.
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ClinicalTrials.gov. A Study to Evaluate the Efficacy and Safety
of
Bimekizumab
in the Treatment of Subjects With Active
Psoriatic Arthritis (BE COMPLETE). Available at:
https://www.clinicaltrials.gov/ct2/show/NCT03896581
.
Accessed 11 February 2022.
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ClinicalTrials.gov. A Study to Evaluate the Efficacy and Safety
of
Bimekizumab
in Subjects With Active Ankylosing Spondylitis
(BE MOBILE 2). Available at:
https://www.clinicaltrials.gov/ct2/show/NCT03928743
.
Accessed 11 February 2022.
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ClinicalTrials.gov. A Study to Evaluate the Efficacy and Safety
of
Bimekizumab
in Subjects With Active Nonradiographic Axial
Spondyloarthritis (BE MOBILE 1). Available at:
https://clinicaltrials.gov/ct2/show/NCT03928704
. Accessed 11
February 2022.
10
Clinical Trials.gov ‘A Study to Test Efficacy and Safety of
Rozanolixizumab in Adult Patients With Generalized
Myasthenia Gravis’:
https://clinicaltrials.gov/ct2/show/NCT03971422
. Accessed 11
February 2022.
10
efficacy and safety of
rozanolixizumab
.
**
3 RAISE study,
11
zilucoplan
**
positive topline results too. These two treatment
options have the potential to offer flexibility to
patients and healthcare professionals, delivering
new and innovative solutions to suit individual
needs among the gMG community.
And of course, we continued to build on our strong
heritage in supporting
people living with epilepsy
,
expanding our expertise in the pediatric
population to address the unmet needs of the
youngest patients. Both
BRIVIACT
® (
brivaracetam
)
and VIMPAT® (
lacosamide
) were approved by the
U.S. Food and Drug Administration
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treatment of partial-onset seizures in patients one
month of age and older.
Meanwhile, adults, adolescents and children from
4 years of age living with
idiopathic generalized
epilepsy
from the launch of VIMPAT® as an adjunctive
therapy in the treatment of primary generalized
tonic-clonic seizures. We established a new social
business approach to improve epilepsy care for
underserved patients with a first pilot in Mumbai,
India. In the year ahead, we aim to close the
planned acquisition of Zogenix, Inc., to continue to
bring new and innovative treatment options to
people living with epilepsy.
The year saw us advance with multiple
partnerships and initiatives to deepen the value
we create for patients now and into the future,
particularly in the area of
digital care
transformation
. We announced an expanded,
multi-year collaboration with
Microsoft
, which
brings together Microsoft’s computational, cloud
and AI services with UCB’s drug discovery and
development capabilities, to discover new
medicines in a more efficient and innovative way.
We launched
Nile AI, Inc.
, a new independent
company developing an epilepsy care
management platform to make the journey of
every epilepsy patient more predictable – building
on our long heritage of leadership in epilepsy to
meet the challenges of the future. And we
announced that we will be licensing our home-
grown AI-based solution,
BoneBot
, which screens
for vertebral fractures, to
ImageBiopsy Lab
further development and launch. This will enable
earlier diagnosis and treatment of spinal fractures
and potentially reduce the co-morbidities
associated with osteoporosis.
Partnering with other players in the healthcare
ecosystem is allowing us to bring value to patients
in new ways. We signed an agreement with
Novartis
modifying treatments for people with
Parkinson’s
disease
Handl
Therapeutics
BV, a rapidly growing and
transformative
gene therapy
Leuven, Belgium. Alongside our previous
acquisition of
Lacerta Therapeutics
, this is allowing
us to advance our ambitions in gene therapy as a
means to eventually move from symptomatic
treatment towards disease modification and cures
for severe chronic diseases.
Working together for and with our people, our
communities and the planet
As we enter the third year of the COVID -19
pandemic, the word which springs to mind when
we think of our colleagues is
resilience
. UCB
employees have gone above and beyond to deliver
for people with severe diseases and continue to
create value for society even in challenging
conditions.
To support our people and continue to foster a
diverse, inclusive and engaging working
environment for all, we rolled out a number of
foundational initiatives in 2021.
** Is an investigational drug product and its safety and efficacy
has not yet been established and has not been approved for
any use by any authority in the world.
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Clinical Trials.gov ‘
Safety, Tolerability, and Efficacy of
Zilucoplan in Subjects With Generalized Myasthenia Gravis
(RAISE)
’:
https://clinicaltrials.gov/ct2/show/NCT04115293
.
Accessed November 2021.
12
https://www.accessdata.fda.gov/scripts/cder/daf/
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Thousands of colleagues are set to benefit from
our new
hybrid working model
, providing those
who can work from home with the flexibility they
need, while still nurturing our culture of
collaboration and curiosity. With an increased
Health, Safety and Wellbeing Index score of 81.9%
(78.4% in 2020), we exemplify our
focus on health,
safety and wellbeing for everyone at UCB
use these results obtained to continue shaping
global and local programs, so that our people can
thrive at work.
Alongside this, we continued our efforts to embed
diversity, equity and inclusion
(DE&I) principles in
our daily work, grounded in new DE&I Indexes in
development to track progress. We aim to inspire
a culture of inclusion, both among our people and
in everything we do. To that end, we are actively
working to make our clinical trials more inclusive
and accessible
communities, through decentralized clinical trials
(DCTs) which make up almost 20% of our active
clinical trials.
Expanding our impact in the communities where
we live and work is part of our commitment to
addressing global challenges at the intersection of
our business strategy and wider societal interests.
In 2021, we reinforced our collaboration with our
suppliers to improve our joint performance on
environmental protection, labor, human rights,
and ethical business practices. We continued our
philanthropic contribution to improve the mental
health of vulnerable young people through the
UCB Community Health Fund
99 projects worldwide since it was created in 2020;
and we maintained our commitment to
strengthening healthcare systems in low- and
medium-income settings under the
UCB
Innovation for Health Equity Fund.
It is clear that protecting human health also means
safeguarding the health of our planet. As our
portfolio and pipeline continue to grow,
we are on
track to uncouple our growth from our
environmental footprint
. In 2021, we reduced CO₂
emissions we directly control by 7% compared to
2020, bringing our reduction to 62% compared to
2015. This commitment extends to our goods and
services suppliers, with 23% of our suppliers (by
emission) agreeing to set their own engagement
targets to shift towards a low-carbon economy,
aligned with the Science Based Targets initiative
(SBTi).
Looking ahead to deliver on our ambitions
We are confident in our ability to deliver on our
future ambition to lead in five specific populations
(patients living with partial onset/focal epileptic
seizures, psoriatic arthritis, myasthenia gravis;
patients experiencing osteoporosis -related
fractures; and women of childbearing age living
with immune-inflammation and/or epilepsy).
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We are entering a transition phase, followed by
accelerated company growth. Our financial
guidance for 2022: we are aiming for revenue in
the range of € 5.15 – 5.4 billion and an underlying
profitability (adj. EBITDA) in the range of 26 - 27%
of total revenue. By 2025, we want to achieve at
least €6 billion in annual revenues, a low-mid-
thirties adj. EBITDA margin, and improve our ESG
rating performance even further."
Thanks to our investment in the next generation of
science and technologies and our engagement
with partners across society to create sustainable
impact, we are exploring new therapeutic
solutions such as gene therapy, to address unmet
needs of people living with severe diseases, while
still building on our core heritage and areas of
expertise.
As society faces significant challenges, from the
rise of social inequalities to climate change, it
seems clear to us that greater collaboration is the
only way forward. Every company, country and
citizen is interconnected – what one of us does
impacts the others.
That’s why we would like to thank you for being
part of this shared journey in 2021, and for your
continued trust and support in UCB. As we seek to
improve the wellbeing of our societies, it is vital
that we do so together, building on our shared
experiences and expertise to advance better
health for all.
This is how we stay true to our purpose, to create
value for patients – now and into the future.
Stefan Oschmann, Chair of the Board
Jean-Christophe Tellier, Chief Executive
Officer
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Our purpose
We create value for patients now and into the future.
At UCB, we want to give people with severe
diseases the freedom to live
the best life they can -
as free as possible from the challenges and
uncertainty of diseases. We work in a way that is
sustainable as we care for the patients who need
our solutions, for our employees, for the
communities where we live and work, for our
shareholders, and for the planet.
Where we are
UCB has its headquarters in Belgium and our 8 561
colleagues across 36 markets put patients at the
heart of everything they do.
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Our ambition
We innovate to deliver
unique outcomes
best
individual experience for them
, and to
ensure access
viable for patients, society and UCB.
Since UCB’s inception 90 years ago, making a
positive impact on society has also been part of
our core mission. Society currently faces significant
challenges that transcend geographical borders
and organizational boundaries – from deepening
inequalities further entrenched by the COVID -19
pandemic, to the widespread impact of climate
change. Every societal actor has a responsibility to
take urgent action and play their part in creating a
fairer, safer, and healthier society for all.
At UCB, sustainability is our business approach. We
aim to create value not only for patients but also
for our employees who discover, develop and
deliver patient solutions, for the shareholders who
invest to fund our work and for the communities
where we live and work. At the same time, we also
aim to take care of the planet that we all call
home. We are therefore evolving our measure of
value creation, integrating both financial and
extra-financial elements.
We firmly believe that by maximizing the positive
impact we have on society, with patients at the
center, we can ensure the success of UCB, now
and into the future and contribute to a better
world for generations to come.
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Our value creation model
At UCB, our operating model places patients and their individual experiences at the heart of everything we do
– from discovery to development to delivery of our medicines. We leverage their insights to inform our science
and develop innovative and differentiated solutions for specific patient populations.
We strive to optimize the use of our resources
(whether human, financial, natural, or other) and
leverage our skills and expertise to maximize the
value we create for people with severe diseases,
our employees, our shareholders, and the
communities where we live and work, while also
minimizing the impact we have on the planet.
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As a responsible actor in society, we create value
while respecting and playing our part in achieving
the UN Sustainable Development Goals (SDGs), in
collaboration with all relevant partners. Being a
signatory to the UN Global Compact, we commit to
follow its 10 principles and we endorse the
achievements of the UN SDGs.
We focus on Good health and wellbeing (SDG #3),
and Partnership for the goals (SDG #17) because
we believe this is where we can have the biggest
impact, while still contributing to other goals.
To better understand our overall contribution to
the 2030 United Nations Agenda for Sustainable
Development, see our GRI tables with SDGs
mapped per topic. This report is also used as our
Communication on Progress for the UN Global
Compact.
Updating our materiality assessment
To play our part in creating a more sustainable future for society, we want to focus on the areas where we
have the most potential to deliver impact, given our specific skills, expertise and heritage.
To identify these topics, we conduct regular
materiality analyses. A materiality assessment is a
formal process to identify, refine and assess
environmental, social and governance topics,
which matter most to a company’s internal and
external stakeholders and which have an impact
on business performance. The insights from this
assessment are then used to inform company
strategy, risk assessment and reporting.
Our 2019 materiality assessment informed our
approach to integrating sustainability into our
business strategy and to updating our
performance measurement metrics. In 2021, rapid
changes in society driven by the COVID-19
pandemic spurred us to update our materiality
assessment, building mostly on an extensive
literature review and the engagement of a group
of emerging leaders, our External Sustainability
Advisory Board and the UCB Sustainability
Governance Committee. This update fulfils the
requirements of the Global Reporting Initiative
(GRI). More information on the process followed
for our 2021 materiality update can be found on
UCB’s corporate page
.
Our Top 10 Material Sustainability Topics
Our methodology for our 2021 materiality update
differed from 2019, as we focused on
understanding how the topics prioritized in 2019
have evolved. Ten topics were identified, ranked
and prioritized, based on their business impact and
relevance to our stakeholders.
While nine of these were carried over from our
2019 materiality assessment, a new addition to the
list of primary topics for 2021 was Product Safety
and Quality. This is a topic which is increasingly in
the spotlight, given the scrutiny around COVID-19
vaccine safety. Counterfeiting and misinformation
are also amplifying the importance to
communicate about product safety and quality.
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Over the course of this report, we demonstrate
how we adapt our business approach to address
each of our material topics. For each material topic
defined, we comment on the associated risks and
our performance, along with describing how the
topic is managed.
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Highlights
Launch of BIMZELX
®
bimekizumab
)
Our new solution BIMZELX
®
EU
13
, Great Britain
14
moderate to severe plaque psoriasis in adults who
are candidates for systemic therapy.
We announced positive top-line results from Phase
3 studies evaluating the efficacy and safety of
bimekizumab
15,16
,
radiographic axial spondyloarthritis (r-axSpA), and
non-radiographic axial spondyloarthritis (nr-axSpA),
also known as ankylosing spondylitis (AS)
.
17,18,19**
Promising results for
rozanolixizumab
#
generalized myasthenia gravis (gMG)
We observed positive topline results from our
MycarinG
20
safety of
rozanolixizumab
in patients with
generalized myasthenia gravis (gMG).
We also achieved positive top -line results for our
developmental medicine
zilucoplan
, a peptide
inhibitor of complement component 5 (C5 inhibitor),
which could deliver patient value to people living
with gMG.
Creation of Nile AI to transform epilepsy care
We announced the launch of Nile AI, Inc., a new
independent company which is developing an
epilepsy care management platform to help make
the journey of every epilepsy patient more
predictable.
Digitilizing drug discovery with Microsoft
UCB and Microsoft announced a multi-year,
strategic collaboration to combine Microsoft’s
computational abilities and expertise with UCB’s
drug discovery and development capabilities, to
discover new medicines in a more innovative way.
Partnering with Novartis to advance treatment for
Parkinson’s
We announced a partnership with Novartis to co-
develop two drug candidates for Parkinson’s
Disease.
Acquisition of
We entered into an agreement to acquire Zogenix,
Inc., a global biopharmaceutical company
commercializing and developing therapies for rare
diseases.
# rozanolixizumab is an investigational drug product and its safety and efficacy have not yet been established.
Rozanolixizumab has not been approved for any use
by any authority in the world.
** the safety and efficacy of bimekizumab have not been established in PsA, r-axSpA and nr-axSpA, and it is not approved for
use by any regulatory authority worldwide for these indications
13
https://www.ema.europa.eu/en
14
https://products.mhra.gov.uk/
15
ClinicalTrials.gov. A Study to Test the Efficacy and Safety of
Bimekizumab
OPTIMAL). Available at:
https://clinicaltrials.gov/ct2/show/NCT03895203
.
16
ClinicalTrials.gov. A Study to Evaluate the Efficacy and Safety of
Bimekizumab
(BE COMPLETE). Available at:
https://www.clinicaltrials.gov/ct2/show/NCT03896581
.
17
ClinicalTrials.gov. A Study to Evaluate the Efficacy and Safety of
Bimekizumab
2). Available at:
https://www.clinicaltrials.gov/ct2/show/NCT03928743
. Last accessed: December 2021.
18
ClinicalTrials.gov. A Study to Evaluate the Efficacy and Safety of
Bimekizumab
Spondyloarthritis (BE MOBILE 1). Available at:
https://clinicaltrials.gov/ct2/show/NCT03928704
.
19
the safety and efficacy of
bimekizumab
regulatory authority worldwide for these indications
20
Clinical Trials.gov ‘A Study to Test Efficacy and Safety of
Rozanolixizumab
Gravis’:
https://clinicaltrials.gov/ct2/show/NCT03971422
. Accessed February 2022.
19
Our performance
The financial and extra-financial data are reported for the period 1 January – 31 December. Financial data is
reported semi-annually, and extra-financial data is reported annually. The last UCB Annual Integrated Report
was published on February 25, 2021.
20
Working towards the future
By 2025, we want to lead in five specific patient populations:
In line with this aim, we want by 2025 to have
achieved a revenue of at least €6bn, an adjusted
EBITDA margin in the low- to mid-thirties and a
continued improvement in our ESG rating
performance.
As we look to the future, we aspire to move from
symptomatic treatments to disease modification,
and eventually, towards a cure for several severe
chronic diseases.
We aim to do this by continuing to engage within
UCB and across society, co-creating sustainable
impact, and attracting the next generation of
talent which will lead the next generation of
science and technologies.
21
Together for Patients
We innovate to bring differentiated solutions with unique outcomes that help specific patients
achieve their life goals. By doing so, we aim to create value now and into the future.
Innovating for patients with severe diseases
Our approach
We are driven by our commitment to people living
with severe diseases who inspire our work across
neurology, immunology, and other areas where
our expertise, innovation and ambition align with
unmet needs, allowing us to achieve our ambition
for patients.
Research and development (R&D) form the
foundations of our innovation. Based on a deep
understanding of disease biology and patient
reality, we are combining today’s transformative
science with our leadership capabilities to rapidly
discover, develop and deliver highly differentiated
medicines.
At UCB, we aim to connect the patient with
everything we do, as much as possible and this
approach is instrumental in allowing us to
innovate and differentiate, so that we can provide
additional value for those we serve. We
continually advance our understanding of human
and disease biology while constantly learning from
the patients and the information they provide.
This gives us a deeper appreciation of patients’
burden of disease so that we constantly keep
these considerations top of mind and strive to
turn our science into medicines that make a
difference to their daily lives.
We will continue our efforts to constantly raise
the bar, to be even more connected with the
external world, and to be more engaged with
patients.
22
UCB has a strong culture of innovation; it forms
the foundation for our future. To this end, we
continuously monitor disruptive technologies,
keep pace with evolving science, upgrade our
therapeutic modality platforms and embrace
adaptive clinical study design. Together, this
ensures that our R&D teams have access to state-
of-the-art scientific and digital technologies to aid
them in their pursuit of continuous innovation,
help accelerate our development timelines and
improve patient experiences.
We consistently invest more than a quarter of our
revenue annually back into research and
development, well above the industry average of
around 13% (TK2020 Number).
We forge strong connections and collaborate with
patients, caregivers, and healthcare professionals
who face these conditions each day – and with
peers and partners who share our passion for
meeting the challenges of severe diseases. This is
how we can continually ensure that our work has
the greatest impact, delivering purposeful,
intentional innovation and differentiated solutions
to all patients who need them and creating value
that cannot be expressed in numbers alone.
As we look to develop differentiated solutions with
unique outcomes, we are conscious that
transforming how we conduct research is a long-
term investment, whose benefits are not
immediately visible in the short-term (given the
average research cycle lasts 3 to 5 years, and the
average development cycle lasts 7 to 11 years).
We are also conscious of market - and launch-
related risks, notably the entry of biosimilars and
generics to the market, the launch of new biologic-
based drugs from competitors, and the need for
UCB to establish clear value messaging supported
by strong evidence as we approach the next wave
of new solutions, which may come in quick
succession. As we look to develop our product
portfolio within different platforms, such as gene
therapy, we are aware of the need to deepen our
knowledge and expertise in these areas. You can
learn more about product and innovation -related
risks in the
report.
Innovation is understanding the patient reality
All pharmaceutical companies are “data -driven”
given that they take large pools of data to see
what learnings can be extracted from it. At UCB,
we are data driven too, but we are also question-
led. This helps us connect the patient to our
science and we believe it is an approach that
better serves patients and allows us to focus on
answering the most important questions.
Questions like, “How can we improve symptoms
and how quickly?”, “What is the appropriate dose
of a medicine?”. Or, “Can we predict future patient
response or relapse to a treatment?”.
UCB’s collaboration with Stanford is a great
example of our question-led approach. The
collaboration leverages our expertise in discovery,
clinical, real-world, omics, and other data sources
to advance learning in certain key areas.
Our first project with Stanford focuses on
Hidradenitis Suppurative (HS), also known as acne
inversa. HS is an immunological skin disease that
results in debilitating quality of life for people
living with the disease. The treatment journey is
often long and complex with delays, misdiagnoses,
and ineffective treatment. With our Stanford
collaboration, we plan to further examine
phenotyping, computational discovery of
pathogenic mechanisms, as well as the disease
burden and societal experience for people living
with severe diseases like HS.
Ultimately, a better understanding of the patient
reality and taking a question-led approach drives
the focus towards what’s most important - using
our skills to deliver differentiated solutions that
serve our patients.
23
Innovating in research
Our research strategy is anchored in the concept
of differentiation, which goes beyond incremental
improvement of existing outcomes. We believe
that our operating model based on a robust
patient-science-solution cycle can lead to unique
patient outcomes. We are shifting from a
symptom management approach to etiology-
based treatments – meaning we are focused on
exploring the root causes of disease in order to
design solutions which address the underlying
pathology. We have a vision to move from
symptomatic treatments to disease modification,
and eventually, towards cures for several severe
chronic diseases.
Our technology platforms
We are continuously evolving our therapeutic
modality platform capabilities to improve our
ability to design the right solutions for patients
ranging from small molecules (NCE, new chemical
entities) to biologics (NBE, new biological entities)
and gene therapy.
As an example, in 2021, UCB and researchers at
the University of Bath, UK discovered a new way to
produce miniaturized antibodies, opening the way
for a potential new class of treatments for
diseases. The potential medical implications of the
new antibodies’ diminutive size are significant, as
they may bind to sites on pathogens that regular
antibody molecules are too large to latch on to,
triggering the destruction of invasive microbes, or
may be able to gain access to sites of the body
which larger antibodies can’t.
Meanwhile, an ongoing collaboration between
UCB and researchers at the University of
Southampton, UK saw the development of a new
technology that enhances the natural ability of
therapeutic antibodies to attack blood cancer cells.
It uses part of the human immune system known
as the complement cascade, opening the way for a
potential new class of treatments.
Gene therapy at UCB
We are also building on our legacy of expertise in
the areas of disease biology and chemistry, by
strengthening our capabilities in
gene therapy.
Gene therapy uses modified viruses or other
technologies to deliver therapeutic genes to cells
or tissues and address genetic diseases at their
source. They can work by several mechanisms:
they can replace a gene causing a medical problem
with a healthy copy of the gene, they can add
genes that help fight against or treat disease, or
they can turn off the disease-causing gene(s).
Since the first gene therapy trial launched in 1990,
we have seen a significant evolution in the field
and 30 years later, gene therapy is regarded as an
exciting platform towards treatments for patients
living with severe diseases that were once
considered incurable.
Expanding and strengthening our own gene
therapy activities aligns with our overarching
ambition to move from symptomatic treatment
towards disease modification, and eventually,
towards cures for severe chronic diseases. In 2020,
our ambition in this area led us to acquire Handl
Therapeutics BV, a rapidly growing and
transformative gene therapy company based in
Leuven, Belgium – a company which was fully
integrated into UCB in June 2021. In September
2021, UCB embarked on a partnership with CEVEC
to evaluate and gain access to their ELEVECTA®
technology, which may enable UCB to develop a
scalable, robust and efficient manufacturing of
gene therapy vectors.
24
Embracing all the potential of gene therapy also
demands increased collaboration and shared
accountability between all healthcare actors and
policymakers. At UCB, we are recalibrating our
development model for therapies to go beyond a
traditional approach, and to allow us to meet new
challenges head on, particularly in the area of
clinical trials, quality and safety for gene therapy.
“UCB’s ambition for patients relies on our ability to innovate and deliver highly differentiated medicines.
Gene therapy can allow us to drive a fundamental change in how diseases are treated, moving us towards
disease modification and eventually towards cures, which will allow us to transform the lives of people with
severe disease.” Dhaval Patel, Chief Scientific Officer, UCB
Our research hubs
We have globally enabled, locally integrated
research hubs in Braine-l’Alleud (Belgium), Slough
(United Kingdom), and Boston, Massachusetts
(United States) with additional research satellites
in Durham, North Carolina and Seattle,
Washington (United States), Leuven (Belgium), and
Kings College London (United Kingdom). Our
clinical development teams are integrated globally
with 7 sites across 6 countries (Belgium, China,
Germany, Japan, United Kingdom, and United
States).
Innovating in clinical development
We continue to evolve our interactions with
patients, investigators, and caregivers. We are
fostering deeper patient partnerships, designing
protocols to reduce operational burden and strive
to create a positive experience for patients.
Our approach focuses on understanding patients
as people and addressing their needs beyond
therapeutic treatments. We therefore believe that
patients included in UCB clinical trials should be
reflective of the population that will ultimately
benefit from our new medicines and we continue
to measure and improve the diversity baseline of
our own clinical trials for phase 3 programs
completed in 2021 or being completed in 2022, in
comparison to the FDA Drug Trials Snapshots
average.
We strive toward inclusive clinical trials by taking
actions to address age, gender, race and ethnicity,
genetics, geographic location, socio-economic data
and more. We also aim to enhance the patient
experience by recognizing the collective richness
of their unique backgrounds, life and cultural
experiences and the diversity of thought this
brings.
Through our technological and data driven
approaches, we have implemented decentralized
clinical trials (DCT) – including virtual studies and
site visits, and remote assessments – which are
more accessible and easier to participate in for
patients, particularly those who have been
traditionally underrepresented. With DCTs, overall
physical patient visits are reduced and there is an
increase in remote-friendly or virtual visits. This
innovative approach allows us to
leverage telemedicine and mobile
apps alongside traditional clinical services. Across
our portfolio, UCB has almost 20% of active trials
in the DCT model, with more than half of the study
visits captured remotely or virtually.
Technology allows us to find eligible patients that
could participate in clinical trials and to find
principal investigators to open clinical sites and
identify referral physicians in the areas where
patients are found. This allows us to identify
underrepresented geographic areas and
bring trials to new locations and new patients.
Lastly, technology creates excellent opportunities
for educating patient communities about the
importance of clinical trials and encouraging them
to participate.
25
“Our data driven approaches, use of technology, and implementation of real-world evidence are all helping
us find new, more diverse patient populations and enabling us to create value for specific groups of
patients.” -
Our Pipeline
Our scientists, assisted by world class facilities and
ground-breaking platforms and technologies, are
continually evolving and improving their
knowledge and capabilities to deliver value for all
our stakeholders. This has fueled a strong pipeline
spanning several therapy areas that we are
confident will deliver highly differentiated
solutions in years to come.
Our pipeline is fueled by a rich pre-clinical research
unit that has hubs across the
. UCB takes
pride in being a reliable and productive partner in
research, working at the forefront of science to
find solutions for patients. In this report we will
focus on Phase 2 studies onwards. A remarkable
example of UCB patient-driven research engine is
given in the following chapter where the
26
BIMZELX
®
2021 marked a significant milestone for the
dermatology community and UCB with the
approval of a new solution in the European Union
(EU)
21
22
: BIMZELX
®
(
bimekizumab
), for the treatment of moderate to
severe plaque psoriasis in adults who are
candidates for systemic therapy.
Bimekizumab
patient value strategy since it demonstrates what
happens when we connect the unmet needs of
patients with innovative biological research and
cutting-edge science. Inspired by the needs of
patients with chronic immune-mediated
inflammatory diseases, the story began more than
a decade ago, when scientists at UCB developed an
original scientific hypothesis that dual
neutralization of Interleukin (IL)-17A and IL-17F –
both key drivers of inflammation – may lead to
improved clinical outcomes for patients compared
with inhibition of IL-17A alone.
In psoriasis, positive results from clinical studies
support the original hypothesis. In phase 3 clinical
studies
23
skin clearance compared to placebo and the two
commonly prescribed biologics
adalimumab
ustekinumab
ustekinumab
a ranked secondary endpoint) and was generally
well tolerated. In addition, data from a Phase 3b
study comparing
bimekizumab
, to an IL-17A
inhibitor,
secukinumab
,
24
inhibition of IL-17F in addition to IL-17A in the
treatment of patients with moderate to severe
plaque psoriasis.
Bimekizumab
to addressing patients’ unmet needs, advancing
science and delivering solutions with the potential
to elevate the standard of care for patients.
In addition, in January 2022, UCB reported positive
top-line interim analysis results from the Phase 3
BE MOBILE 1 study which is evaluating
bimekizumab
in the treatment of adults with non-
radiographic axSpA, and positive top-line results
from the Phase 3 BE COMPLETE study, which
evaluated bimekizumab in the treatment of active
PsA in adults who were inadequate responders or
intolerant to anti-TNF (tumor necrosis factor)
treatment.
UCB is committed to bringing
bimekizumab
patients worldwide. In January 2022, the Japanese
Ministry of Health, Labor and Welfare granted
marketing authorization for BIMZELX
®
treatment of plaque psoriasis, generalized pustular
psoriasis and psoriatic erythroderma in patients
who are not sufficiently responding to existing
treatments.
Bimekizumab
review by the U.S. Food and Drug Administration
(U.S. FDA) for the treatment of moderate to severe
plaque psoriasis in adults.
21
ClinicalTrials.gov. A Study With a Initial Treatment Period
Followed by a Randomized-withdrawal Period to Evaluate the
Efficacy and Safety of
Bimekizumab
in Adult Subjects With
Moderate to Severe Chronic Plaque Psoriasis (BE READY).
Available at: https://clinicaltrials.gov/ct2/show/NCT03410992.
Accessed 11 February 2022.
22
Clinicaltrials.gov. A Study to Evaluate the Efficacy and Safety
of
Bimekizumab
Chronic Plaque Psoriasis (BE SURE). Available at:
https://www.clinicaltrials.gov/ct2/show/NCT03412747.
Accessed 11 February 2022.
23
ClinicalTrials.gov. A Study With a Initial Treatment Period
Followed by a Randomized-withdrawal Period to Evaluate the
Efficacy and Safety of
Bimekizumab
in Adult Subjects With
Moderate to Severe Chronic Plaque Psoriasis (BE READY).
Available at: https://clinicaltrials.gov/ct2/show/NCT03410992.
Accessed 11 February 2022. Clinicaltrials.gov. A Study to
Evaluate the Efficacy and Safety of
Bimekizumab
in Adult
Subjects With Moderate to Severe ChronicPlaque Psoriasis (BE
SURE). Available at:
https://www.clinicaltrials.gov/ct2/show/NCT03412747.
Accessed 11 February 2022.
ClinicalTrials.gov. A Study to Evaluate the Efficacy and Safety of
Bimekizumab
Compared to Placebo and an Active
Comparator in Adult Subjects With Moderate to Severe Chronic
Plaque Psoriasis (BE VIVID).
Available at: https://clinicaltrials.gov/ct2/show/NCT03370133.
Accessed 11 February 2022.
24
ClinicalTrials.gov. A Study to Evaluate the Efficacy and Safety
of
Bimekizumab
Subjects With Moderate to Severe Chronic Plaque Psoriasis (BE
RADIANT). Available at:
https://clinicaltrials.gov/ct2/show/NCT03536884
February 2022.
27
2021 was a year of significant progress for
bimekizumab:
●
In
February
, The Lancet published two
manuscripts detailing the efficacy and safety
results from the Phase 3 BE VIVID
25
comparing
bimekizumab
primary endpoint and
to ustekinumab
ranked secondary endpoint in the treatment
of moderate to severe plaque psoriasis. The
BE READY
26
bimekizumab
placebo in the treatment of moderate to
severe plaque psoriasis.
●
In
April
, The New England Journal of Medicine
published two manuscripts detailing the
efficacy and safety results from the Phase 3 BE
SURE
27
28
studies, comparing
bimekizumab
adalimumab
and
, respectively,
in the treatment of moderate to severe
plaque psoriasis.
●
In
June
, the European Medicines Agency
(EMA) Committee for Medicinal Products for
Human Use adopted a positive opinion
recommending granting a marketing
authorization for
bimekizumab
treatment of moderate to severe plaque
psoriasis in adults who are candidates for
systemic therapy.
●
In
August
, the European Commission granted
marketing authorization and
became the first approved treatment in the
EU for moderate to severe plaque psoriasis,
that is designed to selectively and directly
inhibit both IL-17A and IL-17F. The approval in
the EU represented the first marketing
authorization for UCB’s new psoriasis
treatment worldwide.
●
In
August
, the U.K.’s Medicines and
Healthcare products Regulatory Agency
granted marketing authorization for
bimekizumab
in Great Britain for the
treatment of moderate to severe plaque
psoriasis in adults who are candidates for
systemic therapy.
●
In
September
, the U.K.’s National Institute for
Health and Care Excellence published its final
Technology Appraisal Guidance
recommending
bimekizumab
as a treatment
option for adults with severe plaque psoriasis.
This represented the first positive health
technology assessment for
bimekizumab
worldwide highlighting the value that
bimekizumab
can bring to patients, healthcare
systems and society.
29
●
In
November
, UCB reported positive top-line
interim analysis results from the Phase 3 BE
OPTIMAL
30
the treatment of adults with active psoriatic
arthritis.
●
In
December
, UCB announced positive top-
line interim analysis results from the Phase 3
BE MOBILE
31
bimekizumab
in adults with active ankylosing spondylitis,
also known as radiographic axial
spondyloarthritis (r-axSpA).
25
Reich K., Papp K.A., Blauvelt A., Langley R.G., Armstrong A. et
al.
Bimekizumab
ustekinumab
moderate to severe plaque psoriasis (BE VIVID): Efficacy and
safety from a 52-week, multicentre, double-blind, active
comparator and placebo controlled phase 3 trial Lancet 2021;
397(10273):487–98
26
Gordon K.B., Foley P., Krueger J.G., Pinter A., Reich K. et al.
Bimekizumab
psoriasis (BE READY): A multicentre, double-blind, placebo-
controlled, randomised withdrawal phase 3 trial Lancet 2021;
397(10273):475–86
27 Richard B. Warren, M.D., Ph.D., Andrew Blauvelt, M.D., Jerry
Bagel, M.D., Kim A. Papp, M.D., Ph.D., Paul Yamauchi, M.D.,
Ph.D., April Armstrong, M.D., M.P.H., Richard G. Langley, M.D.,
Veerle Vanvoorden, M.Sc., Dirk De Cuyper, M.D., Christopher
Cioffi, Ph.D., Luke Peterson, M.S., Nancy Cross, M.D., et al.
Bimekizumab
Med 2021; 385:130-141
28
Kristian Reich, M.D., Ph.D., Richard B. Warren, M.D., Ph.D.,
Mark Lebwohl, M.D., Melinda Gooderham, M.D., Bruce Strober,
M.D., Ph.D., Richard G. Langley, M.D., Carle Paul, M.D., Ph.D.,
Dirk De Cuyper, M.D., Veerle Vanvoorden, M.Sc., Cynthia
Madden, M.D., Christopher Cioffi, Ph.D., Luke Peterson, M.S., et
al.
Bimekizumab
Secukinumab
J Med 2021; 385:142-152
29
https://www.nice.org.uk/guidance/ta723/chapter/1-
Recommendations
30
ClinicalTrials.gov. A Study to Test the Efficacy and Safety of
Bimekizumab
Arthritis (BE OPTIMAL). Available
at:
https://clinicaltrials.gov/ct2/show/NCT03895203
. Accessed
11 February 2022.
31
ClinicalTrials.gov. A Study to Evaluate the Efficacy and Safety
of
Bimekizumab
(BE MOBILE 2). Available
at:
https://www.clinicaltrials.gov/ct2/show/NCT03928743.
Accessed 11 February 2022.
28
29
Disease areas and solutions for people with severe diseases
In 2021, we continued striving to deliver solutions that transform the lives of people living with severe
diseases.
We are driven by science to translate patient
insights into differentiated solutions that provide
unique outcomes and the best individual patient
experience. This year saw significant progress in
achieving this ambition for several specific patient
populations in the following disease areas. You can
learn more about these and other disease areas
we support on our
website
.
Psoriasis
UCB has a long-standing commitment to
supporting people living with
psoriasis
. UCB’s
CIMZIA
®
certolizumab pegol
), a tumor necrosis
factor (TNF) inhibitor was available to psoriasis
patients in 50+ markets around the world in 2021.
In the U.S.
32
33
, CIMZIA
®
treatment of moderate to severe plaque psoriasis
in adults who are candidates for systemic therapy
or phototherapy (phototherapy in the U.S. only).
In 2021, we were proud to expand our portfolio
with the approval and launch of BIMZELX
®
(
bimekizumab
) in the EU and Great Britain for the
treatment of moderate to severe plaque psoriasis
in adults who are candidates for systemic therapy.
Bimekizumab
is the first approved psoriasis
treatment in the EU, GB and Japan that is designed
to selectively and directly inhibit both IL-17A and
IL-17F, two cytokines driving inflammatory
processes.
Spondyloarthritides
Spondyloarthritides
(SpA) is the name for a family
of inflammatory rheumatic diseases. Two of the
most common and severe forms of SpA are
Psoriatic Arthritis (PsA) and Axial Spondyloarthritis
(axSpA)
34
.
Psoriatic arthritis
already have psoriasis; up to 30% of patients with
psoriasis will develop PsA
35
. While patients are
usually diagnosed with psoriasis first, joint
problems can also appear before skin symptoms
do.
In EU, CIMZIA
®
,
22
methotrexate (MTX), is indicated for the treatment
of active PsA in adults when the response to
previous disease-modifying anti-rheumatic drug
therapy has been inadequate. CIMZIA® can be
given as monotherapy in case of intolerance to
MTX or when continued treatment with MTX is
inappropriate. We are also exploring the potential
for
bimekizumab
psoriatic arthritis and we have already received
positive Phase 3 topline results.
36
Axial Spondyloarthritis (axSpA)
inflammatory rheumatic disease that affects the
32
Cimzia® US PI.
https://www.accessdata.fda.gov/scripts/cder/daf/
33
Cimzia EU SmPC :
https://www.ema.europa.eu/en
34
Sieper J, Braun J. Clinician’s Manual on Axial
Spondyloarthritis. Springer Healthcare 2014
35
disease: the diagnosis and pharmacologic treatment of psoriatic
arthritis in patients with psoriasis. Drugs. 2014;74:423-41.
36
ClinicalTrials.gov. A Study to Test the Efficacy and Safety of
Bimekizumab in the Treatment of Subjects With Active Psoriatic
Arthritis (BE OPTIMAL).
Available at: https://clinicaltrials.gov/ct2/show/NCT03895203.
Accessed 11 February 2022.
30
axial skeleton, causing severe pain, stiffness and
fatigue
37
which often starts in young adulthood
and needs effective treatment.
Some patients with axSpA have definitive
structural damage of sacroiliac joints visible on X-
rays and this axSpA subtype is called radiographic
axSpA (r-axSpA), also historically known as
ankylosing spondylitis (AS), whilst some patients
do not have clear radiographic damage of
sacroiliac joints, and this subtype is called non-
radiographic axSpA (nr-axSpA). Regardless of
whether axSpA patients have the radiographic or
non-radiographic form of the disease, a similar
high burden of disease
38
a
nd irreversible spinal
damage often occurs in many patients with AS and
impacts normal functioning and quality of life over
time. Patients with nr-axSpA and AS share a
similar symptomology (chronic pain, fatigue,
stiffness, and other common disease
manifestations such as enthesitis, dactylitis,
peripheral arthritis, anterior uveitis, psoriasis, and
inflammatory bowel disease) and disease burden.
Nr-axSpA is more common among women with the
disease and has more peripheral enthesitis
.
39
The difference between these two conditions has
been recognized by health authorities; this year in
the U.S. the ICD-10 Coordination and Maintenance
Committee endorsed the creation of a new sub-
category (M45.A) for nr-axSpA, recognizing nr-
axSpA as an established and legitimate condition
and advancing more accurate diagnosis.
40
In the EU, CIMZIA® (
certolizumab pegol
) is
indicated for the treatment of adult patients with
severe active axSpA.
23
®
is a tumor necrosis factor (TNF) blocker indicated
for, treatment of adults with active ankylosing
spondylitis and adults with active non-radiographic
axial spondyloarthritis with objective signs of
inflammation.
potential for
bimekizumab
with axSpA and we have already received positive
Phase 3 topline results
41
bimekizumab
in adults with nr-axSpA, as well as for
radiographic axSpA. You can learn more in our
Beyond Cimzia® our research is focusing on the
development of new solutions that aim to address
remaining unmet needs and provide a more
profound disease control.
Whilst time to diagnosis
of axSpA has improved over the years,
it remains
unacceptably long and
women still experience
much longer diagnostic delay than men: on
average, it takes nine years for a patient to be
37
Laure Gossec, Maxime Dougados, Maria-Antonietta
D’Agostino, Bruno Fautrelab; Fatigue in early axial
spondyloarthritis. Results from the French DESIR cohort; Joint
Bone Spine Volume 83, Issue 4, July 2016, Pages 427-431
38
Rudwaleit M et al. Arthritis Rheum. 2009;60(3):717–727
39
ClinicalTrials.gov. A Study With a Initial Treatment Period
Followed by a Randomized-withdrawal Period to Evaluate the
Efficacy and Safety of
Bimekizumab
in Adult Subjects With
Moderate to Severe Chronic Plaque Psoriasis (BE READY).
40
https://www.the-rheumatologist.org/article/non-
radiographic-axial-spondyloarthritis-recognized-with-icd-10-
code/
41
ClinicalTrials.gov. A Study With a Initial Treatment Period
Followed by a Randomized-withdrawal Period to Evaluate the
Efficacy and Safety of Bimekizumab in Adult Subjects With
Moderate to Severe Chronic Plaque Psoriasis (BE READY).
Available at: https://clinicaltrials.gov/ct2/show/NCT03410992.
Accessed 11 February 2022.
31
diagnosed with axSpA,
average 2 years more than men
for their
diagnosis
.
Epilepsy
UCB has a strong heritage in epilepsy and a history
of finding and developing the right molecules to
treat the symptoms of the disease. For over 30
years, we have provided solutions that have
helped transform the treatment landscape and
improved the lives of millions of people living with
epilepsy. UCB’s existing product portfolio for
epilepsy symptom management includes KEPPRA®
(levetiracetam)
, VIMPAT® (
lacosamide
), BRIVIACT®
(
brivaracetam
) and NAYZILAM® (
midazolam
nasal
spray
43,
44
Following our acquisition of Engage Therapeutics,
a clinical-stage pharmaceutical company
developing STACCATO
®
alprazolam
, we are now
running a full development program for the rapid
termination of ongoing, prolonged seizures in
patient 12 years of age and older living with
epilepsy. The pivotal Phase 3 trial to bring
STACCATO
®
alprazolam
and China was started as planned in Q4 2021.
In January 2022, UCB entered into an agreement
to acquire Zogenix, Inc., a global
biopharmaceutical company commercializing and
developing therapies for rare diseases. Upon
closing (expected in Q2, 2022) the Zogenix
acquisition will build upon and broaden our role as
a leader in and commitment to addressing the
unmet needs of people living with epilepsy, by
adding
fenfluramine to UC
B’s existing product line.
FINTEPLA
®
45
and the EMA
46
Japan
47
, for the treatment of seizures associated
with Dravet syndrome in patients two years of age
and older. Zogenix is also pursuing indications for
the use of FINTEPLA
®
associated with Lennox-Gastaut syndrome and
additional rare epilepsies. Closing of the
acquisition is subject to certain conditions,
including the tender of shares representing at
least a majority of the total number of Zogenix’s
outstanding shares, receipt of required antitrust
clearances, and other customary conditions and is
expected to close by the end of the second quarter
of 2022.
42
43
CIMZIA® U.S. PI.
https://www.accessdata.fda.gov/scripts/cder/daf/
44
CIMZIA EU SmPC : https://www.ema.europa.eu/en
45
Dravet Syndrome. June 25, 2020.
46
Products for Human Use (CHMP) 12-15 October 2020.
47
for FINTEPLA® (Fenfluramine) in Japan for the Treatment of
Epileptic Seizures Associated with Dravet Syndrome. 21st
December 2021.
32
UCB has achieved a number of additional
milestones in 2021, expanding our expertise in the
pediatric population and advancing towards our
ambition to better support people living with the
uncertainty of epilepsy:
●
In early 2021, VIMPAT
®
as adjunctive therapy in the treatment of
primary generalized tonic-clonic seizures in
adults, adolescents and children from 4 years
of age with idiopathic generalized epilepsy.
●
In March, VIMPAT
®
Australia for the extension of the indication as
add-on therapy in the treatment of primary
generalized tonic-clonic seizures in patients
with idiopathic generalized epilepsy aged 4
years and older.
●
In March, we also launched VIMPAT®
Monotherapy and Oral Solution in China.
●
In August, BRIVIACT® was approved by the
U.S. FDA as both monotherapy and adjunctive
therapy for the treatment of partial-onset
seizures in patients one month of age and
older.
●
In October, VIMPAT® was approved by the
U.S. FDA, as both monotherapy and adjunctive
therapy, for the treatment of partial-onset
seizures in patients one month of age and
older.
Whether a person is experiencing focal seizures,
seizure clusters, or a rare syndrome, their
experience and response to medication vary.
Insights from our research and development
efforts have highlighted the need for potential
new treatments in a number of epilepsy subtypes,
such as tumor-associated epilepsy, tuberous
sclerosis complex, and autoimmune epilepsy. As
we increase our understanding of each of these
epilepsy types, we come closer to being able to
target the critical underlying pathologies, creating
the potential for disease modification or correction
at the genomic level.
We are also advancing technology support
solutions that address specific unmet patient
needs across the patient journey, from diagnostics
and treatment, to coordination of care.
2021 saw the launch of
Nile.AI
, Inc., a new
independent company created to improve care for
people living with epilepsy, their caregivers, and
HCPs. Nile.AI was founded with a clear mission in
mind: to make the journey of every epilepsy
patient predictable. To that end, Nile.AI is
developing an epilepsy care management platform
that serves as a digital extension of the healthcare
provider (HCP), with the ultimate goal of
shortening the path to optimal treatment. In just
over a year, Nile.AI has gone from an idea to a
company with 35 employees, and two offices in
two countries. The technology has been U.S. FDA
registered and ISO certified it will soon be CE
marked registered.
48
Meanwhile our ongoing collaboration with Med
Tech company
Byteflies
opportunity to support patients and care providers
with tracking and recording seizures, particularly
focal seizures – thanks to a discreet wearable
electroencephalogram device which is designed
for the detection of focal seizures. We are also
contributing seed funding to
Neurava
, a medical
device startup based in the U.S., that is working on
adapting a potential mechanism of action behind
Sudden Unexpected Death in Epilepsy (SUDEP)
into a first-of-its-kind smart wearable. This
wearable device could be capable of identifying
and alerting for seizures and impending SUDEP
risk, could have an impact on the 50 million people
worldwide who live with epilepsy.
Over the next five years we aim to bring UCB’s
epilepsy treatments to even more patients than
ever before. To this end, in the U.S., UCB
completed research to better understand the
experiences of Hispanic people with epilepsy to
improve our effort to break down barriers to
48
https://www.nile.ai/pr2/
33
equitable health outcomes. UCB’s Population
Health Team conducted research through patient
focus groups to learn more about the experiences
of people of Mexican heritage living with epilepsy
and the resources they would find beneficial. In
these focus groups, two key obstacles emerged:
cultural misunderstandings and oversights, and a
dearth of native language disease information and
resources. As a result of this research, UCB is
looking for ways to address these barriers and
further improve equity in these communities. UCB
is also piloting a social business approach in India
to enable access for people living with epilepsy in
countries and settings with limited access to
quality care and medicines. You can learn more in
the
Osteoporosis
Osteoporosis is a condition characterized by low
bone mass and deterioration of bone micro-
architecture resulting in low-impact, or fragility
fractures. UCB’s primary therapy for osteoporosis
is EVENITY®
▼
49
a bone forming
monoclonal antibody, which is co-developed and
co-commercialized by UCB, Amgen and Astellas. In
Europe, EVENITY®
is indicated for the treatment of
severe osteoporosis in postmenopausal women at
high risk of fracture. Following its first European
launch in 2020, UCB has continued to bring
EVENITY® to markets across Europe in the past
year and our impact continues to grow, reaching
more than 200 000 women living with severe
postmenopausal osteoporosis.
UCB is also committed to advancing post-fracture
care. We do this by partnering with hospitals and
health systems around the globe to provide
fracture liaison services that ensure best
practices in coordinated care. We work to
address policy and reimbursement issues,
helping policymakers around the world to
implement policies that reduce the economic
burden of fragility fractures, particularly in the
light of ageing populations, and to show how
coordination of care can help society overall.
▼
This medicinal product is subject to additional monitoring. This will allow quick identification of new safety
information. Healthcare professionals are asked to report any suspected adverse reactions
It is estimated that only one-third of vertebral
fractures come to clinical attention.
50
is mind that UCB developed
BoneBot
, an AI-based
solution that opportunistically screens for
vertebral fractures on CT scans being performed
for other purposes, detecting the presence of
“silent” or asymptomatic spinal fractures that
often go unrecognized. The tool assesses patient
scans and flags vertebral fractures to relevant
health care professionals. In October, UCB
announced we will be licensing BoneBot to
ImageBiopsy Lab, a leading AI imaging diagnostics
company, for further development and launch.
ImageBiopsy Lab will further develop the
technology to obtain regulatory clearance as a
medical device and launch it with its existing IB
Lab Zoo platform for delivery to hospitals and
physician groups practices to help increase the
identification and reporting of spinal fractures,
enabling diagnosis and appropriate treatment
earlier and potentially reducing the negative
outcomes associated with osteoporosis.
49
https://www.ema.europa.eu/en
50
Adams J, et al; National Osteoporosis Society. Clinical
Guidance for the Effective Identification of Vertebral Fractures
[Internet]. 2017 Nov;1-11.
34
Generalized Myasthenia Gravis (gMG)
There are around 7 000 rare diseases
51, 52,
53
in the
world, each impacting a relatively small number of
patients. While progress is being made for people
living with rare diseases, there are still relatively
few treatment options for these patients. People
living with rare diseases may often feel forgotten,
unheard or misunderstood. The challenges they
face can be magnified by isolation, and they may
wonder if anyone else cares about what they
need. They worry their disease affects too few
people for anyone to care.
At UCB, we believe that the greatest needs can’t
always be measured in numbers. We don’t just see
patients or population sizes, we see people in
need. Focusing on our purpose of creating patient
value for people living with severe diseases now
and into the future, we are expanding our efforts
to developing treatments for rare neurological and
immunologic diseases.
We are leveraging our experience to develop
treatments for rare neurological diseases, such as
generalized myasthenia gravis (gMG), a rare,
chronic auto-immune neuromuscular disease
associated with muscle weakness
54
.
In December 2021, we announced positive topline
results from the Phase 3 MycarinG
55
evaluating
rozanolixizumab
, a subcutaneously
infused monoclonal antibody targeting the
neonatal Fc receptor (FcRn), versus placebo in
adults with gMG. The trial met its primary and
secondary endpoints, demonstrating a statistically
significant and clinically meaningful change from
baseline.
Alongside
, UCB is also
investigating whether its developmental medicine
zilucoplan
,
56
component 5 (C5 inhibitor), could deliver patient
value to people living with gMG. In February 2022,
the Phase 3 RAISE study, investigating the efficacy
and safety of
zilucoplan
in patients with gMG,
concluded that its primary endpoint was met,
demonstrating a statistically significant, clinically
meaningful, placebo-controlled reduction in the
Myasthenia Gravis-Activities of Daily Living Profile
(MG-ADL) total score from baseline at Week 12.
57
In November, UCB hosted its first ever virtual Rare
Disease Connect in Neurology (RDCN) event
focused on rare diseases, specifically gMG;
bringing physicians, scientists and researchers,
patients and patient organizations together to
highlight the issues faced in this area and advance
towards solutions together. In 2021, we also
supported the development of a
unique, patient
study
gMG and current gaps in care. The qualitative
research explored the significant physical,
psychological, social and day-to -day experience of
living with the rare autoimmune conditions and
identifies a need for improved dialogue between
patients and clinicians. The findings were
described in a peer-reviewed article co-authored
by gMG patients and UCB colleagues.
51
Global Genes. RARE facts. Available at:
https://globalgenes.org/rare-facts/ (Accessed February 2020);
von der Lippe C, et al. Mol Genet Genomic Med 2017;5:758–73;
National Institute of Health. FAQs about rare diseases. Available
at:
https://rarediseases.info.nih.gov/files/rare_diseases_faqs.pdf
(Accessed February 2020); European Commission. Rare
diseases. Available at:
https://ec.europa.eu/health/non_communicable_diseases/rare
_diseases_en (Accessed February 2020).
52
von der Lippe C, et al. Mol Genet Genomic Med 2017;5:758–
73
53
National Institute of Health. FAQs about rare diseases.
Available at:
https://rarediseases.info.nih.gov/files/rare_diseases_faqs.pdf
(Accessed February 2020); European Commission. Rare
diseases. Available at:
https://ec.europa.eu/health/non_communicable_diseases/rare
_diseases_en (Accessed February 2020).
54
Inga Koneczny, and Ruth Herbst, Myasthenia Gravis:
Pathogenic effects of Autoantibodies on Neuromuscular
Architecture; Cells 2019, 8, 671
55
Clinical Trials.gov ‘A Study to Test Efficacy and Safety of
Rozanolixizumab
in Adult Patients With Generalized
Myasthenia Gravis’:
https://clinicaltrials.gov/ct2/show/NCT03971422.
Accessed November 2021
56
Zilucoplan
and efficacy has not yet been established.
Zilucoplan
been approved for any use by any authority in the world.
57
https://www.ucb.com/stories-media/Press-
Releases/article/UCB-announces-positive-data-in-myasthenia-
gravis-with-
zilucoplan
-phase-3-study-results
35
Technology is also playing a significant role in
advancing our efforts. We continue to
collaborate with
doc.ai
, to use smartphones to
detect voice and facial patterns of people with
gMG and we are now implementing a
decentralized, mobile phone-based study to
evaluate the potential of technology to measure
gMG symptoms and eventually detect/predict
exacerbations with an accuracy and clarity that is
currently unavailable for patients in any setting.
Following a successful pilot, we are moving
ahead with our ambition to bring this tool to
patients in need and hope to be testing AI based
solutions with patients by 2023.
36
Advancing science for women of childbearing age
Severe diseases, like rheumatoid arthritis,
epilepsy, generalized myasthenia gravis or lupus,
often manifest in early adulthood, overlapping
with peak reproductive years for women
58
.
Combined with the twin trends of later
pregnancies and the higher prevalence of some
chronic conditions, more and more women need
medications to treat a chronic disease while
pregnant or planning to conceive. But they are
often confronted with confusing and contradictory
communication about possible risks. Fear about
using therapeutics that might harm the fetus or
newborn mean women and health care providers
often feel they must compromise on optimal
disease management before, during and after
pregnancy.
However, only as few as 5%
59
medications have been adequately monitored,
tested and labelled for use in pregnant and
breastfeeding women. There is a clinical and
ethical imperative to generate better standardized
data to inform decision-making on the use of
medicines during pregnancy and breastfeeding.
At UCB, we want to empower women of
childbearing age with severe diseases to make
informed shared decisions with their healthcare
provider. This includes pregnancy planning and
care management, during and after pregnancy, to
help enable optimal health outcomes for mother
and baby.
Our commitment to addressing knowledge gaps in
the care of women of childbearing age began with
CIMZIA® as a valuable treatment option for
women of childbearing age, and we are now
focused on embedding an emphasis on women of
childbearing age across all UCB’s solutions.
We believe there is a clear opportunity for UCB to
be an industry leader on this topic. To this end we
are working closely with external partners such as
the
ConcePTION
consortium in the EU and the
U.S.-based
PRGLAC taskforce
to pregnant and lactating women. In 2021 we
implemented new goals to generate evidence
specifically for women of childbearing age for all
new assets in coming years.
58
Kavanaugh A, Cush JJ, Ahmed MS, et al. Proceedings from the
American College of Rheumatology Reproductive Health
Summit: the management
of fertility, pregnancy, and lactation in women with
autoimmune and systemic inflammatory diseases. Arthritis Care
Res (Hoboken). 2015;67(3):313-25;
Chakravarty E, Clowse ME, Pushparajah DS, et al. Family
planning and pregnancy issues for women with systemic
inflammatory diseases: patient and
physician perspectives. BMJ Open. 2014;4(2):e004081.
59
Barbara D. Wesley, MD, MPH; Catherine A. Sewell,MD, MPH;
Christina Y. Chang, MD, MPH; Kimberly P. Hatfield, PhD;
Christine P. Nguyen, MD.
Prescription medications for use in pregnancy-perspective from
the U.S. Food and Drug Administration. American Journal of
Obstetrics &
Gynecology. JULY 2021; 31-32
37
Ensuring product safety and quality
At UCB, delivering reliable and safe drugs to the patients we serve is critical to our success and our Global
Patient Safety and Quality activities, processes and governance safeguard this commitment.
While these topics have always been important to
us, our 2021 materiality update confirmed their
place on the list, given how the COVID-19
pandemic and related discussions around vaccine
and treatment development have shone a
spotlight on the importance of pharmaceutical
safety and quality assurance.
Our processes are designed to ensure the best
possible product quality, safety and benefit risk
profile for patients. The efficiency of the processes
and compliance with regulations are periodically
assessed and monitored through the audit
program conducted by our Quality Department, as
well as through routine inspections by the
regulatory authorities.
The Global Patient Safety organization ensures
thorough oversight and understanding of the
safety profiles for all our medicinal products,
including those in clinical development and those
on the market. Each product is assigned a
dedicated safety lead, who leads a cross-functional
benefit risk team throughout the full lifecycle of
the product.
The benefit risk teams continuously and
proactively review all available data to identify any
potential emerging safety signals, which are then
assessed to see if they are a safety risk. All
potential and identified risks are considered to see
whether they impact the benefit risk assessment
and if further risk management actions may be
needed.
This might include additional safety measures in a
study protocol, communications with patients,
prescribers and regulators or adapting how a
product is used. These activities are overseen by
the UCB Benefit Risk Board, chaired by the Chief
Medical Officer, and all activities are part of a
pharmacovigilance system designed to ensure
transparent and compliant communication with
regulators and other stakeholders.
Meanwhile the Global Quality organization is
responsible for ensuring that UCB has a Quality
Management System (QMS) in place that adheres
to international and local legislation. This includes
all processes that contribute to the quality, safety
and efficacy of drugs, devices and combination
products throughout all stages of the product
lifecycle (from development until product
discontinuation) including compliance with
approved regulatory filings. These systems are
based on standards, such as Good working
Practices (GxP) in the pharmaceutical industry, ISO
14001 for environmental management and ISO
13485 for medical device QMS standards. This
team works closely with the Patient Safety team,
but also starting from research and development,
right through to manufacturing – while also
managing any complaints received, ensuring
compliance with all relevant regulation, and
administering the process around product recalls if
needed.
COVID-19 has demonstrated just how critical it is
to quickly adapt new ways of working, with a view
to respond to the challenges caused by this
unprecedented situation. In that context and over
the past year, UCB was able to maintain its good
Quality performance thanks to a strong, risk-based
Quality program that allowed to swiftly and
efficiently identify and mitigate the known and
emerging risks.
We are proud to say that in 2020, we had zero
recalls, while in 2021 we have had only one minor
38
recall. We have also seen positive inspection
results throughout the year, with zero critical
inspection findings. We do not have any ongoing
enforcement actions from the U.S. FDA.
Illegitimate medicines management
One key area of focus for UCB’s safety and quality
teams is mitigating risk around illegitimate drugs;
examining what type of products are affected,
how often that is the case and what type of
actions should be taken. As part of this work, we
also take special care to ensure that the supply
chain for any of our products assimilated to
narcotics is secure.
In recent years, UCB has intensified our
collaboration with health authorities and law
enforcement to report events and exchange
information. The growing knowledge on this
subject led to a systematic reporting of the
observed events by affiliates and partners, along
with the investigation requests initiated by the
authorities. A senior governance council meets
periodically, and an annual report is issued for the
management.
Upholding the highest ethical and compliance
standards, particularly in relation to product
marketing, is also a core part of our quality and
safety teams’ work. This includes a robust
auditing strategy, encompassing additional risk
and opportunities around digital. Given the
increased vulnerability of pharmaceutical
companies to malicious cyber-attacks, it is vital to
ensure business and supplier continuity should
such an attack occur, so we can continue to
distribute our products where they are needed.
Frequent, accurate and transparent reporting on
safety and quality is essential for UCB to reassure
all stakeholders in our value chain, from patients
and healthcare providers through to regulators
and investors.
We are committed to maintaining open and
honest communication around the robust
processes we have established for benefit risk
oversight and risk management. UCB has
developed and uses effective monitoring and
control systems, including internal and external
audits, for process performance and product
quality. UCB regularly hosts inspections by global
regulatory bodies of our manufacturing facilities,
as well as inspections in areas such as our
marketing affiliates and clinical areas.
Deploying digital for patients
Through UCB’s Digital Business Transformation, we’re amplifying the power of scientific innovation to improve patient care.
With a research process grounded in cutting-edge science
combined with groundbreaking technologies, we can gain
a deeper understanding of the patients we serve and
deliver the right solutions when and where they are
needed – including solutions that go beyond medicines.
In January 2021, our Digital Care Transformation (DCTx)
team was formally established with the ambition of
developing digital care solutions that meet patients where
they are and specifically address the real issues they face
on a day-to-day basis. You can learn more about various
DCTx initiatives in the “
”
section of this chapter. We have also advanced the
digitalization of our go-to-market operations, to provide a
more personalized and responsive support to patients and
healthcare professionals at every touch point along their
journey. In 2021, we adopted and scaled an agile,
multichannel, analytics-driven approach to engage
healthcare professionals across our key markets.
Working with the right partners is key to maximizing the
potential of technology. In February 2021, we announced
an expanded collaboration with
Microsoft
, following work
we did together as part of the 2020 COVID-19 Moonshot
project. Our new, multi-year collaboration builds on this
work, aiming to combine Microsoft’s computational, cloud
and Artificial Intelligence (AI) services with UCB’s drug
discovery and development capabilities, to discover new
medicines in a more efficient and innovative way. Working
with Microsoft will augment UCB’s scientists, subject
matter experts, and research partners across every part of
the drug discovery and delivery value chain by harnessing
diverse research information and AI models alongside
human expertise and creativity.
As we further integrate technology into our approach, we
are also taking steps to mitigate related risks, such as
cyber threats or data breaches, which can cause
reputational, financial and operational damage, as well as
considering the implications of greater use of AI in the
solutions we develop. Technology -related risks are
reported in
.
“Together, UCB and Microsoft are taking on some of healthcare’s greatest challenges to find connected, innovative ways to
create better experiences, insights, and more personal and more effective care.”
Microsoft Global Sales, Marketing & Operations.
Providing access to our solutions
Our goal is that by 2030, all patients who need our medicines in countries where
we operate have access to them. In addition, we aim to improve access to quality
care and medicines, through our social business model, for people with epilepsy in
low- and medium-income settings.
We recognize there are many challenges which may
prevent access to medicines, including the time taken for
new medicines to be made available in a market,
reimbursement practices, and affordability. We also
consider the diversity of global healthcare systems, health
policies and funding approaches – and how those impact
patient access.
We work to enable access to our solutions for patients, in
a way which is viable for patients, society, and UCB. By
working closely with healthcare systems and payers to set
the right reimbursement and pricing frameworks, and
demonstrating the value of UCB’s medicines for these
patients, we can improve outcomes and experience for
patients.
When it comes to risks related to improving access for
patients who need our solutions, we know that
pharmaceutical pricing continues to come under global
scrutiny from all sides which may impede our ability to
deliver our solutions to those who need them in a way
which is viable and sustainable for patients, society and
UCB. Specific access-related risks are further reported in
the
of this report.
How we measure access to our solutions and our
2021 performance
To achieve our access goal, it is important for us to know
how we are performing. We are committed to assessing
and disclosing our performance every year, in comparison
to the previous year’s baseline.
Access Performance Index
Our access performance index considers three possible
states of access to medicines in each of the countries
where we operate.
The three categories represent the state of access to our
medicines (with the exception of NEUPRO), in the
countries where we operate, versus their regulatory label
(ex EMA label).
• “Reimbursed for all” includes for each medicine the
countries with unrestricted access to the regulatory label
at national level or with unrestricted access in at least 66%
of subnational areas (provinces, landers, etc) when
assessment at subnational level is relevant .
• “Reimbursed for some” includes for each medicine the
countries with restricted access versus the regulatory label
or with access in less than 66% of subnational areas when
access is assessed at subnational level.
• “No reimbursement” includes all other reimbursement
situations: rejected, pending, not planned.
In 2021, we improved unrestricted access and restricted
access by 1% respectively in the countries where we
operate, driven mostly by positive reimbursement
decisions for
EVENITY®
in a challenging access
environment.
It’s important to note that in 2021 we started to deliver
access to BIMZELX
®
, which was not included in our 2020
baseline and therefore not in the reported improvement.
A new baseline has been set at the end of 2021 which
includes an additional 18 countries
60
countries assessed in the Access Performance Index), an
additional 2 products (BIMZELX
and NAYZILAM
®
) and any
new indications which receive regulatory approval in the
timeframe. All indications that are, or soon will be, out of
patent in 2022 have been removed from this baseline. Our
new baseline shows that we have achieved 30%
unrestricted access and 38% restricted access. This will be
the new basis to assess our performance in 2022, with
final results to be published in our next annual report.
Time to access index
60
Australia, Austria, Bulgaria, Canada, Czech Republic, Greece, Honk
Kong, Hungary, Ireland, Korea, Poland, Portugal, Romania, Russia,
Slovakia, Switzerland, Taiwan and Turkey
For any newly launched solution, we are also tracking the
time lapse between marketing authorization and a payer
decision to provide access and reimbursement to a new
medicine, as this has an impact on patients needing new
treatment options.
We have identified the median time for our industry to
achieve reimbursement for their therapeutic offerings in
all the markets where UCB operates, and established
benchmarks. This will allow us to measure ourselves
against our peers and clearly map where we still have
room for improvement. 2022 will be the first year for
which we will be reporting.
UCB pricing in the U.S.
We also take into consideration that healthcare systems
vary; some are funded by private insurance plans,
government funded healthcare systems, or directly by
patients themselves. For patients with partially- or fully-
self-funded healthcare, personal affordability can limit
their ability to access vital medicines. Understanding these
ecosystem differences allows us to develop solutions that
strive to reduce the financial burden associated with using
a UCB medicine.
In
support of our access commitment, in the U.S.
affordability information for UCB’s products is available to
patients and all stakeholders on our website, including
information on patient assistance programs. In 2021, our
U.S. net price change (after discounts and rebates)
averaged -4.0% across the U.S. product portfolio (list price
change averaged 4.1%). At a product level, the largest
single percentage change was a 4.9% list price increase
and a 2.9% net price change from 2020 to 2021. This
reflects the significant rebates and discounts we provide in
the market to ensure patients can access UCB medicines.
As part of UCB’s pricing principles, year -over-year net price
increases generally do not increase more than the
Consumer Pricing Index (CPI-U), a metric that represents
the percent change over time of the price of specific goods
and services in the U.S. Any increase in price is tied to the
value UCB’s products bring to patients, stakeholders, and
society. Exceptional net price increases above CPI-U are
linked to meaningful increase in patient or societal value.
61
CPI-U baseline is determined based on a combination of
Bureau of Labor Statistics data and Federal Open Market
Committee forecasts.
61
For example, new data or enhancements that benefit existing or new
patient populations.
Working together to improve patient’s access to our solutions
Putting patients at the heart of value assessments
Around the world, third-party payers, including
government healthcare programs and private insurance
plans, want to understand the effectiveness, benefits and
risks, and costs associated with any medicine. Their
assessment methodology drives reimbursement decisions
and may lead them to implement restrictions on access or
usage of a medicine. Well-structured value assessments
allow all stakeholders to synthesize or generate
information that enables access and reimbursement for
treatments that meet patient preferences, patient
treatment goals and health system needs.
We launched our Value Assessment Principles in 2021 as
value assessment is a topic of growing importance
globally, and we will continue to work to ensure we are
best serving our patients in every way. As healthcare
systems evolve, systematic frameworks for measuring and
assessing value are increasingly important. Recognizing
this, UCB developed a broad set of Principles to guide
future policy and the use of value assessment frameworks
to enable sustainable access. These Principles will be used
to assess and shape our engagement in the value
assessment landscape, including our proactive positioning
and engagement externally on value assessment.
Importantly, these Principles will strengthen our approach
as we move to amplify our leadership and engage other
stakeholders to reach consensus on future value- and
outcomes-based payment models.
The Principles are:
•
Value-assessment tools must be patient-centered.
•
Value-assessment frameworks must be transparent
and adaptive to differing circumstances (e.g., orphan
drugs).
•
Value assessments must focus on all aspects and
perspectives of healthcare.
•
Value-assessment frameworks must be validated, be
able to be replicated, subject to peer-review, utilize
rigorous methodologies in a timely manner, include
multiple stakeholders throughout its development,
and be revised as necessary (e.g., when new
standards, methods, clinical data, etc. become
available).
•
Value-assessment tools must utilize a broad range of
high-quality evidence and aim to incorporate digital
transformation to enhance its applicability in decision-
making.
•
No single value-assessment framework should be the
final arbiter of value within the U.S.
•
Value-assessment methods and processes must better
account for populations that are typically
underrepresented in research and drivers of health
disparities.
In parallel, we launched a U.S. Voices on Value series in
recognition of the need to have a critical conversation on
value and how we better account for it, so patients have
affordable, sustainable access. We are welcoming a
diverse set of stakeholders discussing their views on value
and how we create a better healthcare system covering
topics such as value-based contracts, value-based
assessment, sustainability, health equity and disparities,
transparency, and more.
Integrating access from innovation to launch
Understanding patient access to our medicines begins
early in the development lifecycle. The importance of
patient affordability, access and reimbursement landscape
assessments is understood with increasing depth
throughout the development lifecycle and ensuring
appropriate endpoints in our clinical studies to enable
patient access and where necessary meet payer
requirements is an integral part of our approach to
research and development.
Access+, our new managed access program
UCB recently created a new managed access program
called Access+. Our approach is to provide access to our
treatments through a standard mechanism in place for
receipt, review, decision, management, and closure of
unsolicited requests and activities related to supplying
investigational products or products approved by at least
one major regulatory body.
Improving access for underserved populations
To achieve our access goal in low- and medium-income
settings, UCB has established a new social business
approach aimed at improving epilepsy care for
underserved patients in a way that is financially
sustainable over time.
In the U.S., we’re looking to build on our health equity
work by developing new social business approaches that
stand up to healthcare disparities seen in the communities
around us. While we’re in the early stages of developing a
blueprint, this will include leveraging an “Innovation Hub”
model to incubate new approaches and engaging with
underserved and marginalized communities to offer
solutions that use a human-centered design approach.
In Mumbai, India – an ever-expanding city of more than 20
million people with an estimated 144 000 of whom live
with epilepsy, we developed a blueprint for a social
business to launch as a pilot. The goal is to address
persisting barriers to treatment ranging from low disease
awareness and existing stigma around epilepsy, to
restricted capacity in the healthcare systems, and to
limited treatment availability and affordability.
As we work to deploy this pilot, we are carefully
considering the related risks caused by the ongoing impact
of COVID-19, as well as the need to establish a strong
organizational structure to successfully roll-out the social
business model.
We are also leveraging UCB’s innovation capabilities with
partners from different sectors, including working with
Boston University to independently measure our efforts (in
partnership with the Public Health Foundation India). This
is how we believe we can make a real difference to help
close the treatment gap.
Together with Our People
We are made stronger because of our culture of collaboration and curiosity. Our diverse perspectives and
backgrounds culminate in a common objective to deliver value for patients and society, as a whole.
At UCB, we value and nurture diverse perspectives and backgrounds and show respect and care for each other. We are made
stronger because of our culture of innovation and collaboration which allows us to create value for patients, for each other and
for society as a whole.
In 2021, we continued to prioritize the care and wellbeing
of our people amid the uncertainty created by the ongoing
pandemic. We began to gradually roll out a hybrid working
model for colleagues to be able to work from home – and
we are still supporting our employees in adapting to the
challenges of hybrid or remote work through a range of
initiatives.
We are progressing in embedding sustainability into the
recruitment, performance reward, and development of
employees; however, we are aware of related risks such as
increased uncertainty associated with long project
timelines and budget constraints. Further risks are reported
in the
Our hybrid working model
Based on learnings gleaned during the first year of the pandemic, we began piloting a hybrid working model in March 2021, in
countries where the ongoing COVID-19 situation permitted it.
The hybrid working approach was fully rolled out in
September, alongside a playbook designed by employees
for employees to better understand what this approach
meant for them. Our hybrid working model allows for a
minimum of 40% physical office presence and up to 60%
home working on a monthly basis. Our ambition is to
leverage the possibilities of technology to foster connection
and moments that matter, while also offering greater
flexibility – as and when more colleagues will be able to
return to their workplaces.
Health, safety and wellbeing
UCB’s delivery model for our health, safety and wellbeing (HSWB) initiatives is focused on meeting employee needs in a
comprehensive way, while being mindful that there is no one-size-fits-all approach – and while paying
special attention to colleagues affected by severe diseases as patients or caregivers. This delivery model has five key pillars:
In 2021, the pandemic has continued to affect employee
wellbeing. We tailored our activities to tackle related
challenges, such as fatigue, ergonomics and adapting to a
hybrid working model. Meanwhile, we continue to offer
occupational health programs for colleagues exposed to
potential occupational hazards. Risks other than those
directly related to research and manufacturing have also
been the subject of specific initiatives to reduce their
impact on our employees, such as a global safety driving
program which was initiated to minimize the traffic risks our
colleagues, using their car professionally, face. Other social
risks are reported in the
report.
How we evaluate Health, Safety and Wellbeing and
our 2021 performance
To measure our HSWB efforts and performance, UCB
created a HSWB index. This expresses our performance as a
percentage versus target with two main indicators: the
safety performance indicator and the health, safety and
wellbeing indicator. The index allows us to identify focus
areas when selecting global and local programs to
implement, conscious that our employees’ experiences
vary depending on their geographical location.
The safety performance indicator is measured using the lost
time incident rate (LTIR), which considers lost time
incidents, i.e. incidents with at least one day lost. This
accounts for 30% of the HSWB index. The remaining 70% is
made up of the HSWB indicator which combines results
from our annual global HSWB survey and employee metrics,
such as Employee Assistance Program coverage, promotion
rate and Personal Development Plan engagement rate.
Our 2021 global survey on health, safety and wellbeing was
launched in November. The results of the survey
demonstrate, once again, the influence of the pandemic on
the wellbeing of our colleagues. We saw a small decrease -
between 2 and 3% - in the score for “Physical wellbeing "
and “Interacting with care”. Compared to last year’s figures
due to various initiatives in the area of mental wellbeing
and the inclusion of health, safety and wellbeing in
employee personal development plans, the decrease in the
“Mental wellbeing " and “Purpose & Growth” pillars was
limited to an average of 1.5%.
Despite these small reductions in part of the score
mentioned above, the Health, Safety and Well-being Index
rose, overall, from 78.4% in 2020 to 81.9% in 2021. This
increase is due, in part, to the fact that more colleagues
have access to an employee assistance program (currently
96%) and subsidized sports activities (87%), in addition to
the increase for “Social wellbeing " and strong safety
performance. The number of lost time incidents (rate of
1.22) and recordable incidents (rate of 2.05)went down by
25% and 10%, respectively, compared with 2020
62
. This
62
Both rates are calculated per million hours worked. For China, India,
Poland, Canada, Korea, Saitama (Japan), Bulgaria, U.K., Brazil,
Switzerland, and Turkey both employees and employees who work under
the direct supervision of UCB are in scope. For all other countries and
sites, only UCB employees are in scope.
result leaves us on track with our safety performance goal
and results in a Safety Performance Indicator of 100%.
Based on the outcome of the Index, we will adapt our plan
for global and local HSWB activities in 2022.
Wellbeing in the workplace
Based on results from our 2020 HSWB survey, in 2021 we
focused on:
1.
Employee experience
journey from hire to retire and identifying all the
moments that matter and their link with our HSWB
strategy
2.
Integrating HSWB in employee’s Personal
Development Plans
3.
Engaging employees
across the globe to ensure
awareness around our ambition, delivery model and
strategy
4.
Strengthening our HSWB platform
as a central point
where colleagues can access resources to support their
own HSWB
Furthermore, together with the Mentally Fit Institute and
Mental Health UK, an organization overlooking different
mental health charities in the UK, we organized 24 global
webinars on 12 different topics including: dealing with
pressure, recognizing stress signals, managing wellbeing
conversations, and self-care. On October 7
th
our first global mental health day with “breaking the stigma
around mental health” as a central theme.
Different local working groups have been established to
launch and support local HSWB initiatives. Examples include
the launch of a mental wellbeing pledge and plan in the UK,
a financial wellbeing knowledge series in China, and
workshops on nutrition for night workers in Switzerland. In
the U.S., we continued the employee hardship fund and
UCBWell provided a wide variety of wellness resources,
being nationally recognized as a recipient of the 2021 Cigna
Well-Being Award.
Finally, we encouraged all countries that did not currently
offer the Employee Assistance Program – an initiative
allowing colleagues to seek assistance from a psychologist
for personal and work-related issues – to do so.
Occupational health and safety in the workplace
Occupational health and safety is a fundamental aspect of
HSWB at UCB. In 2021, our Safety Beyond Zero corporate
program continued to underpin UCB’s occupational health
and safety program, with a focus on three main pillars:
safety mindset, safety fundamentals and safety
management systems.
The
safety mindset
leadership. More than 300 people managers from
operations and supply and technology solutions in Belgium,
Switzerland, the UK, China and Japan followed workshops
on safety leadership. The visible-felt safety leadership
behaviors for managers and employees were rolled out
across the organization. A safety recognition program was
initiated to recognize colleagues and teams who visibly
went the extra mile for safety and a “Go 5 For Safety”
initiative was launched to provide supporting material on
the topic of safety in the workplace, during other safety
moments.
The
safety fundamentals pillar
activities that could lead to severe injuries or even death.
These include working from a height, equipment for
potentially explosive atmospheres, confined spaces and
chemical handling. The three key strategies followed to
avoid such accidents are: designing inherently safe
installations and equipment, providing clear and robust
operating procedures, and ensuring people are trained with
the right competencies to safely carry out their tasks.
In the
safety management pillar
, a corporate standard on
risk identification, assessment, evaluation, and mitigation
was developed for the entire organization. The safety
maturity assessment was trialed and tested with the
objective to take the lessons learned from operations
across the entire organization, globally.
On April 28, UCB celebrated World Day for Safety and
Health at Work by focusing on Ergonomics & the Prevention
of Musculoskeletal Disorders (MSD). This was an
opportunity to remember that creating value for patients,
now and into the future, starts with taking care of
ourselves. Colleagues all around the world took the
opportunity to organize dedicated activities, such as
webinars, online training courses, and even face to face
talks, while respecting sanitary provisions in force on site,
as well as developing dedicated communications, podcasts,
and cartoon animations to underscore the subject matter.
Finally, to support UCB’s Global Occupational Hygiene
Program, our colleagues from local HSE departments at
manufacturing sites established local monitoring programs
to evaluate and control workers’ exposure to specific
hazards. Qualitative and quantitative assessments were
performed throughout the year around exposure to specific
chemicals and physical hazards.
Diversity, equity and inclusion
At UCB, we aim to deeply embed diversity, equity and inclusion (DE&I) into all our business activities.
The diversity of thought, experience and personal
background that our colleagues bring to their work is felt in
the value we deliver to patients, since fostering an engaging
and inclusive environment where colleagues feel valued
and respected allows them to reach their highest potential.
We are making great strides to incorporate DE&I at every
level of the organization. This is particularly important given
the introduction of the hybrid working model – while this
can enable greater flexibility for our colleagues, it may also
give rise to exclusion or inequality if not properly handled.
Other social risks are reported in the
section of this report.
Measuring our progress in our DE&I journey and our
2021 performance
2021 saw us approach DE&I from an evidence-based
perspective, making progress in establishing Diversity,
Equity and Inclusion Indexes and advancing our efforts in
this area, not only in terms of diverse representation, but
also in our processes, systems and policies.
Our overall ambition regarding diversity is to reach at least
a gender balance target of 40% of women and 60% of men
at senior leadership level, a representation of People of
Color to reflect local demographics and mirror the global
working population and echo the multi-generations of the
global working population. In terms of equity, we continue
to focus on offering similar career opportunities to different
gender and ethnicity groups. Finally, our inclusion is
measured, through an equity and inclusion employee
survey, to help us evaluate two dimensions: feeling safe
(based on psychological safety in teams, psychological
safety with leaders, micro-aggressions) and transparency
and objectivity in process (based on talent and salary
decisions).
We plan to publish a comprehensive baseline for these 3
indexes in the near future and to disclose yearly our
performance.
We also strive to ensure an inclusive workplace for all
employees by removing barriers to advancement,
ensuring
equity in pay and rewards, and by building our
talent pipeline by inclusive talent management. In
countries with staff above 150 people, i.e.,
China,
Germany, Japan, France, Switzerland, the U.K. and the
U.S., 85% of the leadership teams are from within the
country (last year was 86%) and the split between women
and men is 41% and 59% respectively. More information
on diversity at
can be found in the
Focusing on what matters
In 2021, we continued several major initiatives. These
included the inclusive learning curriculum, which urges
colleagues to consider a number of behaviors including
respect for others, open-mindedness, curiosity, cultural
competence, kindness, and empathy. This program has
been one of the central DE&I programs at UCB over the past
year, beginning with unconscious bias training. At the end
of 2021, more than 1 500 colleagues had embarked on this
inclusive learning curriculum. We also directed our efforts
on building diverse teams and equipping leaders to lead
inclusively and with empathy, holding courageous
conversations with their team members where necessary.
Connecting together
This year we grew additional capabilities through our
Employees Resource Groups (ERGs), demonstrating the
important role these play in engaging and supporting
employees of different ethnicities and backgrounds. Overall
membership of our ERG communities grew by 61%, with
around 1 800 employees now involved with these
initiatives. This accounts for 21% of the workforce. There
are currently 8 ERGs
63
, three of which were new in 2021.
One new ERG, Avid, aims to create a safe, fulfilling, and
empathetic working environment for UCB colleagues living
with a health condition or a disability, or those colleagues
who are caregivers to such individuals. 2021 also saw the
creation of
ACES
, a group dedicated to supporting and
uniting UCB’s Asian colleagues around the world, with a
mission to promote cultural diversity and the professional
development of their members. Meanwhile, building on
data showing that up to five generations can exist in a team,
the Youngsters ERG evolved, rebranding and refocusing its
objective towards a multigenerational ERG under the new
name
Emerge
. It is important to note that
while several
ERGs officially launched in the US, the evolution of ERGs at
UCB includes a broader expansion across both national and
international markets for 2022 and beyond.
“This ERG will ensure that these colleagues have a voice that will fuel UCB’s patient value ambition and it will further
increase a sense of empathy at UCB, which is a key attribute in the development of people.”
Tim Verfaillie, Global Program Manager Sustainability & Avid ERG Leader
Avid Employee Resource Group
About 15% of world’s population has a disability. In 2020,
an internal survey showed that our colleagues that are
caregivers recorded the lowest sense of wellbeing. These
findings, combined with growing awareness of the specific
needs of colleagues with disabilities, led to the creation of
Avid, an ERG for any colleague living with a disability or a
chronic, acute, visible, invisible, physical or mental health
condition, as well as caregivers or any other colleague who
wishes to join. Avid currently has 275 members and the goal
is to give all these individuals a voice.
Below is a list of the Employee Resource Groups currently in operation at
UCB:
●
ACES: Asians Committed to Excellence and Success
●
Avid: UCB colleagues living with a health condition, a
disability, or who are a caregiver
●
B.E.I.N.G.: Black Employee Interconnecting Network Group
●
EMERGE (Formerly Youngsters): Generational ERG
●
RA
Í
Z: Hispanic and Latinx colleagues
●
UCB+: LGBTQ+ colleagues
●
UNITED FOR VETERANS: Veterans and Veteran Champions
●
WiL: Women in Leadership
We know that being a member of a group such as Avid can
help colleagues realize that there are others going through
the same experiences, even if they don’t feel that they can
share their own concerns. We are here to help increase
inclusiveness, to create more equity and build a caring,
empathic environment. In short, it’s about ensuring all
people can thrive.
Together locally
In addition to global, company-wide DE&I initiatives, 2021
saw an increase in local DE&I activities. In the U.S., we
implemented a training on courageous conversations to
address the systemic nature of racial injustices and
inequities. In other markets, thanks to the actions of five
local DE&I councils (UK, Germany, U.S., Switzerland and
Japan), a number of initiatives have gathered pace, and we
expect more local DE&I councils to be created in 2022.
“Local councils are important to make sure UCB’s DE&I approach remains meaningful in our specific locations
and realities. You will have different DE&I needs in Germany than you would in China or Belgium or the U.S. So, while
aligning with the global approach, we look at what are really the most burning questions for us locally and where we can
have a true impact.”
Julia Iczek, Talent Partner Corp. Develop. & Finance & DE&I Local Council – Germany
Continuing to strengthen culture and leadership
UCB’s strategy builds on our strong foundation of being “Inspired by Patients. Driven by Science”.
The cultural component of our strategy is centered on
encouraging each of UCB’s employee to take
accountability to create meaningful value for patients and
society by staying focused on value creation and striving to
generate a positive impact in everything they do, while
elevating the ability to push the boundaries of innovation.
To unitedly deliver on our shared ambition, UCB
colleagues must continuously learn, develop and adapt in
order to be prepared to tackle internal and external
challenges. Attention has been placed on developing the
authenticity, adaptiveness and resilience of our leaders
and, more recently, their ability to develop multi-level
system thinking.
How we evaluate the evolution of culture and leadership
In 2021, we conducted a culture and leadership survey to
measure the evolution of culture and leadership over the
last few years at UCB. This was achieved through
workshops, interviews and crowdsourcing information
from leaders within the organization, with the results
showing that our expected behaviors are very well known
and embedded in the company as the North Star of our
culture. Topline feedback from the survey showed our
strengths, areas of focus and upcoming topics.
These results are serving as a basis to further reflect on
how our culture and leadership will evolve to support our
next strategic phase.
An organization-wide competency framework was
developed in 2021, to increase clarity around performance
expectations and establish a clear link between individual
and organizational performance. In an era of flexible
working, it becomes crucial to guarantee the continued
ability to capitalize on strengths and safeguard
functional working.
Building on our learning culture
In 2021, 96% of our employees received regular
performance reviews, and 82% of our employees received
regular career development reviews.
To connect beyond our company and stay abreast of
current societal trends and challenges, in 2021 we
continued to invite thought leaders to hold talks under the
#imagine webinar series,
which is also available to the
general public. The #imagine webinars are important for all
UCB colleagues as, to create value and positive impact on
patients’ lives, we need to envision our ambition for
patients with key societal challenges in mind and develop a
deep understanding of the context around us. Connecting
these different elements boosts our ability to imagine new
approaches for value creation and ensure strong
performance and a successful future for UCB. We have
invited experts that provided external insights and brought
different perspectives to help us reflect on alternative ways
for value creation, on topics such as system thinking in
healthcare, intersectionality, wellbeing in a digital age, and
the roots for vaccine confidence and hesitancy
.
Focusing on culture across the organization
Extending the success of the leadership programs we ran
with the
International Institute for Management
Development
leaders continue to develop their strategic and leadership
skills through a series of workshops. UCB continued to
mature this program with new modules in the final stages
of preparation. These additional modules will be rolled out
to leadership in 2022.
Finally, to properly welcome newcomers who joined UCB
during the pandemic, a virtual onboarding module was
developed integrating elements such as UCB’s vision,
culture and leadership. We also created a Culture Infusion
book to trigger discussions and develop workshops,
bringing everybody back to a basic level of understanding
of our culture, which places collaboration and curiosity at
its heart.
Learning and development
At UCB we constantly work to close the gap between current and future capabilities to ensure that we can deliver differentiated
solutions for patients living with severe diseases.
In 2021, we made important strides in the area of capability
planning. By taking both a top-down and bottom-up
approach t, a broad view of the capability gap emerged
which allowed us to define our areas of focus and ensure
we are leaving no one behind.
Preparing our workforce for the future
The recent launch of BIMZELX® combined with the richness
of UCB’s late-stage pipeline has prompted a focused effort
on building up our launch excellence capability. The
approach relied on strategic capability planning and
build/buy/borrow methodologies and was largely
successful thanks to a well-anticipated and orchestrated
learning and development and talent acquisition. Next to
launch excellence, our focus is on our Digital Business
Transformation and our Rare Disease capabilities; and we
expect to focus on global Gene Therapy capabilities in the
coming years. Lastly, we are framing organizational agility
as a capability developing across the organization and are
aligning existing efforts to
accelerate and scale at a pace
necessary to meet societal needs, changes and unexpected
situations.
The highly specialized nature of our industry makes for a
competitive talent market. Attracting, developing and
retaining top R&D talent is therefore crucial. To this end, we
rolled out several related initiatives in 2021, targeted
specifically at R&D professionals:
●
Funding a series of internal and external PhDs at the
following academic institutions in the U.K. and EU: the
universities of Oxford and Cambridge, King’s College
London, University College London, Queen Mary
University of London, Birkbeck University of London,
Edinburgh, Leicester, Liverpool, Manchester, Bristol,
and Bath universities, as well as Maastricht University
and KU Leuven.
●
Hosting a number of guest speakers to talk to young
professionals, including motivational speaker John
O´Leary, author of “On Fire” and “In Awe”.
●
Continuing to offer job rotations between different
roles to all employees working in Development
Solutions, allowing them to expand professional
experience and collaborate across different
departments.
●
The roll out of a sponsorship program between UCB
Executives and junior employees to develop emerging
talent.
Early Careers program
Attracting the right talent, with the right skills and
expertise, is critical for UCB to deliver on our ambition. To
nurture future leaders, 2021 saw the creation of the Early
Careers Program to develop and improve upon several
initiatives already in place. This includes a range of entry
options for recent graduates, including a two-year graduate
program consisting of three eight-month rotations across
international UCB hubs.
2021 also saw us partner with several Belgian universities,
such as Mons University, KU Leuven and Université Libre
de Bruxelles in the fields of digital, manufacturing and
engineering. We established 21 partnerships with
universities and like-minded organizations, increasing our
presence at global career fairs, insight days and lectures,
representing UCB and Early Careers towards an audience
of close to 39 000 'Young Talent '. In the U.S., we continued
our internship program which was 100% virtual in the past
year
.
“The Early Career program is for those who are curious, who want to develop their skills and who have the
objective of helping patients.” – Charles Reyserhove, Early Careers, UCB
Measuring our progress on talent acquisition
Over the past year, a new candidate relationship
management tool (CRM) was implemented to manage and
measure candidate application traffic to UCB’s career site,
allowing the management of entire career campaigns to
be implemented and monitored. In 2021, we received 836
216 visits to our career site and managed 33 457
applications to deliver against our 1 147 external hires.
Our commitment to moving towards an insight-led
recruitment strategy was recognized in December 2021,
when the UCB Talent team received the LinkedIn Talent
Insights award for companies headquartered in Belgium.
The award recognizes companies who utilized LinkedIn
Talent Insights to make informed talent decisions with
real-time insights.
Together for Communities
At UCB, we know that the challenges facing the world, from climate change to rising inequalities, are inextricably
linked. We are working to address global challenges at the intersection of our business strategy and wider
societal interests, particularly when it comes to areas that are central to our expertise. We also aim to support
people living in the communities where we operate, deepening our local connections and helping to address
health disparities amongst vulnerable populations.
Strengthening relationships with our suppliers
Ensuring continuity of supply and distribution chains
Together, our internal development and manufacturing
capabilities and external network cover the full spectrum
of Chemistry, Manufacturing and Controls (CMC) activities
for small and large molecules – from process, analytical,
formulation, device and packaging development to pre-
clinical, clinical and commercial drug substance, as well as
drug product manufacturing, fill and finish, device
assembly and packaging. These activities are performed
across our sites and at selected partners and contract
manufacturing organizations (CMOs).
We operate distribution centers worldwide for direct
distribution of most of our commercial and clinical
products. We also use third-party distributors to
supplement distribution. Through our global supply chain
organization, we ensure end-to-end oversight of supply –
from raw material procurement to delivery in each of the
countries where UCB delivers directly.
Partnering with our suppliers for better societal impact
With a shared goal to deliver societal impact, UCB is
committed to providing its suppliers with information key
to our shared success. An action plan for tracking supplier
compliance on a range of issues including ethical working
methods, human rights, ethics and diversity, equality and
inclusion issues is already ongoing
,
collaborating with our suppliers to improve our joint
performance.
UCB continues to use
EcoVadis
suppliers on dimensions such as environmental protection,
labor and human rights, and ethical business practices. In
2021, UCB increased the number of suppliers included in
the EcoVadis sustainability performance audit to 229
suppliers, accounting for 30% of our spend. This group
includes strategic suppliers, contract manufacturing
organizations (CMOs) and contract research organizations.
We collaborate with
RiskMethods
, a supply chain risk
management software that identifies potential risks in our
supply chain in terms of labor practice and human rights,
fair business practices, ethics and environmental impact.
Our risk management approach was also reassessed in
2021 to encompass future risks including natural hazards
and water scarcity for our strategic suppliers, in addition
to volatility in demand, excessive national stock building
and, related to this, export and transp ortation limitations.
UCB’s commitment to the
Science Based Targets initiative
(SBTi) includes a supplier engagement target; to cover at
least 60% of our scope 3 greenhouse gas (GHG) emissions
due to external partners by 2025. In order to achieve this
target, we define an annual plan to target key suppliers we
want to influence. In 2021, UCB ran dedicated digital
events for certain categories of suppliers to discuss how
they can contribute by reducing their footprint. For CMOs,
we run deeper engagement activities and discussions.
For
more information about how UCB suppliers are being
encouraged to reach their own climate targets, see the
Planet chapter.
Finally, we aim to engage with business partners to improve
ethical, social and environmental performance across our
supply chain. UCB has joined forces with other
pharmaceutical companies as part of the
Pharmaceutical
Supply Chain Initiative
health, safety and environmental outcomes in the
communities where we buy. We believe that by sharing
knowledge and expertise, PSCI members drive global
change more effectively than any one organization alone.
Supporting vulnerable communities through philanthropy
At UCB, we believe our responsibility goes beyond the impact we can create through our business approach. We can make a
difference in the world around us through targeted philanthropic contributions, for which we partner with expert
organizations to deliver the greatest impact in three key areas:
Inspiring Science for Better Health
In the U.S., Inspiring Science for Better Health is a key
focus of our philanthropic efforts. Despite advances in
recent years, today’s STEM workforce does not reflect the
U.S. population with respect to gender, race and ethnicity.
To address this gap, UCB sought opportunities to support
STEM education opportunities in the communities where
UCB has an office. Through a combination of proactive
outreach and existing contacts, UCB contributed to 18
local organizations to support STEM education with a
special focus on K-12 education and underserved
populations.
As an example, UCB supported
BioBuilder
, based in
Boston, USA. BioBuilder takes a comprehensive approach
to the emerging field of synthetic biology, providing
programs for young students and their teachers to
integrate biology and engineering through practical,
hands-on lessons and club activities. UCB is supporting the
costs of the BioBuilder Apprenticeship Challenge, a pre-
professional experience for high school students in the
Boston area to prepare them for summer internships in
life science companies.
In addition, and to reach communities beyond our offices,
UCB field-based employees were also provi ded with the
opportunity to nominate a community-based STEM
organization in their local area to receive additional
donation grants – further expanding our impact.
Inspiring Communities towards Better Health
2020 saw the launch of the UCB Community Health Fund,
created in response to the COVID -19 pandemic with the
aim of addressing health disparities amongst vulnerable
populations. The fund, which is managed by the King
Baudouin Foundation in Belgium, takes a holistic view to
the term “health”, including physical and psychosocial
wellbeing.
The Fund’s aim is to support these populations by
providing grants to organizations designing, implementing
and evaluating impact-driven projects, and those pursuing
social science and/or medical research projects outside of
UCB’s traditional therapeutic areas. To that end, in 2021
we launched a second call for projects focused on the
mental health of vulnerable young people (15-24 years
old).
On this second call for projects, the Fund received 145
applications from organizations and projects positively
impacting young people’s mental health. This led to us
contributing to a total of 49 organizations and projects,
providing grant sums of between €30 000 (US$ 36 000)
and €50 000 (US$60 000) each. Since its creation in 2020,
the Fund has distributed €4.5 million to 99 projects
worldwide.
Kubb evenings at Hejmo (SOS Kinderdorpen)
In 2021, the UCB Community Health Fund supported
Hejmo, a project from SOS Kinderdorpen. Hejmo is a
shelter in Leuven that provides a home for up to nine
unaccompanied refugee minors, where they can find the
peace, security and the guidance they need to build a new
life in Belgium.
Every week in the summer, Hejmo hosts Kubb evenings:
events that bring together the young people at Hejmo
with a number of invited guests. The parties take place in
the garden where Kubb, a bowling game, provides fun and
relaxation. The young people take full responsibility for
organizing the Kubb evenings: from defining the teams, to
cooking for their guests and ensuring the smooth running
of the event. While talking and eating together, they get to
know many people and organizations. They are thus
building a large social network. The evenings also give the
young people the opportunity to mutually discover each
other’s worlds, generating solidarity among the guests and
strengthening their social skills.
The many lockdowns somewhat isolated the youth in Hejmo. To reconnect with society around us, we decided to invite
people for a friendly game of Kubb. The encounters between our youth and the guests are very valuable. Conversations start
spontaneously; the game brings people together. This connection allows our youth to share stories from their home country
and their new life here. They are listening and are being listened to. The fact that they organize the events themselves,
welcoming the guests, preparing meals, organizing the game, taking pictures, strengthens their confidence in their own
talents.
Seppe De Bruyn, social worker, Hejmo
Inspiring Access to Better Healthcare
The UCB Societal Responsibility Fund was jointly launched
by UCB and the King Baudouin Foundation in 2014 with
the objective of improving the quality of life and access to
neurological care for persons living with epilepsy in low-
.and middle-income settings. In 2021we have evolved the
fund to focus our philanthropy efforts on strengthening
healthcare systems, under the recently renamed UCB
Innovation for Health Equity Fund.
gap in neurology and epilepsy care smaller for the poorest
patient populations.
Our philanthropic approach is a complement to our work
to establish social businesses that meet the needs of
epilepsy patients in low- and middle-income settings. You
can read more about this in the Access section of the
Together for Patients chapter.
In the past years, a number of projects in Africa and Asia
have been also supported by UCB in different ways. These
include activities such as education of health care
providers on epilepsy, raising disease awareness,
improving access to services such as diagnostic services
and training of next generation researchers and
neurologists. They have been conducted with partners
such as
Duke University
,
Project Hope
,
WHO
,
Fracarita
Belgium
,
Handicap International
has been delayed because of disruptions caused by COVID-
19, UCB has agreed to extend the program into 2022.
Improving neurological skills in Rwanda
The UCB Innovation for Health Equity Fund provides
resources for Ghent University in Belgium to develop a
Neurology Masters curriculum with the University of
Rwanda.
The curriculum has been scientifically approved. Under
this new pathway, rather than studying abroad, residents
will enter a local curriculum program. With the creation of
this new opportunity for in-country learning and training,
the end goal is to have 16 new neurologists in the country
after ending the program. We hope this will contribute to
building a regional neurological center of excellence which
can in turn better serve the unmet needs of people living
with epilepsy in Rwanda and in nearby countries.
Together for the Planet
We take a long-term view of our business activities. We strive to uncouple our growth from our environmental
footprint so that we can protect the planet for future generations.
It is now clearer than ever that protecting human health also means safeguarding the health of our
planet. At UCB, we strive to develop, produce and deliver solutions for the people we serve in the most environmentally
friendly way possible.
We take a long-term view, considering the overall
footprint of our business activities alongside our growth.
Our efforts in this area are aimed not only at overcoming
the challenge on our own, but also working with partners
across our end-to-end value chain to make collective and
coordinated progress.
As UCB’s portfolio and pipeline continue to grow, we are
striving to uncouple our growth from our environmental
footprint. With our ambition being in absolute value, and
keeping in mind our role in society, we need to continue to
reduce our existing footprint while avoiding and absorbing
the environmental impact from our growth.
Environmental-related risks are reported in the Risk
Management section of this report.
We use advanced analytics models to model and forecast
our environmental footprint to 2030, including our business
growth and the activities we carry out to reduce our impact.
We use multiple entry points, such as our historic and
current environmental consumptions, our environmental
ten-year plan reduction, pipelines, production planning and
temperature forecast to create a navigation tool that will
chart our footprint and identify where we need to focus,
maximize or accelerate our efforts.
Animated video developed to make UCB’s health of the planet principles known across the organization.
2030 Priority areas
To demonstrate our joint commitment to contribute to the health of the planet, we have set ambitious targets for becoming
carbon neutral and reducing our environmental impact in three main priority areas by 2030:
Reaching carbon neutrality by 2030
Our commitment to becoming carbon neutral by 2030 for
the operations we directly control will be achieved through
two mechanisms:
●
80% of our time, effort and money will be invested in
reducing our greenhouse gas (GHG) emissions by
changing the way we operate. Operationally, this
means making our operations more energy efficient,
reducing GHG emissions by increasing the usage of
energy generated from renewable sources, and
mobilizing behavior change among employees.
●
20% will be dedicated to offsetting the short-term
impact we cannot avoid via compensation programs.
For these efforts, we continue to partner with
CO2logic
and
WeForest
, enabling reforestation efforts in the
Virunga Park in the Democratic Republic of Congo and
the Desa’a Forest in Northern Ethiopia.
Our planetary performance
We are exploring how to
report to the Task Force on
Climate-related Financial Disclosures (TCFD), aimed at
improving and increasing reporting of climate-related
financial information. You can read UCB’s first TCFD
disclosure, reflecting our actions and processes, in the Data
& Reporting chapter. We aim to provide a full TCFD
disclosure in the near future.
Key initiatives to reduce our overall environmental footprint
As part of our ongoing journey to reduce our environmental
footprint, UCB remains committed to embedding initiatives
in its local and global business activities to achieve our
goals. In 2021, highlights in this area included:
●
Approval by the Science Based Targets initiative of
UCB’s CO
2
e target. UCB commits to reducing absolute
scope 1, 2 and 3 greenhouse gas (GHG) emissions we
directly control by 38% by 2030 from a 2015 base year.
UCB also commits that 60% of its suppliers by emissions
will have science-based targets by 2025.
●
Receiving the 'Eco-Design' award for the new U.S.
CIMZIA
®
Packaging Awards.
●
Revamping buildings to increase UCB’s capacity with
green certification (BREEAM for our European sites or
equivalent in LEED certification framework for the U.S.
and Asia). In relation to the construction of our
biggest biologics plant in Braine l’Alleud, our
environmental projections have been validated by the
Walloon region in Belgium, proving the efficiency of
this innovative plant. We expect 21% lower CO
2
emissions compared with an average bio plant, in
addition to avoiding 22% of water consumption.
●
Organizing a technical Hackathon aimed at building
best practices on GREEN HVAC (Heat, Ventilation and
Air Conditioning), which continues to be the main area
for our scope 1 & 2 energy consumption. This was
carried out in collaboration between our
manufacturing and engineering teams; our
environmental practitioners and our procurement
colleagues.
●
Calculating UCB’s carbon dioxide equivalent (CO
2
e)
indirect impact baseline from our full portfolio of goods
and services suppliers.
Reducing our emissions
Taking concrete actions to decrease the emissions we
control
In 2021 we reduced our CO
2
2020. Business travel continued to remain low (-89%
compared to 2015); due to the ongoing pandemic (-9%
compared to 2020) but also the gradual roll-out of our
hybrid working model. We ask employees to be intentional
about their travel means and to consider the value of
business travel compared with alternative communications
channels used over the past two years.
In order to lower our energy consumption, 2021 saw the
widening in scope of our green initiatives which now
encompass the entire value chain, in particular in terms of
product and supply chain. We expanded our AIR to OCEAN
program by adding Japan and Mexico to our list of
destinations, increasing the number of reefer containers
shipped in 2021 which allowed us to reduce by 21% the
TCO2e emitted compared to 2020.
Additional efforts made in 2021 towards achieving our
environmental goals included:
●
Optimizing energy consumption by making our
operations more energy efficient.
●
Reducing GHG emissions by increasing the usage
of energy generated from renewable sources,
either produced at UCB’s sites or purchased (on a
percentage basis). For example, we continue to
move away from fossil fuels in favor of biogas,
accelerating our CO
2
●
Including green by design in our facilities and
assets.
●
Mobilizing behavior change among leaders and
employees, from the recruiting and onboarding of
new hires and through internal awareness
campaigns about energy consumption and carbon
emissions.
●
Launching the ‘IT for the Planet’ program, which
aims to address the environmental impact of
technology usage via the green lifecycle
management of our IT infrastructure and
hardware, a sustainable collaboration and
computing ecosystem, as well as a responsible
vendor management approach and practices.
●
Compensating for any GHG we cannot eliminate in
the short-term (applying the 80/20 principle),
alongside WeForest and CO2logic initiatives.
The total CO
2
e reported for electricity consumption (market
based) has increased by 49% compared to 2020 as we have
added into the scope of reporting four sites in the U.S.,
mainly laboratories, from newly acquired assets and
companies in 2019 and 2020.
Taking concrete action to reduce GHG emissions we
don’t directly control
The indirect impact created by the activities of our goods
and services suppliers on behalf of UCB represents a
significant proportion of our CO
2
e emissions. Our indirect
emissions target is approved by the Science Based Targets
initiative.
In recent years, UCB has been working with suppliers and
supporting them to shift towards a low-carbon economy.
UCB’s CO
2
e indirect impact baseline, which was fully
calculated in 2021, sets a clear vision of UCB's suppliers and
contract manufacturing organizations’ (CMOs)
CO
2
carbon economy.
In this regard, we are now requesting CMOs and other
partners to join us on our quest to define ambitious climate
targets with an aim to have 60% of the emissions created
by our suppliers covered by SBTi -inspired goals.
To date
,
23% of our suppliers (by emission) have reached
level A, with other major strategic business partners
showing a willingness to move to level A in the coming
years. This puts us in a good position to achieve our target,
furthered by the general industry trend which is moving in
the same direction.
In February 2022, UCB was named by global not-for-profit
disclosure system,
CDP
Engagement Leaders”, in recognition of our efforts to
measure and reduce climate risks throughout our supply
chain.
In the coming years, we will continue to engage with our
key business partners and external manufacturing partners
(CMOs) and deploy the approach to other areas within
UCB’s value chain, such as to our contract research
organizations (CROs), raw materials suppliers, etc. In
parallel, we have been embedding this “low-carbon
economy” maturity assessment and scoring into our
supplier selection process. It is now part of our vendor code
of conduct, our request for information and proposal
process and our selection criteria for all new suppliers and
contracts for selected suppliers.
Our Green Scorecard
In 2021, a new initiative aimed at scoring our solutions
based on their sustainable performance was launched: the
Green Scorecard for Solutions. Based on a systematic
”Cradle-to-grave” lifecycle analysis, this allows us to assess
our impact and map opportunities for environmental
footprint reductions when developing and producing
solutions.
WeForest and CO2logic partnerships
In an effort to compensate for the emissions that we cannot
offset, UCB continues to collaborate with WeForest and
CO2logic. The goal is to restore an area of 22 000 hectares
of forest by 2030.
CO2logic supports companies and other organizations
towards a low carbon economy by facilitating
collaborations with local partners in developing countries.
In this context, UCB collaborates with CO2logic and the
EcoMakala
Congo (DRC). In the North-Kivu Region, DRC, the
EcoMakala Virunga Reforestation project promotes
various activities to protect the forests of Virunga National
Park (PNVi) and alleviate poverty in the surrounding
communities. The project consists of three components:
●
Reforestation with fast-growing trees, helping
to fight habitat loss of local fauna
●
The introduction of improved stoves for cooking
●
Fuel substitution of non-renewable charcoal by
charcoal from renewable plantations (supply of
renewable charcoal).
UCB has also been collaborating with a similar project
based in the Desa’a Forest in Northern Ethiopia with
WeForest. 74% of the Desa’a Forest has already
disappeared and the remaining 26% is severely degraded.
This has led to several complications in the area: water
conservation is critical and population pressure is high,
culminating in a vicious circle of poverty and
environmental degradation.
Yet evidence of low clouds and fog that can be intercepted
by standing forest has the potential to increase the overall
precipitation in this dryland area, reversing the effects
witnessed in recent times. Projects that build water basins
to collect natural rainwater can alleviate these issues by
helping to re-fill the tableshed. The goal is to expand
small-scale irrigation for vegetable gardens, using
improved and locally adapted vegetable seeds, such as
onion, cabbages, beetroot, and potato. Until now, 13
storage pounds have been created by these projects.
Eco-design for drug development
UCB is paying close attention to the environmental impacts
of chemical manufacturing, and more specifically, working
on the eco-design of our medicine production processes.
For petrochemically -sourced solvents, the impact in terms
of global warming potential can often be lower than bio-
sourced solvents, though they are non-renewable. UCB’s
CO2
and waste mapping reinforces the need to focus on
reducing the amount of fresh raw materials used in
chemical production.
To evaluate our efforts in this area, UCB chose in 2019 to
adopt the Global Warming Potential (GWP) metric
developed by the American Chemical Society’s (ACS) Green
Chemical Institute (GCI). This method estimates the kg of
CO2
equivalents necessary to produce 1 kg of Drug
Substance. In 2020, the business process to set up
ambitious targets for every new synthetic molecule was put
in place. At the end of 2021, the first-year review took place,
showing that UCB had already made considerable progress
towards reaching its target.
Going forward, reducing the amount of
CO2
emissions in
drug development will follow five best practices:
●
Reframe
: selection of the most environmentally-
friendly synthetic pathway
●
Reject
: shift toward greener solvents
●
Reduce
: reducing solvent use
●
Reuse
: reutilize the process outputs multiple
times, as long as it does not negatively impact on
safety and quality controls
●
Recycle
: either in-house or externally
Reducing our water withdrawal
We set our target to reduce water withdrawal by 20% by 2030 compared with our 2015 baseline (absolute figures).
This is an ambitious target, given our business growth
strategy and the fact that our Research & Development
pipeline includes several antibodies which involve water-
intensive production processes.
In 2021 we experienced a slight increase in water
consumption, up by 2% compared to 2020. Compared to
2015, we are still aligned with our target, but this trend is
likely to continue increasing for several years before we
notice a decrease given the company’s switch to
biopharmaceutical business activities. UCB is tightly
working with its development teams to integrate the
environmental impact in the decision-making process and
minimize future water consumption. We are also exploring
options for reusing wastewater on our manufacturing sites.
We hope to reach a zero-liquid discharge on our main site
at Braine -l'Alleud, Belgium which will support to uncouple
the increase of biopharmaceutical production and our
water consumption.
Reducing our waste
We set our goal to reduce waste production by 25% by 2030, compared with our 2015 absolute figures as a baseline.
2021 saw an increase of 12% in our waste production due
to transformation work
on our site at Braine-l’Alleud,
investing in efficient technologies for the future and
replacing outdated facilities
. All the waste produced during
this work is managed as part of the BREEAM certification
we are targeting for our new facilities, which includes
minimizing waste and greater control of the waste we sort
so we are able to maximize the amount of waste we
recycle.
waste to compare the figures to our usual business
activities, we remained flat compared to 2020 (with a -1%
difference). We expect this 2021 increase to be a one-off
occurrence linked to this phase of transformation, and we
envisage it to return to previous levels by 2026.
Together with Our Shareholders
We pay attention to patient insights and societal challenges to guide how we do business, create
value and generate sustainable business growth. We aim to deliver long-term positive value to our shareholders,
today, and bearing future generations in mind, too.
UCB aspires to
freedom to live the best life they can – as free as possible
from the challenges and uncertainty of diseases.
get there, we became an innovation -driven global
biopharmaceutical company which aims to create value
for, and be valued by, our patients, employees,
shareholders and a whole host of other stakeholders in
society. We are entering a transition phase, followed by
accelerated company growth. For our financial guidance
for 2022, we are aiming for revenue in the range of € 5.15
– 5.4 billion and an underlying profitability (adj. EBITDA) in
the range of 26 - 27% of total revenue. By 2025, we want
to achieve at least €6 billion in annual revenues and a low-
mid-thirties adj. EBITDA margin.
Paying attention to patient insights and societal challenges
guides how UCB does business and is necessary to
generate sustainable busines s growth and deliver long-
term value to our shareholders, who make it possible for
the organization to innovate and grow.
Core earnings per share (EPS) EPS evolution:
Full-Year
Core EPS
2016
3.19€
2017
4.82€
2018
4.78€
2019
5.20€
2020
5.36€
2021
6.49€
In today’s ever-changing and more complex environment,
UCB’s strategy centered on patients is the best route to
achieve our ambition for continued success, delivering
positive results for shareholders today, and bearing future
generations in mind too.
UCB remains confident in the fundamental underlying
demand for our products and our prospects for durable
profitability. The company will continue to closely follow
the evolving COVID-19 pandemic, as well as other
emerging trends, to assess potential near- and mid-term
challenges and opportunities and adapt to the rapid
evolution of society.
We intend to continue to sustain a dynamic dividend
policy, consistent with the long-term growth prospects of
the company, offering gradual increase in dividend, and as
far as possible not to reduce it, irrespective of the short-
term income variations.
For Full-Year
Gross Dividend
2016
1.15€
2017
1.18€
2018
1.21€
2019
1.24€
2020
1.27€
2021 proposed
1.30€
We acknowledge the complex social, economic, and
environmental issues facing our world today; and we
believe in deepening our societal impact by addressing
global challenges at the intersection of our expertise and
wider societal interests.
By doing so we not only create value for our key
stakeholders but also decrease our company’s exposure to
long-term environmental, social and governance (ESG)
risks.
by Sustainalytics from medium- to low-risk level (16.8). We
have also seen a continued improvement in other ESG
ratings, such as ISS ESG, CDP, and WDI and we are aiming
to continue improving our ESG ratings in 2022.
Our Governance
We aim to maximize our positive societal impact while supporting our strong financial performance. We
endeavor to conduct business in a responsible way through our corporate governance policies and procedures
which shape a strong culture of integrity and guide how the organization operates.
UCB strives to conduct business in a responsible way, maximizing our societal impact while driving business growth. The policies
and procedures that we put in place help shape our strong culture of integrity, guide how the organization operates, how
decisions are made and how risks are mitigated.
The governance of UCB is based on a one-tier structure. This
means that the Company is administrated by a Board of
Directors and run by an Executive Committee, whose
respective functions and responsibilities are clearly defined
in accordance with the Articles of Association of the
Company and the UCB Corporate Governance Charter (the
“Charter”). The roles and responsibilities delegated to the
Executive Committee are established by the Board.
The Board’s role is to drive total value creation by setting
the company’s strategy and putting in place
effective, entrepreneurial, responsible, and ethical
leadership within a framework of prudent and effective
controls which enables risks to be assessed and managed.
The Board sets UCB’s strategic aims, ensures that the
necessary financial and human resources are in place for
UCB to meet its objectives and monitors the company’s
performance. The Board develops an inclusive approach
that balances the legitimate interests and expectations of
all stakeholders and sets UCB’s values and standards. It
takes collegiate responsibility for sound exercise of its
authority and powers. The Board ensures that the
Company’s culture is supportive of the realization of its
strategy and that it promotes responsible and ethical
behavior.
In an effort to maximize our sustainable value creation,
sustainability is considered to be a matter embedded to
UCB’s strategy and overseen by the full Board of Directors.
For this reason, no specific sustainability committee has
been created within the Board but UCB has established a
Sustainability Governance Committee at management level
and an External Sustainability Advisory Board (ESAB). The
Sustainability Governance Committee is an internal
committee that monitors progress on our sustainability
journey. Meanwhile, the External Sustainability Advisory
board is composed of six external experts on sustainability
which provide an outside perspective on our approach in
this field.
1. Ethical Business Practices
Ethical business practices are a core foundational element in driving sustainable business growth. Our mission is complex and
brings ethical demands that make each of us reflect on that complexity. We hold ourselves – and each other – to the highest
standards, striving to make decisions and choices that are focused on the balanced interests of our stakeholders and acting with
integrity in all business dealings.
Our industry is subject to many rules, regulations and
industry codes aimed at protecting patients, the healthcare
system, the industry and all of us as individuals. UCB is
committed to following all applicable laws and regulatory
requirements governing our activities. In addition to
meeting these obligations, we are guided by ethical
principles that drive our actions.
The UCB Code of Conduct is our governing policy that
reflects UCB’s core company values, including our
commitment to sustainability and ethical business
practices. The Code outlines the general principles of
business conduct that are expected from UCB colleagues
and partners throughout the world.
In 2021, a total of 8449 UCB employees completed the Code
of Conduct, generating an overall global completion rate of
95%. This included:
●
5 304 employees in the EU, with a completion rate
of 95%
●
1 630 employees in the U.S., with a completion
rate of 97%
●
1 515 employees in international markets, with a
completion rate of 92%.
In 2021, a new Code of Conduct was developed to reinforce
the ethical principles and commitments which must drive
our decisions and actions. This new version, named “UCB
Code of Conduct: our Ethics in Action”, was written to
express UCB’s commitment to ethics and the importance of
having our guiding principles be incorporated into
everything we do. The Code was developed using input
from various groups within the organization, including
employees and representatives from the ERGs, as well as
from contractors, vendors, and external experts.
The new Code will be rolled out early in 2022 with a
dedicated website and online training for all employees.
The Code of Conduct will be available in 14 languages and
on our internal and external corporate websites. Third
parties are also expected to acknowledge and adhere to the
principles of the Code of Conduct, and this expectation is
reflected in their legal agreements with UCB where
necessary.
In 2021, 48% of our employees answered our first global
Ethical Culture and Compliance Perception Survey which
exceeds the peer benchmark for responses, reflecting the
commitment from our employees on this important topic.
The survey provided data on how colleagues see,
understand, live and apply ethical principles and behaviors.
In addition to the positive signals around the strong
commitment to ethics and compliance by employees, the
survey results also gave some signals on areas to explore
further. An important element of an effective ethics and
compliance program is continuous assessment and
improvement of the program. The survey results are used
to support our commitment to ensuring that the program is
dynamic and responsive to the growing needs of our
organization.
1.1.
UCB’s Compliance Program is built based on the established
elements of compliance programs defined by the U.S. Office
of Inspector General and adapted based on local country
requirements. Elements of UCB’s compliance program
include leadership and governance; risk assessments and
due diligence; standards, policies and procedures; training
and communications; systems for employee reporting; case
management and investigations; testing and monitoring;
third-party compliance and continuous improvement.
Our ethics and compliance strategy involves ensuring an
open environment where our employees have the space
and confidence to report a suspected unethical behavior
and compliance breach. Employees are encouraged to
report suspected non-compliance or misconduct to their
manager or their primary contacts in Legal / Ethics &
Compliance / HR departments. In addition, UCB maintains
the UCB Integrity Line™ for individuals to submit reports
anonymously, if they choose to do so. The UCB Integrity
Line™ is comprised of a confidential secure website and toll-
free telephone numbers that are managed by an
independent third-party agency. The Integrity Line™ is
available 24 hours a day, 365 days a year, and in multiple
languages for online reporting and telephone reports. UCB
has procedures in place for reporting concerns and
misconduct, mechanisms for capturing reports, and the
handling and investigation reports.
In 2021, we launched a revised version of our global process
on the reporting and handling of misconduct and
inappropriate behaviors at UCB as well as an improved
version of the UCB Integrity Line™. We also ran a global
Speak-Up campaign with the tagline “Your voice has power.
Speak up when you see something wrong and together we
will make it right.” which triggered significant engagement
from UCB leaders and employees across the different
regions. This initiative provided a powerful reminder on the
critical important of raising one’s voice when observing
concerns and how to access and use the reporting system.
94 internal investigations were conducted globally in 2021
with 30 cases substantiated and 4 cases in progress. The
cases resulted in the following actions: no action (43%),
coaching (41%), termination (12%), warning letter (3%),
resignation (1%).
The results from our first global Ethical Culture and
Compliance Perception Survey demonstrated that the level
of our employees’ satisfaction on the reporting
mechanisms was comparable with our peer benchmark. We
nevertheless noted an improvement opportunity on this
important area and we aim to further work on it in 2022 and
beyond.
In order to support colleagues dealing with ethical
dilemmas, UCB developed its own set of guidelines, built
into a practical tool that helps colleagues to (1) identify an
ethical dilemma; (2) explore the impact of their choices on
stakeholders, not limiting to the immediate impact but
considering the impact and perception over time and for
future generations; and (3) engage colleagues in
conversations to resolve ethical dilemmas.
Competition and antitrust
UCB remains committed to full compliance with all laws and
regulations related to anti-competitive behavior, antitrust
or monopoly. Our Global Antitrust Policy has been revised
in 2021 and additional global guidelines have been
introduced. We have also released a new set of e-learnings
on EU Competition Law.
In 2021 there were no material actions or litigations
associated with UCB.
1.2.
The UCB Code of Conduct encompasses, amongst others,
core principles and behaviors aiming at mitigating the risks
related to bribery and corruption. Considering the nature of
our business, UCB identified our engagement of the
healthcare stakeholders as the primary Anti-Bribery/Anti-
Corruption (ABAC) risk area. ABAC risks are reported in the
In 2021, the dedicated Anti-Bribery/Anti-Corruption
training generated an overall global completion rate of 95%,
including 96% for the EU, 99% for the US and 90% for
international markets. In 2021, no material cases of bribery
or corruption were reported.
As a critical component of UCB’s overall internal control
environment and structure, UCB Global Internal Audit
provides independent, objective assurance activities
designed to evaluate and improve UCB’s internal control
and operations, including to ensure compliance with
applicable laws, rules, regulations and our Code of Conduct
on topics such as anti -bribery and anti -corruption, among
others. The Global Internal Audit department periodically
audits UCB’s global operations for potential risks related to
these areas in accordance with an established rotational
schedule or on an issue basis where appropriate. They
continuously monitor, enforce and follow up on any
compliance-related findings.
1.3.
UCB and its colleagues are required to comply with all
applicable laws and to respect human rights and act with
due diligence to avoid infringing on the rights of others, as
expressed by the International Bill of Human Rights and the
principles set out in the International Labour Organization’s
Declaration on Fundamental Principles and Rights at Work.
UCB respects the human rights of workers and ensures that
employees are treated with dignity and respect. UCB
expects the same behavior from consultants and others
acting on behalf of UCB. Respecting Human Rights is the
responsibility of everyone. UCB colleagues should notify
their Manager or report via Hotline/Helpline or the UCB
Integrity Line™ of any adverse impacts involving the
company, colleagues or contractors. Human rights risks are
reported in the
UCB is determined to make an impact in the domain of
human rights and to take the necessary steps to promote
and encourage high ethical standards of working and fair
treatment of human beings. We have a zero-tolerance
approach to any form of human rights abuses, including
forced or child labor, modern slavery or human trafficking.
Considering the nature of our operations, UCB monitors our
relationships with third parties, since this is the area where
risks related to Human Rights are most likely to materialize.
These third parties include our supply chains (i.e.
purchasing of goods and services) and agency workers, and
particularly in countries where we operate which may be
regarded as higher risk. Our Code of Conduct, a robust due
diligence process and audits conducted by our Global
Internal Audit team aim to mitigate these risks.
To date, no report of an infringement of human rights
associated with UCB or its suppliers has been identified to
the company.
1.4.
UCB takes the safety of our products seriously and has an
internal process to oversee the review of safety information
for medicines in development by UCB as well as for our core
products. The Global Labelling Committee reviews the
labeling of all UCB drugs.
This Committee ensures that the labeling:
1.
meets country regulations of drugs relative to
safety, efficacy and quality of drugs as well as the
accuracy of the product information provided
pursuant to their regulation,
2.
reflects appropriately and understandably
information about drugs and the safety profile for
patients and physicians and
3.
in the manufacturing country is identical for
patients and physician s in countries to which the
same drug is exported.
1.5.
UCB only promotes drugs in accordance with laws,
regulations, and industry codes applicable to that country.
There is oversight that promotion of drugs is accurate, fair,
objective, meets the highest ethical standards, and
conforms to local legal requirements. Claims must reflect
the latest up-to-date scientific evidence warrants and must
be deprived of ambiguity. Promotional, press and scientific
communication relating to our compounds, products and
disease are submitted to the global or local committees,
with members duly trained. UCB does not sell any products
that are banned in a market and all UCB products comply
with drug regulatory and safety requirements.
UCB adheres to all applicable country laws, regulations and
industry codes, the CIOMS/WHO recommendation derived
from the WHO Ethical Criteria of Medicinal Drug Promotion,
the Directive of the European Parliament and of the Council
on the Community Code relating to medicinal products for
human use, as well as the EFPIA, IFPMA and PhRMA codes,
among others.
2. Risk Management
2.1.
Within enterprise risk management at UCB, we maintain
our commitment to our purpose and our sustainable
patient value strategy and seek to find new ways to manage
risks and deliver impact in an increasingly volatile, complex
and ambiguous environment.
Strengthening our connection to strategy and expanding
our risk lens
Enterprise Risk Management is positioned into the Global
Legal Affairs team which allows the members of the
Enterprise Risk Management group to fully leverage the
transversal nature of the legal function. Under this
structure, UCB enhanced the interfaces between strategy,
enterprise risk management and business stakeholders for
a more agile and value-added approach. In addition, we
heightened our understanding of uncertainty both from our
internal context and emerging risks arising from the
external environment
.
2.2.
Engaging with key representatives from all operational,
functional, and strategic business areas, risks are identified
and assessed by each business area and the respective
leadership team. In addition, a “top-down/outside-in”
assessment is conducted to complete a holistic risk profile.
To maximize the impact, top risks are connected to the
strategic priorities. An understanding of both how the risk
is trending and how well UCB is prepared to respond, is
communicated to and discussed with both, our Executive
Committee and our Board of Directors.
The risks we face are evolving, thus our approach to
management of these risks is dynamic, allowing for new or
changed risks to be assessed and reassessed throughout
the year. In this regard, in 2021 two new dimensions were
incorporated into the risk process: Proximity and Velocity.
These measurements help determine how soon risks are
likely to develop, and how quickly UCB would be able to
react to them should they materialize.
Governance and oversight
UCB continues to demonstrate its commitment to
managing uncertainty by creating accountability at the top
and driving action by the business. Every top risk is owned
by a member of the Executive Committee. That member is
accountable for understanding the nature of the risk and
enabling our response to it.
2.3.
The effects of COVID-19 have accelerated a number of risks.
We have integrated the COVID -19 dimension into our risk
analysis and concluded that our overall risk profile remains
stable.
We maintain strong connectivity to our Board of Directors/
Audit Committee and bring their feedback on risk back into
the organization. The Global Internal Audit function
independently and regularly reviews the top risks and
supports the business functions on their risk response. The
risks presented are a representation of the top risks
identified and managed in 2021.
Top risks identified
UCB’s response
Competition from biosimilars, generics and new drug classes
Biosimilar and generic entrants and their market
impact are increasing globally. In parallel, the launch
of new classes of biologic-based drugs contribute to
the rich complexity of the biologics market.
UCB supports increasing innovation and access to biologics by
investing in superior overall value propositions in target patient
populations. We are vigilant to ensure pipeline will bring new growth
opportunity as we need to compensate for the impact of generics/
biosimilar of commercialized products.
As an innovative company, we offer superior patient outcomes at a
competitive cost of care, influenced by a deep understanding of
patient and regulatory stakeholder needs.
Intensity of successive product launches
UCB delivered strong pipeline results as we continue
to pursue and invest in highly differentiated drugs
focusing on the needs of well-defined populations.
Our next wave of new solutions may come in rapid
succession, creating a need for clear value messaging
and launch agility.
UCB is matching its capabilities and reallocated resources and talents
in an agile way to optimize launch success in a fast moving and
changing environment.
Leadership and capabilities will continue to evolve in line with our
Patient Value Strategy with the development of innovative and
adaptive capacity of all leaders and teams.
Exchange rate volatility
UCB’s revenues are subject to foreign currency
exchange rate fluctuations due to the global nature of
its operations. U.S. net sales accounted for 53% of
total reported net sales in 2021. Manufacturing,
research and development, and other operating
expenses are incurred predominantly in euro, British
Pound and Swiss Franc. Consequently, UCB’s results
and cash flows are exposed to foreign currency
volatility, predominantly to depreciation of the U.S.
Dollar, and, to a lower extent, to depreciation of
Japanese Yen and appreciation of Swiss Franc and
British Pound against the euro.
The financial risks of the UCB group are managed centrally. Group
financial risk management policies have been established to identify
the net foreign currency exposures of the UCB group, and to hedge
anticipated foreign currency cash flows for a period of a minimum of
six months and a maximum of 26 months. In addition, the currency
composition of the group’s assets and liabilities is closely monitored.
For further details, refer
to Note 4.
Global pricing and access challenges
Pharmaceutical pricing continues to be under scrutiny,
with global payers, both government and private,
looking for means to reduce costs. Payer strategies
include downward pricing pressure, rebate
considerations, increase in out-of-pocket costs to
patients, and access restrictions.
Medicare access changes and other changes in the
U.S. government posture have the potential to
impede UCB’s ability to provide the needed services
and solutions to our patients.
UCB is actively engaging in collaboration with payer and industry
associations to enable the best access for patients while promoting
sustainable solutions that make a material difference across the
globe.
Our executive and leadership team-level committees monitor and
engage with the U.S. policy ecosystem to continue to deliver on our
vision of making a difference for people living with severe diseases.
Cybersecurity/big data and artificial intellig ence
Our world is increasingly dependent on the evolving
digital landscape to meet today’s goals and to create
new paradigms for the future. Cybersecurity and data
privacy in all forms is of utmost importance to UCB, as
breaches and disruptions can cause reputational,
financial and operational damage. Artificial
intelligence (AI) is changing the way we live and
interact, with the experience already gained at UCB in
the AI space, we are constantly reviewing how this can
UCB has a multifaceted cybersecurity and data management
strategy, along with active programs for the proper prevention,
detection and response controls. This includes continuous
monitoring and analytics, intrusion incident detection and response,
security testing and user awareness training and campaigns.
Additionally, UCB is building a Cyber Crisis program that allows us to
properly handle large security incidents (e.g. data breach or
malware). Two data breaches attempts were notified by UCB as data
controller to the Belgian Data Protection Authority, as required by
play a role in our patients’ lives and in how we do
business.
Article 33 of the GDPR. However, none of the incidents involving
personal data reported to the supervisory authority resulted in high
risk to the rights and freedoms of the data subjects concerned.
UCB has established robust processes, procedures and controls to
continue to comply with the GDPR legislation as the gold standard
for privacy and data protection. In addition, we liaise with regulators
to remain abreast of developments as this dynamic area continues
to evolve. Ethical reviews will be an integral part of any relevant AI
project at UCB.
2.4.
Environmental, social and governance risks are managed
alongside strategic and company risks in our Enterprise Risk
Management process and governance, as described above.
These risks are therefore identified and managed according
to the policies and procedures of the respective business
area and escalated according to the corporate risk
management process.
Environment, social and governance risks are not identified
among the company top risks above, if they did not reach
the threshold defined for the top risk. In that case, the risks
are managed at the level of the business area and team. Our
risks and mitigation strategies related to scientific
innovation and access to medicines are outlined above. In
addition to these risks, an overview of social, environmental
and governance risks is given below.
Social risks
Risk identified
UCB response/Policy
In a highly specialized, industry with a competitive talent
market, the main social and employee risk is attracting and
retaining key leadership profiles. This includes the risk of not
being able to provide adequate compliance training to
employees, being unable to provide a healthy and safe
environment (particularly in the context of COVID-19) where
employee wellbeing is inadequately supported or promoted,
or where workplace dangers are not managed or sufficiently
outlined. These risks could result in a loss of collective
capability, impacting operational efficiency and strategy
implementation, leading to sub-optimal results and/or safety
incidents or sub-optimal health of employees, both physical
and mental.
The Talent department manages the Workforce Engagement
policy, and the policy is continuously improved by different
processes, including:
•Robust annual human resources processes to optimize
talent development opportunities including employee
development discussions with adequate and continuous
employee learning opportunities; continuous employee
performance reviews, including an articulation of expected
values and behaviors,
•Regular review of the total reward offering to ensure
balanced, competitive remuneration to drive outcomes
aligned with the company strategy and to ensure the
employee and their family are adequately covered during key
life events,
•Periodic employee engagement surveys that enable UCB
and its leadership to respond to employee feedback on their
employment experience,
•Working practices in line with data privacy requirements
(GDPR),
•UCB has also rolled out various health, wellbeing and safety
policies as per our sustainability commitment, as well as
remote and flexible work policies.
Environmental risks
Risk identified
UCB response/Policy
UCB has identified certain risks related to the nature of our
manufacturing, supply and business operations. Apart from
the risk to locally cause soil or water pollution which might
result from its industrial activities, UCB recognized that
climate change, and more specifically the related current and
future regulatory requirements and the accelerating
transition to a low carbon economy might globally adversely
impact UCB’s compliance status and value chain, if not
addressed firmly.
UCB has defined a robust environmental ambition and
developed a strategy and policy to minimize our
environmental footprint and impact, on the short as well as
on the long term. UCB’s response to the environmental risks
identified include:
•Setting ambitious and absolute targets for reducing our local
and global environmental impact by 2030.
•Assessment of environmental impact asset-by-asset, so we
can fully understand and address how each asset contributes
to our environmental footprint and how we can take steps to
reduce this impact accordingly.
•Dedicate 80% of our efforts to reduce our GHG emissions
and 20% to GHG compensation programs for any emissions
we cannot reduce in the short-term.
•Partnership with suppliers and contract manufacturing
organizations so that our partners also define ambitious
climate targets.
•Prioritization of renewable sources such as wind, solar,
hydro and biomass for the energy needed to run our sites and
facilities.
•Regular review of processes for locating opportunities for
improved performance in energy saving, water conservation
and reduction / recovery of waste.
ABAC risks
Risk identified
UCB response/Policy
In line with our sustainable business approach, UCB is
committed to conducting business in accordance with the
highest ethical standards and all forms of bribery and
corruption are prohibited. This includes offering, promising,
authorizing or providing anything of value (directly or
indirectly) to any customer, business partner, vendor or other
third party in order to induce or reward the improper
performance of an activity connected with our business. This
includes interactions with government officials or individuals
in the private sector.
Bribery and extortion are illegal everywhere, and UCB and its
colleagues will not engage in it. That includes the receipt of
bribes that would or might cause a UCB colleague to violate
his or her duty of loyalty to UCB.
All UCB colleagues must comply with all applicable
antibribery laws worldwide. Violations of these laws can
result not only in the loss of business but also may lead to
severe criminal and civil penalties for UCB and the individuals
involved.
Human rights risks
Risk identified
UCB response/Policy
UCB is committed to conducting business in accordance with
the highest ethical standards and respecting human rights in
all that we do. UCB respects the human rights of workers and
ensures that employees are treated with dignity and respect.
UCB and its colleagues are required to comply with all
applicable laws and to respect human rights and act with due
diligence to avoid infringing on the rights of others, as
expressed by the International Bill of Human Rights and the
principles set out in the International Labour Organization’s
Declaration on Fundamental Principles and Rights at Work.
UCB expects the same behavior from consultants and others
acting on behalf of UCB. Respecting Human Rights is the
responsibility of everyone.
3. Corporate Governance Statement
Introduction letter from the Chair of the Governance, Nomination and Compensation Committee
Dear Reader,
As Chair of the Governance,
Nomination and Compensation
Committee of the Board (“GNCC”)
since April 2021, I am honored to
introduce the Corporate Governance section of our 2021
Integrated Annual Report and share some governance
highlights of the year.
2021 was a year of change in the composition of the Board
of UCB, as we bid farewell to several esteemed members of
the Board and we welcomed our new board members who
bring with them a wealth of health care experience.
First, our new Chair of the Board, Dr. Stefan Oschmann,
former CEO of Merck, joined us following a long and
distinguished career in life sciences, and brings exceptional
leadership skills, strategic business experience and above
all, a track record in creating sustainable value for patients,
people, communities, the planet and shareholders.
We were equally thrilled to welcome Professor Susan
Gasser as Board member and member of the Scientific
Committee. Susan brings in-depth experience in various
scientific fields including biophysics, molecular biology and
genetics – key to UCB’s future development. Her roles on
renowned scientific review panels and international
advisory roles will help guide the Company for the coming
years.
We were also very pleased to announce Jonathan Peacock’s
appointment to the Board and Chair of the Audit
Committee. Jonathan has a stellar record within biotech
and pharmaceutical industries, including having served as
CFO of Amgen Inc and later, of Novartis’ pharmaceutical
division.
I, myself, am humbled to take on the role of Vice Chair of
the Board and Chair of the Governance, Nomination and
Compensation Committee of UCB, a Company that I am
deeply familiar with and proud to be part of, having spent
several years working within the organization, firstly as
EVENITY® Commercial Lead, then Head of EU for the Bone
business and later as Venture Partner at UCB Ventures. As
Vice Chair and Chair of the GNCC, I look forward to
contributing to our ambition to enable people living with
severe diseases, their caregivers, and their families to live
their best lives and endeavor to serve UCB in our
transformation towards biopharma leadership.
Apart from being a year of change in terms of Board
composition, 2021 has been an exciting year from a
governance perspective, most notably in view of our
sustainability approach.
To accelerate our efforts and impact we established in late
2020 the External Sustainability Advisory Board (“ESAB”),
which brings together thought leaders, each recognized as
a change agent in society, to work in collaboration with our
CEO, Executive Committee, Board of non-executive
Directors and other senior leaders. The ESAB will help us
stay on track with what society expects from a sustainable
biopharma leader and has been integrated since 2021 into
UCB’s long-term strategic plan discussions. The GNCC also
endorsed the long-term plan for inclusion of extra -financial
indicators into Executive short-term and long-term
incentives, with the first steps of this journey outlined in our
Remuneration Report (section 3.7). Furthermore,
sustainability has been incorporated into all aspects of
decision-making, for instance in the revision of the
Company Code of Conduct, in our Patient Value Strategy
and within our Launch Excellence.
In line with our aim to have open and constructive
relationships with all our stakeholders, the GNCC has also
encouraged more frequent and regular engagement with
investors, to gather their feedback and understand their
priorities while also ensuring mutual understanding, with
relevant contextual information, of UCB’s priorities and
choices. In 2021, UCB organized two roadshows with its top
20 investors, focusing on ESG matters. A first roadshow was
organized in March 2021, prior to our AGM, and a second
one in November/December 2021 with deep dive into our
sustainability approach. Beyond the top 20 investors,
shareholders who expressed the willingness to engage with
UCB on ESG matters were also invited. UCB also engaged on
a regular basis with proxy advisors on these matters.
Finally, building on and integrating the feedback from this
engagement with our stakeholders, UCB is publishing in this
report, details of the blend and diversity of skills of our
Board members. This is a point we will continue to closely
monitor and evolve with the Company’s needs. UCB also
confirms that it has procedures in place, both as part of its
succession planning and as an ongoing process, to monitor
the external appointments of its Board members, as well as
their independence, in accordance with Belgian and
European regulation, as well as international standards.
I look forward to further develop the solid foundation of
governance UCB has built over the years, and maintaining a
stakeholder-centric, sustainable and long-term holistic view
of our landscape to inform our future evolution.
FIONA DU MONCEAU
Vice Chair of the Board and Chair of the GNCC
3.1 Scope of reporting
As a Belgian company listed on Euronext Brussels, UCB SA/
NV (“UCB”) is committed to the highest standards of
corporate governance and is required by Belgian law (in
particular Article 3:61 of the Belgian Code of Companies and
Associations or the “BCCA”) to apply the 2020 Belgian Code
on Corporate Governance or the “2020 Code”, which both
entered into force on January 1, 2020.
The 2020 Code is based on the “Comply or Explain”
principle. Belgian company law and the Belgian Code on
Corporate Governance require UCB to adopt and publish a
Charter of Corporate Governance and, on an annual basis,
a Corporate Governance Statement, to be included in its
(Integrated) Annual Report.
The Board of Directors of UCB (the “Board”) has established
a Corporate Governance Charter (the “Charter”) since 2005.
It describes the main aspects of corporate governance at
UCB, including its governance structure, the terms of
reference of the Board and its committees as well as those
of its Executive Committee, and the rules applicable to its
shareholder meetings. The Charter is updated from time to
time and annually reviewed by the Board to be in line with
the applicable laws and regulations, the relevant Code on
Corporate Governance, international standards and the
evolution of UCB. The latest version of the UCB Charter is
available on the
UCB website
.
As required by the BCCA and the 2020 Code, UCB also
publishes every year as part of its Annual Report a
Corporate Governance Statement, which includes all
information required by law as well as a description of how
the 2020 Code has been applied in the last reporting year
and, if applicable, an explanation of any deviations to the
provisions of this Code (application of the comply or explain
approach). This section of the Integrated Annual Report
constitutes the Corporate Governance Statement for the
year 2021.
3.2 Capital and shares
3.2.1 Capital
The capital of UCB has not been modified in 2021. On
December 31, 2021, it amounted to € 583 516 974 and was
represented by 194 505 658 shares.
Since March 13, 2014, the share capital of UCB is
represented by 194 505 658 shares, all fully paid up (“UCB
shares”).
3.2.2 Shares
UCB shares may be in registered or dematerialized form, at
the request of the shareholder, in accordance with the
BCCA.
Pursuant to the Belgian Law of December 14, 2005, bearer
securities have been subject to a gradual abolishment,
leading to their conversion into registered or
dematerialized securities as from January 1, 2014, a
mandatory sale of outstanding bearer shares by the
Company in June 2015 and their complete abolishment at
the end of 2015.
As of January 1, 2016, the rightful owners of unclaimed
bearer shares have the right to claim the payment of the
corresponding net proceeds of the mandatory sale from the
Belgian Deposit and Consignment Fund (“Caisse des Dépôts
et Consignations“/“Deposito- en Consignatiekas“) subject
to evidence of their valid title to the shares and subject to a
fine of 10% of the proceeds of the sale of the underlying
bearer shares per each commenced year of arrears. More
details are available on
UCB’s website
.
Registered UCB shares are recorded in the share register of
UCB. All UCB shares are admitted for listing and trading on
Euronext Brussels. Each share gives right to one vote (“one
share one vote” principle).
3.2.3 Treasury shares
In accordance with article 12 of the Articles of Association
of UCB (the ‘
Articles of Association
’), the Extraordinary
General Meeting of April 30, 2020 decided to renew, for a
period of
2 years starting on July 1, 2020 and expiring on June 30,
2022, the authorization granted to the Board of Directors
to acquire, directly or indirectly, whether on or outside of
the stock exchange, by way of purchase, exchange,
contribution or any other way, up to 10% of the total
number of the Company’s shares, as calculated on the
date of each acquisition, for a price or an exchange value
per share which will not be (i) higher than the highest price
of the Company’s shares on Euronext Brussels on the day
of the acquisition and (ii) lower than one (1) euro, without
prejudice to article 8:5 of the royal decree of April 29,
2019 implementing the Belgian Code of Companies and
Associations. As a result of such acquisition(s), the
Company, together with its direct or indirect subsidiaries,
as well as persons acting on their own behalf but for the
account of the Company or its direct or indirect
subsidiaries, may not hold more than 10% of the total
number of shares issued by the Company at the moment
of the acquisition concerned. This authorization extends to
any acquisitions of the Company’s shares, directly or
indirectly, by the Company’s direct subsidiaries in
accordance with article 7:221 of the BCCA. A renewal of
this authorization for a period of 2 years expiring on June
30, 2024 will be submitted to the General Meeting of April
28, 2022.
In 2021, UCB SA acquired 750 000 UCB shares and disposed
of 898 441 UCB shares. On December 31, 2021, UCB SA held
a total of 5 331 781 UCB shares representing 2.74% of the
total number of UCB shares, and no other UCB securities.
The UCB shares were acquired by UCB SA in order to cover
part of UCB’s obligations resulting from the employees’
stock option plans, stock award plans and performance
share plans. None of its affiliates is holding UCB shares on
December 31, 2021.
3.2.4 Authorized capital
The Extraordinary General Meeting of April 30, 2020
decided to renew the authorization to the Board (and to
amend the Articles of Association accordingly), for a period
of 2 years, until May 9, 2022, to increase the share capital,
amongst other by way of the issuance of shares, convertible
bonds or warrants, in one or more transactions, within the
limits set by the BCCA.
1.
with up to 5% of the share capital calculated at the time
of the decision of the Board to make use of this
authorization, in the event of a capital increase with
cancellation or limitation of the preferential
subscription rights of the shareholders (whether or not
for the benefit of one or more specific persons who are
not employees of the Company or of its subsidiaries);
2.
with up to 10% of the share capital calculated at the
time of the decision of the Board to make use of this
authorization, in the event of a capital increase without
cancellation or limitation of the preferential
subscription rights of the existing shareholders.
In any event, the total amount by which the Board may
increase the share capital by a combination of the
authorizations set forth in (1) and (2) above, is limited to
10% of the share capital at the time of the decision of the
Board to make use of this authorization.
The Board is moreover expressly authorized to make use of
this mandate, within the limits as set out under (i) and (ii)
above, for the following operations:
1.
a capital increase or the issuance of convertible bonds
or warrants with cancellation or limitation of the
preferential subscription rights of the existing
shareholders,
2.
a capital increase or the issuance of convertible bonds
or subscription rights with cancellation or limitation of
the preferential subscription rights of the existing
shareholders for the benefit of one or more specific
persons who are not employees of the Company or of
its subsidiaries, and
3.
a capital increase by incorporation of reserves.
Any such capital increase may take any and all forms,
including, but not limited to, contributions in cash or in kind,
with or without share premium, with issuance of shares
below, above or at par value, the incorporation of reserves
and/or share premiums and/or profits carried forward, to
the maximum extent permitted by the Law.
Any decision of the Board to use this authorization requires
a 75% majority within the Board.
The Board is empowered, with full power of substitution, to
amend the Articles of Association to reflect the capital
increases resulting from the exercise of its authorization.
The BCCA does not allow the use of this authorization as of
the moment the Company has been notified by the
Financial Services and Markets Authority (the ‘FSMA’)
about a public takeover bid.
At December 31, 2021, the Board did not make use of this
authorization. Since the authorization granted by the
Extraordinary General Meeting of April 30, 2020 will expire
in 2022, a renewal of the authorized capital for a new period
of 2 years expiring on 2024 will be proposed to the General
Meeting of April 28, 2022.
3.3 Shareholders and shareholders’ structure
3.3.1 Reference shareholder
The main shareholder of UCB SA is Financière de Tubize SA
(also referred to herein as the “Reference Shareholder” or
“Tubize”), a Belgian company listed on Euronext Brussels,
holding 68 333 981 UCB shares on a total number of 194
505 658 (i.e., 35.13%) as at December 31, 2021.
Based on the most recent public disclosure made by Tubize,
the shareholder structure of Tubize per December 31, 2021
was as follows:
Altaï Invest SA is controlled by Evelyn du Monceau, born
Evelyn Janssen. Barnfin SA is controlled by Bridget van
Rijckevorsel, born Bridget Janssen.
The shareholders of Financière de Tubize SA, belonging to
the Janssen family, act in concert, i.e. they have entered
into a shareholders’ agreement of which the key elements
are summarized as follows, based on publicly available
information:
•The objective of the concert is to ensure, through
Financière de Tubize SA, the stability of the shareholder
structure of UCB in view of the long-term industrial
development of the latter. In this perspective, it aims to
preserve the predominance of the family shareholder
structure of Financière de Tubize SA.
•The parties to the concert consult with each other about
the decisions to be taken at the general meeting of
Financière de Tubize SA, and try, to the extent possible, to
reach a consensus. They ensure that they are properly
represented in the Board of Directors of Financière de
Tubize SA. Within this Board and through their
representatives at the Board of Directors of UCB, they
consult with each other about the significant strategic
decisions concerning UCB, and try, to the extent possible,
to reach a consensus.
•The parties inform each other prior to any project of
significant acquisition or sale of shares of Financière de
Tubize SA. Pre-emption rights and rights of resale are also
in place within the family.
In accordance with rule 8.7 of the 2020 Code, “
the Board
should debate whether it would be appropriate for the
Company to enter into a relationship agreement with the
significant or controlling shareholder.
” The Board is of the
opinion that there is currently no need for establishing a
relationship agreement. The Corporate Governance Charter
of UCB, the current composition of the Board and the rules
of the BCCA provide a sufficiently clear frame to the Board
and the Reference shareholder. In addition, the Reference
Shareholder of UCB is itself a listed company and as such
subject to extensive disclosure obligations.
3.3.2 Transparency notifications
During 2021, UCB issued or received the following
transparency notifications in accordance with the law of
May 2, 2007 on the disclosure of large shareholdings:
On March 29, 2021, UCB sent a transparency notification to
the FSMA, confirming that UCB SA’s holding in UCB shares
had crossed upwards the lowest threshold of 3%. On March
24, 2021, UCB SA/NV owned 5 855 888 UCB shares with
voting rights (versus 5 742 539 UCB shares in its previous
notification dated January 20, 2020), representing 3.01% of
the total number of shares issued by the Company (194 505
658) (versus 2.95% in the notification dated January 20,
2020).
An updated transparency notification has been submitted
by UCB to the FSMA on April 7, 2021, due to UCB executing
its obligations towards employees (and delivering shares to
its employees) in the framework of the Long-Term Incentive
plans of the UCB group. As a result, voting rights relating to
voting securities held by UCB SA/NV crossed downwards
the lowest notification threshold of 3% on April 1, 2021.
UCB received a transparency notification from FMR LLC. as
well, dated August 5, 2021. FMR LLC., notified that,
following an acquisition of UCB shares with voting rights by
its affiliates, its holding in UCB shares with voting rights had
increased and crossed for the first time the 5% threshold on
July 30, 2021. The previous notification dated July 28, 2020
stated that FMR LLC., including the holding of its affiliates,
as of July 27, 2020, owned 7 060 944 UCB shares with voting
rights, representing 3.63% of the total number of shares
issued by UCB.
Finally, UCB received a transparency notification from
Wellington Management Group LLP, dated September 2,
2021. Wellington Management Group LLP notified that,
following a disposal of UCB shares with voting rights by its
affiliates, its shareholding in UCB SA decreased and crossed
the threshold of 7.5% on September 1, 2021. On September
1, 2021, Wellington Management Group LLP (taking into
account the holding of its affiliates) owned 14 516 633 UCB
shares with voting rights (versus 15 575 749 shares in its
previous notification dated October 3, 2019), representing
7.46% of the total number of shares issued by the Company
(194 505 658), versus 8.01% in its previous notification.
All these notifications, as well as more recent notifications
received in 2022, can be found on
UCB’s website
.
3.3.3 Relationship with and between shareholders
Please refer to
of UCB with shareholders. Furthermore, UCB is not aware
of any agreements between its shareholders, apart from
the information mentioned below.
UCB has received notifications pursuant to article 74, §7 of
the Law of April 1, 2007 on public takeover bids from
Tubize, Schwarz Vermögensverwaltung GmbH & Co. KG and
UCB Fipar SA respectively on November 22, 2007,
December 11, 2007 and December 28, 2007.
On August 25, 2021, UCB received an updated notification
pursuant to article 74, §8 of the Law on public takeover bids
from Tubize (available on the
UCB website
), in which Tubize
declared that since July 31, 2020, it acquired 257 000 UCB
shares, owning a total of 68 333 981 shares, representing
35.13% of the total number of shares issued by the
Company (194 505 658).
3.3.4 Shareholder structure
Apart from the notifications mentioned above under 3.3.2
and 3.3.3, UCB SA also holds UCB shares (see above – own
shares). The remaining UCB shares are held by the public.
Please find below an overview of the large shareholdings of
UCB (including assimilated financial instruments), taking
into account the shareholders’ register of UCB, the
transparency notifications received pursuant to the Law of
May 2, 2007 on the disclosure of large shareholdings, the
notification received pursuant to article 74, §8 of the Law of
April 1, 2007 on public takeover bids, the notifications to
the FSMA pursuant to the Law of August 2, 2002 on the
supervision of the financial sector and the financial services
and as the case may be, more recent public disclosures
(situation as per December 31, 2021):
(all percentages are calculated on the basis of the current total number of voting rights)
Assimilated financial instruments within the meaning of
article 6, §6 of the Law of May 2, 2007 on the disclosure of
large shareholdings.
Free float being the UCB shares not held by the reference
shareholder (Tubize) and UCB SA/NV. Only securities
carrying voting rights (shares) held by these entities are
taken into account for this calculation; assimilated financial
instruments are excluded.
In-line with UCB’s long-term dividend policy, the Board
proposes a gross dividend of € 1.30 per share (2020: € 1.27).
If the dividend is approved by the Annual General Meeting
on April 28, 2022, the net dividend of € 0.91 per share will
be payable as of May 3, 2022 against the delivery of coupon
#25.
3.3.5 General Meeting of Shareholders
In accordance with the Articles of Association, the Annual
General Meeting of Shareholders (the
‘General Meeting’
)
takes place on the last Thursday of April at 11.00 AM CET.
In 2022, this will be on April 28.
The rules on the agenda, the procedure for convening
meetings, admittance to the meetings, the procedure on
the exercise of voting rights and other details can be found
in the Articles of Association and in the Charter, which are
available on
UCB’s website
.
3.4 Board of Directors and Board committees
The governance of UCB is based on a “one-tier” structure.
This means that the Company is administrated by a Board
of Directors and run by an Executive Committee, whose
respective functions and responsibilities are defined below
in accordance with the Articles of Association of the
Company and the Charter. The Board did not opt for a “two-
tier” structure based on a separate Supervisory Board and
Management Board. It considers that the current system
foresees an appropriate balance of powers between the
Board and the management, and the composition of the
Board is in line with UCB’s current shareholder structure
and business activities. It also did not want to permanently
delegate to management the powers granted to the Board
by the law in its current one-tier structure, nor the general
representation of UCB. The Board will review its governance
structure at least once every 5 years. The last review was
performed by the Board in October 2019
.
3.4.1 Board of Directors
Composition of the Board and independent Directors
Board composition and changes in 2021
As of the General Meeting held on April 29, 2021, the Board
of Directors was composed as follows:
Mandates of Board Members in other listed companies are marked with an *
The
Secretary of the Board
Secretary General. The role and responsibilities of the
secretary of the Board are described in the UCB Charter.
At the General Meeting of April 29, 2021, the mandates of
Viviane Monges (independent Director) and Albrecht De
Graeve (independent Director until the Annual General
Meeting of 2022), were renewed for a term of four years.
The same General Meeting also ratified the cooptation of
Susan Gasser (independent Director) for the period from
January 1, 2021 until April 29, 2021 and appointed her as
independent Director for a term of four years until the close
of the Annual General Meeting of 2025. Finally, the General
Meeting of April 29, 2021 appointed (i) Stefan Oschmann
(independent Director), (ii) Fiona du Monceau (Director)
and (iii) Jonathan Peacock (independent Director), all for a
term of four years until the close of the Annual General
Meeting of 2025.
Evelyn du Monceau, previous Chair of the Board, reached
the age limit in the course of 2020 and resigned from the
Board with immediate effect as from the closing of the AGM
2021. She was replaced by Stefan Oschmann as Chair of the
Board.
Since the AGM 2021 with the departure of Evelyn du
Monceau and Roch Doliveux, the total number of Board
members increased from 13 to 14 members, which is within
the maximum limit currently set forth in the Charter (15
Board members). This increase is designed to ensure a
smooth transition, continuity and succession planning for
the years to come, after a year of important changes in the
Board composition and other critical functions at UCB. In
2021, the Board had a new Chair and Vice Chair, a new chair
of its Audit Committee and a new member of its Scientific
Committee, while at the same time, a new External Auditor
was appointed (Mazars).
On December 31, 2021, Stefan Oschmann, Jonathan
Peacock, Susan Gasser, Kay Davies, Albrecht De Graeve,
Viviane Monges, Pierre Gurdjian, Jan Berger and Ulf
Wiinberg all qualify as independent Directors and meet the
independence criteria, as set forth by the 2020 Code and
the Board. The mandate of Albrecht De Graeve was
renewed at the AGM of April 29, 2021 for a term of 4 years
(until the AGM of 2025). However, given that his total
tenure as Director will be of 12 years at the time of the AGM
of April 28, 2022 (maximum tenure for an independent
Director under the 2020 Code), Albrecht De Graeve will no
longer qualify as independent Director as of that date. For
this reason, he will step down from the Audit Committee
after the AGM of April 28, 2022, but he will remain in the
Board as non-independent Director for the remainder of his
mandate.
Fiona du Monceau, Charles -Antoine Janssen, Cyril Janssen
and Cédric van Rijckevorsel are representatives of the
Reference Shareholder and, as such, are not eligible to
qualify as independent Director. Jean-Christophe Tellier
being the CEO of UCB SA/NV, is also not eligible to qualify
as independent Director. He is also the only executive
director in the UCB Board.
In 2021, the Board was therefore composed of a majority of
independent Directors: out of the 14 members, 9 members
were independent. The Board was also composed of 5
women out of a total of 14 members (35%), in compliance
with the gender diversity requirement of Article 7:86 BCCA.
Expected Board Changes in 2022
he mandates of Jean-Christophe Tellier, Cédric van
Rijckevorsel and Kay Davies will expire at the Annual
General Meeting of April 28, 2022 (“AGM 2022”) and the
Board will propose at this AGM the renewal of their
mandate for a new period of four years.
While Mrs. Kay Davies reached the age limit in 2021, the
Board is proposing to renew her mandate as permitted
under section 3.2.4 of its Charter of Corporate Governance.
Mrs. Kay Davies is chairing the Scientific Committee of the
Board and is bringing a unique scientific contribution at the
level of the Board. Applying the age limitation rule without
exception would have led to a simultaneous change of the
two scientists of the Board in the period 2021-2022. Given
the long development cycles in creating new medicines that
can span more than a decade, coupled with new drug
research modalities such as gene therapy where UCB is
investing in new platforms, proposing the re-election of
Mrs. Kay Davis for a new mandate is considered by the
Board the best option to maintain continuity in the follow
up of this key scientific evolution for UCB. It also allows the
Company to count another new key scientist in the Board
(Susan Gasser). Her re-election is guaranteeing that UCB
maintains a sufficient level gender diversity in the Board as
requested by Belgian law. If re-elected, Mrs. Kay Davies
shall continue to be the Chair of the Scientific Committee
and member of the GNCC. She meets the independence
criteria stipulated by article 7:87 of the Belgian Code of
Companies and Associations, by provision 3.5 of the 2020
Belgian Corporate Governance Code and by the Board.
Upon confirmation of the above renewals by the General
Meeting of April 28, 2022, and in accordance with the
Charter, the Board will continue to be composed of a
majority of independent non-executive Directors. All
special Board Committees will also continue to be
composed of a majority of independent Directors:
•Audit Committee: Jonathan Peacock (Chair &
independent), Viviane Monges (independent) and Charles-
Antoine Janssen (non-independent);
•GNCC: Fiona du Monceau (Chair and non-independent),
Stefan Oschmann (independent), Pierre Gurdjian
(independent) and Kay Davies (independent);
•Scientific Committee: Kay Davies (Chair & independent)
and Susan Gasser (independent).
Jean-Christophe Tellier will continue to be the only
executive Director (CEO) in the Board.
Following the proposed renewals, and if approved by the
AGM 2022, the Board will still be composed of 5 women out
of 14 members (35%), remaining compliant with the gender
diversity requirement of Article 7:86 BCCA.
8
Functioning of the Board
In 2021, the Board met six times for its regular meetings,
including for its 3-day annual strategic meeting (October).
Because of the COVID-19 pandemic, and except for its
meetings in July and October 2021, all other meetings were
held by videoconference, which is allowed by Belgian law
and the Articles of Association of the Company. The
attendance rate of its members for its regular meetings was
as follows:
On top of its regular meetings, the Board also met via
shorter ad hoc videoconference calls to decide on specific
projects. The Board used the unanimous written procedure
authorized by law at one occasion during the year for the
approval of an urgent matter. The Board also had a few
more informal sessions to reflect on its ways of working,
onboarding, leadership and team dynamics following the
substantial changes that took place in the composition of
the Board after the AGM 2021.
During 2021, the Board’s main areas of discussion, review
and decisions included:
•The strategy of UCB and the overall supervision of its
implementation by the Management, including ESG
matters and the integration of sustainability into the overall
ambition and activities of the Company, the long-term
innovation strategy, and manufacturing capabilities.
•The performance of the Company and the monitoring of
the impact of the COVID-19 pandemic on the performance
and the overall business and activities of the Company.
•Resource & cash allocation and budget.
•Monitoring of the launch of BIMZELX®.
•Launch preparedness and Organizational model for Rare
diseases.
•Business Development and M&A Projects (including
thepublic offering for the acquisition of Zogenix).
•Digital business transformation & Cybersecurity.
•The integration of the new Board members and Board as
a team dynamic.
The general oversight of the IT strategy as well as
cybersecurity is part of the Board’s mission. Every year, the
Board and its Audit Committee in particular have specific
sessions dedicated to IT and cybersecurity strategies and
operations. Digital transformation and strategy are also
fully embedded in the overall strategy of UCB as defined by
the Board, upon proposal of the Executive Committee.
There were no transactions or contractual relationships in
2021 between UCB, including its affiliated companies, and
a member of the Board, giving rise to conflicts of interest,
except as reported in
All new Board members appointed in 2021 benefited from
appropriate onboarding program, including individual
meetings with each member of the Executive Committee
and selected senior managers of UCB. Given the substantial
changes in the composition of the Board in 2021, the Board
held several sessions to work on its team dynamics and
ways of working. The Board used to hold two executive
sessions per year (i.e. sessions in the absence of the CEO,
the only executive Board member), one in June and another
one in December. This year, the Board decided to cancel
these sessions. The June and December Board meetings
had to be held virtually and the June Board meeting was
also the first meeting of the newly composed Board under
the new chairmanship of Stefan Oschmann. It was
considered at the time not appropriate to hold such
executive session. This was also considered not appropriate
for the December Board meeting. Not holding such sessions
is therefore an exception to the rules of the 2020 Code
which stipulates in its article 3.11 that “
non-executive board
members should meet at least once a year in the absence of
the CEO and the other executives
”.
Assessment of the Board
In accordance with its
Charter
conduct an assessment on a regular basis and at least
every other year. The last assessment was carried out in
2019 by an external consultant and was reported in the
Integrated Annual Report 2019. The Chair of the GNCC is
responsible for conducting the Board effectiveness
assessment process and for reporting the results to the
Board. In accordance with the above rules, an assessment
should have normally taken place in 2021. However, given
that 2021 was a year of critical changes in the composition
of the Board (see above) the newly constituted Board (as
of May 2021) was of the opinion that it was too early for
conducting such assessment and decided to postpone it to
2022. This will allow the Board to assess functioning and
performance of the Board after a full year cycle.
Honorary directors
The Board has nominated following directors as honorary
directors:
●
Karel Boone, Honorary Chair
●
Evelyn du Monceau, Honorary Chair
●
Mark Eyskens, Honorary Chair
●
Georges Jacobs de Hagen, Honorary Chair
●
Daniel Janssen, Honorary Deputy Chair
●
Gerhard Mayr, Honorary Chair
●
Prince Lorenz of Belgium
●
Alan Blinken
●
Alice Dautry
●
Arnoud de Pret
●
Roch Doliveux
●
Peter Fellner
●
Guy Keutgen
●
Jean-Pierre Kinet
●
Tom McKillop
●
Gaëtan van de Werve
●
Jean-Louis Vanherweghem
●
Bridget van Rijckevorsel
●
Norman J. Ornstein
3.4.2 Board committees
Audit Committee
The Board has set up an Audit Committee whose
functioning and terms of reference are in accordance with
the BCCA, the 2020 Code and the Charter. It is composed of
a majority of independent Directors, all non-executive
Directors, and is chaired by Jonathan Peacock, since his
appointment as independent director by the AGM of April
29, 2021. Before his appointment and until April, 29 2021,
the Audit Committee was chaired by Albrecht De Greave,
independent director. Albrecht De Graeve will step down
from the Audit Committee at the AGM of April 28, 2022, as
he will no longer qualify as independent director as from
that date. All members have the competencies in audit and
accounting matters as required by article 7:99 of the BCCA.
The Audit Committee met four times in 2021. Each Audit
Committee meeting includes separate private sessions
attended solely by the internal and external auditors
respectively without management presence. As necessary,
the External Auditors attended all or part of each Audit
Committee meeting. Because of the COVID-19 pandemic,
the meetings of the Audit Committee took place by
videoconference, except for the meetings in July and in
October that were held in-person.
The Audit Committee meetings were also attended by
Sandrine Dufour (EVP - Chief Financial Officer & Corporate
Development), Thomas Debeys (Head of Internal Audit
since September 2021), Doug Gingerella (former Head of
Global Internal Audit and Special Advisor to the CEO since
September 2021) and Xavier Michel (Group Secretary
General), who acts as secretary of the Audit Committee.
The meetings were also attended on a regular basis wholly
or partially by Jean-Christophe Tellier (CEO), Stefan
Oschmann (Chair of the Board) and other members of the
management or staff depending on the topic (accounting,
tax, risk, pensions, quality, IT, etc.).
In 2021, and in accordance with its terms of reference (see
the Charter available on
UCB website
), the Audit Committee
monitored the financial reporting process (including the
financial statements); internal control and risk
management systems of UCB and their effectiveness; the
internal audit and its effectiveness, (with a particular focus
on this topic considering the change of the Head of Internal
Audit as of September 1, 2021); the Audit Plan and resulting
achievements; the statutory audit of the annual and
consolidated accounts; the review and monitoring of
Pensions schemes and liability; the independence of the
External Auditor including the provision of additional
services to UCB, which the Audit Committee reviewed and
for which it authorized the fees. Cybersecurity and IT
controls as well as Enterprise Risk Management (including
risks relating to the COVID-19 Pandemic) also remained
high on the agenda of the Audit Committee in 2021. The
Audit Committee had a close look at the non-financial
information reporting process, approach, methodology and
measures to ensure its consistency with the reporting of the
financial information in the Integrated Annual Report.
Since 2021 was a year of transition to a new External
Auditor (Mazars was appointed at the AGM of April 29,
2021), the Audit Committee focused on the performance of
the newly appointed External Auditor and the overall
external audit process to be put in place with the new
External Auditor.
Governance, Nomination and Compensation Committee
The Board has set up a Governance, Nomination and
Compensation Committee (the “GNCC”), whose
composition, functioning and terms of reference are in
accordance with the BCCA, the 2020 Code and the Charter.
The composition of the GNCC is currently as
follows:
The GNCC met four times in 2021. The committee was
attended by Jean-Christophe Tellier (CEO), except when
discussing issues relating to him, and by Jean-Luc Fleurial
(EVP & Chief Human Resources Officer), who has been
acting as secretary of the GNCC, except when discussing
issues relating to him and to the CEO compensation.
Because of the COVID-19 pandemic, the meetings of the
GNCC were organized by videoconference, except for the
meetings in July and October which were held in-person. In
2021, and in accordance with its terms of reference (see the
Charter available on UCB website), the GNCC reviewed and
made recommendations with respect to the appointments
to be submitted to Board approval (senior management
positions), the performance of the Executive Committee
members and their remuneration. It also proposed and
reviewed the succession planning and new appointments of
the members of the Board, the Executive Committee and
senior executives. It reviewed and made relevant proposals
or recommendations to the Board with respect to the
future composition of the Board and of its committees, to
be effective as of approval by the General Meeting of April
28, 2022.
The GNCC had a particular attention throughout the year on
the UCB response to the continuing COVID-19 pandemic,
including UCB’s contribution to society, communities,
patients, and employees.
The GNCC also focused on remuneration related matters
(remuneration policy and Remuneration report) and the
results of the ESG roadshows with investors performed in
March and November 2021.
It reviewed and submitted to Board approval the
remuneration report and policy 2020 (for its submission to
the AGM 2021), the short-term and long-term incentives to
be granted to the management (including the CEO) and the
performance criteria to which these grants were linked, as
well as the Group LTI plans conditions.
The GNCC has also been closely following up on corporate
governance matters, taking the feedback from the ESG
roadshows mentioned above.
A majority of the members of the GNCC is independent and
meets the independence criteria stipulated by the 2020
Code and the Board. All members have the competencies
and the expertise in matters of remuneration policies as
required by article 7:100, §2 BCCA
Scientific Committee
The Scientific Committee assists the Board in its review of
the quality of UCB’s R&D science and its competitive
standing. The Scientific Committee is composed of
members who have scientific and
medical expertise and who are currently (and will continue
to be) all independent.
They meet regularly with Dhaval Patel (EVP & Chief
Scientific Officer) and Jean-Christophe Tellier (CEO). The
members of the Scientific Committee are also closely
involved in the activities of UCB’s Scientific Advisory Board
(SAB) composed of external leading scientific medical
experts (usually 3 meetings per year). The SAB, composed
of ad hoc experts, provides scientific appraisal and strategic
input as to the best way for UCB to become a more robust
and thriving biopharmaceutical leader and to advise the
Executive Committee on the strategic choices related to
early-stage R&D. Furthermore, the Scientific Committee’s
main task is to report to the Board on the SAB’s appraisal of
UCB’s research activities and strategic orientations. This
year, because of the restrictions imposed on physical
meetings due to the COVID-19 pandemic, only one in-
person SAB meeting took place. The subject matter of this
meeting was Gene Therapy Clinical development. The
Members of the Scientific Committee also participated in
the R&D Portfolio review meeting organized by
Management and which took place in January 2021 (in
virtual format).
Committee continued to meet regularly with Dhaval Patel,
UCB’s Chief Science Officer, to maintain a continuous
engagement and dialogue on the science and early pipeline.
In 2021, the Scientific Committee continued to look closely
at the development of the Gene Therapy strategy.
3.4.3 Governance for Sustainability
UCB’s sustainability ambition is embedded in the overall
strategy of UCB as defined by the Board, upon proposal of
the Executive Committee. Sustainability is considered to be
a matter for the full Board (strategy) and, for this reason, no
specific sustainability committee has been created within
the Board.
At management level, UCB has established a Sustainability
Governance Committee and has appointed a Head of
Sustainability who directly reports to the CEO.
UCB also created an External Sustainability Advisory Board
(ESAB), composed of a mix of external international experts
in sustainability, who can inspire, as well as challenge and
advise on the sustainability dimension of UCB’s strategy and
results and provide an “outside in” perspective. Board
members have access to the meetings of the ESAB and at
least one member of the Board with ESG skills & experience
is participating in the meetings of the ESAB. The external
members of this advisory board are currently Mr. Elhadj As
Sy (President Kofi Annan Foundation), Ms. Sandrine Dixson-
Declève (Co-President Club of Rome), Ms. Charlotte Ersbøll
(Trustee Forum for the Future), Ms. Teresa Fogelberg
(Former GRI deputy Chief Executive), Ms. Hannah Jones
(CEO, the Earthshot Prize at the Royal Foundation of the
Duke and Duchess of Cambridge), and Mr. Bright Simons
(Founder and President mPedigree). A report of the EASB is
presented to the Board of Directors of UCB on an annual
basis. The first report was presented to the Board of UCB in
October 2021 (at the occasion of its annual strategic
meeting).
3.5 Executive Committee
Composition of the Executive Committee
In 2021, the Executive Committee was composed as
follows:
●
Jean-Christophe Tellier: Chief Executive Officer &
Chair of the Executive Committee
●
Dhaval Patel: Executive Vice President - Chief
Scientific Officer
●
Iris Löw-Friedrich: Executive Vice President - Chief
Medical Officer
●
Charl van Zyl: Executive Vice President - Neurology
Solutions & Head of EU/International
●
Emmanuel Caeymaex: Executive Vice President -
Immunology Solutions & Head of US
●
Kirsten Lund-Jurgensen: Executive Vice President -
Supply & Technology Solutions
●
Jean-Luc Fleurial: Executive Vice President - Chief
Human Resources Officer
●
Sandrine Dufour: Executive Vice President - Chief
Financial Officer
●
Bill Silbey: Executive Vice President - General
Counsel
The composition of the Executive Committee is reflecting
the ways of working of the group and is aimed at fostering
agility, cross collaboration and the transversal dimension of
the organization.
Xavier Michel, Group Secretary General, acts as the
secretary of the Executive Committee, ensuring the link
between the Board of Directors, the Executive Committee
and the broader organization.
Honorary chairmen of the Executive Committee
The following persons have been nominated as honorary
Chair of the Executive Committee:
• Roch Doliveux
• Georges Jacobs de Hagen
• Daniel Janssen
Functioning of the Executive Committee
The Executive Committee met on a regular basis with an
average of 1 to 2 days a month in 2021.
There were no transactions or contractual relationships in
2021 between UCB, including its affiliates, and a member of
the Executive Committee.
The functioning, competences and authority of the
Executive Committee are further described in the
Charter
.
3.6 Diversity at Board and Executive Committee level
This section includes the information required pursuant to
articles 3:32, §2 and 3:6, §2, 6° of the BCCA.
Diversity at Board and Executive Committee Level is part of
the overall Diversity, Equity and Inclusion ambition of UCB,
as described in the
Diversity at the Board level
For the Board of Directors, the legal requirements
applicable in Belgium in terms of gender diversity have been
followed and have been integrated into the Board
recruitment and nomination process. When replacements
or appointments for the Board are considered, UCB
systematically takes into account how it will enhance
gender diversity of the Board.
The Board is currently made up of 14 members of which 5
women and 9 men, with 7 nationalities represented (see
also above).
Building on and integrating the feedback from our
stakeholders, details of the skills diversity, as well as the
specific geographic expertise of the Board members, are
included in the 2021 integrated annual report. Beyond
gender diversity, UCB Board always strives to keep a
balanced mix of diversity in terms of skills, experience,
geographical expertise, nationality, age, independence,
tenure as well as any other relevant criterion. The diversity
of the Board can be visualized as follows:
Diversity at the Executive Committee level
For our Executive Committee roles, we do monitor the
talent pipeline from a diversity perspective, ensuring
a robust and diverse succession plan is in place, and
any recommendations for future composition are
made firmly on this basis. Generally, and in relation to
succession planning for UCB leaders in relation to
diversity, focus is on simulating gender balance
scenarios and ensuring a well-rounded senior
leadership pipeline that has been exposed to diverse
professional and cultural experiences. The Executive
Committee members have also embarked with other
leaders on a multi-step program to address
unconscious bias and develop inclusive teams and
leadership. Generally, key HR process (including in
recruitment and reward) have been reviewed to
ensure DE&I principles are embedded in the process
and systems.
Today, UCB’s executives come from a diverse
education and multi-disciplinary professional
backgrounds. In 2021, the committee was made up of
9 members of which 3 women and 6 men with 5
nationalities represented.
At the end of 2021, the diversity characteristics for the Executive Committee can be visualized as follows:
The size of the Executive Committee is designed to focus on
the Company’s core activity areas with agility, allowing UCB
to further evolve its patient value strategy.
The approach today is not to formalize diversity, equity and
inclusion in a set of policies, but to actively promote a
culture and practice of diversity, equity and inclusion.
To learn more about diversity, equity and inclusion in
general at UCB visit
3.7 Remuneration Report
At UCB, we have a fundamental commitment to enabling
people living with severe diseases, their caregivers, and
their families to live the best life they can - as free as
possible from the challenges and uncertainty of disease. To
do so, we continuously need to innovate to bring
differentiated solutions with unique outcomes, ensure
access for all patients who need our solutions in a way
which is viable for patients, society and UCB so that
ultimately we help patients achieve their life goals and
create the best individual experience for them. Our reward
offering is designed to attract, develop, engage and retain
talented people who can help us reach our commitment by
successfully navigating in an ever increasingly complex and
dynamic healthcare environment. Our priority is to reflect,
in our rewards, the strong cultural foundation shared by all
our colleagues, to help drive the value that we aim to create
for all our stakeholders and foster a working environment
where our people are happy, healthy and safe.
In this report we look back at 2021 and reflect on how our
performance, including our progress on our sustainability
ambition, influenced our executive remuneration
recommendations.
AGM and Stakeholder Engagement
As mentioned in the introduction to the Corporate
Governance Statement, we have continued to engage with
our investors and with proxy advisors to understand their
specific priorities and to solicit their feedback on our
planned policy evolution, with a special focus on our
sustainability approach. And while we were pleased with
the voting outcomes for both our remuneration report
(90.63% votes in favor) and policy (96.38% votes in favor)
we firmly believe that that we need to continuously strive
for improvement and incorporate feedback into our
governance practices, including our remuneration policy.
We had positive feedback to our efforts to increase
transparency compared to previous years and acknowledge
that several investors would like further information in this
respect. Several proposed changes are summarized in the
“Remuneration Policy – Looking Ahead” section below.
2021 performance highlights
Significant agility and resilience were required to navigate
continuing global challenges. 2021 was a pivotal year for
UCB, as we closed the Accelerate and Expand phase of our
strategy and prepared the pathway to our Breakthrough
and Lead phase. Despite many headwinds in 2021, we are
proud of our achievements which resulted in our meeting
most of our corporate goals and either meeting or
overachieving our top and bottom -line targets. To prepare
for launches while advancing a robust pipeline at all stages
of development and facing continued uncertainty in global
health, economics and policy, it was critical for us to
manage profitability with discipline and with robust
scenario planning.
Sustainable growth not only required a careful balancing
of resources, but also a focus on creating incremental
value for all our stakeholders: the patients who need our
solutions, our employees, the communities where we
work, our shareholders, and the planet.
We achieved a strong financial performance, while
maintaining a solid level of investment in research and
development and making progress on our commitments to
our stakeholders. Some of our key achievements (as
detailed in the Annual Report) in the past year include:
●
Sustained financial performance with revenue in 2021
reaching € 5 777 million, up by 8% (+10% CER) and net
sales increasing to €5 471m, also 8% higher than last
year (+11% CER)
●
This solid growth, mainly driven by the continuous
growth of UCB’s product portfolio and supported by a
change in the distribution model for E KEPPRA© in
Japan, was at the high end of financial expectations
set by UCB in February 2021, especially when
considering the headwinds faced.
●
Adj. EBITDA increased to € 1 641m (+14%; +21% CER),
while net profit attributable to shareholders stood at
€1 058 million up from € 761 million (+39%; +51%
CER) driven by continued revenue growth and
moderately growing operating expenses, reflecting
the investments into the future of UCB. As reflected in
the core EPS calculation, the company exceeded
guidance as well as internal targets.
●
Our new psoriasis treatment BIMZELX® was approved
in the EU and the UK for the treatment of moderate to
severe plaque psoriasis in adults who are candidates
for systemic therapy.
●
Following the acquisition of Ra Pharmaceuticals, Inc.
in 2020 we were delighted to obtain positive topline
results from our MycarinG study investigating the
efficacy and safety of
rozanolixizumab
generalized myasthenia gravis (gMG), and also
progressed our phase III studies in
Zilucoplan
.
●
We announced the launch of Nile AI, Inc., a new
independent company developing an epilepsy care
management platform to help make the journey of
every epilepsy patient more predictable.
●
We integrated our sustainability ambition deeper in
our governance and operational model and made
robust progress across all pillars of our sustainability
approach, in scientific innovation, patient access to
medicines across the geographies in which we
operate, employees’ health, safety and wellbeing, and
protecting the health of the planet, while making
great progress on diversity, equity, and inclusion. We
also significantly improved our ESG ratings.
●
We accelerated our digital business transformation in
core operations and breakthrough initiatives such as
our strategic collaboration with Microsoft, combining
their computational abilities and expertise with UCB’s
drug discovery and development capabilities, to
discover new medicines in a more innovative way.
Application of Remuneration Policy - 2021 remuneration
outcomes
Our pay decisions for the CEO and the Executive
Committee considered the following factors:
●
The company’s performance against both short- and
long-term goals.
●
The team’s individual and collective contribution.
●
External market forces.
●
Our reward philosophy, as applied to the wider
workforce.
All 2021 related remuneration decisions were taken in
accordance with our approved remuneration policy. The
key recommendations made to the UCB Board by the
Governance, Nomination and Compensation Committee
(GNCC) were the following:
●
Annual bonus outcomes were determined in
reference to performance against objectives and the
GNCC’s assessment of the CEO and Executive
Committee members’ levels of performance. This has
resulted in a bonus payment above target. For the
CEO specifically, the overall payout was € 1 456 186
(see below for more details). The GNCC and Board
believe that these bonus outcomes appropriately
reflect the overall 2021 performance.
●
The 2018-2020 performance share plan, vesting in
2021, was based on achieving several pre -determined
measures: R&D pipeline milestones, cashflow
conversion rate, relative revenue growth over the
three years and level of employee engagement. This
resulted in an overall vesting level of 118% against a
maximum potential payout of 150% of target. In
addition, Stock Options and Stock Awards vested as
detailed later in this report.
When the GNCC recommended salary, bonus and LTI
outcomes to the Board, following a full assessment of
performance across all relevant measures, it did not
derogate from the 2021 remuneration policy in its
determination.
The remuneration policy for UCB’s Executive Committee
Members and Non-Executive Directors was reviewed and
validated by the GNCC on February 19, 2021 and approved
by the Board of Directors on February 24, 2021. The policy
was adopted during the General Meeting of Shareholders
on April 29, 2021 and became effective as of January 1,
2021.
Remuneration policy – Looking Ahead
As we progress on the integration of sustainability in our
corporate culture and business strategy, we are
increasingly embedding collective sustainability measures
resulting from our
remuneration of our Executive Committee members and
CEO as this is an intrinsic part of our performance.
Our aim in this journey is to do this progressively, with
robust KPIs that are assured by our auditors. Several of our
sustainability pillars are not represented in variable pay
collective measures – some will remain in individual
objectives and some will transition into our variable pay
programs as we gain insights and experience on how we
can precisely measure and influence outcomes. As from
2022 we are planning these first steps:
●
The use of a negative modifier linked to our
of the Executive Committee and CEO. The pandemic
has shown us that the health, safety and wellbeing of
our workforce is essential for sustainable performance
and by embedding this metric we aim to keep a focus
on maintaining a robust foundation of care for our
employees and pushing the bar for HSWB even higher.
Our metric will not provide an additional benefit to
the Executive Committee members compared to the
broader workforce but instead reduces the bonus of
the Executive Committee by 5% if a specific threshold
compared to our annual target is not reached.
●
We are also including as from 2022 a new metric in
our Performance Share Plan linked to our patient
access ambition. Our goal with this KPI is to measure
and drive timely access for patients who need our
newly launched solutions, through improvements in
national & local reimbursement. The metric will be
linked closely to our “
” and
will represent a 10% weighting in the plan while
Annual Revenue Growth and Adjusted Cumulative
Operating Cashflow Compounded would each carry a
weight of 45%. As we progressively include other
extra-financial KPIs these weightings could evolve
over time.
To ensure we remain aligned to competitive market levels,
we performed a review of our Board committee fees, the
last review having been conducted in 2019. While we saw
that, overall, our Board and committee member fees
remain aligned with market levels, we did identify that the
committee Chair fees were lagging behind market peer
levels. The proposed increased remuneration corresponds
to a level closer to the regressed median of our European
Pharma reference UCB peer group (i.e. relevant peer
pharma median data, adjusted to UCB’s revenue size). In
addition, we observe increasing demands on our Board
members, in particular for our Committee Chairs, where
the environment and related governance legislation has
become more complex resulting in a higher workload. The
following recommended adjustments will be submitted to
shareholder voting at the upcoming Annual General
Meeting:
In addition, also subject to approval by the shareholders,
there would be a conversion of the previously approved
special travel allowance for our members living in a
location with at least 5 hours of time zone difference with
Belgium, to a fixed lump-sum allowance of EUR 45,000
(EUR 7,500 per meeting, with at least 6 meetings per year).
This allowance is irrespective of actual travel and considers
the inconvenience caused by attending meetings which
are mainly in Europe.
Remuneration in 2021
1. Executive Committee total remuneration
The total remuneration package of the Executive
Committee members consists of the following elements
that will be further outlined below:
From the total remuneration, there is a strong focus on
total direct compensation (base salary plus bonus and
long-term incentives). The total direct compensation mix
at target level places a higher weight on variable elements.
The CEO and Executive Committee target total direct compensation mix is as follows:
The pay for performance impact can be illustrated as
follows for the CEO and is described in more detail below:
2. Peer group and competitive positioning
UCB refers primarily to a European peer group for
comparing pay policy and decisions (see below). A
separate U.S. peer group is maintained to ensure a
good understanding of this specific market, given the
international character of our Executive Committee,
but is not the reference for our pay policy, for
instance when setting bonus and LTI target levels.
Both groups include international biopharmaceutical
(pharmaceutical and/or biotechnology) companies
with whom UCB competes for talent. These
companies vary in size and therapeutic area.
We prioritize fully-integrated biopharmaceuticals
peer companies operating in a complex research-
driven environment and which have both
development and commercialization capabilities.
Where possible we aim to include companies
competing in the same therapeutic areas.
While we do target companies that broadly reflect
UCB’s size, company size is not the primary factor,
given the limited nature of this group. Regression
analysis is therefore used, where relevant, to adjust
the market data to UCB’s size. The composition of
our compensation peer group is regularly monitored
and adjusted as needed, for instance when industry
consolidation leads to less robust benchmarking.
UCB’s competitive positioning policy is to target
median pay levels of this comparator group for all
elements of Total Direct Compensation (base salary +
variable remuneration). The bonus and LTI target
levels are benchmarked against European biopharma
levels. The actual compensation for each individual is
determined based on their experience in relation to
the benchmark, as well as their impact on company
performance.
3. Executive Committee remuneration elements
Pay Element - Fixed Remuneration
Pay Element – Fixed Remuneration
Base Salary
Base Salary is defined in relation to the specific job dimensions and the
median level of base salary in the market for similar roles. The individual’s
impact on the business and their level of skill and experience is also taken into
consideration.
Fees
Any director fees for executive directors are paid on top of the remuneration
received as an Executive. This is only applicable to the CEO.
Other Benefits
Executive Committee Members receive benefits in line with UCB’s
remuneration policy, including participation in a healthcare plan, executive life
insurance, and executive perquisites such as a company car. Executive
Committee members can also receive additional in-kind benefits in line with our
standard Global Mobility policies. These amounts can vary from year to year but
are reported in this section due to their recurring nature.
Pay Element – Variable Remuneration
Pay Element – Variable Remuneration
Description
Bonus
The bonus target is subject to a double
performance multiplier which rewards
the achievement of corporate and
individual objectives. The target bonus
was set at 90% of base salary for the CEO
and 65% for the other Executive
Committee members.
The overall bonus opportunity is capped
at 175% of the target for the CEO and the
Executive Committee.
Corporate Objectives
To encourage a focus on revenue growth but also on
underlying profitability, UCB considered annual Adjusted
Earnings Before Interest Tax Depreciation and
Amortization (“ Adj. EBITDA”) as a shared short-term
corporate performance metric for 2021, for the CEO and
Executive Committee, as well as the wider workforce. This
target is defined company-wide and is translated into a
payout curve which ensures that only an acceptable range
of performance is rewarded. The philosophy is that Adj.
EBITDA, as a proxy for UCB’s underlying profitability,
ensures that the overall bonus plan is self-funding,
rewarding collective efforts across the organization. For
performance between the defined payout levels shown,
linear interpolation is used to determine the payout (2021
payout curve):
Adj. EBITDA vs target
Payout vs target
<85%
0%
85%
30%
93%
90%
100%
100%
106%
110%
113%
150%
Individual Objectives
Individual objectives are defined according to the extent
to which annual objectives have been met, as well as the
behaviors demonstrated by the individual in relation to
UCB’s Patient Value principles. The CEO’s individual
objectives mainly represent the overall company
objectives, covering both financial and extra-financial
priorities. The CEO’s individual objectives can be
summarized under the following categories, representing
the value UCB aims to create for all stakeholders. No
specific weighting is defined per category as we believe
that performance needs to be measured in a holistic way,
considering short-term impact and overall long-term
company sustainability. The GNCC and Board consider all
relevant elements to arrive at the individual performance
multiplier.
Performance measure
Value Creation
Financial priorities
Sustainability is our business
approach. Our financial
health is key to our overall
sustainability and ability to
continue to create value for
patients, our employees, and
society, now and into the
future. A strong focus is
placed on delivering on the
following financial targets:
●
Revenue
●
Net Profit
●
Net Sales across our
product portfolio
●
Cashflow generation
Extra-financial priorities
Value for patients
a pipeline of differentiated
solutions and improving
patient access to these
solutions
Value for our people
fostering a working
environment where our
people can thrive by being
happy, healthy and safe
Value for the planet
transitioning UCB towards a
low carbon and green
economy
Other
several of the above such as
societal value or other
company strategic goals and
personal development goals.
Other Executive Committee members’ goals are derived from the same goals and adjusted according
to their specific area of impact. UCB is progressively embedding its sustainability goals within the
objectives of the entire Executive Committee and as we gain experience with these goals and KPIs, we
are integrating these into our corporate objectives, to illustrate our collective commitment.
Long-Term incentives
The LTI program is a two-tiered incentive
program which includes:
A stock option plan
the LTI grant and a
performance share
plan
The actual LTI grant size is adjusted from year to year,
bearing in mind individual past performance as a proxy
for future impact and value creation, as well as other
factors such as market premiums observed for certain
roles. The LTI grant value is translated into a number of
Target LTI levels represented 140% of base
pay for the CEO and 80% for the other
Executive Committee Members.
long-term incentives considering the underlying value of
each award. The actual grant can represent a maximum
of 150% of the target (i.e. up to 210% of the current base
salary for the CEO and 120% of base salary for the other
Executive Committee members) at the moment of the
award determination.
Stock Options
Our option plan has a minimum vesting
period of three years. As from the moment
of vesting the beneficiary can exercise the
option until 10 years from the date of
grant.
Through sustainable performance, the positive evolution
of the share price determines the realizable value of this
long-term incentive plan. UCB does not facilitate entering
into derivate contracts related to Stock Options, nor do
we hedge the attached risk, as this is not consistent with
the purpose of the Stock Options. For incumbents based
in Belgium, options granted in April 2021 cannot be
exercised before 1 January 2025, and taxation occurs at
the moment of grant, as per Belgian tax legislation. For
incumbents based in other countries, options granted in
April 2021 cannot be exercised before 1 April 2024.
Options expire on the 10th anniversary of the date of
grant.
Performance shares
Performance shares are subject to a three-
year vesting period and vest upon
condition of meeting pre-determined
company targets.
The 2021 grant was based on our performance against
two performance criteria: Adjusted Cumulative Operating
Cashflow and Compounded Revenue Growth, both
weighted at 50%. These criteria ensure a focus on growth
and sustainability, so that we can continue to invest in
innovative solutions for patients. The number of shares
awarded is adjusted at the end of the performance
period based on the company’s performance against the
targets defined at the time of grant. If actual company
performance is below a specified threshold or the
beneficiary leaves prior to the vesting date, no shares are
awarded. The maximum vesting level is 150% of the
original grant, if results would significantly exceed the
targets.
Pay Element – Extraordinary Items & Pension
Pay Element
Description
Extraordinary
items
Any non-recurring remuneration for 2021, such as sign-on awards or termination
pay, are reported further in the present remuneration report and elaborated in our
remuneration policy. For instance, the company may decide to award a sign-on
award, via cash or shares, to new Executive Committee members. This is not an
automatic practice and considers various factors such as losses that the individual
would otherwise incur in leaving another employer or other related negative
cashflow effects. Any sign-on awards are deliberated and approved by the GNCC.
Pension
The CEO participates in a cash balance retirement benefit plan which is fully funded
by UCB and in the UCB Executive supplementary defined contribution plan. The
other Executive Committee members each participate in the pension plans available
in their country of contract; those incumbents based in Belgium participate in the
same plans as the CEO.
4. Other policy provisions
Clawback and malus provisions
During 2021, we have introduced clawback and
malus provisions for the variable pay plans of our
CEO and Executive Committee members.
This means that the Board of Directors may decide –
subject to applicable law – to retain any unpaid or
unvested incentive compensation (malus), or to
recover incentive compensation that has been paid
or has vested (clawback) in case of (i) evidence of
fraud or serious misconduct and/or (ii) material
breach of UCB’s Code of Conduct and Dealing Code,
and/or (iii) engaging in conduct or actions that can
reasonably be expected to cause reputational harm
to UCB and/or in case of material negative
restatement of the company’s financial results.
Shareholding guidelines
While the weight of LTI in our overall pay mix results
in our Executive Committee members having a
meaningful stake in unvested (and vested) LTI at any
moment, we have, during 2021, introduced
shareholding guidelines for our CEO and Executive
Committee members.
The requirement is for the current CEO and Executive
Committee members to own a minimum multiple of
their annual gross base salary in UCB shares (owned
from vesting of stock awards, performance shares or
exercised stock options) over a building period of 5
years reaching and maintaining the threshold
afterwards. The requirement is to reach 150% of
annual gross base salary for CEO and 50% of annual
gross base salary for Executive Committee members.
Termination Arrangements
Given the international character of our Executive
Committee as well as the dispersal of our various
activities across different geographies our members
have agreements governed by different legal
jurisdictions.
A Belgian service contract was established during
2014 for Jean-Christophe Tellier and maintains
similar termination conditions to those in place
under his previous U.S. employment agreement,
comprising a lump sum equal to 18 months base
compensation plus the average of the actual bonuses
paid for the three previous years if the contract is
terminated by the company or if there is a change of
control of UCB.
The agreements of Emmanuel Caeymaex and Iris
Löw-Friedrich were signed before the entry into force
of the Belgian Corporate Governance law of 6 April
2010 which limits the level of termination
indemnities.
Emmanuel Caeymaex has no specific termination
provisions in his Belgian contract. In case of
involuntary termination, local employment law and
practices apply.
Iris Löw-Friedrich has a German employment
agreement which provides a six months’ notice
period and a termination indemnity equal to one-
year base salary and bonus.
Jean-Luc Fleurial, Sandrine Dufour, Dhaval Patel, and
Charl van Zyl have Belgian employment contracts
including a termination clause which entitles them to
a severance payment of 12 months base salary and
bonus if the contract is terminated by the company
or of there is a change of control of UCB.
Kirsten Lund-Jurgensen and Bill Silbey hold a U.S.
employment agreement, and each has a termination
clause which provides for a severance payment of 12
months base salary and target bonus if the contract is
terminated by the company or if there would be a
change in control in UCB.
5. Non-Executive Directors
The level of pay for the Board of Directors is regularly
assessed against both European peer companies as
well as companies listed on Euronext Brussels
benchmark stock market index (BEL 20). Peer
company data constitutes the primary reference,
given our need to attract experts with a deep
knowledge of our industry. The median levels of this
peer group are the target. Following this review and
the approval at the General Meeting of shareholders
of 29 April 2021, the annual fee for the Chair of the
Board has been increased from € 240 000 to
€ 330 000. These fees include any participation on
Board committees.
A revised remuneration policy including such changes
was approved at the General Meeting of
Shareholders of April 29, 2021.
As such, per the policy terms, Non-Executive
Directors are entitled to the following fees:
In accordance with the policy, Non-Executive Board
members do not receive variable or equity-related
remuneration, based on the position that
shareholding could create a conflict of interest for
long-term mandates, nor are they entitled to receive
benefits. Board members residing in a country where
the time zone difference with Belgium is five hours or
more receive a special travel allowance.
2021 Remuneration Outcomes for the CEO and the Executive Committee Members
1. Total Remuneration summary
Following new reporting standards, below provides
an overview of the total remuneration of our CEO
and Executive Committee members:
As a comparison to the 2020 Remuneration Report,
the CEO’s total direct compensation (base salary +
bonus + LTI) for 2021 amounts to €4 613 665
(excluding pension contributions and other benefits),
compared to € 5 004 367 in 2020. The aggregated
Executive Committee compensation (base salary +
bonus + LTI) for 2021 amounts to: €12 155 964
(excluding pension contributions and other benefits),
compared to € 12 105 162 in 2020.
A. Fixed Remuneration
Base Salary
The table below show the 2021 base salary levels of the CEO and the Executive Committee:
The CEO’s salary evolved by 3% according to
observed market movements and in line with the
overall salary movements of the broader workforce.
Fees
The CEO is also entitled to director fees as Board
member of UCB SA. For 2021, these fees amounted
to € 86 000 (€ 80 000 in annual fees and € 6 000 in
presence fees).
Other Benefits
Insurances, as well as benefits due in line with our
standard Global Mobility policies and our
remuneration policy, are included in “other
benefits”.
The impact of the COVID-19 pandemic continued to
result in UCB exceptional costs in 2021, linked to our
standard Global Mobility policies. While these costs
did not result in additional net pay, they did
represent an exceptional cost to the company and
are therefore reported as a benefit in-kind.
For the CEO these other benefits represented an
amount of € 1 163 405, while for other Executive
Committee members this amounted to a total
aggregate amount of € 2 501 345.
B. Variable Remuneration
Bonus (“One-Year Variable”) 2021 performance against targets
The achievement of performance targets was
measured during the period that started on 1 January
2021 and ended on 31 December 2021. In line with
the remuneration policy, corporate objectives are
defined by the percentage of actual Adj. EBITDA
versus the budget, at constant exchange rates. As the
target set for 2021 was exceeded, the Company
Performance Multiplier is above target.
The payout level for the individual objectives for the
CEO were proposed to the Board by the GNCC based
on the performance assessment at the end of the
cycle as summarized below in the key priority areas
for 2021. The outcome for 2021 is as follows:
Performance measure
2021 CEO performance against key priority areas
Financial priorities
UCB continued to grow in a sustainable way, achieving a strong financial performance,
mainly above our guidance as well as internally defined targets, while investing heavily
in innovation and R&D.
Despite continued net price pressure our revenue growth remains driven by our core
products.
With increasing agile, fact-based resource reallocation across the organization, we
were able to sustain our resilience.
Our revenue, product net sales, adjusted EBITDA, net profit and cash conversion rate
results generally exceeded our targets (refer to introduction to remuneration report
for more detail).
Value for patients
Enrich our pipeline by bringing new assets into existing and new populations:
●
Marketing authorization was obtained for BIMZELX© in the European
Union/European Economic Area and Great Britain for the treatment of moderate
to severe plaque psoriasis in adults. In the US,
Bimekizumab
review with the FDA following delay induced by the pandemic situation.
●
The early pipeline was strengthened through delivery of several new candidates
from research and several early-stage assets progressed towards POC, supporting
sustained long-term growth.
●
Phase 3 MycarinG study, investigating the efficacy and safety of
Rozanolixizumab
in patients with generalized Myasthenia Gravis, demonstrated positive topline
results
●
UCB was recognized as a corporate partner by Myasthenia Gravis Foundation of
America (MGFA), an award which is a testament to our growing commitment to
the MG community
●
Zilucoplan
Rozanolixizumab
track.
●
Several approvals and launches in new indications and patient populations across
our existing epilepsy franchise, for instance VIMPAT© launched in Japan as
adjunctive therapy in the treatment of primary generalized tonic-clonic seizures
and as Monotherapy and Oral Solution in China.
●
BRIVIACT© approved by the U.S. FDA as both monotherapy or adjunctive therapy
for the treatment of partial-onset seizures in patients one month of age and older.
●
CIMZIA© established our commitment to women of childbearing age (WocBA);
today in Europe and the US, 30 to 40% of CIMZIA© patients are WoCBA patients.
●
UCB has continued to bring EVENITY© to markets across Europe in the past year,
and our patient value commitment continues to grow. UCB developed BoneBot,
an AI-based solution that opportunistically screens for vertebral fractures on CT
scans, which has now been licensed to ImageBiopsy Lab for further development
and launch.
Accelerate our digital business transformation in core operations and breakthrough
initiatives:
●
Digital Care Transformation team was formally established with the ambition of
developing digital care solutions that meet patients where they are and
specifically address the real issues they face on a day-to-day basis.
●
Advanced the digitalization of our go-to-market operations to provide a more
personalized and responsive support to patients and healthcare professionals at
every touch point along their journey
●
Entered in a multi-year strategic collaboration with Microsoft that synergizes their
computational services, cloud and artificial intelligence (AI) with UCB drug
discovery and development.
Target % countries in scope offering access to patients who need CIMZIA
®
(PsO,
AxSpa), VIMPAT
®
, BRIVIACT
®
, EVENITY
®
●
Overall, we have improved patient access, even if we were slightly below our
ambitious target, mainly driven by our challenges to obtain an unrestricted
reimbursement status for EVENITY
®
restrictions in some areas we did successfully obtain unrestricted access in others,
for instance VIMPAT
®
®
well as unrestricted access to EVENITY
®
Value for our people
Further progress on our Diversity, Equity and Inclusion ambitions to increase our
impact:
• All leadership teams embarked on DE&I change journey with UCB Board engagement
and around 1 500 UCB colleagues embarked on an inclusive mindset journey.
• Solid progress in female leadership representation, allowing us to start 2022 with 37%
of our executives being female talents.
• 8 Employee Resource Groups (ERGs) in place representing in 2021 more than 1 800
employees (up by 61% from the previous year)
Progress on our health, safety and wellbeing goals
• Through an employee survey and employee metrics in our HSWB Index we saw
positive progress compared to our robust 2020 baseline
Value for the Planet
As part of our 2030 green target to reduce carbon emissions by 35%, decrease waste
generation by 25% and water consumption by 20%, we progressed ahead of plan for
2021 across all targets.
Other goals
Recognition of our sustainability approach
:
• We progressed on 4 of the 5 ESG ratings that we chose to engage with (selected
as they include in their evaluation our priority areas for societal impact, and are
considered important and relevant to our different stakeholders ).
• We were recognized this year by Sustainalytics as a top-rated performer for
management of ESG risks in the pharmaceutical industry, and by CDP on how
effectively we are engaging our suppliers on climate change by being included in
their 2021 supplier engagement leader board.
Overall we believe that excellent progress was made
on our commitments to creating value for patients,
our people, shareholders and society. As well as the
progress against goals, the navigation of the
challenges brought by COVID-19 was handled
commendably, with patient, employee and societal
value at the core of all our actions.
The CEO proposed individual performance multipliers
for each of the other Executive Committee members
to the GNCC for consideration prior to Board
endorsement. The combined total value of cash
bonuses paid to the Executive Committee amounted
to € 3 246 965
LTI (“Multi-Year Variable”)
In 2021, the CEO and Executive Committee members
were awarded an LTI grant between the LTI target
and the maximum policy value.
A) Grant made in 2021
The table below details the number of
stock options
and
performance shares
B) LTI Vesting in 2021
The table below details the number of
stock options,
stock awards
performance shares
, granted to
the Executive Committee members in previous years
(reported in previous annual reports) and which have
vested during the calendar year 2021 (not to be
aggregated with the information in the above table
which details the long-term incentives granted in
2021):
The performance shares vesting in 2021 relate to the
2018 grant. The vesting of those performance shares
was subject to three-year performance against the
following criteria:
●
Cashflow conversion ratio (35%)
●
Relative revenue growth (35%)
●
Reaching defined pipeline milestones (20%)
●
UCB global employee engagement score (10%)
Based on the performance against each of the
targets, the number of shares that vested was equal
to 118% of the target number of shares conditionally
granted, due to performance above target on
Cashflow Conversion ratio and at target against the
other three performance criteria.
C) LTI Forfeited in 2021
There were no
stock options, stock awards
and
performance shares
members in previous years and which were forfeited in 2021.
C. Extraordinary Items
Te
rmination payments
There were no termination payments made in 2021.
Sign-on fees
There were no sign-on fees awarded in 2021.
D. Pension expense
E. CEO and Executive Committee pay comparison
Remuneration of Executive Committee, Employees
and Company Performance over 5 years
The below table is a summary of the evolution of
total remuneration of our CEO, Executive Committee,
our average employee and compared to company
performance over the last five years, represented
here by year on year growth of revenue and adj.
EBITDA.
Total Remuneration of CEO versus Lowest Remunerated Employee
The below table shows a comparison of the 2021
remuneration of our CEO (in €), to the 2021
remuneration of the lowest paid fulltime UCB SA
employee (in €). The remuneration includes fixed and
variable remuneration as well as employee benefits,
excluding employer social security charges.
F. CEO and Executive Committee Share-based Remuneration
Shareholding Guidelines
In 2021 UCB implemented shareholding guidelines
for its CEO and Executive Committee members. Each
member has 5 years to meet their respective
requirement, since the inception of this guideline (i.e.
April 2026). Currently the CEO does meet this
requirement and so do the majority of longer serving
members of the committee (i.e. those with 5+ years
of service).
LTI Information
The tables below detail the opening and closing
balance, as well as movements during the year in of
share-based remuneration for each of the Executive
Committee Members (both current and former).
2021 Remuneration of Non-Executive Directors
The following table sets out the remuneration
received by each Non-Executive Director in 2021.
This includes the fixed annual payment for Board and
Committee memberships, the attendance fees per
Board meeting, and any travel allowances paid.
The fees received by the CEO as Board member of UCB
SA are included in Section 5 under the Remuneration
Policy in 2021.
3.8 Main features of the internal control and risk
management
systems of UCB
3.8.1 Internal control
As the governing body of UCB, the Board provides
entrepreneurial leadership to UCB and is responsible
for approving the strategy, goals and objectives of the
Company. This includes overseeing the establishment,
implementation and review of a prudent and effective
system of internal controls, as described herein, as
well as the risk management processes as further
described in 3.8.2 below.
The Audit Committee assists the Board in its
responsibility of monitoring the internal control and
risk management processes established by the
management of UCB and the UCB Group as a whole;
the effectiveness of the overall internal control
processes of UCB; the overall financial reporting
process; the External Auditor (including its
appointment procedure); and the Global Internal
Audit function and its effectiveness.
UCB management is responsible for establishing and
maintaining within UCB adequate internal controls to
provide reasonable assurance regarding the reliable
nature of financial information, compliance with
relevant laws and regulations, in the most efficient
manner. The internal controls process is monitored
worldwide by the Internal Controls Department in an
automated manner for system access and segregation
of duties, process control-self assessment testing, and
continuous controls monitoring. Information systems
are developed to support UCB’s long- term objectives
and are managed by a professionally staffed
Information Management team.
As an important component of managements system
of internal controls, UCB updates its business plan on
an annual basis and prepares a detailed annual budget
for each financial year that is considered and
approved by the Board. A management reporting
system is in place, providing management with
financial and operational performance measurement
indicators. Management accounts are prepared
monthly to cover each major area of the business.
Variances from plan and previous forecasts are
analyzed, explained and acted on in a timely manner.
In addition to regular Board discussions, meetings are
held at least monthly by the Executive Committee to
discuss performance, with specific projects being
discussed as and when required.
The Global Internal Audit function provides
independent, objective assurance services designed
to evaluate, add value and improve the internal
control environment and operations of UCB by
bringing a systematic, disciplined approach to the
evaluation of, and recommending enhancements to
the governance, compliance, internal control and risk
management processes of UCB.
The Global Internal Audit group undertakes an Audit
Plan of financial, compliance and operational audits
and reviews, as reviewed and approved by the Audit
Committee and covering relevant company activities.
The program includes independent reviews of the
systems of internal control and risk management. The
findings and the status of corrective actions taken to
address these are regularly reported in writing to the
Executive Committee, and the status of the
completion of the Audit Plan as well as a summary of
the findings and the status of corrective actions are
reported in writing to the Audit Committee at least
twice per year.
UCB has adopted formal procedures focused on
internal controls over financial reporting, referred to
as the Transparency Directive process. This process is
intended to help minimize the risk of selective
disclosure; to help ensure that all material information
disclosures made by UCB to its investors, creditors and
regulators are accurate, complete, timely and fairly
present the condition of UCB; and to help ensure
adequate disclosure of material financial and non-
financial information and significant events,
transactions and risks.
The process consists of a number of activities.
Identified key contributors in the internal control
process, which include all Executive Committee
members, are required to certify in writing that they
understand and have complied with the requirements
of UCB related to the financial reporting process,
including providing reasonable assurance of effective
and efficient operations, reliable financial information
and compliance with Laws and regulations. To
promote their understanding of the broad range of
potential issues, a detailed checklist is provided to
them to complete and to assist them in their
certification. In addition, a detailed worldwide desk
review of Sales, Credits and related Gross-to-Net
accounts, Accounts Receivables, Trade Inventories,
Accruals, Provisions, Reserves and Payments is
performed, and the Finance Directors/representatives
of all individual entities are required to acknowledge
in writing that their financial reporting in these areas
is based on reliable data and that their results are
properly stated in accordance with requirements.
These procedures are coordinated by the Global
Internal Audit function in advance of the issuance of
the half-year and annual accounts. The results of the
procedures are reviewed with the Chief Accounting
Office, as well as with key stakeholders in Finance, the
Legal Department and the External Auditor.
Appropriate follow-up of any potential issues
identified is performed and consideration of
adjustments to reported financial information or
disclosures is evaluated. The results of these
procedures are reviewed with the CEO and the CFO,
and subsequently with the Audit Committee, prior to
the publication of the accounts.
3.8.2 Risk management
The whole UCB group and its affiliates worldwide are
committed to providing an effective risk management
system to minimize threats that may impact our ability
to achieve our strategic plans and corporate
objectives.
To this effect, the UCB Group incorporates Risk
Management practices as follows:
A global Risk Management policy, applicable for the
whole UCB Group and its affiliates worldwide,
describes the commitment of UCB to provide an
effective risk management system across the UCB
Group and articulates the framework and architecture
for managing key risks at UCB.
The Board is responsible for approving the strategy of
the UCB Group and reviewing and monitoring the UCB
Group’s establishment and effective implementation
of the risk management systems and processes. The
Audit Committee reviews on a regular basis the areas
where risks could significantly affect the financial
situation or reputation of the UCB Group.
The Audit Committee monitors the overall risk
management process of UCB. The Executive
Committee is responsible for implementing the risk
management strategy and objectives, as well as
championing the prioritization, control and review of
risks critical to UCB’s success. The Global Internal
Audit function is responsible for independently and
regularly reviewing as well as validating the risk
management process in UCB and jointly agreeing with
the business functions on actions to mitigate and
control assessed risks.
The Head of Enterprise Risk Management provides
periodic updates to the Executive Committee and, on
a periodic basis, to the Audit Committee as well as to
the Board. The Risk2Value Table and Strategic Risk
Council, consisting of management representatives of
all business functions, provides strategic leadership
that endorses the enterprise level risk identification,
assessment, prioritization and response process,
supported by an enterprise risk management system
to effectively assess, report and manage actual or
potential risks or exposures. The sources of risk
information include the assessment from the business
areas (bottom-up), input from executive leadership
(top-down) and the external context for the
organization (outside-in). Every top risk of the
organization is owned by a member of the Executive
Committee to ensure accountability and priority. The
Enterprise Risk Management group continually
assesses its governance structure and stakeholder
alignment to ensure the most robust assessments,
prioritization and responses are achieved.
Our risk management system is based on current
plans, estimates and projections of management and
our risk profile is constantly evolving as internal and
external factors and associated risk assumptions
change over time.
To learn more on top risks and environmental and
social risks visit the
. To learn
more on financial risks visit the
3.9 Private investment tr
ansactions and trading
in UCB shares
The Board has approved a Dealing Code to prevent
insider trading offences and market abuse,
particularly during the periods preceding the
publication of results or information that would likely
have an effect on the price of UCB securities or, as the
case may be, the price of the securities issued by a
third-party company.
In 2016, a new Dealing Code has been approved by the
Board to reflect the rules of the EU Regulation No
596/2014 on Market Abuse, Directive 2014/57/EU on
criminal sanctions for market abuse and the Belgian
Law of August 2, 2002 on the supervision of the
financial sector and on financial services, as amended
by the Law of June 27, 2016, which entered into force
on July 3, 2016. During 2017, UCB reviewed the
Dealing Code and updated it to reflect this legislation
and to include considerations relating to ethics in
accordance with our Patient Value Strategy. In 2019,
some practicalities have been updated in the Dealing
Code.
The Dealing Code includes rules for Directors,
executive management and key employees which
prohibit the dealing in UCB shares or other financial
instruments related to the UCB share for a designated
period preceding the announcement of its financial
results (so-called “closed periods”). It further prohibits
trading in UCB shares or other related securities for
persons who are, or may soon be, in possession of
inside information.
The Board has appointed the Group General Counsel
(Bill Silbey) and the Group Secretary General (Xavier
Michel) as Insider Trading Compliance Officers, whose
duties and responsibilities are defined in the Dealing
Code.
In accordance with the Dealing Code, the Company
has further established the list of Persons Discharging
Managerial Responsibilities (Directors and members
of the Executive Committee) and the list of key
employees, who must inform and obtain prior
clearance from the Insider Trading Compliance
Officer(s) for the transactions on UCB shares and
related securities they intend to make for their own
account. Dealings in the Company securities by the
Persons Discharging Managerial Responsibilities as
well as the Persons closely associated therewith also
need to be reported to the Financial Services and
Market Authority (FSMA), the Belgian market
supervisory authority. The procedure for such
reporting and the duties relating thereto are also
reflected in the UCB Dealing Code. The Dealing Code
is publicly available on the
UCB website
.
3.10 External audit
The mandate of the External Auditor, PwC
Bedrijfsrevisoren BCVBA / Réviseurs d’Entreprises
SCCRL (PwC), expired at the end of the General
Meeting of April 29, 2021. By application of the
European and Belgian mandatory rotation rules
applicable to External Auditors, PwC was no longer
eligible for re-election as External Auditor. As a result,
and following the rules and process required as per
the applicable European and Belgian legislation, the
audit firm Mazars Bedrijfsrevisoren – Réviseurs
d’Entreprises CVBA – Avenue du Boulevard 21, box 8,
1210 Saint-Josse-ten-Noode (Brussels) – Belgium
(“Mazars”), currently represented by Mr. Anton
Nuttens, was appointed by the General Meeting of
April 29, 2021 for a mandate of 3 years (legal term).
This mandate is renewable.
Mazars has been appointed as External Auditor in all
affiliates of the UCB Group worldwide.
The 2021 fees paid by UCB to its External Auditors
amounted to:
3.11
Information requested under article 34 of
the Royal Decree of November 14, 2007
3.11.1 UCB’s capital structure, with an indication of
the different classes of shares and, for each class of
shares, the rights and obligations attached to it and
the percentage of total share capital that it represents
on December 31, 2021
As from March 13, 2014, the share capital of UCB
amounts to € 583 516 974, represented by 194 505
658 shares of no-par value, fully paid up. All UCB
shares are entitled to the same rights.
There are no different classes of UCB shares (see
section 3.2.2).
3.11.2 Restrictions, either legal or prescribed by the
Articles of Association, on the transfer of securities
Restrictions on the transfer of securities only apply to
shares that have not been fully paid up according to
article 11 of UCB’s Articles of Association (the “
Articles
of Association
”) as follows:
(“…)
B) any shareholder holding shares not fully paid who
wishes to transfer all or part of his shareholding,
should notify his intention by registered letter to the
Board of Directors, indicating the name of the
candidate to be approved, the number of shares
offered for sale, the price and the proposed terms of
sale.
The Board of Directors may, by registered letter,
oppose this sale within a month of such notification,
by presenting another candidate as purchaser to the
selling shareholder. The candidate proposed by the
Board will have a right of pre-emption on the shares
offered for sale, unless the proposed seller withdraws
from the sale within 15 days.
The right of pre-emption will be exercisable at a unit
price corresponding to the lower of the two following
amounts:
●
The average closing price of a UCB ordinary share
on the “continuous trading market” of Euronext
Brussels in the 30 stock exchange working days
preceding the notification under the preceding
paragraph, reduced by the amount still to be paid
up;
●
The unit price offered by the third-party proposed
for approval.
The above-mentioned notification by the Board of
Directors shall be taken as notification of the exercise
of the right of pre- emption in the name and for the
account of the purchasing candidate presented by the
Board. The price will be payable within the month of
this notification without prejudice to any more
favorable conditions offered by the third-party
presented for approval.
C) if the Board does not reply within the period of a
month from notification set out in the first paragraph
of subsection b) above, the sale may take place on
conditions no less favorable than those set out in the
above-mentioned notification for the benefit of the
candidate presented for approval.
(...”)
To date, the capital of UCB is fully paid up.
3.11.3 Holders of any securities with special control
rights and a description of those rights
There are no such securities.
3.11.4 System of control of any employee share
scheme where the control rights are not exercised
directly by the employees
There is no such system.
3.11.5 Restrictions, either legal or prescribed by the
Articles of Association, on the exercise of voting rights
The existing UCB shares entitle holders thereof to vote
at the General Meeting.
According to article 38 of the
Articles of Association
,
the following restrictions apply:
“Each share gives the right to one vote. Any person or
entity who acquires or subscribes to beneficial
ownership in shares, whether registered or not, in the
capital of the Company, conferring a right to vote, will
be obliged to declare within the period required by
law, the number of shares purchased or subscribed
for, together with the total number of shares held,
when such number in total exceeds a proportion of 3%
of the total voting rights exercisable, before any
possible reduction, at a General Meeting. The same
procedure will have to be followed each time that the
person obliged to make the initial declaration
mentioned above increases his voting strength up to
5%, 7.5%, 10% and subsequently for each additional
5% of the total voting rights acquired as defined above
or when following the sale of shares, his voting rights
fall below one of the limits specified above. The same
notification requirements will apply to any
instrument, option, future, swap, interest term
agreement and other derivative granting its holder the
right to acquire existing securities carrying voting
rights pursuant to a formal agreement (i.e. an
agreement that is binding pursuant to the applicable
law) and only on the holders’ own initiative. In order
for the notification requirements to apply, the holder
must either have an unconditional right to acquire
existing securities carrying voting rights or be able to
make free use of its right to acquire them. A right to
acquire securities carrying voting rights is considered
to be unconditional if it depends merely on an event
that can be caused to happen or prevented from
happening by the holder of the right. These
notifications will occur according to the modalities
described in the legislation applicable to the
disclosure of large shareholdings in issuers whose
securities are admitted to trading on a regulated
market. Failure to respect this statutory requirement
will be able to be penalized in the manner laid down
in the applicable articles of the law of May 2, 2007 on
the disclosure of shareholdings in issuers whose
securities are admitted to trading on a regulated
market.
No-one may at a General Meeting cast a greater
number of votes than those relating to such shares as
he has, in accordance with the above paragraph,
declared himself to be holding, at least twenty days
before the date of the Meeting.”
The voting rights attached to UCB shares held by UCB
or by its direct or indirect subsidiaries as the case may
be, are, as a matter of law, suspended.
3.11.6 Agreements between shareholders which are
known to UCB and may result in restrictions on the
transfer of securities and/or the exercise of voting
rights
UCB has no knowledge of agreements which may
result in restrictions on the transfer of its securities
and/or the exercise of voting rights.
replacement of Board members
Under the
Articles of Association
:
“
The Company shall be managed by a Board of
Directors having at least three members, whether
shareholders or not, appointed by the general meeting
for a term ending at the latest at the end of the fourth
annual shareholders’ meeting following the date their
appointment has become effective. The General
Meeting can, at all times, end the mandate of each
director without any reason and with immediate
effect.
Outgoing Directors are eligible for re-election. The
period of office of outgoing Directors, who are not re-
appointed, ceases immediately on the closing of the
Ordinary General Meeting.
The General Meeting shall determine the fixed or
variable remuneration of the Directors and the value
of their attendance vouchers, to be charged to
operating expenses
."
The General Meeting decides by a simple majority of
votes on these matters.
The rules relating to the composition of the Board of
Directors are detailed in section 3.2 of the Charter as
follows:
Composition of the Board of Directors
”
The Board is of the opinion that a number of between
ten and fifteen members is appropriate for efficient
decision-making on the one hand, and contribution of
experience and knowledge from different fields on the
other hand. Such a number also allows for changes to
the Board’s composition to be managed without
undue disruption. This is way within the provisions of
the law and the Articles of Association of UCB from
which the Board shall be composed of at least three
members. The General Meeting of Shareholders
decides on the number of Directors, upon proposal of
the Board.
A large majority of the Board members are non-
executive Directors. The curricula vitae of the Directors
and directorship candidates are available for
consultation on UCB’s website (
). These
curricula vitae mention, for each Director, the
directorships in other listed companies
.”
Appointment of Directors (section 3.2.2 of the Charter)
“
The Directors are appointed by the General Meeting
of Shareholders, following a proposal by the Board,
and upon recommendation of the GNCC.
In proposing candidates at the General Meeting of
Shareholders, the Board takes particular account of
the following criteria:
●
a large majority of the Directors are non-executive
Board Members;
●
at least three non-executive Directors are
independent in accordance with the general legal
definition, the criteria set out in the 2020 Code,
and those adopted by the Board;
●
no single Director or group of Directors may
dominate decision-making;
●
the composition of the Board guarantees diversity
of skills, background, age and gender, and
contribution of experience, knowledge and ability
required for UCB’s specialist international
activities; and
●
candidates are fully available to carry out their
functions and do not take more than five
directorships in listed companies. Changes to their
other relevant commitments and their new
commitments outside the Company must be
reported to the Chair of the Board and the
Company Secretary as they arise.
The GNCC gathers information, allowing the Board to
ensure that the criteria set out above have been met
at the time of the appointments and renewals and
during the term of office.
For each new directorship appointment, the GNCC
performs an assessment of existing and required
abilities, knowledge and experience on the Board. The
profile of the ideal candidate is drawn up based on this
assessment and proposed to the Board for discussion
and definition
.
When the profile is established, the GNCC selects
candidates that fit the profile in consultation with the
Board members (including the Chair of the Executive
Committee) and possibly using a recruitment firm.
Recommendation of final candidates is made by the
GNCC to the Board. When making such
recommendation, relevant information is provided to
the Board (such as curriculum vitae, assessment, a list
of the positions held and, if applicable, any necessary
information about the candidate’s independence).
The Board decides on the proposals to be submitted to
Shareholders' approval
.”
Duration of mandates and age limit
"
Directors are appointed by the General Meeting of
Shareholders for a maximum four-year term, and their
terms may be renewed.
Moreover, an age limit of seventy has been stipulated.
A director shall give up his/her current term the day of
the Annual General Meeting of Shareholders following
his/her 70th birthday. The Board may propose
exceptions to that rule
."
Procedure for appointment, renewal of terms
"
The process of appointment and re-election of
Directors is led by the GNCC, which makes
recommendation to the Board and strives to maintain
an optimum level of abilities and experience within
UCB and its Board.
The proposals for appointment, renewal, resignation
or possible retirement of a Director are examined by
the Board based on a recommendation from the
GNCC.
The GNCC assesses for each of the Directors who are
candidate for re-election at the next General Meeting
of Shareholders, their commitment and effectiveness
and makes recommendations to the Board regarding
their re-election. Special attention is given to the
evaluation of the Chair of the Board and the Chairs of
the Board committees.
The assessment is conducted by the Chair of the GNCC
and the Vice Chair of the Board or another member of
the GNCC, who have meetings with each of the
Directors in their capacity as a Director and, as the
case may be, as Chair or member of a Board
Committee. For the Chair of the Board and of the
GNCC, the assessment is conducted by the Vice Chair
of the Board and a senior independent Director. The
sessions are based on a questionnaire and cover the
Director’s role in the governance of the Company and
the effectiveness of the Board, and, amongst others,
how they evaluate their commitment, contribution
and constructive involvement in the discussions and
decision-making.
Feedback is given to the GNCC who then reports to the
Board and makes recommendations as to the
proposed re-election.
The Board submits to the General Meeting of
Shareholders its proposals concerning the
appointments and renewals of Directors. These
proposals are communicated to the General Meeting
of Shareholders as part of the agenda of the relevant
shareholders meeting.
The General Meeting of Shareholders resolves on each
proposed appointment of Directors separately and the
proposals of the Board in this area are resolved by a
majority of the votes.
In the event of a vacancy during a term, the Board is
empowered to fill the post and to allow its decision to
be ratified at the next General Meeting of
Shareholders.
The Board ensures that there is a succession planning
for Board members in place.
Proposals for appointment state whether or not the
candidate is proposed as an executive Director, define
the term proposed for the mandate (i.e., not more
than four years, in accordance with the Articles of
Association), and indicate the place where all useful
information in relation to the professional
qualifications of the candidate, in addition to the main
functions and directorships of the candidate, may be
obtained or consulted.
The Board also indicates whether the candidate meets
the independence criteria stipulated in the BCCA and
the 2020 Code, such as the fact that a Director, in order
to qualify as “independent” may not hold a mandate
for a total term of more than twelve years as a non-
executive Board member. The proposal will be
submitted to the General Meeting of Shareholders to
acknowledge such independent character.
These provisions also apply to proposals for
appointments proposals originating from
shareholders.
The proposals for appointment are available on UCB’s
website (
."
The
Charter
qualifies as independent if he or she has not had
business or other relations with the UCB group which
could compromise his/her independent judgement. In
the assessment of this criterion, significant status as
customer, supplier or shareholder of the UCB Group is
taken into consideration by the Board on an individual
basis.
3.11.7. B. Rules governing the amendment of UCB’s
Articles of Association
The rules governing the amendment of the Articles of
Association are set by the BCCA.
The decision to amend the Articles of Association has
to be made by a general meeting, provided that at
least 50% of the share capital of UCB is present or
represented at the meeting, in principle with a
majority of 75% of the votes cast.
If the attendance quorum is not met at the first
Extraordinary General Meeting, a second General
Meeting can be convened and will decide without any
attendance quorum having to be reached.
In exceptional circumstances (for example
amendment of the object of the company, changing of
rights of securities), additional attendance and voting
requirements may be applicable.
3.11.8 Powers of the Board of Directors, in particular
to issue or buy back shares
Powers of the Board of Directors
The Board is UCB’s governing body. It has the power
to take decisions on all matters which the law does not
expressly attribute to the general meeting of
shareholders.
The Board has kept responsibility for certain key areas
for itself and has delegated the remainder of its
powers to an Executive Committee (further detailed in
the
Charter
). In all matters for which it has exclusive
responsibility, the Board works in close cooperation
with the Executive Committee, which in particular is
responsible for preparing most of the proposals for
decisions by the Board.
The Board’s authorizations to issue or buy back
shares
The Extraordinary General Meeting of April 30, 2020
decided to renew (i) the authorization of the Board
(and to amend the Articles of Association accordingly),
for another period of 2 years, to increase the share
capital, amongst other by way of the issuance of
shares, convertible bonds or warrants, in one or more
transactions, within the limits and under the
conditions as set out above under section 3.2.4
Authorized capital, and (ii) the authorization of the
Board, for another period of 2 years starting on July 1,
2020 and expiring on June 30, 2022, to acquire,
directly or indirectly, whether on or outside of the
stock exchange, by way of purchase, exchange,
contribution or any other way, up to 10% of the total
number of Company’s shares as calculated on the date
of each acquisition, within the limits and under the
conditions as set out above under 3.2.3 Treasury
shares. The previous authorization of the Board
granted by the Extraordinary General Meeting of April
26, 2018 remained valid until June 30, 2020 (see also
section 3.2.3 and 3.2.4 above).
3.11.9 Significant agreements to which UCB is a party
and which take effect, alter or terminate upon a
change of control of UCB following a takeover bid, and
the effects thereof, except where their nature is such
that their disclosure would be seriously prejudicial to
UCB; this exception shall not apply where UCB is
specifically obliged to disclose such information on the
basis of other legal requirements
●
Facility agreement in the amount of € 1 billion
between, amongst others, UCB SA/NV, BNP
Paribas Fortis SA/NV, Commerzbank
Aktiengesellschaft, Filiale Luxemburg, ING
Belgium SA/NV and Mizuho Bank Europe N.V. as
coordinating bookrunners, Banco Santander, S.A.,
Paris Branch, Bank of America Merrill Lynch
International Limited, The Bank of Tokyo-
Mitsubishi UFJ, Ltd., Paris Branch, Barclays Bank
PLC, BNP Paribas Fortis SA/NV, Commerzbank
Aktiengesellschaft, filiale Luxemburg, Crédit
Agricole Corporate and Investment Bank, Belgian
Branch, ING Belgium SA/NV, Intesa SanPaolo Bank
Luxembourg S.A, Amsterdam branch, KBC Bank
NV, Mizuho Bank Europe N.V., Sumitomo Mitsui
Banking Corporation and The Royal Bank of
Scotland PLC, as mandated lead arrangers, and
Wells Fargo Bank International Unlimited
Company as lead arranger, dated November 14,
2009 (as amended and restated on November 30,
2010, on October 7, 2011, on January 9, 2014, on
January 9, 2018, on December 5, 2019 and for the
last time on December 3, 2021), which change of
control clause was last approved by the General
Meeting of April 29, 2021, according to which any
and all of the lenders can, in certain
circumstances, cancel their commitments and
require repayment of their participations in the
loans, together with accrued interests and all
other amounts accrued and outstanding
thereunder, following a change of control of UCB
SA/NV.
●
Euro Medium Term Note Program dated March 6,
2013, with last update of the base prospectus per
March 8, 2021, for an amount of up to € 5 billion
(the “EMTN Program”), providing for a change of
control clause (condition 5 (e) (i)) under which, for
any Notes issued thereunder where a change of
control put clause is included in the relevant final
terms, any holder of such Note and following a
change of control of UCB SA/NV, has a right to
redeem that Note by exercising such put right. The
following notes have been issued under the EMTN
Program by UCB SA/NV and are/were subject to
the above described change of control clause:
●
Private placement bond 1.000% due October 1,
2027 in the amount of € 150 million issued on
October 1, 2020;
●
Institutional bond 1.000% due March 30, 2028 in
the amount of € 500 million issued on March 30,
2021.
Pursuant to article 7:151 of the BCCA, the above
described change of control clause provided for in the
EMTN Program of March 6, 2013 has been approved
by the General Meetings of April 25, 2013, April 24,
2014, April 30, 2015, April 28, 2016, April 27, 2017,
April 26, 2018, April 25, 2019, April 30, 2020 and April
29, 2021 in respect of any series of Notes to be issued
under the EMTN Program within the 12 months
following such respective General Meetings and to
which such change of control has been made
applicable. A similar approval pursuant to article 7:151
of the BCCA will be submitted to the
General Meeting
of April 28, 2022 in respect of any series of Notes to
be issued under the EMTN Program from April 28,
2022 until April 27, 2023, if any, and to which, as the
case may be, such change of control would be made
applicable.
●
Senior unsecured retail bonds of UCB SA/NV
issued on October 2, 2013 and maturing October
2, 2023 in the amount of € 175 717 000 bearing a
5.125% fixed rate, and which states that in case of
change of control (as defined in the terms and
conditions of the offering) the bondholders have
the right to require the issuer to redeem such
bonds. This change of control clause was
approved at the general meeting of April 24, 2014.
●
Facility agreement in the amount of € 75
million/US$ 100 million between UCB SA/NV as
borrower and the EIB, dated June 16, 2014, as
amended and restated on October 20, 2016 with
effect as of October 21, 2016, of which the change
of control clause was approved by the General
Meeting of April 24, 2014, and whereby the loan,
together with accrued interests and all other
amounts accrued and outstanding thereunder,
could in certain circumstances become
immediately due and payable – at the discretion
of the EIB – following a change of control of UCB
SA/NV.
●
Facility agreement in the amount of € 350 million
between UCB SA/NV as borrower and the EIB and
of which the change of control clause will be
submitted to the General Meeting of April 28,
2022, and whereby the loan, together with
accrued interests and all other amounts accrued
and outstanding thereunder, could in certain
circumstances become immediately due and
payable – at the discretion of the EIB – following a
change of control of UCB SA/NV.
●
A term facility agreement in the amount of US$ 2
070 million between, amongst others, UCB SA/NV
and UCB Biopharma SRL, as borrowers, and BNP
Paribas Fortis SA/NV and Bank of America Merrill
Lynch International Designated Activity Company
as bookrunners dated October 10, 2019 with a
change of control clause, under which any and all
of the lenders can, in certain circumstances,
cancel their commitments and require repayment
of their participations in the loans, together with
accrued interests and all other amounts accrued
and outstanding thereunder, following a change
of control of UCB SA/NV. The
General Meeting
of
April 30, 2020 has approved this change of control
clause in accordance with article 7:151 of the
BCCA.
●
A term facility agreement in the amount of US$
800 million between, amongst others, UCB SA/NV
and UCB Biopharma SRL, as borrowers, and BNP
Paribas Fortis SA/NV and Barclays Bank PLC as
bookrunners dated January 19, 2022 with a
change of control clause, under which any and all
of the lenders can, in certain circumstances,
cancel their commitments and require repayment
of their participations in the loans, together with
accrued interests and all other amounts accrued
and outstanding thereunder, following a change
of control of UCB SA/NV, and of which the change
of control clause will be submitted to the General
Meeting of April 28, 2022 in accordance with
article 7:151 of the BCCA
●
The UCB stock awards and performance share
plans by which UCB shares are granted annually
by UCB to certain employees according to grade
and performance criteria, vest according to the
rules of both plans after three years, upon
condition that its beneficiary remains in
continuous employment with the UCB group.
They also vest upon change of control or merger.
The General Meeting of April 25, 2019 has
approved this change of control clause in all
existing and future UCB LTI plans. On December
31, 2021, the following number of stock awards
and performance shares are outstanding:
●
2 408 788 Stock awards, of which 745 489 will vest
in 2022;
●
491 938 Performance shares, of which 116 163
will vest in 2022.
The change of control clauses in the Executive
Committee members’ contracts, as further described
in the
3.11.10 Agreements between UCB and its Board
members or employees providing for compensation if
the Board members resign or are made redundant
without valid reason or if the employment of the
employees ceases because of a takeover bid
For more details, see the
termination arrangements for the CEO and members
of the Executive Committee. No other agreements
provide for a specific compensation of Board
members in case of termination because of a takeover
bid.
In addition to the Executive Committee members
identified in section 3.7, at the end of 2021 only two
employees outside the U.S. benefited from a change
of control clause that guarantees their termination
compensation if their employment is terminated
following a public takeover bid.
3
.12 Conflicts of interest – Application of article
7:96 of the Belgian Code of Companies and
Associations
EXCERPT FROM THE MINUTES OF THE MEETING OF
THE BOARD HELD ON FEBRUARY 24, 202
Article 7:96 of the BCCA was applied by the Board of
February 24, 2021 in the context of the decisions
relating to the CEO remuneration, the performance
bonus and LTI grants (relevant excerpt from the
minutes of the meeting)
“(…)
Prior to any deliberation or decision by the Board of
Directors concerning the approval of the 2020 bonus
pay-out, the LTI vesting and the 2021 LTI plans,
metrics and grants, the approval of the CEO bonus
based on 2020 performance, the CEO 2021 base salary
and the CEO 2021 LTI grant (including stock options
and performance shares), J.-C. Tellier stated that he
had a direct financial interest in the implementation
of said decisions (items 5.3). In accordance with Art.
7:96 of the BCCA, he withdrew from the meeting of
the Board of Directors in order to not participate in the
deliberation and vote relating to these issues. The
Board of Directors established that Art. 7:96 of the
BCCA was applicable to these operations. J.-L. Fleurial
also left the videoconference before any deliberation
or decision on these issues.
5.1.1 Corporate Results 2020 bonus payout/LTI
award vesting and 2021 Targets
Decision
: After review, the Board unanimously
RESOLVED to approve the recommendations of the
Governance, Nomination and Compensation
Committee (‘GNCC’) relating to (i) the 2020 bonus
payout (Corporate Performance Multiplier or “CPM”)
based on the year end 2020 results (Adj. EBITDA), (ii)
the Adj. EBITDA target for 2021 bonus payout and (iii)
the metrics used for the Performance Share Plan
2021-2023 (payout 2024). It further endorsed the
vesting (and total payout) in 2021 relating to the 2018-
2020 Performance Share Plan as well as the stock
award vesting for the 2018-2020 plan (payout 2021).
5.1.2 UCB Long Term Incentives Grants in 2021
Decision:
Board unanimously RESOLVED to approve the
following Long-Term Incentive Plans and the main
terms and conditions thereof:
●
UCB stock option plan 2021
: Issue of 575 000
stock options, in principle on April 1, 2021 unless
exceptional circumstances, for approximately 476
employees (not taking into consideration
employees hired or promoted to eligible levels
between January 1, 2021 and April 1, 2021).
The exercise price of these options will be the
lower of (i) the average of the closing price over
the 30 calendar days preceding the offer (i.e. in
principle from March 1-31, 2021) or (ii) the closing
price of the day preceding the offer (in principle
March 31, 2021).
UCB will determine a different exercise price for
those eligible employees subject to legislation
which requires a different exercise price. Stock
options will have a vesting period of 3 years as of
the date of grant, except where local legal
regulations may differ.
●
Stock awards and Performance Shares (“PSP”)
grants 2021 – 2023
: Allocation of an initial amount
of 940 000 shares of which:
(i)
an estimated number of 750 000 shares
(stock awards) to eligible employees,
namely to about 2 323 employees,
according to the applicable allocation
criteria. These free shares will be
allocated if and when the eligible
employees remain in continuous
employment with the UCB Group until the
3 years anniversary of the grant of
awards;
(ii)
an estimated number of 190 000 shares to
Upper Management employees for the
Performance Share Plan 2021, namely to
about 143 individuals, according to the
applicable allocation criteria. These free
shares will be delivered if and when the
eligible employees remain in continuous
employment with the UCB Group until the
3 years anniversary of the grant and the
number of shares actually allocated will
vary from 0% to 150% of the number of
shares initially granted depending on the
level of achievement of the performance
conditions set by the Board of UCB SA/NV
prior to the moment of the grant;
The estimated figures under (i) and (ii) do not take
into account employees hired or promoted to
eligible levels between January 1, 2021 and April
1, 2021.
●
It was acknowledged that the financial impact for
the Company of the granting of options is linked
to the difference between the acquisition cost of
own shares by the Company (or the share price at
vesting date for cash settled plans) on the one
hand and the strike price of the options paid to the
Company by the beneficiary upon exercise of the
options on the other hand. For the stock awards
and the PSP, the financial impact corresponds to
the value of the UCB shares at the time of
acquisition by the Company in view of delivery, or
at the time of vesting for cash settled plans.
●
The Board further decided to delegate all powers
to the Head of Talent & Company Reputation,
acting alone and with faculty of sub-delegation, to
do whatever is necessary, required or useful to
execute, roll-out and implement the above
decisions, including the finalization of all required
documentation, the actual grant decision, the
final terms and conditions and modalities of the
plans and incentives (Stock options, Stock awards
and performance share plans).
5.1.3 CEO compensation and LTI
Decision:
Upon recommendation of the GNCC, the
Board unanimously approved the following
compensation for the CEO performance:
●
CEO base salary as of March 1, 2021: € 1 177 530
(against € 1 143 233 as from March 1, 2020);
●
CEO bonus pay-out 2021 (performance 2020):
€ 1 508 484.
●
CEO LTI 2021:
●
stock options: 30 490 (3 years and 9 months
vesting);
●
performance shares: 24 332 (3-years vesting).
Financials
2021 Full-Year Financial Report
Brussels, 24 February 2022
1.
Business performance review
1.1 Key highlights
Ø
I
n 2021
Revenue
constant exchange rates (CER)).
Net sales
continued growth up to € 5 471 million by 8% (+11% CER).
Royalty income and fees were € 79 million, other revenue €
227 million.
Ø
Adjusted EBITDA
Driven by higher revenue, higher marketing and selling –
due to upcoming launches – slightly higher research and
development expenses – thanks to the pipeline progress –
and a strong increase in other operating earnings due to the
Amgen partnering contribution.
Ø
Profit
of 39% (+51% CER).
Ø
Core earnings per share
based on an average of 189 million shares outstanding.
Actual
1
Variance
€ million
2021
2020
Actual rates
CER
2
Revenue
5 777
5 347
8%
10%
Net sales
5 471
5 052
8%
11%
Royalty income and fees
-18%
-15%
Other revenue
14%
14%
Gross Profit
4 339
3 984
9%
12%
Marketing and selling expenses
-1 346
-1 221
10%
13%
Research and development expenses
-1 629
-1 569
4%
4%
General and administrative expenses
- 208
- 196
6%
6%
Other operating income/expenses (-)
70%
76%
Adjusted EBIT
1 318
1 093
21%
30%
Impairment, restructuring and other income/expenses (-)
- 34
- 122
-72%
-72%
EBIT (operating profit)
1 284
32%
43%
Net financial expenses
- 58
- 93
-37%
-37%
Share of profit/loss (-) of associates
0
-100%
-100%
Profit before income taxes
1 226
39%
51%
Income tax expenses
- 170
- 119
43%
50%
Profit from continuing operations
1 056
39%
51%
Profit/loss (-) from discontinued operations
0
N/A
N/A
Profit
1 058
39%
51%
Attributable to UCB shareholders
1 058
45%
52%
Attributable to non-controlling interests
0
-100%
-100%
Adjusted EBITDA
1 641
1 441
14%
21%
Capital expenditure (including intangible assets)
41%
Net financial cash / debt (-)
- 860
-1 411
-39%
Operating cash flow from continuing operations
1 553
1 081
44%
Weighted average number of shares – non diluted (million)
0%
EPS (€ per weighted average number of shares – non diluted)
5.60
3.87
45%
52%
Core EPS (€ per weighted average number of shares – non diluted)
6.49
5.36
21%
26%
1.
Due to rounding, some financial data may not add up in the tables included in this management report
2.
CER: constant exchange rates and excluding hedging
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
143
This Business Performance Review is based on the consolidated
financial statements for the UCB Group of companies prepared
in accordance with IFRS. The separate statutory financial
statements of UCB SA prepared in accordance with Belgian
Generally Accepted Accounting Principles, together with the
report of the Board of Directors to the General Assembly of
Shareholders, as well as the auditors’ report, will be filed at the
National Bank of Belgium within the statutory periods, and be
available on request or on our website.
Scope change
: As a result of the divestment of the activities
Films (September 2004) and Surface Specialties (February 2005),
UCB reports the results from those activities as a part of profit
from discontinued operations.
Restructuring, impairment and other income / expenses (-):
Transactions and decisions of a one-time nature that affect
UCB’s results are shown separately (“restructuring, impairment
and other income/expenses” items).
Besides EBIT (earnings before interest and taxes or operating
profit), a line for “
adjusted EBIT
” (underlying operating profit),
reflecting the ongoing profitability of the company’s
biopharmaceutical activities, is included. The adjusted EBIT is
equal to the line “operating profit before impairment,
restructuring and other income and expenses” reported in the
consolidated financial statements.
Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation
and Amortization charges) is the operating profit adjusted for
amortization, depreciation, impairment charges, restructuring
expenses and other income and expenses.
Core EPS
shareholders, adjusted for the after-tax impact of restructuring,
impairment, other income/expense items, the financial one-offs,
the after-tax contribution from discontinued operations and the
after-tax amortization of intangibles linked to sales, per non-
dilutive weighted average number of shares.
1.2 Key events
1
Impact of COVID-19 pandemic
Sustainability is our approach for business growth and societal
impact. Our purpose is to create value for patients now and into
the future. Our Patient Value Strategy is to deliver unique
outcomes, best experiences and access for all the patients who
need our medicines. To fulfil our ambition for patients we must
create the right conditions and enable health for employees and
the communities in which we operate, our planet and our
shareholders.
Despite the resilience and the exceptional endurance fighting
this unprecedented healthcare crisis, UCB remains vigilant and
puts its energy to support partners in society and patient
communities. Hence, UCB is prioritizing its assistance to
employees, patients, and communities. These initiatives did not
have a material impact on UCB’s financial situation.
UCB will continue to put measures in place to protect the health
of its employees and stakeholders worldwide, especially its
patients, while remaining focused on ensuring business critical
activities are properly maintained.
For the current impact on financial performance, financial
position and cash-flows (liquidity position and liquidity risk
management strategy), impact on revenues, we refer to Note 2
of this financial report.
As the expected future impact of the COVID-19 pandemic on
UCB’s financial performance, financial position and cash-flows is
assessed as being low, no special or additional contingency
measures are planned to mitigate the expected future impact of
this pandemic.
UCB’s existing risk management processes are comprehensive
and therefore no material unaddressed risks or uncertainties
were identified compared to the ones mentioned in the Risk
Management section of this Integrated Annual Report.
There were several key events that have affected or will affect
UCB financially.
Important agreements / initiatives
As part of UCB’s digital business transformation, UCB engaged in
two major projects at the beginning of this year:
In January 2021
Inc., a new independent company created to improve care for
people living with epilepsy, their caregivers, and healthcare
providers (HCPs). Nile is developing an epilepsy -care
management platform that serves as a digital extension of HCPs
with the goal of shortening the path to optimal care. UCB’s € 25
million (US$ 29.3 million) investment is part of UCB’s overall
commitment to improving the lives of people living with severe
diseases, including epilepsy, as digital technologies continue to
change and impact the way healthcare is delivered.
In February 2021
, UCB and Microsoft announced a new multi-
year, strategic collaboration to combine Microsoft’s
computational services, cloud, and artificial intelligence (AI) with
UCB’s drug discovery and development capabilities. As several
drug discovery activities require the analysis of high-dimensional
data sets or multi-modal unstructured information, Microsoft’s
platform can support UCB’s scientists, including its data
scientists, to discover new medicines in a more efficient and
innovative way. This combination of cutting-edge science,
computing power, and AI algorithms aims to significantly
accelerate the iteration cycles required to explore a vast
chemical space to test many hypotheses and identify more
effective molecules. The collaboration plans to extend this
model and identify other areas where computing power, AI, and
science can accelerate the development of life changing
therapies for people living with severe diseases in immunology
and neurology.
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
144
In September 2021
, UCB embarked on a partnership with CEVEC
to evaluate and gain access to their ELEVECTA® technology,
which may enable UCB to develop a scalable, robust and
efficient manufacturing of gene therapy vectors.
In October 2021
, UCB announced the strategic out-licensing of
Artificial Intelligence (AI)-based fracture identification
technology, BoneBot, to ImageBiopsy Lab, Vienna, Austria,
demonstrating UCB’s ongoing commitment to a world free of
fragility fractures. The radiology AI solution will screen
computed tomography (CT) scans to detect the presence of
“silent” or asymptomatic fractures in the spine which can
otherwise go unrecognized and unreported and is expected to
reach clinical practice by 2023.
In November 2021,
signed an agreement granting Chiesi a worldwide exclusive
license to develop, commercialize, and manufacture zampilimab,
a clinical stage investigational transglutaminase 2 inhibitor with
the potential to be an anti-remodeling agent in fibrotic diseases
such as idiopathic pulmonary fibrosis. UCB received an upfront
payment and is eligible to receive future milestone payments
and royalties.
In December 2021,
development and co-commercialization agreement covering
UCB0599, a potential first in class, small molecule, alpha-
synuclein misfolding inhibitor currently in Phase 2 clinical
development, and upon completion of the ongoing Phase 1
program, an opt-in to co-develop UCB7853, an anti-alpha-
synuclein antibody, both in Parkinson’s disease. These are two
innovative and potentially disease-modifying investigational
assets. UCB received an upfront payment of US$ 150 million and
is eligible to receive further milestone payments with a total
potential consideration approaching US$ 1.5 billion.
In January 2022
, UCB and Zogenix, Inc. announced that the
companies have entered into a definitive agreement under
which UCB would acquire Zogenix. This proposed acquisition
broadens and builds upon UCB’s continued epilepsy ambitions.
The proposed acquisition includes the treatment option
FINTEPLA
®
, complementing UCB’s existing treatment offerings,
bringing value to patients suffering from Dravet syndrome and,
if approved, from seizures associated with Lennox-Gastaut
syndrome and potentially other rare epilepsies. FINTEPLA
®
been approved in the U.S. and Europe and is under regulatory
review in Japan for the treatment of seizures associated with
Dravet syndrome in patients two years of age and older.
Under the terms of the agreement, UCB commenced a tender
offer to purchase all outstanding shares of Zogenix for a
purchase price per share of US$ 26.00 in cash at closing, plus a
contingent value right (CVR) for a potential cash payment of US$
2.00 upon EU approval by December 31, 2023, of FINTEPLA
®
an orphan medicine for treatment of Lennox-Gastaut syndrome.
The upfront consideration represented at the announcement a
72% premium to Zogenix shares based on the 30-day volume
weighted average closing stock price of Zogenix prior to signing.
The total transaction is valued at up to approximately US$ 1.9
billion / € 1.7 billion.
The closing of the tender offer will be subject to certain
conditions, including the tender of shares representing at least a
majority of the total number of Zogenix’s outstanding shares,
receipt of required antitrust clearances, and other customary
conditions. The transaction is expected to close by the end of
the second quarter of 2022.
Regulatory update
In August 2021,
authorization for BIMZELX
®
bimekizumab
) for the treatment of
moderate to severe plaque psoriasis in adults who are
candidates for systemic therapy.
In August, BIMZELX
®
Great Britain.
In January 2022
, the Japanese Ministry of Health, Labor and
Welfare granted marketing authorization for BIMZELX
®
treatment of plaque psoriasis, generalized pustular psoriasis and
psoriatic erythroderma in patients who are not sufficiently
responding to existing treatments.
In February 2022
, Health Canada, granted approval for
BIMZELX® (bimekizumab injection) for the treatment of
moderate to severe plaque psoriasis in adults who are
candidates for systemic therapy or phototherapy.
Regulatory reviews are also underway in Australia, Switzerland,
and the U.S.
On October 15, 2021
, the U.S. Food and Drug
Administration (U.S. FDA) deferred the Prescription Drug User
Fee Act (PDUFA) date for BIMZELX®. The Agency determined
that on-site inspections of the European manufacturing facilities
are required before the U.S. FDA can approve the application.
The U.S. FDA indicated that they were unable to conduct the
inspections during the current review cycle due to COVID -19-
related restrictions on travel. Therefore, the U.S. FDA is
deferring action on the application until the inspections can be
completed. UCB is expecting an U.S. FDA decision during the first
half of 2022.
In August 2021
, BRIVIACT
®
monotherapy or adjunctive therapy for the treatment of partial-
onset seizures in patients one month of age and older.
In October 2021
, VIMPAT
®
treatment of partial-onset seizures in patients one month of age
and older.
In January 2022
, both, BRIVIACT
®
brivaracetam
) and VIMPAT
®
(
lacosamide
) received positive
Committee for Medicinal
Products for Human Use (CHMP) opinions for the EU on use for
the treatment of focal epileptic seizures in children 2 to 4 years
of age.
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
145
Clinical Development Pipeline Progress
The updated timelines for UCB’s clinical development program,
also reflecting regulatory update and pipeline progress from
January 1, 2021 up to the publication of date of this report, are
shown below. In 2021 and thanks to the pro-active measures
taken by UCB, the timelines for UCB’s clinical development
program have not experienced any material delays due to
COVID-19. UCB continues to monitor the impact of COVID-19 on
all ongoing clinical trials and will implement changes as
necessary.
In an unprecedented string of events, UCB announced positive
topline results of six Phase 3 readouts towards the end of 2021
and early 2022:
1. Positive results for bimekizumab in psoriatic arthritis (biologic
disease-modifying anti-rheumatic drug naïve patients),
2. Positive results for rozanolixizumab in generalized myasthenia
gravis,
3. Positive results for bimekizumab in radiographic axial
spondyloarthritis (also known as ankylosing spondylitis),
4. Positive results for bimekizumab in non-radiographic axial
spondyloarthritis,
5. Positive results for bimekizumab in psoriatic arthritis
(inadequate responders or intolerant to anti-TNF treatment),
6. Positive results for zilucoplan in generalized myasthenia
gravis.
UCB plans to submit regulatory applications in U.S. and Europe
for all listed above indications in Q3 2022, with further
applications in additional regions to follow.
BIMZELX
®
●
Psoriatic arthritis
UCB published positive topline results for its two Phase 3 studies
in active psoriatic arthritis, namely BE OPTIMAL (biologic
disease-modifying anti-rheumatic drug naïve patients; top-line
interim analysis) and BE COMPLETE (patients who are
inadequate responders or intolerant to TNF inhibitor treatment).
Both studies evaluated the efficacy and safety of bimekizumab in
the treatment of adults with active psoriatic arthritis vs. placebo
and met the primary and all ranked secondary endpoints with
statistically significant and clinically meaningful results.
●
Radiographic (ankylosing spondylitis) and non-
radiographic axial spondyloarthritis
UCB published positive topline results of two Phase 3 studies
evaluating bimekizumab across the full spectrum of axial
spondyloarthritis (axSpA) disease, which includes both active
radiographic (also known as ankylosing spondylitis or AS) and
active non-radiographic (nr)-axSpA. Both studies met the
primary and all ranked secondary endpoints with statistically
significant and clinically meaningful results, supporting that
bimekizumab improved outcomes in patients across the full
disease spectrum of axSpA.
The safety profile of bimekizumab was consistent with safety
findings seen in previous studies with no new observed safety
signals. The safety and efficacy of bimekizumab in active
psoriatic arthritis, active radiographic (ankylosing spondylitis)
and active non-radiographic axial spondyloarthritis have not
been established, and it is not approved for use in these
indications by any regulatory authority worldwide.
Rozanolixizumab -
generalized myasthenia gravis (gMG)
UCB announced positive topline results from the Phase 3
MycarinG study evaluating rozanolixizumab, a subcutaneously
infused monoclonal antibody targeting the neonatal Fc receptor
(FcRn), versus placebo in adults with gMG. The study met
primary and all secondary endpoints with statistical significance.
Rozanolixizumab was well-tolerated with no new observed
safety signals.
Zilucoplan
UCB announced positive topline results from the RAISE trial
evaluating its investigational treatment zilucoplan, a self-
administered, subcutaneous peptide inhibitor of complement
component 5 (C5 inhibitor), versus placebo in adults with gMG.
The study met primary and all key secondary endpoints with
statistical significance. Zilucoplan was well-tolerated with no
new observed safety signals.
The safety and efficacy of both investigational drugs have not
been established, and they are not approved for use in gMG by
any regulatory authority worldwide.
Other BIMZELX
®
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
146
The ongoing Phase 3 program in moderate to severe hidradenitis
suppurativa (HS), a chronic, inflammatory, and debilitating
follicular skin disease, showed an unprecedented, accelerated
patient recruitment, hence, the first topline results are now
projected for H2 2022.
Other rozanolixizumab indications
Maintaining UCB’s focus on autoantibody-mediated
neuroinflammation, UCB announced investigating two additional
patient populations using its rozanolixizumab platform:
(i) people living with autoimmune encephalitis (AIE) – a rare and
serious medical condition, in which the immune system attacks
the brain – leading to epileptic seizures, movement disorders as
well as cognitive decline in some patients. There is no therapy
approved for AIE. The phase 2a study in AIE started in Q3 2021;
first topline results are expected in H1 2024.
(ii) people living with myelin oligodendrocyte glycoprotein
(MOG)-antibody disease – a rare autoimmune inflammatory
demyelinating disorder of the central nervous system caused by
autoantibodies that target the MOG protein – leading to
temporal functional blindness, muscle weakness, bladder
dysfunction, sensory loss, and/or pain. There is no approved
therapy for MOG-antibody disease. The Phase 3 study started in
Q4 2021; first topline results are expected H2 2024.
UCB decided to de-prioritize the development of
rozanolixizumab in chronic inflammatory demyelinating
polyneuropathy (CIDP) which represents a heterogenous and
complex patient population, with only approximately 30% of
patients having detectable autoantibodies. Following this
strategic decision, results of the phase 2a study will be
presented during an upcoming scientific meeting.
Other zilucoplan indications
Zilucoplan was tested in a proof of concept (phase 2a) study in
immune-mediated necrotizing myopathy (IMNM): The results of
this study indicate that zilucoplan is safe, but complement
activation is not relevant in the disease biology of IMNM. Hence,
UCB decided to not move forward with its IMNM development
program. The results in IMNM do not affect UCB’s confidence in
zilucoplan in other indications with complement activation as a
key disease mechanism. UCB presented this data in 2021 to
inform future IMNM research and to contribute towards better
understanding of the disease pathogenesis.
Bepranemab (UCB0107)
Bepranemab is a recombinant, humanized, full-length
immunoglobulin G4 monoclonal anti-tau antibody, targeting
mid-domain tau, which is currently under clinical investigation in
Alzheimer’s disease (AD) in partnership with Roche/Genentech.
The efficacy, safety and tolerability of bepranemab is currently
under investigation in early AD in a Phase 2 study, which started
in Q2 2021. First topline results are expected in H1 2025.
UCB0599
In collaboration with UCB's new partner Novartis a phase 2a
study with UCB0599 for study participants with early-stage
Parkinson’s disease (PD) started, first topline results are
expected in H2 2023.
UCB0599 is an orally bioavailable and brain-barrier-penetrant
small molecule that prevents the pathological misfolding and
accumulation of alpha-synuclein, a protein which plays a key
role in PD pathology. By inhibiting these disease-causing
processes of alpha-synuclein, it is believed that the progression
of PD can be slowed or halted. UCB0599 belongs to a series of
molecules discovered by Neuropore, which were in-licensed by
UCB in 2014.
STACCATO
®
STACCATO
®
combination using STACCATO
®
alprazolam, a benzodiazepine, that has the potential to be the
first rescue treatment to be administered by a patient or
caregiver in an out-patient setting to rapidly terminate (within
90 seconds) an ongoing seizure. The STACCATO
®
small, hand-held inhaler that rapidly vaporizes alprazolam to
form an aerosol, with particle size designed for deep lung
delivery to produce a rapid, systemic effect. The Phase 3 trial to
assess the efficacy and safety of STACCATO
®
participants with stereotypical prolonged seizures started in Q4
2021 and topline results are expected in H1 2024.
All other clinical development programs are continuing as
planned.
1.
From 1 January 2021 up to the publication of date of this report
1.3 Net sales by product
Total net sales
for divestiture).
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
147
The growth in 2021 was driven by the continuous growth of UCB’s product portfolio and was also supported by a change in the
distribution model for E KEPPRA
®
One product was added to the UCB portfolio: In September, UCB launched
BIMZELX
®
(
bimekizumab
)
to severe plaque psoriasis in Germany, followed by the U.K., Sweden and later the Netherlands.
Actual
Variance
€ million
2021
2020
Actual rates
CER
CIMZIA®
1 841
1 799
2%
5%
VIMPAT®
1 549
1 451
7%
10%
KEPPRA® (including KEPPRA® XR / E KEPPRA®)
23%
27%
BRIVIACT®
23%
27%
NEUPRO®
-1%
0%
NAYZILAM®
>100%
>100%
EVENITY®
>100%
>100%
BIMZELX®
0
N/A
N/A
Established brands
-10%
-7%
Net sales before hedging
5 414
5 023
8%
11%
Designated hedges reclassified to net sales
98%
Total net sales
5 471
5 052
8%
11%
Core products
CIMZIA
®
certolizumab pegol
),
with inflammatory TNF mediated diseases with net sales
reaching € 1 841 million (+2%; +5% CER), showing a stronger
growth than the anti-TNF market – driven by continued growth
in the U.S. (despite a reimbursement decrease,
overcompensated by a volume increase ) and a slight decline in
Europe, reflecting the mandated price decrease in Germany
partly compensated with volume growth, and a strong growth in
international markets.
VIMPAT
®
(
lacosamide
)
was accessed by over 800 000 people
living with epilepsy and showed strong growth in all regions,
despite the pandemic. Net sales went up to € 1 549 million (+7%;
+10% CER), reaching the peak sales ambition of at least € 1.5bn,
ahead of the loss of exclusivity in 2022 in the U.S. and Europe.
KEPPRA
®
(
levetiracetam
)
, reached more than 2 million people
living with epilepsy and reported net sales of € 970 million
(+23%; +27% CER). The continued generic erosion in the U.S. and
Europe has been overcompensated by the performance in
Japan. In Japan, UCB took over distribution of E KEPPRA
®
partner Otsuka in October 2020 and now books the in-market
net sales. Generic entries to the Japanese market occurred early
2022.
BRIVIACT
®
(
brivaracetam
)
with epilepsy, reached net sales of € 355 million, a plus of 23%
(+27% CER). This is driven by significant growth in all regions
BRIVIACT
®
®
mode of action from VIMPAT
®
®
.
NEUPRO
®
(
rotigotine
)
, the patch for Parkinson’s disease and
restless legs syndrome, used by 385 000 patients, recorded
stable net sales of € 307 million (-1%; 0% CER), in a competitive
market environment.
NAYZILAM
®
(
midazolam
)
Nasal Spray
CIV
, the nasal rescue
treatment for epilepsy seizure clusters in the U.S. (launched in
December 2019) reached over 50 000 patients and net sales of
€ 57 million after € 26 million.
EVENITY
®
(
romosozumab
)
since its global launch reached more
than 200 000 women living with severe postmenopausal
osteoporosis at high risk of fracture. It had its first European
launch in March 2020 and reported net sales of € 10 million
(after € 2 million), impacted by the pandemic which significantly
impedes outreach to new patient populations, and
regulatory/pricing decisions. EVENITY
®
successfully globally by Amgen, Astellas and UCB since 2019,
with net sales outside Europe reported by the partners.
BIMZELX
®
bimekizumab
)
well-received launch in autumn in Germany, the UK, Sweden and
the Netherlands. Reported net sales were € 4 million. In January
and February 2022, BIMZELX
®
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
148
Canada, respectively. The regulatory review in the U.S. is
ongoing, with a decision expected in the first half of 2022.
Product
€ million
% in Total
Immunology
CIMZIA
®
1 841
34%
BIMZELX
®
0%
Epilepsy
VIMPAT
®
1 549
29%
KEPPRA
®
18%
BRIVIACT
®
7%
NAYZILA
M
®
57
1%
NEUPRO
®
6%
EVENITY
®
0%
Established Brands
6%
Net sales excluding hedging
5 414
Established brands
Net sales of established brands went down by 10% to € 321
million, adjusted for divestitures (mainly in Europe) the decline
was -7% CER, reflecting the maturity of the portfolio and impact
by generic competition.
Part of the portfolio includes UCB’s allergy products
®
(
cetirizine
, including ZYRTEC
®
-D / CIRRUS
®
)
and
XYZAL
®
(
levocetirizine
)
, both affected by generic competition.
Designated hedges reclassified to net sales
29 million in 2020) reflecting UCB’s realized transactional
hedging activities. These are mainly related to the U.S. Dollar,
the Japanese Yen, the British Pound and the Swiss Franc.
1.4 Net sales by geographical area
Actual
Variance actual rates
Variance CER
€ million
2021
2020
€ million
%
€ million
%
Net sales - U.S.
2 888
2 759
5%
9%
CIMZIA®
1 183
1 174
1%
4%
VIMPAT®
1 130
1 072
5%
9%
KEPPRA®
- 11
-7%
- 6
-3%
BRIVIACT®
21%
26%
NEUPRO®
- 3
-3%
0
0%
NAYZILAM®
>100%
>100%
Established brands
0
- 1
-86%
- 1
-86%
Net sales - Europe
1 396
1 374
2%
1%
CIMZIA®
- 11
-3%
- 14
-3%
KEPPRA®
- 5
-2%
- 6
-3%
VIMPAT®
12%
11%
NEUPRO®
- 1
-1%
- 1
-1%
BRIVIACT®
29%
29%
EVENITY®
>100%
>100%
BIMZELX®
0
N/A
N/A
Established brands
- 20
-9%
- 20
-9%
Net sales - International markets
1 130
27%
33%
KEPPRA®
50%
57%
CIMZIA®
22%
27%
VIMPAT®
8%
12%
NEUPRO®
0
0%
3%
BRIVIACT®
33%
32%
Established brands
- 14
-11%
- 7
-6%
Net sales before hedging
5 414
5 023
8%
11%
Designated hedges reclassified to net sales
98%
Total net sales
5 471
5 052
8%
11%
U.S. net sales
went up to € 2 888 million (+5%; +9% CER). This
was driven by the good growth of VIMPAT
®
®
supported by the newly launched NAYZILAM
®
. CIMZIA
®
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
149
well, despite being impacted by a reimbursement decrease since
July 2021, which was overcompensated by volume growth.
NEUPRO
®
®
Net sales in Europe
reached € 1 396 million a plus of 2% (+1%
CER) - due to the double-digit growth of VIMPAT
®
®
.
EVENITY
®
reporting € 10 million of net sales. CIMZIA
®
mandated price decrease in Germany in April 2022, partially
compensated by volume growth. NEUPRO
®
almost stable while KEPPRA
®
’s net sales decline reflects the
continued generic erosion.
International markets net sales
amounted to
€ 1 130 million
reflecting a strong growth contribution from all core products
(+27%; +33% CER).
●
With € 562 million,
Japan
and showed a growth of 48% (+58% CER) driven by E
KEPPRA
®
(+91%). UCB took over distribution of E KEPPRA
®
partner Otsuka in October 2020 and now accounts the
in-market net sales. Generic entries to the Japanese
market occurred in early 2022.
VIMPAT
®
®
44 million (+33%) and NEUPRO
®
million (-12%).
●
Net sales in the second largest market in this region,
China
, were € 140 million (+30%; +26% CER).
Designated hedges reclassified to net sales
29 million in 2020) reflecting UCB’s realized transactional
hedging activities. These are mainly related to the U.S. Dollar,
the Japanese Yen, the British Pound and the Swiss Franc.
€ million
% in Total
Europe
1 396
26%
International markets
1 130
21%
U.S.
2 888
53%
Net sales excluding hedging
5 414
1.5 Royalty income and fees
Actual
Variance
€ million
2021
2020
Actual rates
CER
Biotechnology IP
-23%
-20%
TOVIAZ®
-9%
-6%
Other
-10%
-6%
Royalty income and fees
-18%
-15%
In 2021,
royalty income and fees
reached € 79 million after € 96
million.
The
biotechnology IP
from a one-time royalty recognized in 2020.
The franchise royalties paid by Pfizer for the overactive bladder
treatment
TOVIAZ
®
(
fesoterodine
)
reflect the generic
competition.
1.6 Other revenue
Actual
Variance
€ million
2021
2020
Actual rates
CER
Contract manufacturing sales
-16%
-16%
Other
>100%
>100%
Other revenue
14%
14%
Other revenue
Contract manufacturing sales
152 million, reflecting the demand from UCB’s partners.
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
150
activities in Japan (Daiichi Sankyo for VIMPAT
®
, Astellas for
CIMZIA
®
, E KEPPRA
®
milestones and other payments from R&D partners and licensing
partners, including Biogen for dapirolizumab pegol in lupus (SLE)
and most recently added: partnering with Roche for
bepranemab
development of UCB0599 with an opt-in to develop UCB7853,
two innovative and potentially disease-modifying investigational
assets in Parkinson’s disease as well as the global out-licensing
agreement with Chiesi for
zampilimab
, a novel monoclonal
antibody for fibrotic lung diseases.
1.7 Gross profit
Actual
Variance
€ million
2021
2020
Actual rates
CER
Revenue
5 777
5 347
8%
10%
Net sales
5 471
5 052
8%
11%
Royalty income and fees
-18%
-15%
Other revenue
14%
14%
Cost of sales
-1 438
-1 363
6%
6%
Cost of sales products and services
- 962
- 869
11%
11%
Royalty expenses
- 327
- 315
4%
7%
Amortization of intangible assets linked to sales
- 149
- 179
-17%
-16%
Gross Profit
4 339
3 984
9%
12%
In 2021, gross profit reached € 4 339 million – an improved gross
margin of 75.1% following 74.5% in 2020.
Cost of sales has three components: the cost of sales for
products and services, royalty expenses, and the amortization of
intangible assets linked to sales:
●
The
cost of sales for products and services
962 million – in-line with net sales growth
●
Royalty expenses
●
Amortization of intangible assets linked to sales:
IFRS 3, UCB has reflected on its statement of financial
position a significant amount of intangible assets relating to
acquisitions (in-process research and development,
manufacturing know-how, royalty streams, trade names,
etc.). The amortization expenses of the intangible assets for
which products have already been launched decreased to €
149 million, as NEUPRO
®
1.8 Adjusted EBIT and Adjusted EBITDA
Actual
Variance
€ million
2021
2020
Actual rates
CER
Revenue
5 777
5 347
8%
10%
Net sales
5 471
5 052
8%
11%
Royalty income and fees
-18%
-15%
Other revenue
14%
14%
Gross Profit
4 339
3 984
9%
12%
Marketing and selling expenses
-1 346
-1 221
10%
13%
Research and development expenses
-1 629
-1 569
4%
4%
General and administrative expenses
- 208
- 196
6%
6%
Other operating income/expenses (-)
70%
76%
Total operating expenses
-3 021
-2 891
4%
5%
Adjusted EBIT
1 318
1 093
21%
30%
Add: Amortization of intangible assets
-13%
-13%
Add: Depreciation charges
2%
2%
Adjusted EBITDA
1 641
1 441
14%
21%
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
151
Operating expenses, encompassing marketing and selling
expenses, research and development expenses, general and
administrative expenses and other operating income/expenses,
increased to € 3 021 million reflecting higher marketing and
selling as well as slightly higher research and development
expenses. Total operating expenses in relation to revenue
(operating expense ratio) decreased to 52% following 54% in
2020, consisting of:
•
10% higher
marketing and selling expenses
million, driven by launches and pre-launch activities:
BIMZELX
®
BIMZELX
®
launch activities for zilucoplan and rozanolixizumab for
people living with generalized myasthenia gravis (gMG), and
CIMZIA
®
NAYZILAM
®
®
ongoing launches.
●
4% higher
research and development expenses
million reflect the ongoing strong investments in UCB’s
progressing pipeline with five late-stage assets and ongoing
earlier stage research. The R&D ratio reached 28% in 2021
following 29% in 2020.
•
6% higher
general and administrative expenses
million, driven by implementation expenses for improved
value-focused allocation of resources and share based
payments valuation.
•
other operating income
million, following € 95 million in 2020 - driven by an income
of € 151 million reflecting the net contribution from Amgen
in connection with the commercialization of EVENITY
®
,
following an income of € 96 million in 2020.
Thanks to higher revenues and moderately increased operating
expenses,
adjusted EBIT
compared to 1 093 million in 2020.
●
total
amortization of intangible assets
(product related and
other) amounted to € 187 million.
●
depreciation charges
Adjusted EBITDA
(Earnings before Interest, Taxes, Depreciation
and amortization charges) reached € 1 641 million after € 1 441
million (+14%; 21% CER), driven by continued revenue growth
and moderately growing operating expenses, reflecting the
investments into the future of UCB, namely into product
launches and clinical development. The adjusted EBITDA ratio
for 2021 (in % of revenue) reached 28%, vs 27% in 2020.
1.9 Profit
Actual
Variance
€ million
2021
2020
Actual rates
CER
Adjusted EBIT
1 318
1 093
21%
30%
Impairment charges
- 6
0
N/A
N/A
Restructuring expenses
- 21
- 20
4%
5%
Gain/loss (-) on disposals
- 1
>-100%
>-100%
Other income/expenses (-)
- 6
- 155
-96%
-96%
Total impairment, restructuring and other
income/expenses (-)
- 34
- 122
-72%
-72%
EBIT (operating profit)
1 284
32%
43%
Net financial expenses (-)
- 58
- 93
-37%
-37%
Result from associates
0
-100%
-100%
Profit before income taxes
1 226
39%
51%
Income tax expenses
- 170
- 119
43%
50%
Profit from continuing operations
1 056
39%
51%
Profit/loss (-) from discontinued operations
0
N/A
N/A
Profit
1 058
39%
51%
Attributable to UCB shareholders
1 058
45%
52%
Attributable to non-controlling interests
0
-100%
-100%
Profit attributable to UCB shareholders
1 058
45%
52%
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
152
Total impairment, restructuring and other income/expenses (-)
amounted to € 34 million expenses (after an expense of € 122
million in 2020). In 2020, this was mainly driven by fees related
to acquisitions, which did not reoccur in 2021.
Net financial expenses
million in 2020, thanks to lower hedging costs and reduction of
interest expenses.
Income tax expenses
million in 2020, with an average effective tax rate of 14%
compared to 13% in 2020.
Profit from discontinued operations
was € 3 million after € 0
million.
The
profit of the Group
the full amount is attributable to UCB shareholders as the
contributions to non-controlling interests have expired end of
2020. For 2020, profit was € 761 million, of which € 732 million
were attributable to UCB share holders and € 29 million to non-
controlling interests.
1.10 Core EPS
Actual
Variance
€ million
2021
2020
Actual rates
CER
Profit
1 058
39%
51%
Attributable to UCB shareholders
1 058
45%
52%
Attributable to non-controlling interests
0
-100%
-100%
Profit attributable to UCB shareholders
1 058
45%
52%
Total impairment, restructuring and other income (-)
/expenses
-72%
-72%
Income tax on impairment, restructuring and other
expenses (-)/ credit
- 4
- 3
37%
37%
Financial one-off income (-)/expenses
0
0
N/A
N/A
Income tax on financial one-off income/expenses (-)
0
0
N/A
N/A
Profit (-)/loss from discontinued operations
- 3
0
N/A
N/A
Amortization of intangibles linked to sales
-17%
-16%
Income tax on amortization of intangibles linked to sales
- 9
- 15
-39%
-39%
Core profit attributable to UCB shareholders
1 226
1 015
21%
26%
Weighted average number of shares (million)
0%
Core EPS attributable to UCB shareholders (€)
21%
26%
The
profit attributable to UCB shareholders
, adjusted for the
after-tax impact of to-be adjusted items, the financial one-offs,
the after-tax contribution from discontinued operations and the
net amortization of intangibles linked to sales, amounted to
core
profit attributable to the UCB shareholders
(21%), leading to
core earnings per share
compared to € 5.36 in 2020, per non-dilutive weighted average
number of shares of 189 million.
1.11 Capital expenditure
In 2021, the tangible capital expenditure resulting from UCB
biopharmaceutical activities amounted to € 282 million (2020: €
256 million) and are mainly related to the Bioplant under
construction in Belgium, right-of-use assets related to renewal of
building lease agreements, revamping of office environment,
building facilities and IT hardware.
Acquisition of intangible assets reached € 211 million in 2021
(2020: € 93 million) and is related to software, capitalized
eligible development costs and milestones, and the
capitalization of external development expenses for post
approval studies.
1.12 Statement of financial position
The
intangible assets
million at December 31, 2020 to € 3 159 million at December 31,
2021. The increase includes additions for € 170 million, the
positive impact on the translation of foreign currencies, partially
offset with the ongoing amortization of the intangible assets.
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
153
Goodwill
at € 5 173 million, up € 209 million due to a stronger
US Dollar and British Pound compared to December 2020.
Other non-current assets
additions for property, plant and equipment of € 386 million
offset with ongoing depreciation, and increase of deferred tax
assets related to timing differences and R&D tax credits.
The
current assets
December 31, 2020 to € 3 710 million as of December 31, 2021
mainly related to trade and other receivables following strong
Q4 net sales offset with a decrease in cash and equivalents.
UCB’s shareholders’ equity
, at € 8 386 million, showed an
increase of € 1 114 million between December 31, 2020 and
December 31, 2021. The important changes stem from the net
profit (€ 1 058 million), the US$ and GBP currency translation (€
280 million), offset with cash-flow hedges (€ -103 million), the
dividend payments (€ -240 million) and the acquisition of own
shares (€ -65 million).
The
non-current liabilities
decrease of € 233 million, related to lower financial debt, offset
with increasing deferred taxes linked to timing differences and
intangibles.
The
current liabilities
million, impacted by the repayment of the € 350 million bond
offset with higher trade and rebates payables, and deferred
income related to partnerships.
Net financial debt
compared to net financial debt
of € -1 411 million as of end
December 2020, mainly relates to the underlying net
profitability, offset by the dividend payment on the 2020 results
and the acquisition of own shares. The net debt to adjusted
EBITDA ratio for 2021 is 0.52.
1.13 Cash flow statement
The evolution of cash flow generated by bio- pharmaceutical
activities is affected by the following:
>
Cash flow from operating activities
million, all related to continuing operations, compared to € 1
081 million in 2020. The cash inflow stems from underlying net
profitability, deferred income related to partnerships, higher
outstanding payables in the last quarter, offset with higher
receivables after a strong Q4 2021 and taxes paid.
>
Cash flow from investing activities
487 million from continuing operations, compared to € 2 228
million in 2020 and includes tangible (€ 282 million) and
intangible (€ 211 million) capital expenditures, investments in
venture funds, offset with the sale of non-core assets.
>
Cash flow from financing activities
million, mainly including the issuance of a € 500 million senior
unsecured bond, offset with the repayment of institutional
Eurobonds (€ 700 million), repayment of bank borrowings (€
512 million), the dividend paid to UCB shareholders (€ 240
million), the acquisition of treasury shares (€ 60 million) and
interest payments.
1.14 Financial Guidance 2022
For 2022, UCB is aiming for revenues in the range of € 5.15 - 5.40
billion based on continued core product growth and taking into
account estimated impacts from the loss of exclusivity for
VIMPAT
®
2022), E KEPPRA
®
launch of BIMZELX
®
regulatory review in the U.S. is ongoing, with a decision
expected in the first half of 2022.
UCB will continue to invest into research and development
advancing its late-stage development pipeline and preparing
upcoming launches to offer potential new solutions for patients.
Underlying profitability, adjusted EBITDA, is expected in the
range of 26 - 27% of revenue, reflecting the continued high R&D
and marketing & sales investment levels. Core earnings per
share are therefore expected in the range of € 4.80 - 5.30 per
share-based on an average of 189 million shares outstanding.
The figures for the financial guidance 2022 as mentioned above
are calculated on the same basis as the actual figures for 2021;
they will be updated upon closing of the planned Zogenix, Inc.
acquisition.
Based on UCB’s current assessment of the COVID-19 pandemic,
UCB remains confident in the fundamental underlying demand
for its products and its prospects for long-term growth. UCB will
continue to closely follow the evolving COVID -19 pandemic
diligently to assess potential near- and mid-term challenges.
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
154
2. Consolidated financial statements
2.1 Consolidated income statement
For the year ended December 31
€ million
Note
2021
2020
Continuing operations
Net Sales
6
Royalty income and fees
Other revenue
10
Revenue
Cost of sales
-1 438
-1 363
Gross profit
Marketing and selling expenses
-1 346
-1 221
Research and development expenses
-1 629
-1 569
General and administrative expenses
- 208
- 196
Other operating income/expenses (-)
13
Operating profit before impairment, restructuring
and other income and expenses
Impairment of non-financial assets
14
- 6
Restructuring expenses
15
- 21
- 20
Other income/expenses (-)
16
- 7
- 102
Operating profit
Financial income
17
Financial expenses
17
- 138
- 107
Share of profit/loss (-) of associates
Profit before income taxes
Income tax expense
18
- 170
- 119
Profit from continuing operations
Discontinued operations
Profit/loss (-) from discontinued operations
9
Profit
Attributable to:
Equity holders of UCB SA
Non-controlling interests
Basic earnings per share (€)
from continuing operations
41
from discontinued operations
41
Total basic earnings per share
Diluted earnings per share (€)
from continuing operations
41
from discontinued operations
41
Total diluted earnings per share1
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
155
2.2 Consolidated statement of comprehensive income
For the year ended December 31
€ million
Note
2021
2020
Profit for the period
Other comprehensive income
Items to be reclassified to profit or loss in subsequent periods:
- Net gain/loss (-) on financial assets at FVOCI
- Exchange differences on translation of foreign operations
- 314
- Effective portion of gains/losses (-) on cash flow hedges
- 140
- Income tax relating to the components of other comprehensive
Income
- 23
Items not to be reclassified to profit or loss in subsequent periods:
- Remeasurement of defined benefit obligation
33
- 26
- Income tax relating to the components of other comprehensive
income
- 10
Other comprehensive income/loss (-) for the period, net of tax
- 250
Total comprehensive income for the period, net of tax
Attributable to:
Equity holders of UCB SA
Non-controlling interests
Total comprehensive income for the period, net of tax
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
156
2.3 Consolidated statement of financial position
For the year ended December 31
€ million
Note
2021
2020
Assets
Non-current assets
Intangible assets
20
Goodwill
21
Property, plant and equipment
22
Deferred income tax assets
32
Financial and other assets (including derivative financial
instruments)
23
Total non-current assets
Current assets
Inventories
24
Trade and other receivables
25
Income tax receivables
36
Financial and other assets (including derivative financial
instruments)
23
Cash and cash equivalents
26
Assets of disposal group classified as held for sale
9.2
Total current assets
Total assets
Equity and liabilities
Equity
Capital and reserves attributable to UCB shareholders
27
Non-controlling interests
23.6
Total equity
Non-current liabilities
Borrowings
29
Bonds
30
Other financial liabilities (including derivative financial
instruments)
31
Deferred income tax liabilities
32
Employee benefits
33
Provisions
34
Trade and other liabilities
35
Income tax payables
36
Total non-current liabilities
Current liabilities
Borrowings
29
Bonds
30
Other financial liabilities (including derivative financial
instruments)
31
Provisions
34
Trade and other liabilities
35
Income tax payables
36
Liabilities of disposal group classified as held for sale
9.2
Total current liabilities
Total liabilities
Total equity and liabilities
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
157
2.4 Consolidated statement of cash flows
For the year ended December 31
€ million
Note
2021
2020
Profit for the year attributable to UCB shareholders
Non-controlling interests
Adjustment for profit (-)/loss from associates
- 2
Adjustment for non-cash transactions
37
Adjustment for items to disclose separately under operating cash flow
37
Adjustment for items to disclose under investing and financing cash flows
37
Change in working capital
37
Working capital adjustment relating to acquisitions
8
- 263
Interest received
17
Cash flow generated from operations
Tax paid during the period
- 126
- 72
Net cash flow used in (-)/generated by operating activities:
Net cash flow generated by operating activities
Acquisition of property, plant and equipment
22
- 282
- 256
Acquisition of intangible assets
20
- 211
- 93
Acquisition of subsidiaries, net of cash acquired
-1 986
Acquisition of other investments
- 19
- 7
Sub-total acquisitions
- 512
-2 342
Proceeds from sale of property, plant and equipment
Proceeds from sale of other activities, net of cash disposed
Proceeds from sale of other investments
Sub-total disposals
Net cash flow used in (-)/generated by investing activities:
- 487
-2 228
Net cash flow used in (-)/generated by investing activities:
- 487
-2 228
Proceeds from issuance of Private Placement
30.3
Repayment of bonds (-)
30.3
- 204
- 250
Proceeds from borrowings
29
Repayments of borrowings (-)
29
- 512
- 166
Payment of lease liabilities
29
- 40
- 41
Acquisition (-) of treasury shares
27
- 60
- 106
Dividend paid to UCB shareholders, net of dividend paid on own shares
27.2, 42
- 240
- 235
Interest paid
17
- 63
- 70
Net cash flow used in (-)/generated by financing activities:
From continuing operations
-1 119
From discontinued operations
Net cash flow used in (-)/generated by financing activities
-1 119
Net increase/decrease (-) in cash and cash equivalents
- 53
- 53
Net cash and cash equivalents at the beginning of the period
Effect of exchange rate fluctuations
- 7
- 15
Net cash and cash equivalents at the end of the period
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
158
2.5 Consolidated statement of changes in equity
2021
Attributed to equity holders of UCB SA
€ million
Share
capital
and share
premium
Treasury
shares
Retained
earnings
Other
reserves
Cumulative
translation
adjustments
Financial
assets at
FVOCI
Cash
flow
hedges
Total
Non-
controlling
interests
Total
stockho
lders'
equity
Balance at January 1,
2021
( 393 )
( 144 )
( 372 )
Profit for the period
-
-
-
-
-
-
Other comprehensive
income/loss (-)
-
-
-
( 103 )
Total comprehensive
income
-
-
( 103 )
Dividends (Note 42)
-
-
( 240 )
-
-
-
-
( 240 )
-
( 240 )
Share-based payments
(Note 28)
-
-
-
-
-
-
-
Transfer between
reserves
-
( 63 )
-
-
-
-
-
-
Treasury shares (Note
27)
-
( 65 )
-
-
-
-
-
( 65 )
-
( 65 )
Transfer between OCI
and reserves
-
-
-
-
( 2 )
-
-
-
Movement on NCI
-
-
-
-
-
-
( 1 )
Balance at December
31, 2021
( 395 )
( 56 )
( 92 )
( 38 )
2020
Attributed to equity holders of UCB SA
€ million
Share
capital
and share
premium
Treasury
shares
Retained
earnings
Other
reserves
Cumulative
translation
adjustments
Financial
assets at
FVOCI
Cash
flow
hedges
Total
Non-
controlling
interests
Total
stockho
lders'
equity
Balance at January 1,
2020
( 377 )
( 117 )
( 58 )
( 30 )
Profit for the period
-
-
-
-
-
-
Other comprehensive
income/loss (-)
-
-
-
( 24 )
( 314 )
( 250 )
( 250 )
Total comprehensive
income
-
-
( 24 )
( 314 )
Dividends (Note 42)
-
-
( 235 )
-
-
-
-
( 235 )
-
( 235 )
Share-based payments
(Note 28)
-
-
-
-
-
-
-
Transfer between
reserves
-
( 66 )
-
-
-
-
-
-
Treasury shares (Note
27)
-
( 82 )
-
-
-
-
-
( 82 )
-
( 82 )
Transfer between OCI
and reserves
-
-
( 2 )
-
-
-
Transfer from NCI to
equity holders
-
-
( 2 )
-
-
-
-
( 2 )
Balance at December
31, 2020
( 393 )
( 144 )
( 372 )
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
159
3. Notes to the consolidated financial statements
1.
2.
situation on the financial position, performance
and cash-flows of UCB
3.
4.
5.
6.
7.
8.
9.
disposal group classified as held for sale
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
(including NCI)
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
160
1. General information
(together the Group) is a
.
The consolidated financial statements of the Company as at
and for the year ended December 31, 2021 comprise the
Company and its subsidiaries. Within the Group, UCB
Pharma SA, UCB S.R.O and UCB Inc., all wholly owned
subsidiaries, have branches in the U.K., Slovakia and
Puerto Rico, respectively, that are integrated into their
accounts. UCB Biopharma SRL has set up a new branch in
the U.K. on November 12, 2020. The branch is operational
as from January 1, 2021.
, the parent company, is a
.
The registered office is at
,
.
Brussels Stock Exchange.
The Board of Directors approved these consolidated
financial statements and the statutory financial statements
of UCB SA for issue on February 24, 2022. The
shareholders will be requested to approve the statutory
financial statements of UCB SA at their annual meeting on
April 28, 2022
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
161
2.
Current and expected impact of the COVID-19 situation on the financial position, performance and cash-flows of UCB
UCB has put measures in place to protect the health and
wellbeing of its employees and other key stakeholders especially
its patients, while remaining focused on ensuring business
critical activities are properly maintained.
The direct impact of the COVID-19 pandemic on UCB’s financial
position, performance and cash-flows has been limited.
Revenues of UCB Group for 2021 have not been materially
impacted by the COVID-19 pandemic.
There have been no disruptions in supply chains and/or
production. UCB has been closely monitoring its supply chain for
potential impact to the supply of its medicines around the world.
UCB maintains strategic buffer stock and leverages multi-
sourcing for key materials in its global supply chain to mitigate
the impact of supply disruptions due to events such as the
current coronavirus outbreak. UCB’s global manufacturing and
distribution network has remained fully operational and is in
constant contact with its global network of key suppliers,
manufacturing partners, and distributors to identify potential
risks and take appropriate measures to avoid any disruption. No
supply disruptions of UCB’s products are currently anticipated.
As this global situation evolves, UCB will continue to take the
steps necessary to safeguard the reliable supply of its medicines.
In 2021, thanks to the pro-active measures taken by UCB, the
timelines for UCB’s clinical development program have not
experienced any material delays due to COVID-19. The latest
pipeline and its timelines can be found in the Business
Performance Review under 1.2 Key Events. UCB will continue to
monitor the impact of COVID-19 on all ongoing clinical trials and
will implement changes as necessary.
UCB has not applied for any relief or support measure issued by
governments or other public institutions. The COVID-19 situation
has not substantially impacted UCB’s income tax expenses but
UCB is continuously monitoring for potential impacts.
UCB has not benefited from any COVID-19-related lease
concessions. Therefore, there is no impact on the accounting of
lease agreements from the IASB’s amendments to IFRS 16.
UCB has assessed that the COVID-19 situation has not at present
given any indication that any asset may be impaired and
therefore concluded that none of the impairment indicators in
IAS 36 have been triggered. No significant risk of material
adjustment to the carrying amounts of assets and liabilities has
arisen as a result of the COVID-19 pandemic.
UCB uses a provision matrix in order to determine lifetime
expected credit losses (ECL). However, if there is an indication or
evidence of impairment for a specific receivable, this receivable
will be impaired for the amount of lifetime ECL. Forward -looking
information has been incorporated in the ECL estimate and
assumptions used in the ECL model have not changed
significantly over the period. Up till now, there is no indication
that the COVID-19 pandemic will be impacting the lifetime ECL
for receivables. No impairment for specific receivables as a
result of the pandemic has been accounted for.
The COVID-19 pandemic has not had any major impact on the
liquidity position of UCB group. The liquidity risk management
strategy is adequate and appropriate and has not changed, and
there was no need for any cancellation or reduction of the
dividend pay-out in 2021.
UCB did not change its credit risk management practices
because of the COVID-19 pandemic either.
Financial risks are described under Note 5 and have not been
materially impacted by the COVID-19 situation. UCB’s access to
financing under its existing credit facilities has not been affected
as a consequence of COVID-19. There have not been changes in
existing terms of borrowings or other financial liabilities during
the reporting period.
UCB’s ability to continue as a going concern is not in any
question.
3. Summary of significant accounting policies
The accounting policies applied in the preparation of these
consolidated financial statements are set out below. These
policies have been consistently applied to all the years
presented, unless otherwise stated.
3.1 ǀ BASIS OF PREPARATION
The consolidated financial statements of the Company have
been prepared in accordance with International Financial
Reporting Standards (IFRS) and interpretations issued by the
IFRS Interpretations Committee (IFRS IC) as endorsed by the
European Union as of 31 December 2021.
The preparation of consolidated financial statements in
conformity with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise
its judgement in the process of applying the Group accounting
policies. The areas involving a higher degree of judgment or
complexity, or areas where assumptions and estimates are
significant to the consolidated financial statements are disclosed
in Note 4.
3.2 NEW AND AMENDED STANDARDS ADOPTED BY THE GROUP
A number of amendments to standards are mandatory for the
first time for the financial year beginning January 1, 2021.
However, the Group does not have to change its accounting
policies or make retrospective adjustments as a result of
adopting these amendments and improvements to the
standards. The impact of the IFRS Interpretations Committee’s
March 2021 decision relating to configuration or customization
costs in a cloud computing arrangement is still being analyzed by
UCB. The outcome of this analysis might result in an impact on
the income statement.
UCB applied reliefs provided by the Amendments to IFRS 9
Financial instruments and IFRS 7 Financial instruments:
disclosures – Interest rate benchmark reform on its interest rate
swaps (cash flow hedges) with current nominal amount of USD
450 million and interest rate swaps (fair value hedges) with a
nominal amount of EUR 825 million. As provided under the
Amendments, UCB assumed that the interest rate on which the
hedged cash flows are based (USD LIBOR and/or EURIBOR), will
not change as a result of the reform until the maturity of the
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
162
hedge instrument. Hence, when hedged cash flows may change
as a result of IBOR reform, this will not cause the ‘highly
probable’ test to fail. Moreover, as provided under the
Amendments, UCB assumes minimal ineffectiveness due to
changes in cash flows because of IBOR reform. Therefore the
economic relationship between hedged item and hedging
instrument should not be impacted. For the fair value hedges of
fixed-rate debts, UCB applied the relief provided by the
Amendment to IFRS 9 relating to the fact that the risk
component only needs to be separately identifiable at initial
hedge designation. This approach is warranted taking into
consideration that EURIBOR has been reformed to meet the
regulatory requirements of the Benchmarks Regulation of the
European Union and there are no plans to discontinue EURIBOR.
Also, ICE Benchmark Administration Limited (“IBA”), which is the
authorized and regulated administrator of LIBOR, is expected to
continue to determine and publish the overnight and the 1-, 3-,
6- and 12-Months USD LIBOR settings using panel bank
contributions under the “panel bank” LIBOR methodology until
end of June 2023, which encompasses the remaining maturity of
outstanding USD interest rate derivatives.
3.3 ǀ NEW STANDARDS AND AMENDMENTS TO STANDARDS
NOT YET ADOPTED
There are no standards or amendments or improvements to
standards that have been issued by the IASB that are not yet
effective and that would be expected to have a material impact
on the Group’s consolidated financial statements.
3.4 ǀ CONSOLIDATION
3.4.1 ǀ SUBSIDIARIES
Subsidiaries are all entities (including structured entities) over
which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those
returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to
the Group. They are de-consolidated from the date that control
ceases.
The Group uses the acquisition method of accounting to account
for business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair value of the assets
transferred, the liabilities incurred and the equity interests
issued by the Group. The consideration transferred includes the
fair value of any asset or liability resulting from a contingent
consideration agreement. Acquisition-related costs are
expensed as incurred. Identifiable assets acquired and liabilities
and contingent liabilities assumed in a business combination are
measured initially at their fair values at acquisition date. On an
acquisition-by-acquisition basis, the Group recognises any non-
controlling interest in the acquiree either at fair value or at the
non-controlling interest’s proportionate share of the acquiree’s
net assets.
Any contingent consideration to be transferred by the Group is
recognized at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognized in profit or loss.
Contingent consideration that is classified as equity is not
remeasured, and its subsequent settlement is accounted for
within equity.
Goodwill is initially measured as the excess of the aggregate of
the consideration transferred and the fair value of non-
controlling interest over the net identifiable assets acquired and
liabilities assumed. If this consideration is lower than the fair
value of the net assets of the subsidiary acquired, the difference
is recognized in profit or loss.
Inter-company transactions, balances and unrealized gains on
transactions between Group companies are eliminated.
Unrealized losses are also eliminated unless the transaction
provides evidence of an impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the
Group.
3.4.2 ǀ CHANGES IN OWNERSHIP INTERESTS IN SUBSIDIARIES
WITHOUT CHANGE OF CONTROL
The Group treats transactions with non-controlling interests that
do not result in a loss of control as transactions with equity
owners of the Group. For purchases from non-controlling
interests, the difference between any consideration paid and the
relevant share acquired of the carrying value of net assets of the
subsidiary is recorded in equity. Gains or losses on disposals to
non-controlling interests are also recorded in equity.
3.4.3 ǀ DISPOSAL OF SUBSIDIARIES
When the Group ceases to have control, any retained interest in
the entity is remeasured to its fair value, with the change in
carrying amount recognized in profit or loss. The fair value is the
initial carrying amount for the purposes of subsequently
accounting for the retained interest as an associate, joint
venture or financial asset. In addition, any amounts previously
recognized in other comprehensive income in respect of that
entity are accounted for as if the Group had directly disposed of
the related assets or liabilities. This may mean that amounts
previously recognized in other comprehensive income are
reclassified to profit or loss.
3.4.4 ǀ ASSOCIATES
Associates are all entities over which the Group has significant
influence but not control, generally accompanying a
shareholding of between 20%-50% of the voting rights.
Investments in associates are accounted for using the equity
method of accounting and are initially recognized at cost and the
carrying amount is increased or decreased to recognize the
investor’s share of the profit or loss of the investee after the
date of acquisition. The Group’s investment in associates
includes goodwill identified on acquisition.
When the Group ceases to equity account for an investment
because of a loss of significant influence, any retained interest in
the entity is remeasured to its fair value with the change in
carrying amount recognized in profit or loss. The fair value
becomes the initial carrying amount for the purposes of
subsequently accounting for the retained interest as a financial
asset. In addition, any amounts previously recognized in other
comprehensive income in respect of that entity are accounted
for as if the Group had directly disposed of the related assets or
liabilities. This may mean that amounts previously recognized in
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
163
other comprehensive income are reclassified to profit or loss
where appropriate.
If the ownership interest in an associate is reduced but
significant influence is retained, only a proportionate share of
the amounts previously recognized in other comprehensive
income are classified to profit or loss where appropriate.
The Group share of its associates’ post-acquisition profits or
losses is recognized in the income statement, and its share of
post-acquisition movements in other comprehensive income is
recognized in other comprehensive income with a corresponding
adjustment to the carrying amount of the investment. The
cumulative post-acquisition movements are adjusted against the
carrying amount of the investment. When the Group’s share of
losses in an associate equals or exceeds its interest in the
associate, including any other unsecured receivables, the Group
does not recognize further losses, unless it has incurred
obligations or made payments on behalf of the associate.
The carrying amount of investments in associates is tested for
impairment in accordance with the policy described in note 3.10.
Unrealized gains on transactions between the Group and its
associates are eliminated to the extent of the Group’s interest in
the associates. Unrealized losses are also eliminated unless the
transaction provides evidence of an impairment of the asset
transferred. Accounting policies of associates have been
changed where necessary to ensure consistency with the
policies adopted by the Group.
Dilution gains and losses arising in investments in associates are
recognized in the income statement.
3.4.5 ǀ INTERESTS IN JOINT OPERATIONS
A joint operation is a joint arrangement whereby the parties, or
joint operators that have joint control of the arrangement, have
rights to the assets, and obligations for the liabilities, relating to
the arrangement. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when
decisions about the relevant activities require the unanimous
consent of the parties sharing control.
When conducting activities under joint operations, the Group
recognizes in relation to its interest in a joint operation:
>
its assets, including its share of any assets held jointly;
>
its liabilities, including its share of any liability incurred
jointly;
>
its revenue from the sale of its share of the output arising
from the joint operations;
>
its share of the revenue from the sale of the output by the
joint operation;
>
its expenses, including its share of any expenses incurred
jointly.
When a Group entity transacts with a joint operation in which a
Group entity is a joint operator, the Group is considered to be
conducting the transaction with the other parties to the joint
operation, and gains and losses resulting from the transactions
are recognized in the Group’s consolidated financial statements
only to the extent of the other parties’ interests in the joint
operation.
3.5 ǀ SEGMENT REPORTING
The Group’s activities are in one segment, Biopharmaceuticals.
There are no other significant classes of business, either
singularly or in aggregate. The Chief Operating Decision Makers,
being the Executive Committee, review the operating results and
operating plans, and make resource allocation decisions on a
company-wide basis; therefore UCB operates as one segment.
3.6 ǀ FOREIGN CURRENCY TRANSLATION
The following important exchange rates were used in preparing
the consolidated financial statements:
CLOSING RATE
AVERAGE RATE
2021
2020
2021
2020
USD
1.139
1.223
1.182
1.140
JPY
130.980
126.280
129.812
121.762
GBP
0.841
0.896
0.859
0.889
CHF
1.038
1.082
1.081
1.070
The closing rates represent spot rates as at December 31, 2021
and December 31, 2020.
3.6.1 ǀ FUNCTIONAL AND PRESENTATION CURRENCY
Items included in the individual financial statements of each of
the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (the
functional currency). The consolidated financial statements are
presented in euro (€), which is the functional currency of the
Company, and the presentation currency of the Group.
3.6.2 ǀ TRANSACTIONS AND BALANCES
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the date of the
transactions. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognized in the income
statement under Financial income or Financial expenses (note
17), except when deferred in other comprehensive income as
qualifying cash flow hedges and qualifying net investment
hedges or when attributable to part of the net investment in a
foreign operation.
Exchange differences on a foreign currency monetary financial
asset measured at FVOCI are recognized partly in profit or loss
and partly in other comprehensive income. For the purpose of
recognising foreign exchange gains and losses under IAS 21, the
asset is treated as if it were carried at amortised cost in the
foreign currency. Accordingly, foreign exchange differences on
the amortised cost balance and those arising from changes in
amortised cost (such as interest calculated using the effective
interest method and impairment losses) are recognized in profit
or loss. All other gains and losses (that is, changes in fair value,
including exchange differences thereon) are recognized in other
comprehensive income.
Exchange differences on a foreign currency non-monetary
financial asset measured at FVOCI are recognized in other
comprehensive income as part of the fair value gain or loss.
3.6.3 ǀ GROUP COMPANIES
The results and financial position of all Group entities (none of
which has the currency of a hyperinflationary economy) that
have a functional currency different from the presentation
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
164
currency are translated into the presentation currency as
follows:
>
assets and liabilities for each statement of financial position
presented are translated at the closing rate at the date of
that statement of financial position;
>
income and expenses for each income statement are
translated at average exchange rates (unless this average is
not a reasonable approximation of the cumulative effect of
the rates prevailing on the transaction dates, in which case
income and expenses are translated at the rate on the dates
of the transactions); and
>
all resulting exchange differences are recognized in other
comprehensive income (referred to as “cumulative
translation adjustments”).
On consolidation, exchange difference arising from the
translation of the net investment in foreign operations, and of
borrowings and other currency instruments designated as
hedges of such investments, are taken to other comprehensive
income. When a foreign operation is partially or wholly disposed
of or sold, exchange differences that were recorded in equity are
recognized in the income statement as part of the gain or loss on
sale.
Goodwill and fair value adjustments arising on the acquisition of
a foreign entity are treated as assets and liabilities of the foreign
entity and translated at the closing rate.
3.7 ǀ REVENUE
Revenue is recognized when control of a good or service
transfers to a customer.
3.7.1 ǀ NET SALES
Net sales encompass revenue recognized resulting from
transferring control over products to the customer.
The amount of revenue recognized is the amount allocated to
the satisfied performance obligation taking into account variable
consideration. The estimated amount of variable consideration
is included in the transaction price only to the extent that it is
highly probable that a significant reversal in the amount of
cumulative revenue recognized will not occur when the
uncertainty associated with the variable consideration is
subsequently resolved. Variable consideration that is included in
the transaction price relates to sales returns, rebates, trade and
cash discounts, charge-backs granted to various customers that
are part of commercial and governmental contractual
arrangements or other reimbursement programs, including the
U.S. Medicaid Drug Rebate program, the U.S. Federal Medicare
program and others as well as the U.S. Branded Prescription
Drug Fee. A liability is recognized for expected sales returns,
rebates, trade and cash discounts, charge -backs or other
reimbursements payable directly or indirectly to customers in
relation to sales made until the end of the reporting period.
Payment terms can differ from contract to contract but no
element of financing is deemed present. Therefore the
transaction price is not adjusted for the effects of a significant
financing component. A receivable is recognized as soon as
control over the products is transferred to the customer as this
is the point in time that the consideration is unconditional
because only the passage of time is required before the
payment is due.
The transaction price is adjusted for any consideration payable
to the customer (directly or indirectly) that is economically
linked to the revenue contract unless the payment is for distinct
services received from the customer. In the latter case, the fair
value of the services received is estimated and accounted for as
part of marketing and selling expenses.
The amount of variable consideration is estimated on the basis
of historical experience and the specific terms in the individual
agreements.
Net sales are presented net of value added tax, other sales
related taxes or any other amounts collected on behalf of third
parties such as the government or governmental institutions.
3.7.2 ǀ ROYALTY INCOME
Sales-based royalties resulting from the out -licensing of IP are
recognized as the subsequent underlying sales occur provided
that the related performance obligation has been satisfied by
then.
3.7.3 ǀ OTHER REVENUE
Other revenue comprises revenue generated through out-
licensing and profit-sharing agreements as well as contract
manufacturing agreements. The underlying performance
obligations can be satisfied at a point in time or over time
depending on the specific situation.
For performance obligations satisfied over time, revenue is
recognized based on a pattern that best reflects the transfer of
control of the service to the customer. Usually this progress is
measured by an input method whereby costs incurred and hours
expended relative to total costs expected to be incurred and
total hours expected to be expended are used as a basis.
Any variable consideration that is promised in exchange of a
license of IP and that is based upon achieving certain sales
targets, is accounted for in the same way as sales-based
royalties i.e. at the moment the related sales occur provided
that the related performance obligation has been satisfied.
Any variable consideration such as a development milestone
payment that is promised in exchange for development services
or the license of IP, is only included in the transaction price as
from the moment the achievement of the related milestone
event is highly probable, which then results in a catch up of
revenue at that moment for any performances up till that
moment.
Any upfront payments or license fees for which there are
subsequent performance obligations, are initially reported as
deferred revenue and are recognized as revenue when
performance obligations are satisfied over the period of the
development collaboration or manufacturing obligation.
3.7.4 ǀ INTEREST INCOME
Interest is recognized on a time proportion basis that takes into
account the effective yield on the asset.
3.7.5 ǀ DIVIDEND INCOME
Dividends are recognized when the shareholder’s right to
receive the payment is established.
3.8 ǀ COST OF SALES
Cost of sales includes primarily the direct production costs,
related production overheads and the amortization of the
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
165
related intangible assets as well as services rendered. Start-up
costs are expensed as incurred. Royalty expenses directly linked
to goods sold are included in “cost of goods sold”.
3.9 ǀ RESEARCH AND DEVELOPMENT
3.9.1 ǀ INTERNALLY-GENERATED INTANGIBLE ASSETS,
RESEARCH AND DEVELOPMENT EXPENDITURE
All internal research costs are expensed as incurred. Internal
development expenditure is capitalized only if it meets the
recognition criteria of IAS 38 Intangible Assets. Due to long
development periods and significant uncertainties related to the
development of new products (such as the risks related to the
outcome of clinical trials as well as the likelihood of regulatory
approval), internal development costs generally do not qualify
for capitalization as intangible assets. At December 31, 2021, no
internal development expenditures have met the recognition
criteria.
3.9.2 ǀ ACQUIRED INTANGIBLE ASSETS
Payments for acquired in-process research and development
projects obtained through in-licensing arrangements, business
combinations or separate asset purchases are capitalized as
intangible assets provided that they are separately identifiable,
controlled by the Group and expected to provide future
economic benefits. As the probability criterion in IAS 38 is always
considered to be satisfied for separately acquired research and
development assets and the amount of the payments is
determinable, upfront and milestone payments to third parties
for pharmaceutical products or compounds for which regulatory
marketing approval has not yet been obtained are recognized as
intangible assets, and amortized on a straight line basis over
their useful lives from the date on which the products are
launched for sale.
3.10 ǀ IMPAIRMENT OF NON-FINANCIAL ASSETS
At each reporting date, the Group reviews the carrying amounts
of its intangible assets, goodwill, property, plant and equipment
and investments in associates to determine whether there is any
indication of impairment. If any such indication exists, the
recoverable amount of the asset is estimated in order to
determine the extent of the impairment loss. Irrespective of
whether there is an indication of impairment, an impairment
assessment of the intangibles not yet available for use and
goodwill is carried out annually. These assets are not amortized.
An impairment loss is recognized for the amount by which the
asset’s carrying amount exceeds its recoverable amount.
Where it is not possible to estimate the recoverable amount of
an individual asset, the Group estimates the recoverable amount
of the cash-generating unit (CGU) to which the asset belongs.
The recoverable amount is the higher of an asset’s fair value less
costs to sell and value in use. To determine the value in use, the
Group uses estimates of future cash flows generated by the
asset or the CGU, using the same methods as those used in the
initial measurement of the asset or the CGU on the basis of the
medium-term plans of each business activity. Estimated cash
flows are discounted using an appropriate rate that reflects
current market assessments of the time value of money and the
risks specific to the asset or the CGU.
An impairment loss is recognized directly in the income
statement under the “impairment of non-financial assets”
caption. Non-financial assets other than goodwill that suffered
an impairment are reviewed for possible reversal of the
impairment at each reporting date. The reversal of the
impairment is recognized in the income statement. An
impairment loss is reversed only to the extent that the asset’s
carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or
amortization, if no impairment loss had been recognized.
Impairment losses on goodwill are never reversed.
Intangible assets are assessed for impairment either on a
compound by compound basis or by indication where
applicable.
3.11 ǀ RESTRUCTURING EXPENSES, OTHER INCOME AND
EXPENSES
The expenses made by the Group in order to be better
positioned to face the economic environment in which it
operates are presented in the income statement as
“restructuring expenses”.
The gains and losses arising upon the sale of intangible assets
other than development stage assets or property, plant and
equipment as well as increases or reversals of provisions for
litigations, other than tax litigations or litigations related to
discontinued operations, are presented in the income statement
as “other income and expenses”.
3.12 ǀ INCOME TAXES
The tax expense for the period comprises current and deferred
income taxes. Tax expense is recognized in the income
statement except to the extent that it relates to items
recognized in other comprehensive income or directly in equity.
In the case of items recognized in other comprehensive income
or in equity, the tax is also recognized in other comprehensive
income or directly in equity, respectively.
For the accounting policies related to R&D tax credits we refer to
3.13.2 under Government grants.
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the statement of
financial position date in the countries where the Company’s
subsidiaries operate and generate taxable income.
Current tax assets and tax liabilities are offset if there is a legally
enforceable right to offset and intention either to settle on a net
basis, or to realise the asset and settle the liability
simultaneously.
Deferred income tax is recognized, using the liability method, on
temporary differences arising between the carrying amounts of
assets and liabilities in the consolidated financial statements and
the corresponding tax bases used in the computation of taxable
profit.
Deferred income tax liabilities are generally recognized for all
taxable temporary differences and deferred income tax assets
are recognized to the extent that it is probable that future
taxable profits will be available against which deductible
temporary differences, carried forward tax credits or carried
forward losses can be utilized. Deferred income tax is not
accounted for if it arises from the initial recognition of goodwill
or from the initial recognition of an asset or liability in a
transaction (other than in a business combination) that at the
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time of the transaction affects neither accounting nor taxable
profit.
The carrying amount of deferred income tax assets is reviewed
at each statement of financial position date and reduced to the
extent that it is no longer probable that sufficient taxable profits
will be available to allow all or part of the asset to be recovered.
Deferred income tax is calculated at the tax rates that are
expected to apply in the period when the liability is settled or
the asset realized. The Group only considers substantively
enacted tax laws when estimating the amount of deferred taxes
to be recognized. Deferred tax assets and liabilities are not
discounted.
Deferred tax liabilities and assets are not recognized for
temporary differences between the carrying amount and tax
bases of investments in foreign operations where the Company
is able to control the timing of the reversal of the temporary
differences and it is probable that the differences will not
reverse in the foreseeable future.
Deferred tax assets and liabilities are only offset if there is a
legally enforceable right to offset current tax liabilities and
assets and the deferred income taxes relate to the same taxable
entity and the same taxation authority.
3.13 ǀ GOVERNMENT GRANTS
Grants from the government are recognized at their fair value
where there is a reasonable assurance that the grant will be
received and the Group will comply with all attached conditions.
3.13.1 ǀ RECOVERABLE CASH PAYMENTS RECEIVED FROM THE
GOVERNMENT
The Group receives cash payments from the government to
partially finance certain research and development projects. The
cash payments received from the government are repayable in
cash only if the Group decides to exploit and commercialize the
results of the research phase of the related project. If the Group
decides not to proceed with the results from the research phase,
the cash payments are not repayable. In this case the rights to
the research need to be transferred to the government. When
the Group receives these cash payments, these are accounted
for as other non-current liabilities. Only at the moment when
there is reasonable assurance that the Group will not have to
reimburse the cash payments, these cash payments are
accounted for as government grants and taken up in “other
operating income”. More specifically, this is at the moment the
government confirms the receipt of the research results and its
agreement with the Group’s decision not to proceed with the
research.
3.13.2 ǀ R&D TAX CREDIT
The R&D tax credit is considered as a government grant related
to assets if no additional relevant requirements are to be met
that are not directly related to the asset. The tax credit is taken
in profit and loss in line with the costs it is intended to
compensate. If the tax credit is received to compensate research
and development expenses that are not capitalized, the R&D tax
credit is recognized in P&L at the same moment as the research
and development expenses as a credit to the line “Research and
development expenses”. If the tax credit is received to
compensate amortizations on intangible assets e.g. licenses, the
R&D tax credit is recognized in profit and loss over the
(remaining) useful life of the asset and reported as “Other
operating income”.
The part of the R&D tax credit that cannot be deducted from the
taxable income is accounted for as a deferred tax asset. In this
case, the R&D tax credit can either (i) be received as a cash tax
refund after the legally foreseen waiting period or (ii) be offset
against future taxable income. If the R&D tax credit is not
refundable by the tax authorities, the recoverability of the
deferred tax asset is assessed on a regular basis as for the other
deferred tax assets. The part of the R&D tax credit that can be
deducted from taxable income is debited to the current income
tax liability.
3.14 ǀ INTANGIBLE ASSETS
3.14.1 ǀ PATENTS, LICENSES, TRADEMARKS AND OTHER
INTANGIBLE ASSETS
Patents, licenses, trademarks and other intangible assets
(collectively referred to as “intangible assets”) are shown at
historical cost. Intangible assets acquired in a business
combination are recognized at fair value at the acquisition date.
Intangible assets (except for goodwill) are amortized over their
useful lives on a straight-line basis as from the moment they are
available for use (i.e., in case of a license related to a compound
or product, when the product (containing the compound) is
launched for sale). Estimated useful life is based on the lower of
the contract life or the economic useful life (generally between 5
to 20 years). Intangible assets (except for goodwill) are
considered to have a finite economic useful life; therefore no
intangible assets with an indefinite life have been identified.
3.14.2 ǀ COMPUTER SOFTWARE
Acquired computer software licenses are capitalized on the basis
of the costs incurred to acquire and bring to use the specific
software. These costs are amortized over their estimated useful
lives (3 to 5 years) on a straight -line basis.
3.15 ǀ GOODWILL
Goodwill arises on the acquisition of subsidiaries and associates
and represents the excess of the consideration transferred over
the Group’s interest in the net fair value of the net identifiable
assets, liabilities and contingent liabilities of the acquiree and
the fair value of the non-controlling interest in the acquiree.
Goodwill is initially recognized as an asset at cost and is
subsequently carried at cost less accumulated impairment
losses. Goodwill related to the acquisition of subsidiaries is
presented separately on the face of the statements of financial
position, whereas goodwill arising upon acquisition of associated
companies is included in the investment in associated
companies.
UCB operates as one segment and has one cash generating unit
for the purpose of impairment testing.
As goodwill is considered to have an indefinite life, it is tested
for impairment annually, and whenever there is an indication
that it may be impaired, by comparing its carrying amount with
its recoverable amount. If the recoverable amount of the cash-
generating unit is less than the carrying amount of the unit, the
impairment loss is allocated first to reduce the carrying amount
of any goodwill allocated to the unit and then to the other assets
of the unit pro rata on the basis of the carrying amount of each
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asset in the unit. Impairment losses on goodwill are not
reversed.
On disposal of a subsidiary or an associate, the attributable
amount of goodwill is included in the determination of the profit
or loss on disposal of the entity.
In the event that the fair value of the identifiable assets,
liabilities and contingent liabilities exceeds the cost of the
business combination, the excess remaining after reassessment
is recognized directly in profit or loss.
3.16 ǀ PROPERTY, PLANT AND EQUIPMENT
All property, plant and equipment are carried at cost less
accumulated depreciation and impairment losses except for
property, plant and equipment under construction, which is
carried at cost less accumulated impairment losses.
Cost includes all directly attributable costs of bringing the asset
to its working condition for its intended use.
Purchased software that is integral to the functionality of the
related equipment is capitalized as part of that equipment.
Borrowing costs directly attributable to the acquisition,
construction or production of a qualifying asset are capitalized
as part of the cost of that asset.
Subsequent costs are included in the asset’s carrying amount or
recognized as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are expensed as they
are incurred.
Depreciation is calculated using the straight -line method to
allocate the cost of assets, other than land and properties under
construction, to their residual values over their estimated useful
lives. Depreciation commences when the asset is ready to be
used. Land is not depreciated.
The residual value and the useful life of an asset are reviewed at
least at each financial year-end and, if expectations differ from
previous estimates, the change(s) is(are) accounted for as a
change in an accounting estimate in accordance with IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors.
The following useful lives are applicable to the main property,
plant and equipment categories:
>
Buildings
20-33 years
>
Machinery
7-15 years
>
Laboratory equipment
7 years
>
Prototype equipment
3 years
>
Furniture and fixtures
7 years
>
Vehicles
5-7 years
>
Computer equipment
3 years
>
Right-of-use assets
Shorter of asset’s useful
life and leasing term
Gains and losses on disposals are determined by comparing the
proceeds from disposal with the carrying amount and are
recognized under “other income and expenses” in the income
statement.
Investment property is indicative of land and buildings held to
earn rentals. Such assets are initially carried at cost and
depreciated on a straight-line basis over their estimated useful
lives. The underlying useful lives correspond to those of self-
used tangible assets. Given the insignificant amount of
investment property, it is not separately presented in the
statement of financial position.
3.17 ǀ LEASES
The Group leases various properties, equipment and cars and
the rental contracts are typically made for a fixed, short or long
term period. Lease terms are negotiated on an individual basis
and contain a wide range of different terms and conditions. The
lease agreements do not impose any covenants, but leased
assets may not be used as security for borrowing purposes.
Leases are recognized as a right-of-use asset and corresponding
liability at the date of which the leased asset is available for use
by the Group. Each lease payment is allocated between the
liability and finance cost. The finance cost is charged to the
income statement over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of
the liability for each period. The right-of-use asset is depreciated
over the shorter of the asset’s useful life and the lease term on a
straight-line basis.
Assets and liabilities arising from a lease are initially measured
on a present value basis. Lease liabilities include the net present
value of the following lease payments:
-
fixed payments (including in-substance fixed payments), less
any lease incentives receivable;
-
variable lease payments that are based on an index or a rate.
There are no leases for which it is expected that the Group
would need to pay a residual value guarantee or a certain
amount to exercise a purchase option whereby it is reasonable
certain that the Group will exercise this option or any penalties
for terminating the lease in case the lease term reflects that the
Group will exercise this option.
The lease payments are discounted using the interest rate
implicit in the lease, if that rate can be determined, or the
Group’s incremental borrowing rate.
Right-of-use assets are measured at cost comprising the
following:
-
the amount of the initial measurement of lease liability;
-
any lease payments made at or before the commencement
date;
-
any initial direct costs (except for the leases already existing at
transition date), and
-
restoration costs.
Right-of-use assets are presented as part of property, plant and
equipment and lease liabilities as part of borrowings in the
statement of financial position. All lease payments that are due
within 12 months are classified as current liabilities. All lease
payments that are due at least 12 months after the statement of
financial position date are classified as non-current liabilities.
Payments associated with short-term leases and leases of low-
value assets are recognized on a straight -line basis as an expense
in profit or loss. Short-term leases are leases with a lease term of
12 months or less. Low-value assets comprise mainly IT-
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equipment (laptops, tablets, mobile phones, pc’s) and small
items of office equipment and furniture.
Some of the car leases contain variable lease payments. It
concerns car lease agreements that contain a Terminal Rental
Adjustment Clause (TRAC): a final settlement calculation is made
at termination of the lease to determine the final rental
adjustment. This final rent adjustment is a rent payment (or
credit) that reflects actual usage of the vehicle while under
lease. This final amount is not known at lease commencement.
The rental adjustment amount is not a specified amount but
depends upon known factors such as monthly depreciation and
initial acquisition cost, and several unknown factors at lease
commencement, such as mileage, condition of the vehicle, wear
and tear, damage, geography of operation, disposal channel, and
other factors. Together, these factors generally represent “use”
of the vehicle. Payments that vary due to use of the underlying
asset and vehicle mileage specifically are variable lease
payments. The final rental adjustment is recognized as expense
or, in case of a credit, as a reduction of expenses when realized.
Extension options are included in a number of property and car
leases across the Group. These terms are used to maximize
operational flexibility in terms of managing contracts. The
extension options held are exercisable only by the Group and
not by the respective Lessor.
There are no material lease agreements whereby the Group is
lessor.
3.18 ǀ FINANCIAL ASSETS: INVESTMENTS
3.18.1 ǀ CLASSIFICATION
The Group classifies its financial assets in the following
measurement categories: those to be measured subsequently at
fair value through profit or loss (FVPL), those to be measured
subsequently at fair value through other comprehensive income
(FVOCI), those to be measured at amortised cost. The
classification depends on the Group’s business model for
managing the financial assets and the contractual terms of the
cash flows.
Investments are included in non-current assets unless
management intends to dispose of the investment within 12
months of the statement of financial position date.
Regular purchases and sales of financial assets are recognized on
the trade date – the date on which the Group commits to
purchase or sell the asset. Financial assets are derecognized
when the rights to receive cash flows from the investments have
expired or have been transferred and the Group has transferred
substantially all risks and rewards of ownership.
For assets measured at fair value, gains and losses will either be
recorded in profit or loss or other comprehensive income (OCI).
For investments in equity instruments that are not held for
trading, this will depend on whether the Group has made an
irrevocable election at the time of initial recognition to account
for the equity investment at fair value through OCI (FVOCI).
3.18.2 ǀ MEASUREMENT
At initial recognition, the Group measures a financial asset at its
fair value plus, in case of a financial asset not at fair value
through profit or loss (FVPL), transaction costs that are directly
attributable to the acquisition of the financial asset. Transaction
costs of financial assets carried at FVPL are expensed in profit or
loss.
Financial assets with embedded derivatives are considered in
their entirety when determining whether their cash flows are
solely payment of principal and interest.
Debt instruments
The Group currently does not have any investments in debt
instruments.
Equity instruments
The Group subsequently measures all equity investments at fair
value. Where the Group’s management has elected to present
fair value gains and losses on equity investments in OCI, there is
no subsequent reclassification of fair value gains and losses to
profit or loss following the derecognition of the investment.
Dividends from such investments continue to be recognized in
profit or loss as financial income when the Group’s right to
receive payments is established.
Impairment losses (and reversal of impairment losses) on equity
investments measured at FVOCI are not reported separately
from other changes in fair value.
Changes in the fair value of financial assets at FVPL are
recognized in financial income / expenses in the income
statement.
The fair value of listed investments is based on current bid
prices. If the market for a financial asset is not active (and for
unlisted securities), the Group establishes fair value by using
valuation techniques.
3.19 ǀ DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING
ACTIVITIES
The Group uses derivative financial instruments to hedge its
exposure to foreign exchange and interest rate risks arising from
operational, financing and investment activities. The Group does
not engage in speculative transactions.
Derivative financial instruments are initially recorded at fair
value and attributable transaction costs are recognized in the
income statement when incurred. Derivative financial
instruments are subsequently remeasured at their fair value.
The Group includes the credit and the nonperformance risks into
its valuation techniques leading to non-material impact on
derivative valuation resulting from credit or debit margin
adjustments made on counterparts with who financial market
transactions are contracted.
The method of recognizing the resulting gains or losses depends
on whether the derivative financial instrument is designated as a
hedging instrument and if so, the nature of the item being
hedged. The Group designates derivative financial instruments
as either cash flow hedges, fair value hedges or net investment
hedges.
The Group documents at inception of the transaction the
economic relationship between the hedging instrument and the
hedged item, as well as its risk management objectives and
strategy for undertaking the hedging transaction. The Group
updates this assessment when required for example when the
hedge ratio is rebalanced or when the analysis of sources of
hedge ineffectiveness is updated.
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The full fair value of a hedging derivative financial instrument is
classified as a non-current asset or liability when the remaining
maturity of the hedged item is more than 12 months and as a
current asset or liability when the remaining maturity of the
hedged item is less than 12 months.
Derivative financial instruments embedded in financial liabilities
are separated from the host contract and accounted for
separately if the economic characteristics and risks of the host
contract and the embedded derivative financial instrument are
not closely related, a separate instrument with the same terms
as the embedded derivative financial instrument would meet
the definition of a derivative financial instrument, and the
combined instrument is not measured at fair value through
profit or loss.
3.19.1 ǀ CASH FLOW HEDGES
The effective portion of changes in the fair value of derivative
financial instruments that are designated and qualify as cash
flow hedges is recognized in other comprehensive income. The
gain or loss relating to the ineffective portion is recognized
immediately in the income statement within “Financial
income/Financial expenses”.
When option contracts are used to hedge a firm commitment or
forecast transaction, the group designates only the intrinsic
value of the options as the hedging instrument. Gains or losses
relating to the effective portion of the change in intrinsic value
of the options are recognized in other comprehensive income.
The changes in the time value of the options that relate to the
hedged item (‘aligned time value’) are also recognized within
OCI. These will be moved to the income statement (financial
income / expenses) when the hedged transaction affects the
P&L (in case of transaction related hedges) or over the period of
the hedge (in case of time-period related hedges).
When forward contracts are used to hedge forecast
transactions, the Group generally designates only the change in
fair value of the forward contract related to the spot component
as the hedging instrument. Gains or losses relating to the
effective portion of the change in the spot component of the
forward contracts are recognized in OCI. The change in the
forward element of the contract that relates to the hedged item
(‘aligned forward element’) is recognized in the income
statement (financial income / expenses).
Gains or losses relating to the effective portion of the change in
intrinsic value of the options or relating to the effective portion
of the change in the spot component of the forward contracts
accumulated in other comprehensive income are reclassified to
profit or loss in the periods when the hedged item affects profit
or loss on the same line of the income statement where the
designated hedged item affects profit or loss. However if the
cash flow hedge of a firm commitment or forecasted transaction
results in the recognition of a non-financial asset or a non-
financial liability, then, at the time the asset or liability is
recognized, the associated gains or losses on the derivative
financial instrument that had previously been recognized in
other comprehensive income are included in the initial
measurement of the asset or liability.
When hedging with forwards and financial instruments with
foreign currency basis spreads, the Group decides on a hedging-
relationship-by-hedging-relationship basis to account for the
changes in the currency basis spread by applying either the same
accounting as for the time value of options or by recognizing
these changes in value in the income statement (financial
income / expenses).
When a hedging instrument expires, or is sold or terminated, or
when a hedge no longer meets the criteria for hedge accounting,
any cumulative deferred gain or loss in other comprehensive
income at that time remains in other comprehensive income
until the forecast transaction occurs, resulting in the recognition
of a non-financial asset or liability. When the forecast
transaction is no longer expected to occur, the cumulative gains
or losses that were reported in other comprehensive income are
immediately reclassified to the income statement (financial
income / expenses).
3.19.2 ǀ FAIR VALUE HEDGES
Changes in the fair value of derivative financial instruments that
are designated and qualify as fair value hedges are recorded in
the income statement under “Financial income/Financial
expenses”, together with any changes in the fair value of the
hedged asset or liability that are attributable to the hedged risk.
3.19.3 ǀ NET INVESTMENT HEDGES
Hedges of net investments in foreign operations are accounted
for similarly to cash flow hedges. Any gain or loss on the hedging
instrument relating to the effective portion of the hedge is
recognized in the cumulative translation adjustments reserve;
the gain or loss relating to the ineffective portion is recognized
immediately in the income statement within “Financial
income/Financial expenses”. Gains and losses accumulated in
equity are recycled to the income statement when the foreign
operation is partially disposed of or sold.
3.19.4 ǀ DERIVATIVE FINANCIAL INSTRUMENTS THAT DO NOT
QUALIFY FOR HEDGE ACCOUNTING
Changes in the fair value of any derivative financial instruments
that do not qualify for hedge accounting are recognized
immediately in the income statement within “Financial income/
Financial expenses”.
3.20 ǀ INVENTORIES
Raw materials, consumables, goods purchased for resale, work
in progress and finished goods are valued at the lower of cost
and net realisable value.
Cost is determined using the weighted average cost method. The
cost of work in progress and finished goods comprises all the
costs of conversion and other costs incurred in bringing the
inventories to their present location and condition. The
conversion costs include the cost of production and the related
fixed and variable production overhead costs (including
depreciation charges).
Net realisable value represents the estimated selling price less
all estimated costs of completion and costs to be incurred in
marketing, selling and distribution.
Clinical trial materials are active substances and development
supplies that are used in R&D activities. As these are not used to
be sold in the ordinary course of business, these do not meet the
definition of inventory. However these are presented as other
current assets in the statement of financial position as the
clinical trial materials meet the definition of an asset as it is
probable they will result in future economic benefits flowing to
the Group and as their cost or value can be measured relia bly.
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3.21 ǀ TRADE RECEIVABLES
Trade receivables are recognized initially at fair value and are
subsequently measured at amortized cost using the effective
interest rate method, less provision for expected credit losses.
For determining the expected credit losses, the Group applies
the simplified approach permitted by IFRS 9, which requires
lifetime losses to be recognized from initial recognition of the
receivables. The Group identified 2 categories of trade
receivables: receivables on private customers and receivables on
public sector customers. For each of these categories, the Group
makes use of a provision matrix in order to determine lifetime
expected credit losses.
In case there is an indication or evidence of impairment for a
specific receivable, this receivable will be impaired for the
amount of lifetime expected credit losses.
For all receivables that are covered by a credit insurance or by a
factoring agreement without recourse, the lifetime expected
credit losses will be calculated taking into account this cover.
3.22 ǀ CASH AND CASH EQUIVALENTS
For the purpose of presentation in the Statement of Cash Flows,
cash and cash equivalents comprise cash on hand and demand
deposits and other short-term highly liquid investments with
original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to
an insignificant risk of changes in value, and bank overdrafts.
Bank overdrafts are shown within borrowings in current
liabilities in the statement of financial position.
3.23 ǀ NON-CURRENT ASSETS (OR DISPOSAL GROUPS) HELD
FOR SALE AND DISCONTINUED OPERATIONS
A discontinued operation is a component of the company that
either has been disposed of, or that is classified as held for sale.
It must either: represent a major separate line of business or
geographical area of operations; be part of a single coordinated
disposal plan; or be a subsidiary acquired exclusively with a view
to resale.
Non-current assets or a disposal group are classified as held for
sale when their carrying amount is to be recovered principally
through a sale transaction and a sale is considered highly
probable. Non-current assets and disposal groups are measured
at the lower of the carrying amount and fair value less costs to
sell if their carrying amount will be recovered principally through
a sale transaction rather than through continuing use.
Impairment losses upon initial classification as held for sale are
recognized in the income statement. Non-current assets
classified as held for sale are neither depreciated nor amortized.
3.24 ǀ SHARE CAPITAL
3.24.1 ǀ ORDINARY SHARES
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
The Company did not issue any preference or mandatory
redeemable preference shares.
3.24.2 ǀ TREASURY SHARES
When any Group company purchases the Company’s equity
share capital (treasury shares), the consideration paid, including
attributable direct costs (net of income taxes) is deducted from
the equity attributable to the Company’s equity holders until the
shares are cancelled or sold. Where such shares are
subsequently sold, any consideration received, net of any
directly attributable incremental transaction costs and the
related income tax effects, is included in equity attributable to
the Company’s equity holders.
3.25 ǀ BONDS AND BORROWINGS
Bonds, borrowings and overdrafts are initially measured at fair
value, net of transaction costs incurred, and are subsequently
measured at amortized cost, using the effective interest rate
method. Any difference between the proceeds (net of
transaction costs) and the settlement or redemption of
borrowings is recognized over the term of the borrowings in
accordance with the Group accounting policy.
Borrowings are classified as current liabilities unless the Group
has an unconditional right to defer settlement of the liability for
at least 12 months after the statement of financial position date.
3.26 ǀ TRADE PAYABLES
Trade payables are initially measured at fair value and are
subsequently measured at amortized cost using the effective
interest method.
3.27 ǀ EMPLOYEE BENEFITS
3.27.1 ǀ PENSION OBLIGATIONS
The Group operates various post-employment schemes,
including both defined benefit and defined contribution pension
plans.
A defined contribution plan is a pension plan under which the
Group pays fixed contributions into a separate entity and has no
legal or constructive obligations to pay further contributions in
the event that the fund does not hold sufficient assets to pay all
employees the benefits relating to employee service in the
current and prior periods. Obligations for contributions to
defined contribution pension plans are recognized as an
employee benefit expense in the consolidated income
statement when they are due. Prepaid contributions are
recognized as an asset to the extent that a cash refund or a
reduction in future payments is available.
Typically defined benefit plans define an amount of pension
benefit that an employee will receive on retirement, usually
dependent on one or more factors such as age, years of service
and compensation. The liability recognized in the consolidated
statement of financial position in respect of defined benefit
pension plans is the present value of the defined benefit
obligation less the fair value of plan assets. Any surplus resulting
from this calculation is limited to the present value of any
economic benefits available in the form of refunds from the
plans or reductions in future contributions to the plans.
The defined benefit obligation is calculated by independent
actuaries using the Projected Unit Credit Method. A full actuarial
valuation based on updated personnel information is performed
at least every three years. Additionally, if the net fluctuation
recognized on the statement of financial position is more than
10% from one year to the next due to plan circumstances
UCB Annual Financial Statements 2021
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171
(significant membership changes, modification to plan, etc.), a
full actuarial valuation is also required. For years where a full
actuarial valuation is not required, projections (known as “roll-
forwards”) from the previous year with updated assumptions
(discount rate, salary increase, turnover) is used. For these “roll-
forward” valuations, the individual employee data from the last
full valuation date are used taking into account assumptions for
salary increases and possibly turnover.
All valuations measure liabilities at the applicable statement of
financial position date and the market value of retirement plan
assets are also reported at this date regardless of whether a full
or a “roll-forward” valuation is performed.
The present value of the defined benefit obligation is
determined by discounting the estimated future cash outflows
using yields on high quality corporate bonds that have maturity
dates approximating the terms of the related Group obligations
and that are denominated in the same currency in which the
benefits are expected to be paid.
Remeasurement comprising of actuarial gains and losses, the
effect of the asset ceiling (if applicable) and the return on plan
assets (excluding interest) are recognized immediately in the
statement of financial position with a charge or credit to other
comprehensive income in the period in which they occur.
Remeasurement recorded in other comprehensive income is not
recycled. However, the entity may transfer those amounts
recognized in other comprehensive income within equity. Past
service cost is recognized in profit or loss in the period of plan
amendment. Net-interest is calculated by applying the discount
rate to the net defined benefit liability or asset. Defined benefit
costs are split into three categories:
>
service cost, past-service cost, gains and losses on
curtailments and settlements;
>
net-interest expense or income;
>
remeasurement.
The Group presents the first two components of defined benefit
costs in the line item “employee benefits expense” in its
consolidated income statement (by nature of expenses
aggregation). Net-interest expense or income is presented as
part of the Operating profit. Curtailments gains and losses are
accounted for as past-service cost. Remeasurements are
recorded in other comprehensive income.
3.27.2 ǀ OTHER POST-RETIREMENT EMPLOYEE BENEFITS
Some Group companies provide post-retirement healthcare
benefits to their retirees. The Group’s net obligation is the
amount of future benefits that employees have earned in return
for their service in the current and prior periods. The expected
costs of these benefits are accrued over the period of
employment using the same methodology used for defined
benefit plans.
3.27.3 ǀ TERMINATION BENEFITS
Termination benefits are payable when employment is
terminated before the normal retirement date, or when an
employee accepts voluntary redundancy in exchange for these
benefits. The Group recognizes termination benefits when it is
demonstrably committed to either: terminating the employment
of current employees according to a detailed formal plan
without possibility of withdrawal; or providing termination
benefits as a result of an offer made to encourage voluntary
redundancy. Benefits falling due more than 12 months after
statement of financial position date are discounted to present
value.
3.27.4 ǀ OTHER LONG-TERM EMPLOYEE BENEFITS
The liabilities for jubilee premiums and long service awards are
measured as the present value of expected future payments to
be made in respect of services provided by employees up to the
end of the reporting period using the projected unit credit
method. Consideration is given to expected future wage and
salary levels, experience of employee departures and periods of
service. Expected future payments are discounted using yields
on high quality corporate bonds with terms and currencies that
match, as closely as possible, the estimated future cash
outflows. Remeasurements as a result of experience
adjustments and changes in actuarial assumptions are
recognized in profit or loss.
3.27.5 ǀ PROFIT-SHARING AND BONUS PLANS
The Group recognizes a liability and an expense for bonuses and
profit-sharing, based on a formula that takes into consideration
the profit attributable to the company’s shareholders after
certain adjustments. The Group recognizes a provision when a
reliable estimate of the obligation can be made as there is a past
practice for bonus and profit-sharing payments that has created
a constructive obligation.
3.27.6 ǀ SHARE-BASED PAYMENTS
The Group operates several equity-settled and cash-settled
share-based compensation plans.
The fair value of the employee services received in exchange for
the grant of stock options is recognized as an expense. The total
amount to be expensed is determined by reference to the fair
value of the stock options granted, excluding the impact of any
service and non-market performance vesting conditions (for
example profitability, remaining an employee of the entity over
a specified time period).
Service and non-market vesting conditions are included in the
assumptions about the number of options that are expected to
vest. The total amount expensed is recognized over the vesting
period, which is the period over which all the specified vesting
conditions are to be satisfied.
The fair value of the stock option plan is measured at the grant
date using the Black-Scholes valuation model which takes into
account the expected life and cancellation rate of the options. At
each statement of financial position date, the entity revises its
estimates of the number of options that are expected to vest. It
recognises the impact of the revision to original estimates, if
any, in the income statement, with a corresponding adjustment
to equity.
The proceeds received net of any directly attributable
transaction costs are credited to share capital (nominal value)
and share premium when the options are exercised. The fair
value of the amount payable to employees in respect of share
appreciation rights, phantom share option, share award and
performance share plans, which are settled in cash, is recognized
as an expense, with a corresponding increase in liabilities, over
the period that the employees become unconditionally entitled
to payment. The liability is re-measured at each statement of
financial position date and at settlement date.
UCB Annual Financial Statements 2021
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172
Any changes in the fair value of the liability are recognized as
personnel expenses in the income statement.
3.28 ǀ PROVISIONS
Provisions are recognized in the statement of financial position
when:
>
there is a present obligation (legal or constructive) as a
result of a past event;
>
it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation;
and
>
a reliable estimate can be made of the amount of the
obligation.
The amount recognized as a provision is the best estimate of the
expenditure required to settle the present obligation at the
statement of financial position date. Provisions are measured at
the present value of the expenditures expected to be required
to settle the obligation using a discount rate that reflects current
market assessments of the time value of money and the risks
specific to the obligation. The increase in the provision due to
the passage of time is recognized as interest expense.
A restructuring provision is recognized when the Group has a
detailed formal plan and has raised a valid expectation in those
affected that it will carry out the restructuring by starting to
implement that plan or announcing its main features to those
affected by it.
Environmental provisions are mainly resulting from legal
contractual obligations. For more information about these
environmental and other provisions we refer to note 34
4. Critical judgements and accounting estimates
Estimates and judgements are continuously evaluated and are
based on historical experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances.
4.1 Critical judgements in applying the group accounting policies
Revenue recognition
The Group is party to out-licensing agreements, which can involve
upfront payments, development milestones, sales milestones and
royalties that may occur over several years and involve certain
future contract liabilities. For all out-licensing agreements
whereby a license is transferred with other goods or services, the
Group first makes an assessment about whether or not the license
is to be considered as a distinct performance obligation or not. If
the transfer of the license is considered to be a separate
performance obligation, revenue relating to the transfer of the
license is recognized at a point in time or over time depending on
the nature of the license. Revenues are only recognized over time
if the Group is performing development, manufacturing or other
activities that could significantly affect the IP transferred, hereby
exposing the licensee to the effects of these activities when these
activities do not represent a separate service. If the Group
assesses that these conditions are not fulfilled, revenue resulting
from out-licensing agreements is recognized at the moment
control over the license is transferred.
If revenues are recognized over time and in case the input method
is assessed as the best method to reflect the transfer of control of
the service to the customer, some judgement may be required in
applying this method especially in estimating the total costs and
hours to be incurred. In this case the Group uses its best estimate
based on past experience and actual knowledge and progress of
the service to be provided. Estimates are reassessed on a
continuous basis. Seen the activities of the Group, in most cases,
the input method provides the most faithful depiction of the
transfer of the service to the customer.
For licenses that are bundled with other services (e.g.
development or manufacturing services) the Group will apply
judgment to assess whether the combined performance obligation
is satisfied at a point in time or over time. If revenue is recognized
over time, the Group will apply judgment in determining the
period over which the services are provided. The Group will also
apply judgment when allocating the components of the
transaction price to the different performance obligations in case
the out-licensing agreement includes other performance
obligations in addition to the transfer of the license.
Revenue recognition for out -licensing agreements is therefore
based on the specific conditions of each out-licensing agreement.
This might result in cash receipts being initially recognized as
contract liabilities and then released to revenue in subsequent
accounting periods based on the different conditions specified in
the agreement.
Discontinued operations
Operations that are classified as held for sale or have
been
disposed of, are presented as discontinued operations in the
consolidated income statement
when the operations represent a
major separate line
of business or geographical area of
operations, are
part of a single coordinated disposal plan or
represent
a subsidiary acquired exclusively with a view to resale.
The assessment on what is a major separate line of
business is
done on a case by case basis and depends on the size of the
operations in terms of revenues, gross
profit or total value of
assets and liabilities compared to the total operations of the
Group.
Leases
In determining the lease term, management considers all facts
and circumstances that create an economic incentive to exercise
an extension or termination option. The assessment is reviewed
if a significant event or a significant change in circumstances
occurs which affects this assessment. During the current
financial year,
there was no material financial effect of revising
lease terms to reflect the effect of exercising extension or
termination options.
4.2 Critical accounting estimates and assumptions
The preparation of the financial statements in conformity with
IFRS as adopted for use by the
European Union requires
UCB Annual Financial Statements 2021
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173
management to make
estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial
statements and the reported amounts of
revenue and expenses
during the reporting period.
Management bases its estimates on historical
experience and various other assumptions that are
reasonable under the circumstances, the results
of
which form the basis for making the reported amounts
of revenue and expenses that may not be
readily
apparent from other sources. Actual results will
by
definition not equal those estimates. Estimates and
assumptions are reviewed periodically and the effects
of
revisions are reflected in the financial statements in the
period they are determined to be necessary.
4.2.1 Sales allowances
The Group has accruals for expected sales returns,
chargebacks
and other rebates, including the U.S.
Medicaid Drug Rebate
program and the U.S. Federal
Medicare program, and similar
rebates in other countries.
Such estimates are based on analyses
of existing
contractual obligations or legislation, historical
trends
and the Group experience. After assessment of the
Management, the total accruals for these items are
adequate,
based upon currently available information and interpretation
of relevant regulations. As these
deductions are based on
management estimates, the
actual deductions might differ
from these estimates.
Such differences could impact the accruals recognized in the
statement of the financial position in future periods and
consequently
the level of sales recognized in the income
statement
in future period, as there is often a time lag of
several
months between the recording of the estimate and
the
final accounting of the sales allowances. In general, the
discounts, rebates and other deductions shown on the
invoice are accounted for as an immediate deduction from
gross sales in the income statement. The sales
returns,
chargebacks, rebates and discounts that are not mentioned on
the invoice are estimated, deducted from sales and presented
on the statement of the financial position in the
appropriate
accrual account and deducted from sales.
All sales allowances are considered as being part of the
variable consideration included in the transaction price. The
amount of variable consideration included in the
transaction price is determined so that the total transaction
price is the price estimated by management as not being
constrained.
4.2.2 Intangible assets and goodwill
The Group has intangible assets with a carrying amount
of € 3
159 million (Note 20) and goodwill with a carrying
amount of €
5 173 million (Note 21). Intangible assets
are amortized over
their useful lives on a straight-line
basis as from the moment
they are available for use (
i.e.
when related products are
launched for sale).
Management estimates that the useful life for acquired in-
progress R&D compounds equates to the period these
compounds benefit from patent protection or data
exclusivity. For the intangible assets acquired through a
business combination and which comprises
compounds that
are marketed but for which no patent
protection or data
exclusivity exists, management
estimates that the useful life
equates to the period in which these compounds will realize
substantially all
the cash contributions.
These intangible assets and goodwill are regularly
reviewed for
impairment and whenever there is an indication that an impairment
might exist. The intangible
assets that are not yet available for use
and goodwill are
subject to at least annual impairment testing.
To assess if there is any impairment, estimates are made
of the
future cash flows expected to result from the use of these assets
and their eventual disposal. These
estimated cash flows are then
adjusted to the present
value using an appropriate discount rate
that reflects the
risks and uncertainties associated with the
forecasted cash flows.
Actual outcomes could vary significantly from such estimates of
discounted future cash flows. Factors such as the entrance or
absence of competition, technical
obsolescence or lower than
expected rights could result
in shortened useful lives and
impairments.
The Group applied the following key assumptions
for the
“value in use” calculations required for the
impairment testing
of intangible assets and goodwill
at year-end:
>
growth rate for terminal value 2
.0%
>
discount rate in respect of goodwill and Intangibles related to
marketed products 6
.05%
Since the cash flows also take into account tax
expenses, a post-tax
discount rate is used in the
impairment testing.
Management estimates that the use of the post-tax
discount rate
approximates the results of using a pre-tax
rate applied to pre-tax
cash flows.
4.2.3 Environmental provisions
The Group has provisions for environmental
remediation costs,
which are disclosed in Note 34.
The most significant elements of
the environmental
provisions consist of costs to fully clean and
refurbish contaminated sites and to treat contamination at
certain other sites, mainly related to the discontinued chemical
and films activities of the Group.
Future remediation expenses are affected by a number of
uncertainties that include, amongst others, the
detection of
previously unknown contaminated sites,
the method and extent of
remediation, the percentage
of waste attributable to the Group,
and the financial
capabilities of the other potentially responsible
parties.
Given the inherent difficulties in estimating the liabilities
in
this area, it cannot be guaranteed that additional
costs will not be
incurred beyond the amounts currently
accrued. The effect of
resolution of environmental matters on results of operations
cannot be predicted due to uncertainty concerning both the
amount and timing of future expenditures and the results of future
UCB Annual Financial Statements 2021
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174
operations. Such changes that arise could impact the
provisions
recognized in the statement of the financial position in the future.
4.2.4 Employee benefits
The Group currently has many defined benefit plans,
which
are disclosed in Note 33. The calculation of
the assets or
liabilities related to these plans is based upon statistical and
actuarial assumptions. This is in particular the case for the
present value of the defined benefit obligation which is
impacted by assumptions
on discount rates used to arrive
at the present value of future pension liabilities, and
assumptions on future
increases in salaries and benefits.
Furthermore, the Group uses statistically-based assumptions
covering areas such as future withdrawals
of participants from
the plans and estimates of life
expectancy. The actuarial
assumptions used might differ materially from actual results
due to changes in market
and economic conditions, higher or
lower employee turnover, longer or shorter life spans of
participants, and other changes in the factors being assessed.
These differences could impact the assets or liabilities
recognized in the statement of financial position in future
periods.
4.2.5 Tax positions
The Group operates in multiple jurisdictions with often
complex legal and tax regulatory environments. The Group
engages constructively with the tax authorities. Where
appropriate, we engage advisors and legal counsel to obtain
opinions on tax legislation and principles. The income tax
positions taken are considered by the Group to be
supportable and are intended to withstand challenge from
tax authorities. However, it is acknowledged that some of
the positions are uncertain and include interpretations of
complex tax laws as well as transfer pricing considerations
which could be disputed by tax authorities. The Group judges
these positions on their technical merits and this on a regular
basis using all the information available (legislation, case law,
regulations, established practice, authoritative doctrine as
well as the current state of discussions with tax authorities,
where appropriate).
A liability is recorded for each item that is not probable of
being sustained on examination by the tax authorities and
after using all legal remedies of defending the position
before Court, based on all relevant information. The liability
is calculated taking into account the most likely outcome for
corporate income tax related matters or the expected value
for corporate income tax and transfer pricing matters,
depending on which is thought to give a better prediction of
the resolution of each uncertain tax position in view of
reflecting the likelihood of an adjustment being recognized
upon examination. These estimates are based on facts and
circumstances existing at the end of the reporting period.
The tax liability and income tax expense include expected
penalties and late payment interests arising from tax
disputes.
An asset for tax audit adjustments is recorded when the
Group considers it probable, based on the technical merits of
the tax case, that a Mutual Agreement or Arbitration
Procedure may provide for relief in one or more jurisdictions.
The asset is calculated as the expected value (as relating to
transfer pricing matters) of the recoverability in corporate
income taxes in the concerning jurisdiction upon completion
of the Mutual Agreement or Arbitration procedure.
The Group has recognized net deferred tax assets of € 501
million (Note 32). The recognition of deferred tax assets is
based upon whether it is probable that sufficient taxable
profits will be available in the future against which the
reversal of temporary differences can be used. Where the
temporary differences relate to losses or carry-forward tax
attributes (such as innovation income deduction), the
availability of sufficient forecasted taxable profits to offset
against the tax attributes is also considered.
Significant items on which management has exercised
judgement include recognition on the statement of financial
position of deferred tax assets relating to losses in
jurisdictions where losses have been made in prior periods
but where profits now arise or are forecast to do so for the
foreseeable future. Management has used its best estimate
of the correct value of asset to recognize in such cases,
which includes a judgment on the length of the future time
period to use in such assessments. These judgments are
made on a case by case basis taking into account the origin
and nature of the expected revenues, based on the
functional profiles of the concerning entities and on an
entity-by-entity basis, but this time period in most cases
does not exceed five years.
Differences in forecasted taxable profits and actual
profitability or a downgrade in future forecasted taxable
profits could impact the deferred tax assets recognized in
future periods.
No material deferred tax assets are recognized for entities
that are currently still lossmaking or not using their tax
attributes.
Given the international tax reform developments,
Management is assessing the impact of the pending
international OECD tax reform (‘Tax Challenges arising from
the Digitalization of the Economy’) on recognition &
measurement of deferred tax assets. Given lack of
enactment in the countries where UCB operates, this
currently does not generate any impact.
4.2.6 Valuation of intangibles and related deferred taxes
acquired in business combination
Assets that have been identified as a result of a business
combination are valued incorporating the concept of
highest and best use in accordance with IFRS 13, Fair
Value Measurement and IFRS 3, Business Combinations
from the viewpoint of a market participant.
In order to value the existing In-Process Research &
Development (IPR&D) assets as of the effective date of the
business combination, the multi-period excess earnings
method is used which is a variation of the income
UCB Annual Financial Statements 2021
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175
approach that estimates an intangible asset’s value based
on the present value of the incremental after-tax cash
flows (or “excess earnings”) attributable only to the
intangible asset. As a basis for this valuation,
management-prepared prospective financial information
is used for the prospective earnings associated with the
IPR&D. Specifically, this prospective financial information
relates to revenues, cost of goods sold, R&D expenses,
distribution, sales and marketing expenses, general and
administrative costs and Probability of Technical and
Regulatory Success (PTRS) specific to the IPR&D assets.
The determination of these PTRS is based on benchmarks
and internal analysis.
Other assumptions relate to income tax rate and tax
amortization benefit, useful life and discount rate. The fair
value of the IPR&D assets is considered amortizable for
income tax purposes from the viewpoint of a market
participant. The present value of the tax benefit from
amortization of the assets is added to the present value of
the incremental after-tax cash flows to arrive at the
indicated value of the IPR&D assets. The magnitude of the
discount rate applied to the projected cash flows is related
to the current capital costs. The discount rate utilized
represents an estimate of the Weighted Average Cost of
Capital.
All prospective financial information, PTRS and other
assumptions are assessed on a case by case basis taking
into account all specific circumstances. Actual outcomes
could vary significantly from such assumptions and could
impact the value of the intangibles and related deferred
taxes in future periods. An impairment test is performed
at least once a year and whenever there is an indication
that an impairment might exist. See also note 4.2.2
Intangible assets and goodwill.
4.2.7
Assessment of control over an investment in case
more than 50% of the shares are held by non-controlling
interests.
In order to assess whether or not UCB has control over an
investment in case more than 50% of the shares are held by
non-controlling interests, any contractual arrangement
between UCB and the investment is considered as well as
the design and the purpose of investment, the power to
direct the relevant activities of the investment, the
contractual sharing of risk as well as the power of UCB
compared to the non-controlling interests to affect the
returns of the investment
5. Financial risk management
The Group is exposed to various financial risks arising from its
underlying operations and corporate finance activities.
These financial risks mainly include market risk (including
currency risk, interest risk and price risk), credit risk and liquidity
risk.
This note presents information about the Group exposure and
management of the above-mentioned risks and the Group
management of capital.
5.1 Market risk
Market risk is the risk that changes in market prices, such as
foreign exchange rates, interest rates and equity prices will
affect the Group income statement or the value of its assets and
liabilities. The objective of market risk management is to
manage and control market risk exposures. The Group enters
into derivative financial instruments and also incurs financial
liabilities or holds financial assets in order to manage market
risk. Where possible, the Group seeks to apply hedge accounting
in order to manage volatility in the income statement. It is the
Group policy and practice not to enter into derivative
transactions for speculative purposes.
5.1.1 Foreign exchange risk
The Group operates across the world and is exposed to
movements in foreign currencies affecting its net income and
financial position, as expressed in euro. The Group actively
monitors its currency exposures, and when appropriate, enters
into transactions with the aim of preserving the value of existing
assets and liabilities, as well as anticipated transactions. The
Group uses forward contracts, foreign exchange options and
cross-currency swaps to hedge certain committed and
anticipated foreign exchange flows and financing transactions.
The instruments purchased to hedge transactional exposure are
primarily denominated in U.S. dollar, British pound, Japanese
yen and Swiss franc, the currencies where the Group has its
most important exposures. The Group’s financial risk
management policy is to hedge for the impact from the
translation of foreign currency assets and liabilities into the
functional currency of the relevant group subsidiaries, as well as
the impact of currency fluctuations on the Group’s anticipated
net foreign currency cash flows for a period of minimum 6 and
maximum 26 months.
The Group has certain investments in foreign operations, whose
net assets are exposed to foreign currency translation risk.
The effect of translational exposure arising from the
consolidation of the foreign currency denominated financial
statements of the Group foreign subsidiaries as well as from
assimilated net foreign investment positions and net investment
UCB Annual Financial Statements 2021
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176
hedges is shown as a cumulative translation adjustment in the
Group consolidated statement of changes in equity.
5.1.2 Effect of currency fluctuations
At December 31, 2021, if the euro had strengthened or
weakened by 10% against the following currencies with all other
variables being held constant, the impact on equity and post-tax
profit for the year, based on the outstanding currency balances
and hedge instruments at that date, would have been as follows:
At December 31, 2021
€ million
Change in rate.
Strengthening/
weakening (-) EUR
Impact on equity:
Loss (-)/gain
Impact on income
statement:
Loss (-)/gain
USD
+10%
111
7
-10%
-136
-9
GBP
+10%
-9
2
-10%
11
-3
CHF
+10%
-73
5
-10%
89
-6
JPY
+10%
24
0
-10%
-29
-1
At December 31, 2020
€ million
Change in rate.
Strengthening/
weakening (-) EUR
Impact on equity:
Loss (-)/gain
Impact on income
statement:
Loss (-)/gain
USD
+10%
135
39
-10%
-165
-48
GBP
+10%
-11
0
-10%
13
-1
CHF
+10%
-57
1
-10%
69
-2
JPY
+10%
10
1
-10%
-13
-1
5.1.3 Interest rate risk
Changes in interest rates may cause variations in interest income
and expenses resulting from interest -bearing assets and
liabilities. In addition, they can affect the market value of certain
financial assets, liabilities and instruments as described in the
following section on market risk of financial assets. The interest
rates on the Group’s major debt instruments are both fixed and
floating, as described in Notes 29 and 30. The Group uses
interest rate derivatives to manage its interest rate risk, as
described in Note 39.
The Group designates derivative financial instruments (interest
rate swaps) as hedging instruments, under fair value hedges, to
fixed rate financial assets and liabilities. Both the derivative
financial instrument and the hedged item are accounted for at
fair value through profit or loss.
In 2021, changes in fair value resulting from interest rate
derivatives designated to the floating rate liabilities of the Group
have been accounted for through equity under IFRS 9.
5.1.4 Effect of interest rate fluctuations
A 100 basis points increase in interest rates at statement of
financial position date would have increased equity by € 5
million (2020: € 10 million); a 100 basis points decrease in
interest rates would have decreased equity by € 5 million (2020:
€ 11 million).
A 100 basis points increase or decrease in interest rates at
statement of financial position date would have no impact on
profit and loss (2020: € 0 million).
All interest rate hedges are either designated as cash flow
hedges or fair value hedges under IFRS9 and therefore, except
for minimal hedge inefficiency, the result of a change in the
interest rate curve is accounted for through equity, respectively
offset by the revaluation through P&L of the hedged item.
These concern all pre-tax calculations.
5.1.5 Other market price risk
Changes in the market value of certain financial assets and
derivative financial instruments can affect the income or the
financial position of the Group. Financial long-term assets, if any,
UCB Annual Financial Statements 2021
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177
are held for contractual purposes, and marketable securities, if
any, are mainly held for regulatory purposes. The risk of loss in
value is managed by reviews prior to investing and continuous
monitoring of the performance of investments and changes in
their risk profile.
Investments in equities, bonds, debentures and other fixed
income instruments are entered into on the basis of guidelines
with regard to liquidity and credit rating.
Amounts subject to market price risk are rather immaterial and
therefore the impact on equity or the income statement of a
reasonable change of this market price risk is assumed to be
negligible.
Similar to 2020, during 2021 the Group traded on treasury
shares, which were accounted for through equity.
5.2 Credit risk
Credit risk arises from the possibility that the counterparty to a
transaction may be unable or unwilling to meet its obligations
causing a financial loss to the Group. Trade receivables are
subject to a policy of active risk management, which focuses on
the assessment of country risk, credit availability, on-going
credit evaluation and account monitoring procedures. There are
certain concentrations within trade receivables of counterparty
credit risk, particularly in the U.S., due to the sales via
wholesalers (Note 25).
For some credit exposures in critical countries, such as certain
Southern European countries, the Group has obtained credit
insurance.
In the U.S., the Group entered into a trade receivable financing
agreement that qualifies for derecognition. According to the
terms and conditions of the agreement UCB does not retain any
non-payment or further late payment risk relating to the
transferred trade receivables.
The exposure of other financial assets to credit risk is controlled
by setting a policy for limiting credit exposure to high quality
counterparties, regular reviews of credit ratings, and setting
defined limits for each individual counterparty. The criteria set
by Group Treasury for their investment policy are based on
generally considered high quality long-term credit ratings and 5
years Credit Default Swap rate.
Where appropriate to reduce exposure, netting agreements
under an ISDA (International Swaps and Derivatives Association)
master agreement are signed with the respective
counterparties. The maximum exposure to credit risk resulting
from financial activities, without considering netting
agreements, is equal to the carrying amount of financial assets
plus the positive fair value of derivative instruments.
5.3 Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet
its financial obligations as they fall due. The Group’s approach to
managing liquidity is to ensure, as far as possible, that it will
always have sufficient liquidity to meet its liabilities when due,
under normal circumstances without incurring unacceptable
losses or risking damage to the Group reputation.
The Group maintains sufficient reserves of cash and readily
realisable marketable securities to meet its liquidity
requirements at all times. In addition, the Group has certain
unutilized revolving committed facilities at its disposal.
At the statement of financial position date, the Group had the
following sources of liquidity available:
> cash and cash equivalents (Note 26): € 1 263 million (2020: € 1
336 million)
> unutilized credit facilities and undrawn available amount
under finance
contract (Note 29): € 38 million (2020: € 47
million), linear digressive since 2016 until 2025
> unutilized revolving credit facilities (Note 29): € 1 billion (2020:
€ 1 billion); the existing € 1 billion syndicated committed
revolving credit facility of the Group, maturi
ng in 2025 was
undrawn per end 2021
The table below analyses the contractual maturities of the
Group financial liabilities into relevant maturity groupings based
on the remaining period at the statement of financial position
date to the contractual maturity date, excluding the impact of
netting. The amounts mentioned below with respect to the
financial derivatives are indicative of the contractual
undiscounted cash flows.
At December 31, 2021
€ million
Note
Total
Contractual
cash flow
Less than 1
year
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
Bank Borrowings and other long term loans
29
1 152
1 152
- 1
- 2
1 155
0
Debentures and other short term loans
29
0
0
0
0
0
0
Lease liabilities
29
Institutional Eurobond maturing in 2028
30
Private Placement maturing in 2027
30
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
178
Retail bond maturing in 2023
30
0
0
Institutional Eurobond maturing in 2022
30
0
0
0
0
0
0
Institutional Eurobond maturing in 2021
30
0
0
0
0
0
0
Trade and other liabilities
35
2 641
2 641
2 555
Bank overdrafts
29
0
0
0
Interest rate swaps
Forward exchange contracts and other
derivative financial instruments used for hedging
purposes
Outflow
4 213
4 213
4 213
0
0
0
Inflow
4 128
4 128
4 128
0
0
0
Forward exchange contracts and other
derivative financial instruments at fair value
through profit and loss
Outflow
1 145
1 145
1 145
0
0
0
Inflow
1 185
1 185
1 185
0
0
0
At December 31, 2020
€ million
Note
Total
Contractual
cash flow
Less than 1
year
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
Bank Borrowings and other long term loans
29
1 567
1 567
0
1 554
0
Debentures and other short term loans
29
0
0
0
0
0
0
Lease liabilities
29
Private Placement maturing in 2027
30
Retail bond maturing in 2023
30
0
Institutional Eurobond maturing in 2022
30
0
Institutional Eurobond maturing in 2021
30
0
0
Retail bond maturing in 2020
30
0
0
0
0
0
0
Trade and other liabilities
35
2 229
2 229
2 138
Bank overdrafts
29
0
0
0
Interest rate swaps
0
Forward exchange contracts and other
derivative financial instruments used for hedging
purposes
Outflow
2 924
2 924
2 924
0
0
0
Inflow
2 998
2 998
2 998
0
0
0
Forward exchange contracts and other
derivative financial instruments at fair value
through profit and loss
Outflow
1 623
1 623
1 623
0
0
0
Inflow
1 583
1 583
1 583
0
0
0
5.4 Capital risk management
The Group policy with respect to managing capital is to
safeguard the Group’s ability to continue as a going concern in
order to provide returns to shareholders and benefits to patients
and to reduce the Group external debt further, in order to
obtain a capital structure that is consistent with others in the
industry.
€ million
2021
2020
Total borrowings (Note 29)
1 307
1 710
Bonds (Note 30)
1 037
Less: cash and cash equivalents (Note 26), available for sale debt securities (Note 23) and
cash collateral related to the financial lease obligation
-1 263
-1 336
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
179
Net debt
1 411
Total equity
8 386
7 272
Total financial capital
9 246
8 683
Gearing ratio
9%
16%
5.5 Fair value estimation
The fair value of financial instruments traded in active markets
(such as financial assets at fair value through OCI) is based on
quoted market prices at the statement of financial position date.
The fair value of financial instruments that are not traded in an
active market is determined by using established valuation
techniques such as option pricing models and estimated
discounted values of cash flows. The Group uses a variety of
methods and makes assumptions that are based on market
conditions and the credit and the non-performance risks existing
at each statement of financial position date.
Quoted market prices are used for long-term debt. Other
techniques, such as estimated discounted cash flows, are used
to determine fair value for the remaining financial instruments.
The fair value of the interest rate swaps is calculated as the
present value of the estimated future cash flows. The fair value
of the forward exchange contract is determined using
discounted value of the exchanged amounts in currencies,
converted at the prevailing spot rate at the statement of
financial position date.
The carrying amount less impairment provision of trade
receivables and trade payables is assumed to approximate their
fair values. The fair value of financial liabilities for disclosure
purposes is estimated by discounting the future contractual cash
flows at the current market interest rates that is available to the
Group for similar financial instruments.
5.5.1 Fair value hierarchy
IFRS 7 requires disclosure of fair value measurements by level of
the following hierarchy:
> Level 1: quoted (unadjusted) prices in active markets for
identical assets or liabilities;
> Level 2: other techniques for which all inputs which have a
significant effect on the recorded fair value are observable,
either directly or indirectly;
> Level 3: techniques which use inputs which have a significant
effect on the recorded fair value that are not based on
observable market data.
All fair value measurements disclosed are recurring.
5.5.2 Financial assets measured at fair value
December 31, 2021
€ million
Level 1
Level 2
Level 3
Total
Financial assets
Financial assets at FVOCI (Note 23)
Quoted equity securities
179
0
0
179
Quoted debt securities
0
0
0
0
Derivative financial assets (Note 39)
Forward foreign exchange contracts - cash flow hedges
0
11
0
11
Forward exchange contracts - fair value through profit and loss
0
50
0
50
Interest rate derivatives - cash flow hedges
0
1
0
1
Interest rate derivatives - fair value through profit and loss
0
8
0
8
Other financial assets excluding derivatives (Note 23)
December 31, 2020
€ million
Level 1
Level 2
Level 3
Total
Financial assets
Financial assets at FVOCI (Note 23)
Quoted equity securities
115
0
0
115
Quoted debt securities
0
0
0
0
Derivative financial assets (Note 39)
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
180
Forward foreign exchange contracts - cash flow hedges
0
86
0
86
Forward exchange contracts - fair value through profit and loss
0
37
0
37
Interest rate derivatives - cash flow hedges
0
0
0
0
Interest rate derivatives - fair value through profit and loss
0
15
0
15
Other financial assets excluding derivatives (Note 23)
5.5.3 Financial liabilities measured at fair value
December 31, 2021
€ million
Level 1
Level 2
Level 3
Total
Financial liabilities
Derivative financial assets (Note 39)
Forward foreign exchange contracts - cash flow hedges
0
69
0
69
Forward exchange contracts - fair value through profit and loss
0
29
0
29
Interest rate derivatives - cash flow hedges
0
0
0
0
Interest rate derivatives - fair value through profit and loss
0
12
0
12
Other financial liabilities excluding derivatives (Note 31)
Warrants
0
0
0
0
December 31, 2020
€ million
Level 1
Level 2
Level 3
Total
Financial liabilities
Derivative financial assets (Note 39)
Forward foreign exchange contracts - cash flow hedges
0
0
0
0
Forward exchange contracts - fair value through profit and loss
0
81
0
81
Interest rate derivatives - cash flow hedges
0
4
0
4
Interest rate derivatives - fair value through profit and loss
0
0
0
0
Other financial liabilities excluding derivatives (Note 31)
Warrants
0
0
0
0
During the reporting period ending December 31, 2021, there
were no transfers between Level 1 and Level 2 fair value
measurements, and no transfers into and out of Level 3 fair
value measurements.
Fair value measurements categorized within Level 2 of the fair
value hierarchy are calculated using either the “Discounted cash
flow” or the “Black-Scholes” method (for FX options only) and
market data publicly available.
The fair value of the warrants issued by a subsidiary is
determined using a discounted net present value model of the
probabilized cash outflows. As per December 31, 2021, all
amounts were paid and the value has been reduced to zero. The
change in fair value, recognized in profit and loss, amounts to €
0 million (2020 € 1 million) and is accounted for in other
financial expenses (Note 17).
The following table presents the changes in Level 3 instruments:
€ million
Warrants
TOTAL
January 1, 2020
Cash purchase of additional warrants
0
0
Cash settlement of warrants
- 30
- 30
Effect of changes in fair value recognized in profit and loss
Effect of movements in exchange rates
0
0
December 31, 2020
0
0
Cash purchase of additional warrants
0
0
Effect of changes in fair value recognized in profit and loss
0
0
Effect of movements in exchange rates
0
0
December 31, 2021
0
0
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
181
5.6 Offsetting financial assets and financial liabilities
While the Group has amounts subject to an enforceable master netting arrangement or similar agreements, financial assets and
financial liabilities are reported gross on the statement of financial position as the requirements are not met to report them net. The
reconciliations below depict the amounts subject to an enforceable master netting arrangement or similar agreement that have not
been netted on the statement of financial position.
The tables below show financial assets and liabilities subject to enforceable master netting arrangements:
December 31, 2021
Gross financial assets in
the statement of financial
position
Related amounts not set off in the statement of
financial position
Net amounts
€ million
Financial instruments
Cash collateral received
Derivatives
71
47
0
24
Other
0
0
0
0
Total
71
47
0
24
December 31, 2021
Gross financial liabilities in
the statement of financial
position
Related amounts not set off in the statement of
financial position
Net amounts
€ million
Financial instruments
Cash collateral received
Derivatives
111
47
0
64
Other
0
0
0
0
Total
111
47
0
64
ISDA master agreements (International Swaps and Derivatives Association) have been signed with the respective counterparties
allowing offsetting of financial assets and liabilities. This is applicable to the fair value settlement in case of default, but it is not
applicable at the closing date December 31, 2021.
The tables below show financial assets and liabilities subject to enforceable master netting arrangements:
December 31, 2020
Gross financial assets in
the statement of financial
position
Related amounts not set off in the statement of
financial position
Net amounts
€ million
Financial instruments
Cash collateral received
Derivatives
138
57
0
81
Other
0
0
0
0
Total
138
57
0
81
December 31, 2020
Gross financial liabilities in
the statement of financial
position
Related amounts not set off in the statement of
financial position
Net amounts
€ million
Financial instruments
Cash collateral received
Derivatives
89
57
0
32
Other
0
0
0
0
Total
89
57
0
32
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
182
6. Segment reporting
The Group’s activities are in one segment,
Biopharmaceuticals.
There are no other significant classes of business, either singularly
or in aggregate. The Chief Operating Decision Makers, that being
the Executive Committee, review the operating results and
operating plans, and make resource allocation decisions on a
company-wide basis, therefore UCB operates as one segment.
Enterprise-wide disclosures about product sales, geographic
areas and revenues from major customers are presented below.
6.1 Product sales information
Net Sales consist of the following:
€ million
2021
2020
CIMZIA®
1 841
1 799
VIMPAT®
1 549
1 451
KEPPRA® (including KEPPRA® XR
/ E KEPPRA®)
BRIVIACT®
NEUPRO®
ZYRTEC® (including ZYRTEC-D®/CIRRUS®)
XYZAL®
NAYZILAM®
EVENITY®
BIMZELX®
0
Other products
Designated hedges reclassified to net sales
Total net sales
5 471
5 052
6.2 Geographic information
The table below shows net sales in each geographic market in which customers are located:
€ million
2021
2020
2 888
2 759
Japan
Germany
Europe – other (excluding Belgium)
Spain
France (including French territories)
Italy
U.K. and Ireland
China
Belgium
Other countries
Designated hedges reclassified to net sales
Total net sales
5 471
5 052
The table below illustrates the property, plant and equipment in each geographic market in which the assets are located:
€ million
2021
2020
Belgium
Switzerland
U.K. and Ireland
U.S.
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
183
Japan
China
Germany
Other countries
Total
1 275
1 035
6.3 Information about major customers
UCB has 3 customers which individually account for more than 10% of the total net sales for 2021 and 2020:
●
Mckesson, US for which net sales 2021 amount to € 890 million (16% of total net sales) (2020: € 803 million, 16% of net
sales)
●
Cardinal Health, US for which net sales 2021 amount to € 753 million (14% of total net sales) (2020: € 674 million, 13% of
net sales)
●
Amerisourcebergen Corp, US for which net sales 2021 amount to € 660 million (12% of total net sales) (2020: € 617 million,
12% of net sales)
7. Revenue from contracts with customers
The Group has recognized the following amounts relating to revenue in the consolidated income statement:
€ million
2021
2020
Revenue from contracts with customers
5 748
5 327
Revenue from agreements whereby risks and rewards are shared
Total revenue
5 777
5 347
7.1
Disaggregation of revenue from contracts with customers
ACTUAL
TIMING OF REVENUE RECOGNITION
€ million
2021
2020
2021
2020
At a point
in time
Over time
At a point
in time
Over time
Net sales U.S.
2 888
2 759
2 888
0
2 759
0
CIMZIA®
1 183
1 174
1 183
0
1 174
0
VIMPAT®
1 130
1 072
1 130
0
1 072
0
KEPPRA®
0
0
BRIVIACT®
0
0
NEUPRO®
0
0
NAYZILAM®
0
0
Established brands / Other products
0
0
0
0
Net sales Europe
1 396
1 374
1 396
0
1 374
0
CIMZIA®
0
0
KEPPRA®
0
0
VIMPAT®
0
0
NEUPRO®
0
0
BRIVIACT®
0
0
EVENITY®
0
0
BIMZELX®
4
0
4
0
0
0
Established brands / Other products
0
0
Net sales international markets
1 130
1 130
0
0
KEPPRA®
0
0
CIMZIA®
0
0
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
184
VIMPAT®
0
0
NEUPRO®
0
0
BRIVIACT®
0
0
NAYZILAM®
0
0
0
0
0
0
EVENITY®
0
0
0
0
0
0
Established brands / Other products
0
0
Net sales before hedging
5 414
5 023
5 414
0
5 023
0
Designated hedges reclassified to net sales
0
0
Total net sales
5 471
5 052
5 471
0
5 052
0
Royalty income and fees
0
0
Contract manufacturing revenues
0
0
Income from licensing deals (upfront payments, development
milestones, sales milestones)
Revenue resulting from services & other deliveries
Total other revenue
Total revenue from contracts with customers
5 748
5 327
5 727
5 311
7.2
Contract assets and liabilities
The group has recognized the following revenue-related contract liabilities:
€ million
Note
2021
2020
Contract liabilities resulting from out-licensing agreements
Non-current
35
0
Current
35
Contract liabilities resulting from other agreements
0
Total revenue -related contract liabilities
The Group does not have any revenue -related contract assets.
Revenue-related contract liabilities mainly relate to unsatisfied
performance obligations resulting from out-licensing
agreements with Otsuka, Genentech and Novartis (see below).
These liabilities have increased mainly because of the new
development, license and commercialization agreement that
was concluded during the year between UCB and Novartis
Pharma AG.
The following table shows how much of the revenue recognized
in the current reporting period was included in the contract
liability balance at the beginning of the period and how much
relates to performance obligations that were satisfied in
previous periods.
€ million
2021
2020
Revenue recognized that was included in the contract liability balance at the beginning
of the period
Revenue resulting from other agreements
0
Revenue resulting from out-licensing agreements
Revenue recognized that relates to performance obligations that were satisfied in a
prior year
Product sales
Revenue resulting from out-licensing agreements
The following table shows unsatisfied performance obligations resulting from out-licensing agreements:
€ million
Note
2021
2020
Aggregate amount of the transaction price allocated to development
agreements that are partially or fully unsatisfied as at December 31
35
Upfront payments received for out-licensing agreements to be taken in
revenue as performance obligations are satisfied over time
35
0
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
185
Unsatisfied performance obligations resulting from out-licensing
agreements
Management expects that 18% of the transaction price allocated
to the unsatisfied development agreements as of December 31,
2021 will be recognized as revenue during the next reporting
period. 19% is assessed to be recognized during 2023 and the
remaining 63% will be recognized in financial years 2024 till
2030. The amount disclosed above does not include variable
consideration which is constrained. The performance obligations
still to be satisfied concern development activities to be
performed over the next years.
All other development, manufacturing or other service
agreements are for periods of one year or less or are billed
based on time incurred. As permitted under IFRS 15, the
transaction price allocated to these unsatisfied agreements is
not disclosed.
No assets are recognized from costs to fulfill a contract.
8. Business combinations
As mentioned in the 2020 Integrated Annual Report, UCB had
finalized the purchase price allocation for the acquisition of
Ra Pharmaceuticals Inc., a U.S. clinical stage biopharma
company based in Cambridge, Massachusetts, acquired by
UCB on April 2, 2020 as well as for the acquisition of Engage
Therapeutics Inc., a small, privately held U.S. company,
acquired by UCB on June 5, 2020.
There were no changes to these purchase price allocations in
2021.
9. Discontinued operations and assets and liabilities of disposal group classified
as held for sale
9.1
Discontinued operations
For 2021, the profit from discontinued operations amounts to €
3 million (0 million for 2020), and mainly relates to the reversal
of unused amounts of the Tecumseh (U.S.) provision related to
the Films business for € 4 million partially offset by additional
costs for an environmental provision related to the legacy films
and chemical activities in Belgium for € 1 million.
9.2
Assets and liabilities of disposal group classified as held for sale
Assets and liabilities of disposal group classified as held for sale
as
per December 31, 2021 relate to inventories following the
divestment of non-core established brand products. As not all
market authorizations have been transferred already to the
buyer, UCB is still owner of the inventories for these divested
non-core established brand products in some countries. No
write-off has been accounted for on these inventories.
Assets of disposal group classified as held for sale as per
December 31, 2020 also relate to inventories following the
divestment of non-core established brand products.
10. Other revenues
€ million
2021
2020
Upfront payments, milestone payments and reimbursements
Contract manufacturing revenues
Total other revenue
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
186
During 2021, UCB received milestone payments and
reimbursements from different parties, mainly:
> Chiesi for the sale of global exclusive rights of TG2 -Zampilimab;
> Biogen for co-development of antibody
dapirolizumab pegol
;
> Roche and Genentech for the global development and
commercialization of
Bepranemab
;
The revenue from contract manufacturing activities is mainly
linked to the entering into toll manufacturing agreements after
divestiture of established brands.
11. Operating expenses by nature
The table below illustrates certain items of expense recognized in the income statement using a classification based on their nature
within the Group:
€ million
Note
2021
2020
12
1 523
1 316
22
20
14
0
Total
1 852
1 670
12. Employee benefit expense
€ million
Note
2021
2020
Wages and salaries
1 081
Social security costs
Post-employment benefits – defined benefit plans
33
Post-employment benefits – defined contribution plans
Share-based payments to employees and directors
28
Insurance
Other employee benefits
59
Total employee benefit expense
1 523
1 316
The total employee benefit expense has been allocated along
functional lines within the income statement.
Other employee benefits consist mainly of termination benefits,
severance payments, and other long-term/
short-term disability
benefits.
Headcount at December 31
2021
2020
Monthly Paid
2 860
2 986
Management
5 755
5 423
Total
8 615
8 409
Further information regarding post -employment benefits and share-based payments can be found in Notes 28 and 33.
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
187
13. Other operating income/expenses
€ million
2021
2020
Provisions
- 3
- 15
Impairment trade receivable
- 2
- 4
Gain/Loss (-) on disposal of non-current assets
- 2
- 3
Reimbursement by third parties for development expenses
Grants received
Collaboration agreement for the development and commercialization of EVENITY
®
Other income/expenses (-)
- 4
- 2
Total other operating income / expenses (-)
The result of the collaboration agreement with Amgen for the
development and commercialization of EVENITY
®
151 million income (compared to € 96 million income in 2020).
All recharges of development and commercialization expenses
to/from Amgen are classified as other operating
income/expenses. The equivalent total net recharges as per
December 31, 2021
selling income (€ 98 million in 2020) and € -11 million
development expenses (€ -2 million in 2020).
The provisions are mainly related to VAT risks and grant
recoverability risks .
14. Impairment of non-financial assets
A review of the recoverable amounts of the Group’s assets
resulted in the recognition of impairment losses on intangibles
amounting to € 6 million due to the termination of projects
(2020: € 0 million).
No impairment charges for Group property, plant and
equipment were recognized in 2021 (2020: € 0 million).
On April 22, UCB announced its decision not to move forward
with its immune-mediated necrotizing myopathy
(IMNM) development program based on the initial results of a
Phase 2a study investigating
zilucoplan
the results of this study indicate that
zilucoplan
complement activation is not relevant in the disease
biology of IMNM. An impairment assessment for
zilucoplan
been made but as the carrying amount of the asset did not
exceed its recoverable amount, management decided no
impairment is required.
No reasonably possible change in a key assumption on which
management has based its determination of the assets
recoverable amounts would cause the assets carrying amount to
exceed its recoverable amount.
15. Restructuring expenses
The restructuring expenses for the year ended December 31, 2021 amount to € 21 million (2020: € 20 million) and
are related to new organization models and business discontinuation. Provisions for restructuring as defined in IAS 37.70 that are
included, meet the criteria in IAS 37.72.
16. Other income/expenses
Total other income/expenses amounted to an expense of € 7
million (2020: expense of € 102 million) and is comprised of the
following items:
> Loss on disposal: € 1 million in 2021 related to the sale of
Alprostadil in Germany (€ 37 million gain in 2020). A gain of € 16
million were also recognized in 2020 related to the divestment
of NIFEREX® (iron supplement) franchise in China.
> Other expenses: € 6 million in 2021, related mainly to the
cumulative exchange differences on liquidation, the Distilbène
provision and intellectual property fees (2020: € 155 million and
mainly relate to the Ra Pharma acquisition fees (95M€), the
Distilbène provision and intellectual property fees).
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
188
17. Financial income and financial expenses
The net financial expenses for the year amounted to € 58 million (2020: € 93 million). The breakdown of the financial expenses and
financial income is as follows:
Financial Expenses
€ million
2021
2020
Interest expenses on:
- 18
- 18
- 6
- 15
- 18
- 31
Financial charges on leases
- 3
- 4
Net fair value losses on foreign exchange derivatives
0
- 31
Net foreign exchange losses
- 90
- 7
Net other financial income/expenses (-)
- 3
- 1
Total financial expenses
- 138
- 107
Financial Income
€ million
2021
2020
Interest income on:
Net gain on interest rate derivatives
0
Net fair value gain on foreign exchange derivatives
0
Total financial income
The net other financial income/expenses include
€ 0 million
expenses related to the changes in fair value
of the warrants
linked to the structured entity Edev Sàrl
(€ -1 million in
2020
) (Note
5.5.3.).
18. Income tax expense (-)/credit
€ million
2021
2020
Current income taxes
- 192
- 198
Deferred income taxes
Total income tax expense (-)/credit
- 170
- 119
The Group operates internationally, implying being subject to
income taxes in many different tax jurisdictions.
The income tax expense on the Group’s profit before tax
differ from the theoretical amount that would arise using the
weighted average tax rate applicable to profits (losses) of the
consolidated companies.
Income taxes recognized in the income statement can be
detailed as follows:
€ million
2021
2020
Profit before income taxes
1 226
Income tax expense (-) calculated at domestic tax rates applicable in the respective
countries
- 234
- 181
Theoretical income tax rate
19%
21%
Reported current income tax
- 192
- 198
Reported deferred income tax
Total reported tax charge
- 170
- 119
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
189
Effective income tax rate
14%
13%
Difference between theoretical and reported tax
Expenses non-deductible for tax purposes
- 27
- 35
Non-taxable income
Increase (-) / decrease of liabilities for uncertain tax positions
0
- 3
Tax credits
Variation in tax rates
- 1
Current tax adjustments related to prior years
- 14
Deferred tax adjustments related to prior years
Net effect of previously unrecognised DTA and non-recognition of current year deferred
tax assets
- 32
- 30
Withholding tax
- 3
Other taxes
Total difference between theoretical and reported income tax
The theoretical income tax rate is at 19% compared to 21% in
previous year.
The effective tax rate of 14% is slightly above the prior year
effective tax rate and stems from a current tax charge and a
deferred tax credit. The key drivers for the rate can be
summarized as follows:
Current Tax:
-
The impact of predominantly R&D related tax incentives in
key jurisdictions.
-
The tax impact of prior year one-off IP (Intellectual
Property) or legal entity reorganizations.
Deferred Tax:
-
Increase to the tax rate in respect of deferred tax balance
movements and carry-forward losses and innovation
income deduction generated by UCB in the period for which
no deferred tax asset could be recognized.
-
Recognition of additional deferred tax assets on R&D tax
credits which will be offset against future taxable income.
Factors affecting the tax charge in future years
The Group is aware of many factors that could impact the
future effective tax rate of the Group, in particular the
profit/losses mix between different territories in which the
Group operates, the amount of unrecognized losses and
other tax attributes that in future can be recognized as a
deferred tax asset on the statement of financial position
and the outcome of ongoing and future tax audits.
Corporate restructuring, acquisitions, disposals and other
transactions may also impact the Group’s future tax
charge.
Changes to tax legislation in jurisdictions where the Group
operates as well as the impact of international tax rules
may also have a major impact. UCB is closely following up
the discussions on the OECD’s initiatives on the tax
challenges arising from the digitalization of the economy
that are likely to be enacted into local legislation by the
end of 2022. There is also close monitoring of the U.S. tax
reform initiatives (Build Back Better plan) given UCB’s
substantial revenue footprint in the U.S.
Next to the OECD and U.S. developments, UCB follows up
closely on tax developments in the entire EU and in key
jurisdictions with a substantial sales or R&D footprint, such
as Belgium and the U.K.
19. Components of other comprehensive income (including NCI)
64
64
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
190
January 1,
Movements
December 31,
Movements
December 31,
€ million
2020
2020 net of tax
2020
2021 net of tax
2021
Items of OCI
65
profit or loss in subsequent periods:
-45
-226
-271
199
-72
Cumulative translation adjustments
-58
-314
-372
280
-92
Financial assets at FVOCI
66
9
27
36
22
58
Cash flow hedges
4
61
65
-103
-38
Items of OCI not to be reclassified to
profit or loss in subsequent periods:
-306
-24
-330
87
-243
Remeasurement of defined benefit obligation
-306
-24
-330
87
-243
Total other comprehensive income attributed
to equity holders
-351
-250
-601
286
-315
20. Intangible assets
2021
€ million
Trademarks,
patents and
licenses
Other
Total
Gross carrying amount at January 1
4 960
5 409
Additions
Disposals
0
- 52
- 52
Business Combinations
0
0
0
FX on Business Combinations
0
0
0
Transfer from one heading to another
Effect of movements in exchange rates
Gross carrying amount at December 31
5 359
5 820
Accumulated amortization and impairment losses at January 1
-2 138
- 298
-2 436
Amortization charge for the year
- 152
- 36
- 188
Disposals
0
Impairment losses recognized in the income statement
- 6
0
- 6
Transfer from one heading to another
0
Effect of movements in exchange rates
- 82
- 1
- 83
Accumulated amortization and impairment losses at December 31
-2 376
- 285
-2 661
Net carrying amount at December 31
2 983
3 159
2020
€ million
Trademarks,
patents and
licenses
Other
Total
Gross carrying amount at January 1
2 760
3 157
Additions
Disposals
- 6
- 5
- 11
Business Combinations
2 519
0
2 519
FX on Business Combinations
- 110
0
- 110
Transfer from one heading to another
0
Effect of movements in exchange rates
- 257
- 3
- 260
Gross carrying amount at December 31
4 960
5 409
Accumulated amortization and impairment losses at January 1
-2 050
- 268
-2 318
Amortization charge for the year
- 180
- 35
- 215
65
66
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
191
Disposals
Impairment losses recognized in the income statement
0
0
0
Transfer from one heading to another
0
0
0
Effect of movements in exchange rates
Accumulated amortization and impairment losses at December 31
-2 138
- 298
-2 436
Net carrying amount at December 31
2 822
2 973
The Group amortizes all intangible assets once they are placed in
service. The amortization of intangible assets is allocated to cost
of sales for all intangible assets that are related to compounds.
The amortization charges related to software are allocated to
the functions that use this software.
The majority of the Group intangible assets arose from previous
acquisitions. During 2021, the Group acquired intangible assets
totaling € 170 million (2020: € 74 million). These additions stem
from in-licensing deals, software and capitalized eligible
development costs and capitalization of external development
expenses for post approval studies.
Additionally, the Group capitalized € 20 million (2020: € 17
million) of software and eligible software development costs.
In 2020, UCB recognized intangibles assets of € 2 519 million
from business combinations (refer to Note 8).
Disposals in 2021 mainly relate to old softwares not used
anymore. For 2020, disposals were mainly in respect of the
divestment of Alprostadil license.
During the year, the Group recognized total impairment charges
of € 6 million (2020: € 0 million). The impairment charges are
detailed in Note 14 and have been presented in the income
statement under the caption “Impairment of non -financial
assets”.
The amortization charge for the period amounted to € 188
million (2020: € 215 million).
There was also a transfer of assets for € 42 million from
property, plant and equipment to intangibles.
Furthermore there was an impact from translation of foreign
currencies of € 170 million in 2021 (2020: € -169 million).
Other intangible assets are primarily comprised of software and
in-process development projects. The in-process development
project assets are not amortized until they are available for use
(i.e. when related products are launched for sale) and
transferred to the licenses caption.
21. Goodwill
€ million
2021
2020
Net book value at January 1
4 964
5 059
Acquisition
0
FX on acquisition
0
- 8
Effect of movements in exchange rates
- 248
Net book value at December 31
5 173
4 964
The Group tests goodwill for impairment annually or more
frequently if there are indications that goodwill might be
impaired. For the purpose of the impairment testing, the Group
operates as one segment, Biopharmaceuticals, and has one
single cash generating unit (CGU), which represents the lowest
level at which the goodwill is monitored.
The recoverable amount of the CGU is determined based on the
value-in-use calculations and the methodology applied for
performing the impairment testing has not been modified
compared to 2020.
Key assumptions
The calculations performed are based on the cash flow
projections as derived from the financials underlying the 10-year
strategic plan approved by management and Board of Directors.
Given the nature of the industry, the long-term projections are
used to fully model the appropriate product lifecycles based on
the patent expiry and therapeutic area. These long-term
projections, which are based on past performance and
management’s expectations of market developments, are
adjusted for specific risks and include:
> the revenue growth rates of newly launched products;
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
192
> the probability of reaching commercial stage for new products
and or indications;
> the probability of success of future product launches and the
expected dates thereof;
> the post-patent expiry erosion.
The key assumptions, when comparing to 2020, were adapted
taking into account the latest developments of the probabilities
of success and the post-patent expiry erosion.
For the “value in use” calculations required for the impairment
testing, a discount rate of 6.05 % was used.
Taking into account current market evolutions, the cash flows
beyond the projected forecasted period (terminal value) are
extrapolated using an estimated growth rate of 2%, compared to
2% in 2020. The growth rate does not exceed the long-term
average growth rate for the relevant territories in which the CGU
operates.
The Group has most of its revenue and expenses in EUR and USD
based countries. The following important exchange rates were
used in preparing the future cash flows:
10 Years
Projection
2020
USD
1.22 - 1.30
1.21 - 1.29
GBP
0.89 - 1.09
0.87 - 1.06
JPY
118 - 129
119 - 130
CHF
1.06 - 1.08
1.06 - 1.08
Starting from risk-free short -term LIBOR EUR 6 months and long-
term EU generic government bonds 20 years (2020: 20 years),
the discount rate applied is determined based on the weighted
average cost of capital for DCF models, including the 20 year
(2020: 20 year) benchmark cost of debt and equity, adjusted to
reflect the specific asset and country risks associated with the
CGU. Given the industry, the Group used a discount rate of
6.05% (2020: 5.93%). The discount rate is reviewed at least
annually.
Since after-tax cash flows are incorporated into the calculation
of the value-in-use of the CGU, a post-tax discount rate is used in
order to remain consistent.
The use of the post-tax discount rate approximates the result of
using a pre-tax rate applied to pre-tax cash flows. A tax rate up
to 20% was used (2020: 20%).
SENSITIVITY ANALYSIS
Based on the above, management assessed that no reasonable
change in any of the key assumptions for the determination of
the recoverable amount would cause the carrying value of the
CGU to materially exceed its recoverable amount. For
information purposes, the sensitivity analysis using a 0%
perpetual growth rate combined with an overall discount rate
below 18% would not result in an impairment of the goodwill.
22. Property, plant and equipment
2021
€ million
Land and
buildings
Plant and
machinery
Office,
computer
equipment,
vehicles and
other
Assets under
construction
Total
Gross carrying amount at January 1
2 061
Additions
Disposals
- 7
- 2
- 34
0
- 43
Transfer from one heading to another
- 123
- 42
Effect of movements in exchange rates
Gross carrying amount at December 31
1 007
2 420
Accumulated depreciation at January 1
- 346
- 562
- 118
0
-1 026
Depreciation charge for the year
- 43
- 64
- 28
0
- 135
Disposals
0
Effect of movements in exchange rates
- 10
- 16
- 2
0
- 28
Accumulated depreciation at December 31
- 390
- 640
- 115
0
-1 145
Net carrying amount at December 31
1 275
2020
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
193
€ million
Land and
buildings
Plant and
machinery
Office,
computer
equipment,
vehicles and
other
Assets under
construction
Total
Gross carrying amount at January 1
1 780
Additions
Business combinations
0
Disposals
- 13
- 1
- 30
- 1
- 45
Transfer from one heading to another
- 98
- 40
Effect of movements in exchange rates
- 15
- 7
- 5
- 3
- 30
Gross carrying amount at December 31
2 061
Accumulated depreciation at January 1
- 320
- 499
- 121
0
- 940
Depreciation charge for the year
- 44
- 66
- 29
0
- 139
Disposals
0
Business combinations
- 2
- 4
0
0
- 6
Effect of movements in exchange rates
0
Accumulated depreciation at December 31
- 346
- 562
- 118
0
-1 026
Net carrying amount at December 31
1 035
None of the Group property, plant and equipment is subject to
restrictions on title nor has it been pledged as security for
liabilities.
During 2021, the Group acquired property, plant and equipment
totaling € 386 million (2020: € 368 million). These additions
include right-of-use assets for € 63 million (2020: € 45 million),
mainly related to renewal of building lease agreements in the
U.S. € 126 million relate to Bioplant Braine site reported in
assets under construction. Other additions relate to the
revamping of the office environment, building facilities and IT
hardware and other plan and equipment.
During the year, the Group did not recognize any impairment
expenses (2020: impairment of € 0 million).
The depreciation charge for the year amounts to € 135 million
(2020: € 139 million) and includes the depreciation on the right-
of-use assets (€ 40 million).
CAPITALIZED BORROWING COSTS
No borrowing costs were capitalized during 2021
(2020: € 0 million).
23. Financial and other assets
23.1
Non-current financial and other assets
€ million
2021
2020
Financial assets at FVOCI (excl. derivatives) (Note 23.3)
Cash deposits
Derivative financial instruments (Note 39)
Reimbursement rights with respect to German defined benefit plans
Other financial assets
Non-current financial and other assets
23.2
Current financial and other assets
€ million
2021
2020
Clinical trial materials
Financial assets at FVOCI (excl. derivatives) (Note 23.3)
Derivative financial instruments (Note 39)
Current financial and other assets
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
194
23.3
Financial assets at fair value through other comprehensive income (FVOCI) (excl. derivatives)
The current and non-current financial assets at FVOCI (excl. derivatives) comprise the following:
€ million
2021
2020
Equity securities
Financial assets at FVOCI (excl. derivatives)
The movement in the carrying values of the financial assets at FVOCI (excl. derivatives) is as follows:
2021
2020
€ million
Equity securities
Equity securities
At January 1
Additions
Disposals
- 1
- 27
Fair value gains/losses (-) going through OCI
Reclassification from associates (incl. fair value gain)
0
At December 31
For more information on the derivatives of which fair value
movements are accounted for through OCI, we refer to note 39.
For the financial assets that are valued at amortized cost, the
carrying amount approximates the fair value.
The Group does not have any investments in debt instruments.
The equity securities mainly include investments in Heidelberg
Pharma AG, Syndesi Therapeutics SA, ExeVir Bio BV and
investments in UCB Ventures that have been classified as
financial assets at FVOCI. These investments are measured at
fair value. All fair value gains and losses are presented in OCI.
As at the end of 2021, UCB’s stakes in Heidelberg Pharma AG,
Syndesi Therapeutics SA and ExeVir Bio BV were 3.65%, 16.45%
and 17.89% (on a fully diluted basis) (2020: 3.65%, 16.45%, and
16.52%) respectively. As UCB does not have significant influence
in these companies, the equity investments are classified as
financial assets at FVOCI.
The additions to financial assets at FVOCI in the year include €
19 million investments made in UCB Ventures, UCB’s corporate
venture fund as well as an additional € 4 million investment in
ExeVir Bio BV. The fair value gains going through OCI mainly
relate to the increase in value of UCB’s venture fund
investments.
The current financial assets at FVOCI (€ 49 million in 2021
compared to € 30 million in 2020) relate to vested long term
incentives granted to employees. These are held in custody for
the account of the relevant participants on a separate securities
account of UCB. There is a corresponding liability which is
recorded in Other Payables (Note 35). As these shares are held
for the account of the relevant participants and not for UCB’s
account, these are not treated as treasury shares in accordance
with IAS 32.33.
23.4
Investment in associates
The Group has no investments in associates.
23.5
Joint operations
No joint operations were entered into by the Group in 2021.
23.6
Subsidiaries with material non-controlling interests
As of December 31, 2021, there is no accumulated non-
controlling interest.
The accumulated non-controlling interest as of December 31,
2020 is € 1 million and relates to Edev S.à r.l. (“Edev”). No
dividends have been paid to non-controlling interests during
either 2021 or 2020.
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
195
Based in Luxembourg, Edev was 100% owned by the non-
controlling interests. Summarized financial information for non-
controlling interest is shown in the tables below before
intercompany eliminations.
Edev Sàrl is included in the consolidated income statement for
2020 and 2021 until March 26, 2021, date as from which the
Group has no longer control over this company.
Summarized statement of financial position:
€ million
2021
2020
Non-current assets
0
0
Current assets
0
Total assets
0
Non-current liabilities
0
0
Current liabilities
0
0
Total liabilities
0
0
Non-controlling interest
0
Summarized income statement:
€ million
2021
2020
Revenue
0
Expenses
0
- 1
Profit (loss) attributable to the non -controlling interests
0
Total comprehensive income (loss) attributable to the non-controlling interests
0
Summarized cash flow statement:
€ million
2021
2020
Net cash inflow (outflow) from operating activities
0
0
Net cash inflow (outflow) from investing activities
0
0
Net cash inflow (outflow) from financing activities
0
0
Net cash inflow (outflow)
0
0
24. Inventories
€ million
2021
2020
Raw materials and consumables
Work in progress
Finished goods
Goods purchased for resale
0
- 1
Inventories
The cost of inventories recognized as an expense and included in
“cost of sales” amounted to € 772 million (2020: € 701 million).
There are no inventories pledged for security, nor is there any
inventory stated at net realizable value. The write-down on
inventories amounted to € 34 million in 2021 (2020: € 16 million)
and has been included in cost of sales. Total inventory increased
by € 24 million and related to increase of Core products.
25. Trade and other receivables
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
196
€ million
2021
2020
Trade receivables
Less: provision for impairment
- 18
- 16
Trade receivables – net
VAT receivable
Interest receivables
Prepaid expenses
Accrued income
0
0
Other receivables
Royalty receivables
Trade and other receivables
1 239
1 031
The carrying amount of trade and other receivables
approximates their fair values. With respect to trade receivables,
the fair value is estimated to be the carrying amount less the
provision for impairment and for all other receivables the
carrying value approximates fair value given the short-term
maturity of these amounts.
There is some concentration of credit risk with respect to trade
receivables. For some credit exposures in critical countries, such
as the Southern European countries, the Group obtained credit
insurance. The Group co-operates with dedicated wholesalers in
certain countries. The largest outstanding trade receivable in
2021 from a single customer is 16% (2020: 14%) from McKesson
Corp. U.S..
The aging analysis of the Group trade receivables at year -end is as follows:
2021
2020
€ million
Gross
carrying
amounts
Impairment
Gross
carrying
amounts
Impairment
Not past due
0
0
Past due – less than one month
0
0
Past due more than one month and not more than three months
0
- 3
Past due more than three months and not more than six months
0
0
Past due more than six months and not more than one year
0
- 11
- 8
Past due more than one year
- 7
- 5
Total
- 18
- 16
Based on historical default rates, the Group believes that no
provision for impairment is necessary in respect of trade
receivables not past due. This concerns 98% (2020: 91%) of
the outstanding balance at the statement of financial position
date.
The movement in the provision for impairment in respect of trade receivables is shown below:
€ million
2021
2020
Balance at January 1
- 16
- 14
Impairment charge recognized in the income statement
- 2
- 7
Utilization / reversal of provision for impairment
0
Effects of movements in exchange rates
0
Balance at December 31
- 18
- 16
The other classes within trade and other receivables do not
contain impaired assets.
The carrying amounts of the Group trade and other receivables are denominated in the following currencies:
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
197
€ million
2021
2020
EUR
USD
JPY
GBP
CNY
CHF
KRW
Other currencies
Trade and other receivables
1 239
1 031
The maximum exposure to credit risk at the reporting date is
the fair value of each class of receivable mentioned above.
The Group does not hold any collateral as security.
26. Cash and cash equivalents
€ million
2021
2020
1 011
1 263
1 336
Cash and short-term deposits of € 62 million are held mostly in
countries with restrictive regulations on exporting capital
from
the country other than
via
normal dividends, such as Brazil,
China, India, Korea, Thailand and Turkey.
For the purpose of presentation in the Statement of Cash
Flows, cash and cash equivalents comprise cash on hand and
demand deposits and other short-term highly liquid
investments with original maturities of three months or less
that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value,
and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities in the statement of financial
position.
€ million
2021
2020
1 263
1 336
- 19
- 33
1 244
1 303
27. Capital and reserves
27.1
Share capital and share premium
The issued share capital of the Company amounted to € 584
million (2020: € 584 million), and is represented by 194 505 658
shares (2020: 194 505 658 shares). The Company’s shares are
without par value. At December 31, 2021, 69 144 680 shares
were registered and 125 360 978 were dematerialized shares.
The holders of UCB shares are entitled to receive dividends as
declared and are also entitled to one vote per share at the
shareholders’ meeting of the Company. There is no authorized,
unissued capital.
At December 31, 2021, the share premium reserves amounted
to € 2 030 million (2020: € 2 030 million).
27.2
Treasury shares
The Group acquired, through UCB SA 750 000 treasury shares
(2020: 1 200 000) for a total amount of € 60 million (2020: € 106
million) and transferred 898 441 treasury shares (2020: 1 570
764) for a total amount of € 69 million (2020: € 85 million). Net
transfer of 148 441 treasury shares for a net amount of € 9
million.
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
198
During 2021, the Group did not acquire or dispose of any
treasury shares as part of share swap transactions (2020: 0
acquired and 0 disposed). At December 31, 2021, the Group
retained 5 331 781 treasury shares of which none related to
share swap deals (2020: 5 480 222). These treasury shares have
been acquired in order to honor the exercise of stock options
and share awards granted to the Executive Committee members
and certain categories of employees.
In the current year, no call options on UCB shares have been
acquired (2020: 0) nor have any call options been exercised
(2020: 0). At December 31, 2021, the Group did not hold any
options on UCB shares (December 31, 2020: 0).
27.3
Other reserves
Other reserves amount to € -56 million (2020: € -144 million)
with the movement related to the re-measurement of the
defined benefit obligation for € 87 million bringing total
remeasurement value at € - 252 million (2020: € -339 million)
and transfer of fair value gain related to financial asset at FVOCI
to other reserves (€ - 2 million).
27.4
Cumulative translation adjustments
The cumulative translation adjustments reserve represents the
cumulative currency translation differences relating to the
consolidation of Group companies that use functional currencies
other than the euro as well as any unrealized cumulative foreign
exchange gains or losses resulting from net investment hedges.
28. Share-based payments
The Group operates several equity-based and cash-based
compensation plans, including a stock option plan, a stock
appreciation rights plan, a stock award plan and a performance
share plan to compensate employees for services rendered.
The stock option plan, the stock award plan and the
performance share plan are equity-settled, whereas the stock
appreciation rights plan is a cash-settled plan. Besides these
plans, the Group also operates employee stock purchase plans in
the U.K. and the U.S. and phantom share plans. The expenses
incurred for these plans are immaterial.
28.1
Stock option plan and stock appreciation
rights plan
The Governance, Nomination and Compensation Committee
(GNCC) granted options on UCB SA shares to the Executive
Committee members, the senior executives and the senior
directors of the UCB Group. The exercise price of the granted
options under these plans is equal to the lowest of the following
two values:
>
Brussels, during the 30 days preceding the offer; or
>
day before the grant.
A different exercise price is determined for those eligible
employees subject to legislation which requires a different
exercise price in order to benefit from reduced taxation. The
options become exercisable after a vesting period of three years,
except for those eligible employees subject to legislation which
requires a longer vesting period in order to benefit from reduced
taxation. If an employee leaves the Group, his/her options
usually lapse upon expiry of a period of six months. Options do
not lapse in case of death or retirement and in case of
involuntary termination when taxes have been paid upon grant.
The Group has no obligation to repurchase or settle the options
in cash.
The options are not transferable (except in case of death).
The Stock Appreciation Rights (S.A.R.’s) plan has similar
characteristics to the stock option plan, except that it is reserved
for UCB employees in the U.S. This plan is cash-settled.
28.2
Stock award plan
The GNCC granted free UCB SA shares to the Executive
Committee members, the senior executives and the senior and
middle management of the UCB Group. The free shares have
service conditions attached to them whereby beneficiaries are
required to remain in service for three years post grant date.
Stock awards lapse upon leaving the Group, except upon leaving
on retirement or death in which case they vest immediately. The
beneficiary is not entitled to dividends during the vesting period.
28.3
Performance share plan
The GNCC granted performance shares to senior executives for
specific achievements aligned with company strategic priorities.
The performance shares are conditional on the beneficiary
completing three years of service (the vesting period) and the
number of shares award is adjusted at the end of the vesting
period based on the company’s performance against its goals.
Performance Shares lapse upon leaving the Group, except upon
leaving on retirement or death in which case they vest
immediately. The beneficiary is not entitled to dividends during
the vesting period.
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
199
28.4
Phantom stock option, stock award and
performance share plans
The Group also has phantom stock option, phantom stock award
and phantom performance share plans (collectively referred to
as phantom plans). These phantom plans apply to certain
employees who have an employment contract with certain
affiliates of the Group and are governed under similar rules to
the Group stock option, stock award and performance share
plans except for their settlement. As of December 31, 2021,
these plans had 262 participants (2020: 665) and the share-
based payment expense incurred for these plans is immaterial.
28.5
North America employee stock purchase
plan.
The plan is intended to provide employees of UCB affiliates in
North America with an opportunity to purchase common stock
of the Group. Shares are acquired at a discount of 15% which is
funded by UCB. Employees save a defined percentage of their
salary through payroll deduction and shares will be purchased
with after-tax employee contributions. The shares are held by an
independent third party banking institution in an account in the
employee’s name.
The limit placed on employees’ participation in the plan is as
follows:
>
>
>
employees in all forms of share plans over a rolling period of
12 months.
As of December 31, 2021, the plan had 864 participants (2020:
819). There are no specific vesting conditions and the share-
based payment expense incurred for this plan is immaterial.
28.6
Stock savings plan in the U.K.
The purpose of this plan is to encourage the holding of UCB
shares by employees in the U.K. Participants save a certain
portion of their salary through payroll deductions and UCB
matches every 1 share bought by each participant with 1 free
share. Shares are held in an account in the employee’s name by
an independent company that acts as a trustee. Employee
contributions to the plan are limited to the lower of:
>
>
As of December 31, 2021, the plan had 394 participants (2020:
360) and the share-based payment expense incurred for this
plan is immaterial.
28.7
Share-based payment expense
The total share-based payment expense incurred for the Group
amounted to € 109 million (2020: € 81 million), and has been
included in the relevant functional lines within the income
statement as follows:
€ million
2021
2020
Cost of sales
Marketing and selling expenses
Research and development expenses
General and administrative expenses
Other operating expenses
0
0
Total operating expense
Of which, equity-settled:
Stock option plans
Stock award plans
Performance share plan
Of which, cash-settled:
Stock appreciation rights plan
Phantom stock option, stock award and performance share plans
28.8
Stock option plans
The movements in the number of stock options outstanding and their related weighted average exercise prices as at December 31
are:
2021
2020
Weighted
average fair
value (€)
Weighted
average
exercise price
(€)
Number of
stock options
Weighted
average fair
value (€)
Weighted
average
exercise price
(€)
Number of
stock options
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
200
Outstanding at January 1
3 341 054
4 241 720
+ New options granted
(-) Options forfeited
(-) Options exercised
1 247 746
(-) Options expired
(-) Options converted in other plans
Outstanding at December 31
3 146 115
3 341 054
Number of options fully vested:
At January 1
1 320 368
2 414 922
At December 31
1 582 306
1 320 368
The stock options outstanding as at December 31, 2021 with the following last exercise dates and exercise prices are:
Last exercise date
Range of exercise prices (€)
Number of stock options
31 March 2022
31 March 2023
[48.69 - 49.80]
31 March 2024
31 March 2025
31 March 2026
31 March 2027
[70.26 - 72.71]
31 March 2028
31 March 2029
[76.09-76.56]
31 March 2030
[76.21-79]
31 March 2031
[79.99-81.12]
Total outstanding
3 146 115
The fair value has been determined based on the Black-
Scholes valuation model.
The volatility was determined primarily by reference to
historically observed share prices of UCB over the last five
years. The probability of early exercise is reflected in the
expected life of the options. The expected forfeiture rate is
based on actual turnover of employees for categories eligible
for stock option compensation.
The significant assumptions used in the measurement of the fair value of the stock options granted in 2021 and 2020 are:
2021
2020
Share price at grant date
€
Weighted average exercise price
€
Expected volatility
%
Expected option life
Years
Expected dividend yield
%
Risk free interest rate
%
- 0.50
- 0.27
Expected annual forfeiture rate
%
28.9
Stock appreciation rights (S.A.R.’S) plan
The movements of the S.A.R.’s and the model inputs as at December 31, 2021 can be found in the table below.
The fair value of the S.A.R.’s at grant date is determined using the Black-Scholes model. The fair value of the liability is remeasured at
each reporting date.
2021
2020
Outstanding rights as of January 1
+ New rights granted
+ Rights converted from other plans
0
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
201
(-) Rights forfeited
(-) Rights exercised
(-) Rights expired
Outstanding rights as of December 31
The significant assumptions used in the measurement of the fair value
of the stock appreciation rights are:
Share price at year end
€
Exercise price
€
Expected volatility
%
Expected option life
Years
Expected dividend yield
%
Risk free interest rate
%
- 0.38
- 0.68
Expected annual forfeiture rate
%
28.10
Stock award plans
The share-based payment expense related to these stock
awards is spread over the vesting period of three years.
The beneficiaries are not entitled to dividends during the vesting period. The movement in the number of stock awards outstanding
at December 31 is as follows:
2021
2020
Number of
stock awards
Weighted average fair
value (€)
Number of
stock awards
Weighted average fair
value (€)
Outstanding at January 1
2 480 525
2 153 706
72.18
+ New stock awards granted
1 147 623
(-) Awards forfeited
(-) Awards vested and paid out
Outstanding at December 31
2 334 810
2 480 525
28.11
Performance share plans
The movement in the number of performance shares outstanding at December 31 is as follows:
2021
2020
Number of
shares
Weighted average fair
value (€)
Number of
shares
Weighted average fair
value (€)
Outstanding at January 1
72.63
+ New performance shares granted
(-) Performance shares forfeited
(-) Performance shares vested
Outstanding at December 31
29. Borrowings
The carrying amounts and fair values of borrowings are as follows:
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
202
2020
Cash Flows
Non-cash changes
2021
€ million
From Financing
activities
Increase/
Decrease in
cash
Transfer Non-
Current to
Current
Foreign
Exchange
Movement
Other
Non-current
Bank borrowings
1 554
0
0
0
1 155
Other long-term loans
0
0
0
0
0
0
0
Leases
- 31
0
0
Total non-current borrowings
1 629
0
0
1 252
Current
Bank overdrafts
0
- 16
0
0
Current portion of bank borrowings
0
0
0
2
- 2
Debentures and other short-term
loans
0
0
0
0
0
0
0
Leases
- 10
0
0
0
38
Total current borrowings
- 16
0
2
15
55
Total borrowings
1 710
- 16
0
101
1 307
On December 31, 2021 the Groups weighted average interest
rate was 1.30% (2020: 1.84%) prior to hedging. The floating
interest rate payments are subject to designated cash flow
hedges and fixed interest rate payments are subject to
designated fair value hedges, thereby fixing the weighted
average interest rate for the Group at 1.05% (2020: 1.54%) post
hedging. The fees paid for the arrangement of the bonds (Note
30), and the amended facilities agreement are amortized over
the life of the instruments.
Where applicable under hedge accounting, the fair value of the
non-current borrowings is determined based on the present
value of the payments associated with the debt instruments,
using the applicable yield curve and UCB credit spread for the
various different currencies.
Since the bank borrowings are at a floating interest rate that is
reset every six months, the carrying amount of the bank
borrowings equates to its fair value.
With respect to the current borrowings, the carrying amounts
approximate their fair values as the effect of discounting is
considered to be insignificant.
On January 9, 2018 the Group amended and extended its € 1
billion revolving credit facility then maturing on January 9, 2021
into a € 1 billion revolving credit facility with maturity in 2023
(including the option to request further extensions of the
maturity date by two additional years). In December 2019, the
Group extended the maturity of its credit facility to January 9,
2025 (no further extension option is available). Per December
31, 2021 there were no outstanding amounts under the
revolving credit facility (2020: € 0 million).
On October 10, 2019, the Group entered into a US$ 2.1 billion
bullet term loan facility agreement, maturing in 2025, to finance
the Ra Pharma acquisition.
Per December 31, 2021 there was US$ 1.315 billion outstanding
under this term loan facility (2020: US$ 1.9 million).
The Group has access to certain committed and non -committed
bilateral credit facilities. In this respect, per end of 2021 an
aggregated amount of € 38 million was undrawn on the
committed bilateral facility (2020: € 47 million).
Please refer to Note 5.3 for the maturity analysis of the Group
borrowings (excluding other financial liabilities).
The carrying amounts of the Group borrowings are denominated in the following currencies:
€ million
2021
2020
USD
1 232
1 634
EUR
GBP
CNY
JPY
Other
14
Total borrowings
1 307
1 710
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
203
30. Bonds
The carrying amounts and fair values of bonds are as follows:
Carrying amount
Fair value
€ million
Coupon
rate
Maturity
date
2020
Cash Flows
Fair Value
changes
Other
movements
2021
2020
2021
Institutional Eurobond
1.000%
2028
0
496
-9
0
0
EMTN Note
1
1.000%
2027
0
-3
0
Retail bond
5.125%
2023
0
-5
1
Institutional Eurobond
1.875%
2022
-350
-2
1
0
0
Institutional Eurobond
4.125%
2021
-350
0
0
0
0
Total bonds
1 037
-204
-19
2
1 055
Of which:
Non-current
146
-19
2
Current
-350
0
0
0
0
Derivatives used for hedging
- 14
0
0
Of which:
Non-current assets (-)
- 14
0
0
Current assets (-)
0
0
0
0
0
Non-current liabilities (+)
0
0
0
0
0
Current liabilities (+)
0
0
0
0
0
1
EMTN: Euro Medium Term Note. The fair value of the EMTN Notes cannot be accurately determined given the limited liquidity in secondary market trading
for these notes, and is for reporting purposes replaced by the carrying value.
30.1
Retail bonds
Maturing in 2023:
During October 2009, UCB completed a public offering of € 750
million fixed rate bonds, carrying a coupon and
an effective interest rate of 5.75% per annum, and aimed at
retail investors.
During September 2013, UCB launched an unconditional public
exchange offer for a maximum of € 250 million
out of the € 750 million retail bonds maturing in November 2014
and having a gross coupon of 5.75%. The existing bondholders
had the opportunity to exchange their existing bonds against
newly issued bonds maturing October 2023 in an exchange ratio
of 1 to 1. These bonds carry a coupon of 5.125% per annum
while their effective interest rate is 5.398% per annum.
At the end of the exchange period, 175 717 existing bonds were
tendered in the exchange offer, representing a nominal amount
of € 176 million.
The 175 717 new bonds were issued in October 2013 and have
been listed on Euronext Brussels. The existing
bonds exchanged in the exchange offer were cancelled by UCB.
The outstanding 574 283 of the retail bonds matured and have
been redeemed in November 2014.
30.2
Institutional Eurobonds
Matured in 2021:
In January 2021, UCB repaid the € 350 million institutional
Eurobonds in full.
Matured in 2021:
In April 2021, UCB repaid the € 350 million institutional
Eurobonds (maturity 2022) in full.
Maturing in 2028:
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
204
In March 2021, UCB completed an offering of € 500 million
senior unsecured bonds, due in 2028, issued under its EMTN
program. The Bonds were issued at 99.751% in March 2021 and
will be redeemed at 100% of their principal amount. These
bonds carry a coupon of 1.00% per annum while their effective
interest rate is
1.1231%
per annum. The bonds have been listed
on Euronext Brussels.
30.3
EMTN notes
Maturing in 2027:
In October 2020, UCB completed an offering of € 150 million
notes, due in 2027. The notes were issued at 100% and will be
redeemed at 100% of their principal amount. These notes carry
a coupon of 1.00% per annum while their effective interest rate
is 1.0298% per annum. The notes have been listed on Euronext
Brussels.
30.4
Fair value hedges
The Group designates derivative financial instruments under fair
value hedges to the Retail Bonds and Institutional Eurobonds.
The change in the carrying amount of the bonds is fully
attributable to the change in the fair value of the hedged portion
of the bonds, and is almost fully offset by a change in fair value
of the corresponding derivative financial instrument.
31. Other financial liabilities
Carrying amount
Fair value
€ million
2021
2020
2021
2020
Non-current
Derivative financial instruments (Note 39)
Other financial liabilities
0
0
0
0
Total non -current other financial liabilities
Current
Derivative financial instruments (Note 39)
Other financial liabilities
0
0
Total current other financial liabilities
Total other financial liabilities
The other financial liabilities include a liability of € 2 million related to factoring of receivables.
32. Deferred tax assets and liabilities
32.1
Recognized deferred tax assets and liabilities
€ million
2020
Acquisition
/Disposals
FX
acquisit
ion
R&D
Adjustment
Current
Year
Movement
OCI - Cash
flow hedges
OCI -
Pensions
Effect of
movemen
ts in
exchange
rate
2021
Intangible assets
- 508
0
0
0
0
0
- 36
- 531
Property, plant and equipment
- 19
0
0
0
0
0
- 18
Inventories
0
0
0
0
0
Trade and other receivables
0
0
0
0
0
Employee benefits
0
0
- 2
0
- 11
0
Provisions
0
0
- 5
0
0
0
Other short-term liabilities
- 175
0
0
0
- 55
Net lease assets/liabilities
0
0
- 1
0
0
0
0
Unused tax losses
0
0
0
- 83
0
0
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
205
Unused tax credits
0
- 1
0
0
Total net deferred tax
assets/liabilities (-)
0
0
- 11
- 21
€ million
2019
Acquisition
/Disposals
FX
acquisit
ion
R&D
Adjustment
Current
Year
Movement
OCI - Cash
flow hedges
OCI -
Pensions
Effect of
movemen
ts in
exchange
rate
2020
Intangible assets
- 33
- 563
0
0
0
0
- 508
Property, plant and equipment
- 18
0
0
0
- 1
0
0
0
- 19
Inventories
0
0
0
0
0
- 3
Trade and other receivables
0
0
0
- 6
0
0
0
Employee benefits
0
0
0
0
- 5
Provisions
0
0
0
0
0
0
Other short-term liabilities
- 203
0
0
0
- 23
0
- 6
- 175
Net lease assets/liabilities
0
0
0
0
0
0
0
Unused tax losses
- 7
0
- 113
0
0
- 10
Unused tax credits
0
0
- 38
0
0
- 3
Total net deferred tax
assets/liabilities (-)
- 431
- 38
- 23
Total net deferred tax assets of € 501 million have been
recognized at December 31, 2021. Based upon the level of past
taxable income and projected future taxable profits over the
periods in which the deductible temporary differences are
estimated to reverse, the Group believes it is probable that the
benefits of the recognized deferred tax assets will be realized.
The Group saw an increase of the deferred tax liability exceeded
by an increase of the deferred tax asset balances resulting in a
net deferred tax asset increase.
This is driven by the following
items:
-
Deferred Tax Assets on Losses: utilization of tax losses
carried forward against taxable profit in key entities. In
line with prior years, the loss utilization is also partially
compensated by a decrease of the deferred tax liability
on loss recapture.
-
R&D tax credit: refund received versus further build-up
of R&D tax credit deferred tax assets following R&D
investments.
Other items are a result of the movements on UCB’s statement
of financial position items (such as inventory and intangibles),
reassessment following tax law changes and reassessment of
non-EUR denominated deferred tax balances
.
Tax Reforms
Impact of tax law and tax rate changes, mainly in U.K. and
Switzerland, were assessed by management and
remeasurement of the deferred tax balances took place as
appropriate.
The U.S. tax reform did not materialize per December 31, 2021
and, as a consequence, UCB’s U.S. deferred tax balances were
not impacted. Management is closely following up on further
developments of a U.S. tax reform which may trigger deferred
tax remeasurement and current tax impacts in 2022.
R&D Tax Credits
The group recorded deferred tax assets on tax credits. The total
deferred tax asset in respect of R&D tax credits at year end is €
448 million (2020: € 405 million) which will result in a cash tax
benefit in the future. Other tax credits for € 38 million were also
recorded.
Deferred tax assets on losses
UCB has seen a substantial utilization of tax losses carried
forward, partially compensated by a decrease of deferred tax
liabilities. A deferred tax asset of € 166 million (2020: € 241
million) was recognized in respect of tax losses carried forward
totaling € 683 million (2020: € 1.06 billion) as the Group has
concluded that the relevant entities will generate taxable profits
in the foreseeable future against which these losses can be used
and forecasts are deemed reliable taking into account the profile
of the concerning entities and potential restrictions that could
be available. These losses have arisen in jurisdictions in which
UCB operates and do not expire. This period has seen no further
recognition of losses and tax credits previously unrecognized.
Undiscounted forecasts have been used to assess the availability
of future taxable profits.
32.2
Unused tax losses
As of December 31, 2021, the Group also had € 3 284 million
(2020: € 2 844 million) of gross unused tax losses and innovation
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
206
income deduction for which no deferred tax asset is recognized
in the statement of financial position. Based on the current
legislation, these tax attributes do not expire.
Based on current forecasts and current legislation, the majority
of these tax attributes is expected to be fully utilized within the
next 10 years. Management is currently assessing the impact of
the international (OECD) tax reform.
32.3
Temporary differences for which no deferred
tax asset or deferred tax liability is recognized
Deferred tax assets are recognized on temporary differences
carried forward that represent income likely to be realized in the
foreseeable future. Deferred tax assets amounting to € 300
million gross / € 75 million net (2020: € 312 million gross / € 78
million net) in respect of dividend received deduction and
intangible assets have not been recognized in view of the
uncertain character of the recovery.
No deferred tax liabilities are recognized for taxable temporary
differences arising on investments in subsidiaries as 100%
participation exemption is available for any future equity
upstream.
There is an additional unrecognized deferred tax liability of € 98
million (2020: € 115 million) in respect of an internal
reorganization which occurred in 2014. The tax liability will only
materialize on disposal of the relevant asset, an event which is
controlled by UCB and for which there are no concrete plans in
the foreseeable future.
32.4
Deferred tax directly recognized in OCI
€ million
2021
2020
Deferred tax on pensions
- 10
Deferred tax on effective portion of changes in fair value of cash flow hedges and on
gains financial assets at FVOCI
- 23
Deferred tax directly recognized in OCI
- 21
33. Employee benefits
Most employees are covered by retirement benefit
plans
sponsored by Group companies. The nature of
such plans varies
according to legal regulations, fiscal
requirements and economic
conditions of the countries in which the employees are
employed. The Group operates both defined contribution plans
and defined benefit plans.
33.1
Defined contribution plans
Post-employment benefit plans are classified as “defined
contribution” plans if the Group pays fixed contributions into a
separate fund or to a third party financial institution
and has no
further legal or constructive obligation to pay
further
contributions. Therefore no assets or liabilities are recognized in
the Group statement of financial position in respect
of such plans,
apart from regular prepayments and accruals of contributions. For
the Belgian defined contribution plans,
UCB is required by law to
guarantee a minimum return on employee and employer
contributions. As a consequence, these plans are considered
defined benefit plans. Where reliable estimates can be made for
material plans, they are valued using the projected unit credit
method under IAS 19. These plans are aggregated with the results
for other defined benefit plans.
33.2
The Group operates several defined benefit plans.
The benefits
granted include mainly pension benefits and
jubilee premiums.
The benefits are granted according to local market
practice and
regulations.
These plans are either unfunded or funded via outside
pension
funds or insurance companies. For (partially)
funded plans, the
assets of the plans are held separately
in funds under the control
of the trustees. Where a plan is unfunded, notably for the major
defined benefit plans
in Germany, a liability for the obligation is
recorded in the Group statement of financial position. For funded
plans, the Group is
liable for the deficits between the fair value of
the plan assets and the present value of the benefit obligations.
Accordingly, a liability (or an asset when the plan is over-funded)
is recorded in the Group consolidated statement of financial
position. Independent actuaries assess all main plans annually.
T
he Group analyses the Value at Risk on its statement of
financial position and profit and loss accounts linked to its
defined benefits plans. Target risk level in terms of a one-year
consolidated statement of financial position and profit and
loss Value at Risk measures are defined annually based on
UCB risk tolerance thresholds.
For UCB, the main risks linked to its defined benefit
obligations are discount rate, inflation and longevity. The
majority of the risks lays within Belgium, Switzerland,
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
207
Germany and the U.K. It should be noted that longevity is not
considered as a risk for the plans in Belgium as benefits are
either paid as a lump sum or externalised before being paid
as an annuity.
Over the last years, UCB has performed various de-risking
projects.
●
In the U.K., UCB completed the buy-out of three of its
four pension schemes by securing the benefits of all
members of the schemes with an insurance company.
UCB does, therefore, no longer have any liabilities
towards any members of those three schemes. For the
remaining Scheme, the Celltech Pension and Insurance
Scheme, the focus, since 2012, is on de-risking
progressively from a 50% growth/50% bonds allocation
to a 10% growth/90% bonds allocation. Today the
growth/bonds allocation is around 30%/70%. To better
manage discount rate and inflation risks, the Scheme has
also over the years gradually increased the hedging of
both interest rates and inflation to around 90%.
●
In Belgium, UCB implemented a de-risking strategy by
closing all Belgian defined benefit and cash balance plans
to new entrants as from December 31, 2019 and by
implementing a new cash balance plan with an effective
date of January 1, 2020 with the legally required
guaranteed return. The focus remains on the
diversification of the assets and investment managers
while keeping a close control on risk.
The amount recognized in the consolidated statement of financial position arising from the Group’s obligation in respect of its
defined benefit plan is as follows:
€ million
2021
2020
Present value of defined benefit obligation
1 230
1 196
Fair value of plan assets
- 941
- 816
Funded status – Deficit
Effect of asset ceiling
0
Net liability arising from defined benefit obligation
Add: Liability with respect to cash settled share based payments (Note 28)
Total employee benefit liabilities
Of which:
Portion recognized in non-current liabilities
Portion recognized in non-current assets
0
0
86% of the net liability arising from defined benefit obligations is related to defined benefit pension obligations in Belgium, Germany
and the U.K.
Movements in the present value of the defined benefit obligation in the current year were as follows:
€ million
2021
2020
At January 1
1 196
1 076
Current service cost
66
58
Interest expense
11
14
Remeasurement gain(-)/loss
-2
1
-61
76
20
14
Past service cost and gain(-)/loss on settlements
0
1
Effect of change in foreign exchange rates
25
-16
Benefit payments from the plan
-19
-19
Benefit payments from the employer
-4
-5
Settlement payments
0
0
Plan participants contributions
4
3
Other
-6
-7
At December 31
1 230
1 196
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
208
Movements in the fair value of plan assets in the current year were as follows:
€ million
2021
2020
At January 1
Interest income
Remeasurement gain/loss(-)
Return on plan assets (excl. interest income)
Changes in asset ceiling (excl. interest income)
0
0
Effect of change in foreign exchange rates
- 15
Plan participants contributions
Employer contributions
Benefit payments from the plan
- 24
- 23
Settlement payments
0
0
Expenses, taxes and premiums paid
- 7
- 8
At December 31
The fair value of plan assets amounts to € 941 million (2020: € 816
million), representing 77% (2020: 68%)
of the defined benefit
obligation. The total deficit
of € 289 million (2020: € 380 million) is
expected to
be eliminated over the estimated remaining average
service period of the current membership.
The amounts recognized in the consolidated income statement and in the consolidated statement of comprehensive income in
respect of those defined benefit plans are as follows:
€ million
2021
2020
Total service cost (incl. past service cost and gain (-)/loss from settlements)
Net interest cost
Remeasurement of other long term benefits
0
Administrative expenses and taxes
Components of defined benefit costs recorded in income statement
Remeasurements gain (-)/loss
Effect of changes in demographic assumptions
- 2
Effect of changes in financial assumptions
- 61
Effect of experience adjustments
Return on plan assets (excluding interest income)
- 53
- 63
Return on reimbursement rights (excluding interest income)
0
- 1
Changes in asset ceiling/onerous liability (excluding interest income)
- 1
0
Components of defined benefit costs recorded in OCI
- 97
Total components of defined benefit cost
- 27
The total service cost, the net interest expense,
the
remeasurement of other long term benefits, administrative
expenses and taxes for the year are
included in the
employee benefit expenses in the consolidated income
statement. 82% of the defined benefit costs recorded in
the income statement are relating to defined benefit
pension plans in Belgium and U.K. The remeasurement on
the net defined benefit liability is included in the statement
of comprehensive income as part of other comprehensive
income. Total remeasurements amount to a gain of € 97
million in 2021 compared to a loss of € 26 million in 2020.
The gain in 2021 is mainly resulting from a higher return
on plan assets and increase in discount rates. The loss in
2020 is mainly resulting from a decrease in discount rates
partially offset by higher return on plan assets.
The split of the recognized expense by functional line is as follows:
€ million
2021
2020
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
209
Cost of sales
Marketing and selling expenses
8
Research and development expenses
26
General and administrative expenses
15
Total
70
The actual return on plan assets is € 53 million (2020: € 64
million) and the actual return on reimbursement rights is € 0
million (2020: € 1 million).
The major categories of plan assets at the end of the reporting period, are as follows:
€ million
2021
2020
Cash and cash equivalent
Equity instruments
Europe
U.S.
Rest of the World
Debt instruments
Corporate bonds
Government bonds
Other
Properties
Qualifying insurance policies
Investment funds
Other
0
Total
Virtually all equity and debt instruments have quoted prices
in active markets. Properties can be classified as
Level 3
instruments based on the definitions in IFRS 13
Fair Value
Measurement
.
The assets held in the funds do not contain any direct
investment in UCB Group shares, nor any property
occupied by, or other assets used by the Group,
though this does not exclude UCB shares being
included in mutual investment fund type investments.
The principal
weighted average actuarial assumptions
used for the
purposes of the actuarial valuations were
as follows:
Eurozone
U.K.
Other
2021
2020
2021
2020
2021
2020
Discount rate
1.24%
0.90%
1.80%
1.40%
0.30%
0.02%
Inflation
1.75%
1.75%
2.90%
2.80%
N/A
N/A
Significant actuarial assumptions for the determination of
the defined obligation are discount rate and inflation. The
sensitivity analyses below have been determined based on
reasonably possible changes of the
assumptions occurring
at the end of the reporting period.
>
If the discount rate would be 50 basis points higher (lower),
the defined benefit obligation would decrease
by € 93
million (increase by € 104 million) if all other assumptions
were held constant.
>
If the inflation rate would increase (decrease) by 25 basis
points, the defined benefit obligation would increase by €
24 million (decrease by € 21 million) if all other
assumptions were held constant.
The figures above do not take account of any
interrelationship between the assumptions, especially
between the discount rate, expected salary increases
and
inflation rates.
The Group’s subsidiaries should fund the entitlements
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
210
expected to be earned on a yearly basis. Funding
usually
follows local actuarial requirements and in this
framework,
the discount rate is set on a risk-free rate.
Underfunding linked to past service are met by setting up
recovery plans and investment strategies considering
liability profiles, appropriate time periods for amortization
of past service liability, local regulations and the financial
capabilities of the local company.
The average duration of the benefit obligation at
the end of the reporting period is 16.00 years (2020:
16.60 years). This number can be subdivided into
the
duration related to:
>
Eurozone: 14.10 years (2020: 14.50 years);
>
U.K.: 18.70 years (2020: 19.90 years);
>
Other: 19.50 years (2020: 20.40 years).
The Group expects to make a contribution of
€ 69
million to the defined benefit plans during the next
financial year.
ALM (asset-liability matching) studies are typically
performed every 3 years. Within those studies, investment
strategies are analyzed in terms of risk-and-return profiles.
An ALM study was completed in Switzerland in 2018. In
Belgium, an ALM study was performed in 2021, which
resulted in a slight adjustment of the assets portfolio.
In setting up the long-term investment strategy of the
scheme, the investment committee focuses on some
key principles defined by the Group such as:
>
maintaining a balance between the level of
contributions acceptable to UCB and the level
of investment risk relative to the liabilities;
>
reducing the volatility through investment
diversification; and
>
the degree of investment risk should depend on the
financial state of the schemes and liability profiles.
34. Provisions
The movements in provisions have been disclosed below:
€ million
Environment
Restructuring
Other
Total
At January 1, 2021
Arising during the year
Unused amounts reversed
- 4
- 1
- 19
- 24
Transfer from one heading to another
0
0
Effect of movement s in exchange rates
0
0
Utilized during the year
- 1
- 10
- 21
- 32
At December 31, 2021
Non-current portion
0
Current portion
0
Total provisions
34.1
Environmental provisions
UCB has retained certain environmental liabilities which were
mainly related to the divestiture of Films (2004) and Surface
Specialties (2006). These liabilities relate to the divested sites on
which UCB has retained full responsibility in accordance with
contractual terms. The decrease of the environmental provisions
mainly stems from the reversal of unused amounts of the
Tecumseh (U.S.) provision related to the Films business partially
offset by additional amounts of the existing environmental
provisions. In 2021 a part of the provision was used to cover for
actual expenses incurred.
34.2
Restructuring provisions
The restructuring provisions arising during 2021 are related to
further optimization business models. The utilization is also
mainly related to earlier reorganizations in Europe.
34.3
Other provisions
Other provisions relate mainly to:
>
provisions for litigations that comprise mainly provisions
where UCB or a subsidiary is or might be a defendant against
claims of previous employees;
>
product liability provisions that pertain to the risks related to
the normal course of business and for which the Group might
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
211
be liable by selling these kinds of drugs. UCB is currently
defendant in several product liability cases in France in
respect of Distilbène, a former product of the UCB Group. The
claimants in these actions claim that their mothers took
Distilbène during their pregnancy and that as a result of this
they suffered bodily injuries (see note 43.3). The provision in
respect of Distilbène decreased by € 9 million to a total of €
124 million (2020: increase by € 21 million to a total of € 133
million) to reflect the net estimated future cash outflows. The
provision was discounted using a discount rate of 0.11%
(2020: -0.34%). If the discount rate would be 25 basis points
lower, the provision would increase by € 3 million, at 0%
discount rate the provision would increase by € 1 million;
>
provisions for restoration costs for leased buildings due to the
adoption of IFRS 16 (€ 8 million) (2020: € 10 million) (see Note
40);
>
provisions in respect of the recoverability of non-income tax
receivables.
An assessment is performed with respect to the above-
mentioned risks together with the Group legal advisers and
experts in the different domains.
35. Trade and other liabilities
€ million
2021
2020
Other payables
Total non -current trade and other liabilities
€ million
2021
2020
Trade payables
Invoices to receive
Taxes payable, other than income tax
Payroll and social security liabilities
Other payables
Deferred income linked to development agreements
Other deferred income
Royalties payables
Rebates/discounts and other sales allowances payable
Accrued interest
Other accrued expenses
Total current trade and other liabilities
2 555
2 138
The vast majority of the trade and other liabilities are classified
as current and consequently the carrying amounts of the total
trade and other liabilities is assumed to be a reasonable
approximation of fair value.
“Rebates/discounts and other sales allowances payable” include
rebates, chargebacks, discounts and accruals for product returns
relating to products sold in the U.S. to various customers that
are part of commercial and governmental contractual
arrangements or other reimbursement programs, including the
U.S. Medicaid Drug Rebate program, the U.S. Federal Medicare
program and others. The sales returns and allowances are
recorded in the same period as the underlying sales as a
deduction to sales.
Per management assessment, the total accruals for these items
are adequate, based upon currently available information and
interpretation of relevant regulations.
As these deductions are based on management estimates, the
actual deductions might differ from these estimates. Such
differences could impact the accruals recognized in the
statement of financial position in future periods and
consequently the level of sales recognized in the income
statement in future periods, as there is often a time lag of
several months between the recording of the estimate and the
final accounting of the sales deductions.
The accruals are reviewed and adjusted regularly in light of
contractual and legal obligations, historical trends, past
experience and projected market conditions.
All returns, chargebacks, rebates and discounts that are not
mentioned on the invoice are estimated, deducted from sales
and presented on the statement of financial position in the
appropriate accrual account. The estimate for future product
returns is based on several factors, including: historical return
rates, expiration date by product, return rate by closed batches,
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
212
actual returns processed among others, as well as any other
specifically-identified anticipated returns due to known factors
such as the loss of patent exclusivity, product recalls and
discontinuances, or a changing competitive environment.
Adjustments to these accruals may be required in the future
based on revised estimates to our assumptions, which would
have an impact on our consolidated results of operations. The
U.S. sales return and allowance liability that is included as part of
the rebates and discounts payable liability balance amounts to €
761 million as per December 31, 2021 (December 31, 2020: €
554 million).
36. Income tax payables
Income tax payables include liabilities for uncertain tax positions
for an amount of € 157 million (2020: € 155 million). The
uncertain tax positions balance has remained stable over 2021
and is composed of a further increase of a number of tax
positions compensated by (partial) reversal of some risks in key
countries and the nearing settlement of an important tax audit
in a key jurisdiction. All liabilities are reflecting the tax-technical
merits of the case and the state of discussions with tax
authorities upon tax audit (where appropriate). Liabilities for
uncertain tax positions are recorded when the Group considers
it probable that a tax position taken is unlikely to be sustained if
challenged by the tax authorities and after exhausting all legal
remedies.
The income tax receivable includes assets for tax relief following
Mutual Agreement procedures for an amount of € 27 million
(2020: € 25 million). Assets for relief following Mutual
Agreement procedures are recorded when the Group considers
it probable that a Mutual Agreement procedure may provide for
a corresponding adjustment in one or more jurisdictions.
The assessment for both the uncertain tax positions and
corresponding adjustments is calculated taking into account the
most likely outcome (for corporate income tax related matters)
or the expected value (for corporate tax or transfer pricing
related matters), where appropriate and in line with IFRIC 23.
See Note 4.2.5 for more details on the Group’s assessment of
uncertain tax positions. On a net basis, the group has provided
for a reserve of € 130 million (2020: € 130 million) to cover for
uncertain tax positions and engages into the necessary
procedures to secure tax relief where possible.
UCB faces tax audits in a number of countries where activities
are deployed. The issues under discussion are in some cases
complex and such audits can take a number of years to resolve.
The Group strictly follows up on the liabilities for uncertain tax
positions which are recorded per end 2021, also reflecting the
status of the ongoing tax audits.
37. Note to the consolidated statement of cash flows
The cash flow statement identifies operating, investing and
financing activities for the period.
UCB uses the indirect method for the operating cash flows. The
net profit and loss is adjusted for:
>
the effects of non-cash transactions such as depreciation and
amortization, impairment losses, provisions, mark-to-market,
etc., and the variance in working capital;
>
items of income or expense associated with investing or
financing cash flows.
Important non-cash transactions for 2021 mainly relate to tax
credits (€ 108 million) for which the cash benefit will be received
in later years and to CTA on liquidated entities that were
transferred to the income statement (€ 11 million).
Important non-cash transactions for 2020 mainly relate to
acquired working capital from acquisitions (€ 263 million) and
tax credits (€ 81 million) for which the cash benefit will be
received in later years.
€ million
Note
2021
2020
Adjustment for non-cash transactions
Depreciation and amortization
11, 22, 20
Impairment / reversal (-) charges
11, 14
0
Equity settled share based payment expense
Other non-cash transactions in the income statement
- 120
- 79
Adjustment IFRS 9
17
- 71
Unrealized exchange gain (-) / losses
- 40
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
213
Change in provisions and employee benefits
Change in inventories and bad debt provisions
- 2
Adjustment for items to disclose separately under operating cash flow
Tax charge of the period from continuing operations
18
Adjustment for items to disclose under investing and financing cash flow
Gain (-) / loss on disposal of fixed assets
- 50
Interest income (-) / charge
Change in working capital
Inventories movement per consolidated statement of financial position
- 24
- 74
Trade and other receivable and other assets movement per consolidated statement
of financial position
- 247
- 105
Trade and other payable movement per consolidated statement of financial position
As it appears in the consolidated statement of financial position and corrected by:
Non-cash items
Change in inventories and bad debt provisions disclosed separately under operating
cash flow
- 7
Currency translation adjustments
- 37
As it appears in the consolidated cash flow statement
1
Non-cash items are mainly linked to transfers from one heading to another, non-cash movements linked to stock rewards.
38. Financial instruments by category
December 31, 2021
€ million
Note
Assets at
amortized cost
Assets at fair value
through the profit
and loss (FVPL)
Assets used for
hedging
Assets at fair value
through other
comprehensive
income (FVOCI)
Total
Assets as per statement of
financial position
Financial assets and other assets (excluding derivative
financial instruments and associates)
23
0
0
Derivative financial assets
39
0
0
Trade and other receivables
(including prepaid expenses)
25
1 239
0
0
0
1 239
Cash and cash equivalents
26
1 263
0
0
0
1 263
Total
2 727
2 976
December 31, 2021
€ million
Note
Liabilities at fair
value through the
profit and loss
(FVPL)
Liabilities used
for hedging
Liabilities at
amortized cost
Total
Liabilities as per statement of
financial position
Borrowings
29
0
0
1 307
1 307
Bonds
30
- 5
0
Derivative financial liabilities
39
0
Trade and other liabilities
35
0
0
2 641
2 641
Other financial liabilities
(excluding derivative financial instruments)
31
0
0
Total
4 769
4 877
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
214
December 31, 2020
€ million
Note
Assets at
amortized cost
Assets at fair value
through the profit
and loss (FVPL)
Assets used for
hedging
Assets at fair value
through other
comprehensive
income (FVOCI)
Total
Assets as per statement of
financial position
Financial assets and other assets (excluding derivative
financial instruments and associates)
23
0
0
Derivative financial assets
39
0
0
Trade and other receivables
(including prepaid expenses)
25
1 031
0
0
0
1 031
Cash and cash equivalents
26
1 336
0
0
0
1 336
Total
2 584
2 837
December 31, 2020
€ million
Note
Liabilities at fair
value through the
profit and loss
(FVPL)
Liabilities used
for hedging
Liabilities at
amortized cost
Total
Liabilities as per statement of
financial position
Borrowings
29
0
0
1 710
1 710
Bonds
30
0
1 023
1 037
Derivative financial liabilities
39
0
Trade and other liabilities
35
0
0
2 229
2 229
Other financial liabilities
(excluding derivative financial instruments)
31
- 1
0
0
- 1
Total
4 962
5 065
39. Derivative financial instruments
Assets
Liabilities
€ million
2021
2020
2021
2020
Forward foreign exchange contracts – cash flow hedges
Forward foreign exchange contracts – fair value through
profit and loss
Foreign exchange options – net investment hedges
0
0
0
0
Interest rate derivatives – cash flow hedges
0
0
Interest rate derivatives – fair value through profit and loss
0
Total
Of which:
The full fair value of a hedging derivative is classified as a non-
current asset or liability if the remaining maturity of the hedged
item is more than 12 months, and as a current asset or liability, if
the maturity of the hedged item is less than 12 months.
The cash flow hedges entered into by the Group were assessed
to be highly effective and over 2021, a net unrealized gain of € -
141 million (2020: net unrealized loss of € 84 million) after
deferred taxes was included in equity in respect of these
contracts. These gains/losses will be recycled to the profit or loss
in the period during which the hedged forecast transactions
affect the profit or loss.
The ineffective portion recognized in the profit or loss that arises
from cash flow hedges amounts to € 0 million (2020: € 0 million).
39.1
Foreign currency derivatives
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
215
The Group policy with respect to the use of financial derivative
contracts is described in Note 5 “Financial Risk Management”.
The Group entered into several forward foreign exchange
contracts in order to hedge a portion of highly probable future
sales and royalty income, expected to occur in 2021 and 2022.
The fair values of the foreign currency derivative contracts are as follows:
Assets
Liabilities
€ million
2021
2020
2021
2020
USD
GBP
0
JPY
0
CHF
0
0
RUB
0
0
0
0
Other currencies
Total foreign currency derivatives
The net foreign currency derivatives maturity analysis is noted below:
€ million
2021
2020
1 year or less
- 37
1-5 years
0
0
Beyond 5 years
0
0
Total foreign currency derivatives – net asset/net liability (-)
- 37
The following table shows the split of foreign currency derivatives by currency of denomination (currencies sold view) as at December 31,
2021
:
Notional amounts in € million
USD
GBP
EUR
JPY
CHF
Other currencies
Total
Forward contracts
Currency swaps
2 261
1 754
4 719
Option/collar
0
0
0
0
0
0
0
Total
2 321
2 049
5 358
39.2
Interest rate derivatives
The Group uses various interest rate derivative contracts
to manage its exposure to interest rate movements on its
borrowings. The re-pricing dates and amortization
characteristics are aligned with those of the fixed rate
bonds.
The outstanding interest rate derivative contracts
are as follows:
Contract type
Nominal values
of contracts
(million)
Average rate
(- is payer/
+ is receiver)
Plus margin of
points
(- is payer/
+ is receiver)
For periods from/to
Floating interest receipts
IRS
EUR 175
1.91%
02-Oct-16
02-Oct-23
-EURIBOR 3M
CCIRS
USD 230
-USD LIBOR 3 Months
-0.16%
03-Oct-16
02-Oct-23
EURIBOR 3M
CCIRS
EUR 205
USD LIBOR 3 Months
0.45%
03-Oct-16
02-Oct-23
-EURIBOR 3M
IRS
USD 150
-0.55%
02-Jul-20
03-Jul-23
USD LIBOR 3 Months
IRS
USD 150
-0.56%
02-Jul-20
03-Jul-23
USD LIBOR 3 Months
IRS
USD 150
-0.56%
02-Jul-20
03-Jul-23
USD LIBOR 3 Months
IRS
EUR 125
-0.21%
30-Mar-21
30-Mar-28
-EURIBOR 6M
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
216
IRS
EUR 75
-0.24%
01-Apr-21
01-Oct-27
-EURIBOR 6M
IRS
EUR 125
-0.22%
30-Mar-21
30-Mar-28
-EURIBOR 6M
IRS
EUR 75
-0.26%
01-Apr-21
01-Oct-27
-EURIBOR 6M
IRS
EUR 125
-0.23%
30-Mar-21
30-Mar-28
-EURIBOR 6M
IRS
EUR 125
-0.23%
30-Mar-21
30-Mar-28
-EURIBOR 6M
39.3
Hedge of net investment in a foreign entity
Any unrealized cumulative foreign exchange gains or losses
resulting from net investment hedges are taken up under
Cumulative Translation Adjustments. These unrealized gains
and losses will remain in equity and will only be recycled to
profit or loss when the Group no longer holds the underlying
assets
.
40. Leases
40.1
Amounts recognized in the statement of financial position
The statement of financial position shows the following amounts relating to leases:
€ million
Note
2021
2020
Buildings
22
Plant and machinery
22
0
Office equipment and vehicles
22
Total right -of-use assets
Non-current
29
Current
29
Total lease liabilities
Additions to the right-of-use assets during the 2021 financial year were € 63 million.
As per December 31, 2021, no residual value guarantees are included in the lease liabilities.
As per December 31, 2021, no lease commitments for leases not yet commenced.
40.2
Amounts recognized in the income statement
The income statement shows the following amounts relating to leases:
€ million
Note
2021
2020
Depreciation charge of right-of-use assets
22
Buildings
22
Plant and machinery
22
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
217
Office equipment and vehicles
22
Interest expense (included in Financial expenses)
17
Expense relating to short-term leases
Expense relating to leases of low-value assets that are not short-term leases
Expense relating to variable lease payments not included in lease liabilities
0
0
Total expense related to leases
61
The total cash outflow for leases in 2021 was € 40 million. In 2021 there was no material income from subleasing.
41. Earnings per share
41.1
Basic earnings per share
€
2021
2020
From continuing operations
From discontinued operations
0
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to shareholders of the Company by the weighted average
number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Company and held as treasury shares.
41.2
Diluted earnings per share
€
2021
2020
From continuing operations
From discontinued operations
0
Diluted earnings per share
Diluted earnings per share is calculated by dividing the profit
attributable to shareholders of the Company by the weighted
average number of ordinary shares in issue during the year,
excluding ordinary shares purchased by the Company and
held as treasury shares, adjusted by the number of dilutive
potential ordinary shares attached to the issuance of stock
options, stock awards and performance shares.
The number of dilutive potential ordinary shares is calculated
based on the average number of stock options outstanding
during the reporting period as the difference between the
average market price of ordinary shares during the reporting
period and the weighted average exercise price of the stock
options and on the average number of stock awards and
performance shares outstanding during the reporting period.
Stock options only have a dilutive effect when the average
market price is above the exercise price (stock options are “in
the money”).
For the purpose of calculating dilutive earnings per share,
there were no adjusting elements to the profit attributable to
shareholders of the Company.
41.3
Earnings
The calculation of the basic and diluted earnings per share attributable to the ordinary equity holders of the parent is based on the
following data:
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
218
BASIC
€ million
2021
2020
Profit/loss (-) from continuing operations attributable to shareholders of UCB SA
1 056
Profit/loss (-) from discontinued operations
0
Profit attributable to shareholders of UCB SA
1 058
DILUTED
€ million
2021
2020
Profit/loss (-) from continuing operations attributable to shareholders of UCB SA
1 056
Profit/loss (-) from discontinued operations
0
Profit attributable to shareholders of UCB SA
1 058
41.4
Number of shares
In thousands of shares
2021
2020
Weighted average number of ordinary shares for basic earnings per share
188 973
189 035
Weighted average number of ordinary shares for diluted earnings per share
194 177
194 245
42. Dividend per share
The gross dividends paid in 2021 (in respect of the year ended
December 31, 2020) and 2020 (in respect of the year ended
December 31, 2019) were € 240 million (€ 1.27 per share) and €
239 million (€1.24 per share) respectively.
A dividend in respect of the year ended December 31, 2021 of €
1.30 per share, amounting to a total dividend of € 246 million, is
to be proposed at the annual general meeting of the
shareholders on April 28, 2022.
In accordance with IAS 10, events after the reporting period, the
proposed dividend has not been recognized as a liability at year-
end.
43. Commitments and contingencies
43.1
At December 31, 2021, the Group has committed to spend € 131
million (2020: € 150 million) mainly with respect to expected capital
expenditures for the new biological production unit, the new Gene -
Therapy plant, lab and other equipment and office refurbishment
works on the Braine site (Belgium).
UCB has entered into long-term development agreements with
various pharmaceutical enterprises,
clinical trial operators and
financial investors. Such collaboration agreements may include
milestone payments which are dependent on successful clinical
development or on meeting specified sales targets. The table
below sets out the maximum that would be
paid if all milestones,
however unlikely, are achieved but
excludes variable royalty
payments based on unit sales
and amounts accrued for milestones
already achieved.
The amounts are not risk-adjusted or discounted,
and the
timing of the payments is based on the Group’s current
best estimate of achievement of the relevant milestones.
€ million
2021
2020
Less than 1 year
Between 1 and 5 years
More than 5 years
Total
1 126
1 420
UCB has concluded several agreements with Contract Manufacturing Organizations for the supply of its products. Total
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
219
outstanding commitments towards these CMOs amount to € 563
million as per end of 2021 until 2031 (2020: € 536 million until
2030). If contractually agreed milestones, mainly dependent on
future successful clinical development, are reached, this amount
of contingent payments may increase to € 740 million.
As part of UCB’s innovation strategy, UCB has established a
corporate venture fund, UCB Ventures. The main objectives of
the fund are to add breadth to UCB’s innovation ecosystem, to
create a window on new technologies, products, platforms and
channels to augment or complement UCB’s existing activities, to
develop network and strategic relationships in the venture
capital investor community to identify opportunities that UCB
might not otherwise see. Within this framework UCB has
outstanding commitments at the end of 2021 for a total amount
of € 22 million relating to investments in venture capital funds.
43.2
Guarantees arising in the normal course of business are not
expected to result in any material financial loss.
43.3
The Group continues to be actively involved in litigations, claims
and investigations. The ongoing matters could result in liabilities,
civil and criminal penalties, loss of product exclusivity and other
costs, fines and expenses associated with findings adverse to
UCB’s interests. Potential cash outflows reflected in a provision
might be fully or partially off-set by insurance in certain
circumstances. UCB has not established provisions for potential
damage awards for certain additional legal claims against our
subsidiaries if UCB currently believes that a payment is either not
probable or cannot be reliably estimated.
1. Intellectual property matters (selected matters)
We vigorously protect our patent portfolio and our ability to
bring medicines to patients as we deem necessary.
Consequently, UCB is involved in various litigation matters as a
plaintiff in various jurisdictions in the U.S. and Europe.
●
TOVIAZ
®
Germany
Inventor compensation dispute whereby two former
Schwarz inventors have filed 3 complaints against UCB
alleging that the assignment of rights under the TOVIAZ
®
formulation patents is invalid and hence royalties from
Pfizer should be paid to them. Trial was scheduled for June
2021 but was cancelled. UCB filed a petition for legal
review with the German Supreme Court.
●
VIMPAT
®
Germany
Inventor compensation dispute whereby two inventors of
the improved lacosamide manufacturing route
seek compensation based on product revenue. In 2021,
the lower and appellate courts accepted the inventors’
argument. A hearing regarding potential compensation is
expected in 2022.
●
NEUPRO
®
United States
In 2019, UCB filed separate lawsuits against Actavis and
Mylan to enforce certain NEUPRO
®
the federal court in the Actavis case ruled the patent
invalid. UCB appealed. At the request of the parties, the
appellate court has agreed to consolidate both cases for
appeal.
Europe
In 2018, Mylan and Luye sought to invalidate the NEUPRO
®
reformulation patent. The judge ruled in UCB’s favor. Luye
appealed. Mylan waived its right to appeal.
●
BRIVIACT
®
United States
Eight generic companies filed Abbreviated New Drug
Applications (ANDAs). UCB filed complaints in Delaware
federal court against all 8 companies. Subsequently, one of
the companies (Microlabs) discontinued its challenge of
our patent. Settlement agreements were recently signed
with two defendants. Trial is anticipated to take place in
2022.
●
NAYZILAM
®
United States
Cipla filed an ANDA challenging the validity of certain
NAYZILAM
®
stipulated to infringement. Trial is anticipated to take place
in 2023.
2. Product liability matters
●
Distilbène product liability litigation – France
France Entities of the UCB Group have been named as
defendants in several product liability cases in France. The
claimants in these actions claim that their mothers took
Distilbène, a former product of the UCB Group, during their
pregnancy, and that as a result of this they suffered bodily
injuries. The Group has product liability insurance in place,
but the insurance coverage will likely not be sufficient. the
Group has accounted for a provision (refer to Note 34).
●
Opioid Litigation
UCB, Inc. (“UCB”) has been named as a defendant in 13
lawsuits in connection with the national opioid litigation in
the United States. The plaintiffs are government
municipalities or health care entities claiming damages
related to the promotion, sale and distribution of opioids.
UCB has 5 cases in the federal multi-district litigation (MDL)
and 8 in Utah state court. In all cases, UCB is among
numerous defendants. To date, only 1 UCB case in Utah
has been selected for a trial to proceed (Washington
County, Utah).
Additionally, UCB is contractually obligated to indemnify
one of its former contract manufacturers who is currently a
defendant in 4 cases. UCB controls the defense of these
cases.
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
220
3. Investigations
●
CIMZIA
®
In March 2019, UCB, Inc. received a Civil Investigative
Demand (CID) from the U.S. Department of Justice (DOJ)
and a subpoena from the Department of Health and
Human Services (HHS) Office of Inspector General (OIG)
both seeking information relating to the sales and
marketing practices and pricing of CIMZIA
®
from 2011 and 2008, respectively, to date. On 27 March
2020, UCB was informed that DOJ was suspending the
inquiry initiated by its office in Georgia but continuing its
inquiry related to the OIG subpoena. The Company is
cooperating fully with DOJ and OIG.
4. Concluded legal matters
●
CIMZIA
®
Investigation
In Dec. 2020, UCB was contacted by CDI regarding an
investigation CDI was conducting relating to the sale and
promotion of CIMZIA
®
. In September 2021, CDI closed its
investigation and withdrew its subpoena.
It is not anticipated that any other material liabilities will arise
from the contingent liabilities other than those provided for
(refer to Note 34).
44. Related party transactions
44.1
During the financial years ended December 31, 2021 and 2020,
all intra-UCB Group transactions were carried out based on
assessments of mutual economic benefit to the parties involved,
and the applicable conditions were established in accordance
with criteria of at arm’s length negotiations and fair dealing, and
with a view to creating value for the entire UCB Group.
Conditions governing intra-UCB Group transactions were similar
to conditions governing third-party transactions.
With regard to the sale of intermediary and finished products,
these criteria were in most cases achieved by increasing each
party’s respective production cost by an at arm’s length profit
margin. With regard to intra -UCB Group services rendered,
these criteria are accompanied by the principle of charging fees
sufficient to cover each party’s respective incurred costs and an
at arm’s length mark-up. Intra-Group transactions carried out
within the UCB Group constitute standard transactions for a
biopharmaceutical Group. These transactions include the
purchase and sale of intermediary and finished medical
products, deposits and loans for UCB Group affiliates as well as
functions and activities carried out by the UCB Group in order to
optimize operations.
44.2
During 2021 there have been no financial transactions with related parties other than affiliates of UCB SA.
44.3
Key management compensation as disclosed below comprises compensation recognized in the income statement for members of the
Board of Directors and the Executive Committee, for the portion of the year where they exercised their mandate.
2021
2020
Short-term employee benefits
18
18
Terminati on benefits
0
7
Post-employment benefits
3
3
Share-based payments
6
8
Total key management compensation
27
36
Short-term employee benefits include salaries (including social
security contributions), bonuses earned during the year, car
leasing and other allowances where applicable. Share-based
compensation includes the amortization over the vesting period
of the fair value of equity instruments granted, and comprises
share options, share awards and performance shares further
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
221
explained in Note 28. The termination benefits contain all
compensated amounts, including benefits in kind and deferred
compensation. There have been no loans granted by the
Company or a subsidiary of the Group to any Director or officer
of the Group, nor any guarantees given with respect hereto.
44.4 Shareholders and shareholders structure
The main shareholder of UCB is Financière de Tubize SA (also
referred to herein as the “Reference Shareholder” or “Tubize”),
a Belgian company listed on Euronext Brussels, holding 68 333
981 UCB shares on a total number of 194 505 658 (i.e. 35.13%)
as at December 31, 2021.
Based on the transparency declarations received by Tubize and,
as the case may be, more recent public disclosures, the
shareholder structure of Tubize per December 31, 2021 can be
summarized as follows:
Concert
Outside concert
Total
Voting rights
%
Voting rights
%
Voting rights
%
FEJ SRL
8 525 014
19.15%
1 988 800
4.47%
10 513 814
23.62%
Daniel Janssen
5 881 677
13.21%
0
0.00%
5 881 677
13.21%
Altaï Invest SA
4 969 795
11.16%
0.06%
4 996 263
11.22%
Barnfin SA
3 903 835
8.77%
0
0.00%
3 903 835
8.77%
Jean van Rijckevorsel
0.03%
0
0.00%
0.03%
Total voting rights held by
the reference shareholders
23 292 065
52.33%
2 015 268
4.53%
25 307 333
56.85%
Other shareholders
0
0.00%
19 205 265
43.15%
19 205 265
43.15%
Total voting rights
23 292 065
52.33%
21 220 533
47.67%
44 512 598
100.00%
Altaï Invest SA is controlled by Evelyn du Monceau, born Evelyn
Janssen. Barnfin SA is controlled by Bridget van Rijckevorsel,
born Paule Bridget Janssen.
The reference shareholders of Tubize, belonging to the Janssen
family, act in concert, i.e. they have entered into a shareholders’
agreement concerning the concerted exercise of their voting
rights in order to pursue a sustainable common policy with
regard to Tubize and concerning the possession, acquisition or
transfer of voting securities cf. article 3, §1, 13°, a), b) and c) of
the Law on the disclosure of large shareholdings and article 3,
§1, 5°, a) and b) of the Law on public takeover bids.
UCB also holds UCB shares (see below for an overview of its
shareholdings at December
). The remaining UCB shares
are held by the public.
Please find below an overview of the large shareholdings of UCB
(including assimilated financial instruments) on the basis of the
transparency notifications received pursuant to the law of May
2, 2007, on the disclosure of large shareholdings (situation as at
December 31,
2021
):
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
222
UCB Controlling and major shareholdings on December 31, 2021
Situation as per December 31, 2021
Share capital €
€ 583 516 974
March 13, 2014
Total number of voting rights (= denominator)
194 505 658
March 13, 2014
1
Financière de Tubize SA (“Tubize”)
securities carrying voting rights (shares)
68 333 981
35.13%
May 21, 2021
2
UCB SA/NV
securities carrying voting rights (shares)
5 331 781
2.74%
December 31, 2021
assimilated financial instruments (options)
1
0
0.00%
March 6, 2017
assimilated financial instruments (other)
1
0
0.00%
December 18, 2015
TOTAL
5 331 781
2.74%
Free float
2
(securities carrying voting rights (shares))
120 839 896
62.13%
3
Wellington Management Group LLP
securities carrying voting rights (shares)
14 516 633
7.46%
September 1, 2021
4
BlackRock, Inc.
securities carrying voting rights (shares)
9 412 691
4.84%
January 13, 2020
5
FMR LLC
securities carrying voting rights (shares)
9 728 407
5.00%
July 30, 2021
(all percentages are calculated on the basis of the current total number of voting rights)
1
2
calculation; assimilated financial instruments are excluded.
45. Events after the statement of financial position date
On 18 January 2022, UCB has entered into a definitive
agreement under which UCB would acquire Zogenix, Inc.
(NASDAQ: ZGNX), a global biopharmaceutical company
commercializing and developing therapies for rare diseases.
Under the terms of the agreement, UCB commenced a tender
offer to purchase all outstanding shares of Zogenix for a
purchase price per share of US$ 26.00 in cash at closing, plus
a contingent value right (CVR) for a potential cash payment of
US$ 2.00 upon EU approval by December 31, 2023, of
FINTEPLA® as an orphan medicine for treatment of Lennox-
Gastaut syndrome (LGS). The total transaction is valued at up
to approximately US$ 1.9 billion / € 1.7 billion. The board of
directors of both companies have unanimously approved the
transaction, the closing of which remains subject to the
tender of shares representing at least a majority of the total
number of Zogenix’s outstanding shares, receipt of required
antitrust clearances, and other customary conditions. The
transaction is expected to close by the end of the second
quarter of 2022.
46. UCB Companies (fully consolidated)
Name and office
Holding
Majority controlling
shareholder
ARMENIA
Nile AI LLC
5
100%
Nile AI, Inc.
AUSTRALIA
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
223
UCB Australia Pty. Ltd. – Level 1, 1155 Malvern Road – 3144 Malvern, Victoria
100%
UCB SA
Engage Therapeutics Australia Pty. Ltd., Level 1, 1155 Malvern Road – 3144 Malvern,
Victoria
100%
Engage Therapeutics, Inc
AUSTRIA
UCB Pharma Gesellschaft m.b.H. – Twin Tower, Wienerbergstrasse 11/12a, 1100
Wien
100%
UCB Pharma SA
BELGIUM
UCB Fipar SA – Allée de la Recherche, 60 – 1070 Brussels (BE0403.198.811)
100%
UCB Belgium SA
UCB Biopharma SRL – Allée de la Recherche, 60 – 1070 Brussels (BE0543.573.053)
100%
UCB Pharma SA
UCB Belgium SA – Allée de la Recherche, 60 – 1070 Brussels (BE0402.040.254)
100%
UCB Pharma SA
UCB Pharma SA – Allée de la Recherche, 60 – 1070 Brussels (BE0403.096.168)
100%
UCB SA
Sifar SA – Allée de la Recherche, 60 – 1070 Brussels (BE0453.612.580)
100%
UCB Pharma SA
UCB Ventures SA – Allée de la Recherche, 60 – 1070 Brussels (BE0667 816 096)
100%
UCB SA
UCB Ventures Belgium SA – Allée de la Recherche, 60 – 1070 Brussels (BE0668 388
891)
100%
UCB Ventures SA
Handl Therapeutics BV 1 – Gaston Geenslaan 1, 3001 Leuven (BE0735.503.488)
100%
UCB Biopharma SRL
BRAZIL
UCB Biopharma Ltda – Av. Presidente Juscelino Kubitschek, nº 1327, 5° andar,
Condominio Edificio Intemacional Plaza II – CEP:
04543-011 Sao Paulo
100%
UCB SA
BULGARIA
UCB Bulgaria EOOD – 2B Srebarna street, fl. 9, office 8B, Lozenetz, Sofia 1407
100%
UCB SA
CANADA
UCB Canada Inc. – 2201 Bristol Circle, Suite 602 – ON L6H0J8 Oakville
100%
UCB Holdings Inc.
CHINA
UCB Trading (Shanghai) Co Ltd – Suite 317, 439 No.1 Fu Te Road West, Shanghai (Pilot
Free Trade Zone)
100%
UCB SA
UCB Pharma (Hong Kong) Ltd – Rooms 156 & 157, 20/F, Cityplaza Three, 14 Taikoo
Wan Road, Tai Koo, Hong Kong
100%
UCB Pharma GmbH
UCB Pharma (Zhuhai) Company Ltd – Section A., Workshop, No.3 Science &
Technology 05
th
Zone – Zhuhai Guangdong Province
100%
UCB Pharma GmbH
CZECH REPUBLIC
UCB S.R.O. – Jankovcova 1518/2 - 170 00 Praha 7
100%
UCB SA
DENMARK
UCB Nordic AS – Edvard Thomsens Vej 14, 7 – 2300 Copenhagen
100%
UCB Pharma SA
FINLAND
UCB Pharma Oy Finland – Bertel Jungin aukio 5 , 6.krs – 02600 Espoo
100%
UCB Pharma SA
FRANCE
UCB Pharma SA – Défense Ouest 420, rue d’Estienne d’Orves – 92700 Colombes
100%
UCB SA
GERMANY
UCB Pharma GmbH – Alfred-Nobel-Strasse 10 – 40789 Monheim am Rhein
100%
UCB GmbH
UCB GmbH – Alfred-Nobel-Strasse 10 – 40789 Monheim am Rhein
100%
UCB Pharma SA
UCB BioSciences GmbH – Alfred-Nobel-Strasse 10 – 40789 Monheim am Rhein
100%
UCB Pharma GmbH
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
224
Cosmix Verwaltungs GmbH - Alfred-Nobel-Strasse 10 – 40789 Monheim am Rhein
100%
Ra Pharmaceuticals, Inc.
GREECE
UCB A.E. – 63 Agiou Dimitriou Street – 17456 Alimos – Athens
100%
UCB SA
HUNGARY
UCB Hungary Ltd – Obuda Gate Building Arpád Fejedelem ùtja 26-28 – 1023 Budapest
100%
UCB SA
INDIA
UCB India Private Ltd – Building No. - P3, Unit No. - 103, 1st Floor, Prithvi Complex,
Kalher Pipe Line, Kalher, Bhiwandi, Thane, 421302 Maharashtra
100%
UCB SA
Uni-Mediflex Private Ltd
2
Complex, Kalher Pipe Line, Kalher, Bhiwandi, Thane, 421302 Maharashtra
100%
UCB SA
IRELAND
UCB (Pharma) Ireland Ltd – United Drug House Magna Drive, Magna Business Park,
City West Road – Dublin 24
100%
UCB SA
UCB Manufacturing Ireland Ltd – Shannon Industrial Estate – Shannon, County Clare
100%
UCB SA
ITALY
UCB Pharma SpA – Via Varesina 162 – 20156 Milano
100%
UCB SA
JAPAN
UCB Japan Co Ltd – Shinjuku Grand Tower, 8-17-1 Nishi-Shinjuku 160-0023 Shinjuku,
Tokyo
100%
UCB SA
LUXEMBOURG
Edev Sàrl
4
– Rue Eugène Ruppert, 5C – 2453 Luxembourg
0%
N/A
MALAYSIA
UCB Trading (Malaysia) Sdn. Bhd.
2
Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur
100%
UCB SA
MEXICO
UCB de Mexico SA de C.V. – Calzada Mariano Escobedo 595, Piso 3, Oficina 03/100,
Colonia Rincón del Bosque, Bosque de Chapultepec I sección, Alcaldía Miguel Hidalgo,
11589 Mexico D.F.
100%
UCB SA
Vedim SA de C.V.
3
Rincón del Bosque, Bosque de Chapultepec I sección, Alcaldía Miguel Hidalgo, 11589
Mexico D.F.
100%
UCB SA
NETHERLANDS
UCB Finance N.V.
2
100%
UCB SA
UCB Pharma B.V. (Netherlands) – Hoge Mosten 2 – 4822 NH Breda
100%
UCB Pharma SA
NORWAY
UCB Pharma A.S. – Haakon VIIs gate 6 – 0161 Oslo
100%
UCB Pharma SA
POLAND
Vedim Sp. z.o.o. – Ul. L. Kruczkowskiego, 8, 00-380 Warszawa
100%
UCB SA
UCB Pharma Sp. z.o.o. – Ul. L. Kruczkowskiego, 8, 00-380 Warszawa
100%
UCB SA
PORTUGAL
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
225
UCB Pharma (Produtos Farmaceuticos) Lda – Rua do Silval, nº 37, piso 1, S1.3, 2780-
373 Oeiras
100%
UCB SA
ROMANIA
UCB Pharma Romania S.R.L. – 165 Calea Floreasca, One Tower Building, 3rd Floor, 1st
district, Bucharest 14459
100%
UCB SA
RUSSIA
UCB Pharma LLC – Shturvaluaya 5 bldg 1 – 125364 Moscow
100%
UCB SA
UCB Pharma Logistics LLC – 1st Krasnogvardeyskiy proezd 15, floor 13, office 2, room
35, premises 1 – 123100 Moscow
100%
UCB SA
SOUTH KOREA
UCB Korea Co Ltd. – 4th Fl., A+ Asset Tower, 369 Gangnam-daero, Seocho-gu, 06621
Seoul
100%
UCB SA
SPAIN
UCB Pharma SA – Plaza de Manuel Gómez Moreno, s/n, Edificio Bronce, 5th floor –
28020 Madrid
100%
UCB SA
SWEDEN
UCB Pharma AB (Sweden) – Mäster Samuelsgatan 60 – 111 21 Stockholm
100%
UCB Pharma SA
SWITZERLAND
UCB Farchim SA (A.G. – Ltd.) – ZI de Planchy, Chemin de Croix Blanche 10 – 1630 Bulle
100%
UCB Pharma SA
Doutors Réassurance SA – ZI de Planchy, Chemin de Croix Blanche 10 – 1630 Bulle
100%
UCB Farchim SA
UCB-Pharma AG – ZI de Planchy, Chemin de Croix Blanche 10 – 1630 Bulle
100%
UCB Farchim SA
UCB Medical Devices SA – ZI de Planchy, Chemin de Croix Blanche 10 – 1630 Bulle
100%
UCB Farchim SA
TAIWAN
UCB Pharmaceuticals (Taiwan) Ltd – 12F. -2, No.88, Dunhua N. Rd., Songshan Dist,
10551 Taipei
100%
UCB SA
THAILAND
UCB Trading (Thailand) Ltd
2
3 Road, Kwaeng Bang Phong Pang, Khet Yannawa – 10500 Bangkok
100%
UCB SA
TURKEY
UCB Pharma A.S. – Palladium Tower, Barbaros Mah., Kardelen Sok. No.2, Kat.24/80,
34746 Istanbul
100%
UCB SA
U.K.
UCB (Investments) Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire
100%
UCB SA
Celltech Group Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire
100%
UCB (Investments) Ltd
Celltech R&D Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire
100%
Celltech Group Ltd
Darwin Discovery Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire
100%
Celltech Group Ltd
UCB Pharma Ltd – 208 Bath Road – SL1 3WE Slough, Berkshire
100%
Celltech Group Ltd
Schwarz Pharma Ltd, in liquidation
2
London
100%
Celltech Group Ltd
UKRAINE
UCB Ukraine LLC – 19 Grygoriya Skovorody Str., Business – center ”Podol Plaza” –
04070 Kiev
100%
UCB Pharma GmbH
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
226
U.S.
UCB Holdings, Inc. – Corporation Trust Center, 1209 Orange Street – 19801
Wilmington, Delaware
100%
UCB Pharma SA
UCB, Inc. – Corporation Trust Center, 1209 Orange Street – 19801 Wilmington,
Delaware
100%
UCB Holdings Inc.
UCB Biosciences, Inc. – Corporation Trust Center, 1209 Orange Street – 19801
Wilmington, Delaware
100%
UCB Inc.
UCB Manufacturing, Inc. – Corporation Trust Center, 1209 Orange Street – 19801
Wilmington, Delaware
100%
UCB Inc.
Element Genomics, Inc.
3
Wilmington, Delaware
100%
UCB Biosciences Inc.
Ra Pharmaceuticals, Inc. – Corporation Tr ust Center, 1209 Orange Street – 19801
Wilmington, Delaware
100%
UCB Holdings Inc.
Engage Therapeutics, Inc.
– Corporation Trust Center, 1209 Orange Street – 19801
Wilmington, Delaware
100%
UCB Holdings Inc.
Nile Al, Inc. – Corporation Trust Center, 1209 Orange Street – 19801 Wilmington,
Delaware
100%
UCB Holdings Inc.
1
2
These Companies have been liquidated during 2021: Schwarz Pharma Ltd. on 13 January 2021, UCB Trading (Malaysia) Sdn. Bhd on 5 March 2021, UCB Finance N.V (Netherlands) on 6 April
2021, Uni-Mediflex Private Ltd (India) on 2 July 2021 and UCB Trading (Thailand) Ltd on 10 November 2021. All companies are included in the Consolidated Financial Statements for 2020 and
2021 (up to their liquidation date).
3
the Consolidated Income Statement for 2020 and 2021.
4
Edev Sàrl is included in the consolidated income statement for 2020 and 2021 until 26 March 2021, date as from which the Group has no longer
control over this company.
5
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
227
1.
Responsibility statement
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
228
2. Statutory auditor’s report
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
229
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
230
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
231
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
232
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
233
6.
Abbreviated statutory financial
statements of UCB SA
6.1 Introduction
In accordance with the Belgian Companies Code, it has been
decided to present an abbreviated version of the statutory
financial statements of UCB SA.
The statutory financial statements of UCB SA are prepared in
accordance with Belgian Generally Accepted Accounting
Principles.
It should be noted that only the consolidated financial
statements as presented above, present a true and fair view of
the financial position and performance of the UCB Group.
The statutory auditor has issued an unqualified audit opinion
and certifies that the non-consolidated financial statements of
UCB SA for the year ended December 31, 2021 give a true and
fair view of the financial position and results of UCB SA in
accordance with all legal and regulatory dispositions.
In accordance with the legislation, these separate financial
statements, together with the management report of the Board
of Directors to the general assembly of shareholders, as well as
the auditor’s report will be filed at the National Bank of Belgium
within the statutory periods.
These documents are available on our website www.ucb.com or
on simple request, addressed to:
UCB SA
Corporate Communication
Allée de la Recherche 60
B-1070 Brussels (Belgium)
6.2 Statement of financial position
€ million
2021
2020
Assets
Formation expenses
Intangible assets
0
Tangible assets
Financial assets
8 594
8 776
Fixed assets
8 640
8 815
Amounts receivable after more than one year
1 370
1 341
Amounts receivable within one year or less
Current investments
Cash at bank and on hand
Deferred charges and accrued income
Current assets
2 295
2 576
Total assets
10 935
11 390
Liabilities
Capital
Share premium
2 000
2 000
Reserves
6 254
6 254
Profit brought forward
Equity
8 956
8 889
Provisions
Provisions and deferred taxes
Amounts payable after more than one year
1 542
1 392
Amounts payable within one year or less
Accrued charges and deferred income
Current liabilities
1 947
2 475
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
234
Total liabilities
10 935
11 390
6.3 Income statement
€ million
2021
2020
Operating income
Operating charges
- 113
- 128
Operating result
- 28
- 15
Financial income
3 894
Financial charges
- 76
- 89
Financial result
3 805
Profit before income taxes
3 790
Income taxes
0
0
Profit for the year available for appropriation
3 790
6.4 Appropriation account
€ million
2021
2020
Profit for the period available for appropriation
3 790
Profit brought forward from previous year
Profit to be appropriated
3 792
Transfer to legal reserve
0
0
Transfer to other reserves
0
3 500
Transfer to capital and reserves
0
3 500
Profit to be carried forward
Result to be carried forward
Dividends
Profit to be distributed
If the proposed allocation of the profit is approved, the total gross dividend will be fixed
at:
€ 1.30
€ 1.27
If the proposed allocation of profit is approved and taking into account the tax
regulations, the total net dividend off withholding tax per share will be fixed at:
€ 0.910
€ 0.889
The activities of UCB SA generated in 2021 include € 369 million
financial income stemming from financial fixed assets in
affiliated enterprises. The net profit reaches € 313 million after
income taxes. The amount available for distribution is € 366
million, including € 52 million profit brought forward from last
year.
The issued share capital of UCB SA is represented by 194 505
658 shares without par value as per December 31, 2021.
Per December 31, 2021, UCB SA owns 5 331 781 own shares in
order to honour the exercise of share options and share awards
granted to the Board of Directors and certain categories of
employees.
The Board of Directors proposes to pay a gross dividend of €
1.30 per share. If this dividend proposal is approved by the
General Meeting on April 28, 2022, the net dividend of € 0.91
per share will be payable as of May 3, 2022 against the delivery
of coupon #25. The shares held by UCB SA are not entitled to a
dividend.
Per December 31, 2021, 189 173 877 UCB shares are entitled to
a dividend, representing a total distribution of € 246 million. This
amount may fluctuate depending on the number of UCB shares
held by UCB SA on the dividend approval date. The Board of
Directors will communicate at the general meeting the total
number of UCB shares entitled to a dividend and will submit the
UCB Annual Financial Statements 2021
Source: Cognos Disclosure Management
235
aggregate amount to be distributed for approval. The annual
accounts of 2021 will be adapted accordingly.
6.5 Summary of significant accounting principles
The Board of Directors made the following decisions
in accordance with the Article 3:6 of the Royal Decree
of April 29, 2019 on implementing the company and
association code.
6.5.1 Tangible assets
Tangible assets purchased from third parties have
been included in the statement of financial position
at purchase price; assets manufactured by the
company itself have been valued at cost. The
purchase price or cost is depreciated on a straight-
line basis considering “pro rata temporis”. The
depreciation rates are as follows:
>
Administrative buildings
3%
>
Industrial buildings
5%
>
Tools
15%
>
Furniture and office machinery
15%
>
Vehicles
20%
>
Computer equipment and office
machines
33.3%
>
Prototype equipment
33.3%
6.5.2 Financial assets
UCB shareholdings have been valued in accordance
with the proportion held in shareholders’ equity of
the UCB companies concerned.
Shareholdings not part of the UCB companies are
valued at cost. An impairment is booked whenever
the valuation shows a permanent loss in realizable
value.
6.5.3 Receivables and liabilities
They are shown at their book value. Receivables have
been written down if their repayment, when due, is
entirely or partly uncertain and doubtful.
6.5.4 Assets and commitments expressed in foreign
currencies
Foreign currency transactions are accounted for at
the exchange rates prevailing at the date of the
transactions.
Non-monetary assets and liabilities (intangible and
tangible assets, shareholdings), denominated in
foreign currencies, are translated at the foreign
exchange rate prevailing at the date of the
transaction. Monetary assets and liabilities
denominated in foreign currencies are translated at
statement of financial position date rate. Realized
and unrealized exchange differences on foreign
currency transactions are recognized in the income
statement.
6.5.5 Provisions
All the risks born by the company have been the
subject of provisions reviewed each year, in
accordance with the rules of prudence, good faith
and sincerity. Provisions are recorded at normal
value.
6.5.6 Foreign currencies
Derivatives are accounted for at fair value through
P&L unless the derivative has no offsetting exposure
in the stand-alone financial statements, in which
case, the derivative will only be disclosed as off-
statement of financial position commitment not
affecting the statement of financial position and/or
income statement accounts. The amount disclosed as
off-statement of financial position commitment will
be in line with the IFRS methodology. Additionally,
the effective portion of changes in the fair value of
the derivative financial instruments that are
designated and qualify as cash flow hedges, are
classified on the same line in the income statement
or statement of financial position as the hedged item
once the hedged item affects profit or loss or results
in the recognition of a non-financial asset or liability.
6.5.7 Fair value adjustments on loans being acquired
Loans that have been acquired are recognized in the
statement of financial position at nominal value. All
differences between the nominal value and the
acquisition value are recognized on an accrual
account and taken in the income statement pro rata
temporis on a linear basis over the remaining
duration of the loans.
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Data and reporting
People data
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Environmental data
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GRI Standards & CoP
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SASB
Safety of clinical trial participants
HC-BP-210a.1
Discussion, by world region, of
management process for ensuring
quality and patient safety during
clinical trials
Ensuring product safety and quality
HC-BP-210a.2
Number of FDA Sponsor Inspections
related to clinical trial management
and pharmacovigilance that resulted
in: (1) Voluntary Action Indicated
(VAI) and (2) Official Action Indicated
(OAI)
In 2021, UCB had no FDA Sponsor
Inspections related to clinical trial
management and pharmacovigilance.
HC-BP-210a.3
Total amount of monetary losses as a
result of legal proceedings associated
with clinical trials in developing
countries
Material settlements are reported in 34.
Provisions.
Access to medicines
HC-BP-240a.1
Description of actions and initiatives
to promote access to health care
products for priority diseases and in
priority countries as defined by the
Access to Medicine Index
Providing access to our solutions
HC-BP-240a.2
List of products on the WHO List of
Prequalified Medicinal Products as
part of its Prequalification of
Medicines Programme (PQP)
UCB has no products in the WHO List of
Prequalified Medicinal Products.
Affordabilty & pricing
HC-BP-240b.1
Number of settlements of
Abbreviated New Drug Application
(ANDA) litigation that involved
payments and/or provisions to delay
bringing an authorized generic
product to market for a defined time
period
HC-BP-240b.2
Percentage change in: (1) average list
price and (2) average net price across
US product portfolio compared to
previous year
UCB pricing in the U.S.
HC-BP-240b.3
Percentage change in: (1) list price
and (2) net price of product with
largest increase compared to previous
year
UCB pricing in the U.S.
Drug safety
HC-BP-250a.1
List of products listed in the Food and
Drug Administration’s (FDA)
MedWatch Safety Alerts for Human
Medical Products database
Available via FDA Adverse Event
Reporting website
HC-BP-250a.2
Number of fatalities associated with
products as reported in the FDA
Adverse Event Reporting System
Available via FDA Adverse Event
Reporting website
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HC-BP-250a.3
Number of recalls issued, total units
recalled
Ensuring product safety and quality
HC-BP-250a.4
Total amount of product accepted for
takeback, reuse, or disposal
HC-BP-250a.5
Number of FDA enforcement actions
taken in response to violations of
current Good Manufacturing Practices
(cGMP), by type
Ensuring product safety and quality
Counterfeit drugs
HC-BP-260a.1
Description of methods and
technologies used to maintain
traceability of products throughout
the supply chain and prevent
counterfeiting
Ensuring product safety and quality
HC-BP-260a.2
Discussion of process for alerting
customers and business partners of
potential or known risks associated
with counterfeit products
HC-BP-260a.3
Number of actions that led to raids,
seizure, arrests, and/or filing of
criminal charges related to
counterfeit products
Ethical marketing
HC-BP-270a.1
Total amount of monetary losses as a
result of legal proceedings associated
with false marketing claims
Material settlements are reported in 34.
Provisions.
HC-BP-270a.2
Description of code of ethics
governing promotion of off-label use
of products
Product Responsibility
Employee recruitment, development & retention
HC-BP-330a.1
Discussion of talent recruitment and
retention efforts for scientists and
research and development personnel
Preparing our workforce for the future
HC-BP-330a.2
(1) Voluntary and (2) involuntary
turnover rate for: (a)
executives/senior managers, (b) mid-
level managers, (c) professionals, and
(d) all others
People data
Supply chain management
HC-BP-430a.1
Percentage of (1) entity’s facilities and
(2) Tier I suppliers’ facilities
participating in the Rx-360
International Pharmaceutical Supply
Chain Consortium audit program or
equivalent third-party audit programs
for integrity of supply chain and
ingredients
Business ethics
HC-BP-510a.1
Total amount of monetary losses as a
result of legal proceedings associated
with corruption and bribery
Material settlements are reported in 34.
Provisions.
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HC-BP-510a.2
Description of code of ethics
governing interactions with health
care professionals
Ethical Business Practices
Activity metrics
HC-BP-000.A
Number of patients treated
Letter to Stakeholders
HC-BP-000.B
Number of drugs (1) in portfolio and
(2) in research and development
(Phases 1-3)
https://www.ucb.com/our-products
Our Pipeline
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Glossary
Adjusted EBIT
Operating profit adjusted for impairment
charges, restructuring expenses, and other
income and expenses.
Adjusted EBITDA
(Earnings Before Interest, Taxes, Depreciation
and Amortization charges) Operating profit
adjusted for amortization, depreciation,
impairment charges, restructuring expenses
and other income and expenses.
ALM
Asset-liability matching
CER
Constant exchange rates
Core EPS/Core earnings per share
Profit attributable to UCB shareholders,
adjusted for the after-tax impact of
restructuring, impairment, other
income/expense items, the financial one-offs,
the after-tax contribution from discontinued
operations and the after-tax amortization of
intangibles linked to sales, per non-dilutive
weighted average number of shares.
Core products
CIMZIA®, VIMPAT®, KEPPRA®, BRIVIACT® and
NEUPRO®
CGU
Cash generating unit
CPM
The Corporate Performance Multiplier is one
of the 2 multipliers defining the bonus payout.
It is based on the company’s meeting
corporate targets.
DTA
Deferred tax asset
EBIT/Earnings Before Interest and Taxes
Operating profit as mentioned in the
consolidated financial statements
EMA/European Medicines Agency
Agency responsible for the evaluation of
medicinal products designed to protect and
promote human and animal health. www.
emea.europa.eu
EPS
Earnings per share
Established brands
Portfolio of 150 post-patent, high-quality
medicines, with proven value for patients and
doctors since many years
Equity
Equity means ensuring all employees are
offered fair opportunities for development,
advancement, compensation and reward as
per their aspirations
Extra-financial
‘Extra-financial’ is the term used by UCB for
information commonly referred to as ‘non-
financial’
FDA/U.S. Food and Drug Administration
Agency within the U.S. Department of Health
and Human Services is responsible for
protecting and promoting the nation’s health
www.fda.gov
FVOCI
Fair value through other comprehensive
income
Financial assets at FVPL
Financial assets to be measured subsequently
at fair value through profit or loss
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Financial assets at FVOCI
Financial assets to be measured subsequently
at fair value through other comprehensive
income
Financial one-off items
Gains and losses arising upon the sale of non-
current financial assets (other than derivatives
and reimbursement rights with respect to
defined benefit plans) as well as impairment
losses accounted for on these financial assets
are considered as financial one-off items.
FRMC
Financial Risk Management Committee
Global Reporting Initiative
An international independent standards
organization that helps businesses,
governments and other organizations to
understand and report the most important
social, environmental and governance aspects
raised by internal and external stakeholders
IPM
Individual Performance Multiplier, one of the 2
multipliers defining the bonus payout. It
considers a combination of individual results
achieved and behaviors demonstrated.
LTI
Long-Term Incentives aim at motivating and
retaining key talent over a period of at least 3
years. They align employee rewards with
company and patient goals, providing increased
financial benefits as the company grows. At
UCB, this includes Stock Awards, Stock Options
and Performance Shares.
NCI
Non-controlling interest
Net dividend
The amount a shareholder of UCB will receive
after principal deduction of Belgian witholding
tax which is currently 30%. Lower withholding
tax rates may be applicable for certain
categories of investors.
Net financial debt
Non-current and current borrowings, bonds
and bank overdrafts less available for sale debt
securities, restricted cash deposit with respect
to financial lease agreements, cash and cash
equivalents
OCI
Other comprehensive income
Orphan drug
A medicine used in rare diseases
PBM
Pharmacy Benefit Manager
PGTCS
Primary generalized tonic-clonic seizures
PMDA/Pharmaceuticals and Medical Devices
AgencyJapanese regulatory agency in charge of
protecting the public health by assuring safety,
efficacy and quality of pharmaceuticals and
medical devices. www.pmda.go.jp/english
POS
Partial onset seizures, also known as focal
seizures
PSP
Performance Share Plan which awards a grant
of UCB common stock to qualifying executives.
The awards vest three years after grant,
pending certain conditions, including meeting
pre-established companywide targets.
ROU asset
Right of use asset
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Seed funding
The first official equity funding stage used to
start a business, fund research, or develop a
product
SBTi – Science Based Targets initiative
The Science Based Targets initiative (SBTi) is a
joint initiative by the United Nations, the
Carbon Disclosure Project, the World Resources
Institute and the World Wide Fund for Nature
(WWF). It supports organizations with setting
climate targets in line with the COP21 climate
summit in Paris.
Sustainable Development Goals (SDGs)
Collection of 17 global goals set by the United
Nations General Assembly in 2015 defined as a
call to action to end poverty, protect the planet
and ensure that all people enjoy peace and
prosperity
Weighted average number of ordinary shares
Number of ordinary shares outstanding at the
beginning of a given period, adjusted by the
number of shares bought back or issued during
the period, multiplied by a time-weighting
factor
Working capital
Includes inventories, trade and other
receivables and trade and other payables, both
due within and after 12 months.
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Forward Looking Statement Integrated Annual Report
This Integrated Annual Report contains forward-
looking statements, including, without limitation,
statements containing the words “believes”,
“anticipates”, “expects”, “intends”, “plans”,
“seeks”, “estimates”, “may”, “will”, “continue” and
similar expressions. These forward -looking
statements are based on current plans, estimates
and beliefs of management. All statements, other
than statements of historical facts, are statements
that could be deemed forward -looking statements,
including estimates of revenues, operating
margins, capital expenditures, cash, other financial
information, expected legal, arbitration, political,
regulatory or clinical results or practices and other
such estimates and results. By their nature, such
forward-looking statements are not guarantees of
future performance and are subject to known and
unknown risks, uncertainties, and assumptions
which might cause the actual results, financial
condition, performance or achievements of UCB,
or industry results, to be materially different from
any future results, performance, or achievements
expressed or implied by such forward-looking
statements contained in this Integrated Annual
Report.
Important factors that could result in such
differences include but are not limited to: the
global spread and impact of COVID-19, changes in
general economic, business and competitive
conditions, the inability to obtain necessary
regulatory approvals or to obtain them on
acceptable terms or within expected timing, costs
associated with research and development,
changes in the prospects for products in the
pipeline or under development by UCB, effects of
future judicial decisions or governmental
investigations, safety, quality, data integrity or
manufacturing issues; potential or actual data
security and data privacy breaches, or disruptions
of our information technology systems, product
liability claims, challenges to patent protection for
products or product candidates, competition from
other products including biosimilars, changes in
laws or regulations, exchange rate fluctuations,
changes or uncertainties in tax laws or the
administration of such laws, and hiring and
retention of its employees. There is no guarantee
that new product candidates will be discovered or
identified in the pipeline, or that new indications
for existing products will be developed and
approved. Movement from concept to commercial
product is uncertain; preclinical results do not
guarantee safety and efficacy of product
candidates in humans. So far, the complexity of
the human body cannot be reproduced in
computer models, cell culture systems or animal
models. The length of the timing to complete
clinical trials and to get regulatory approval for
product marketing has varied in the past and UCB
expects similar unpredictability going forward.
Products or potential products which are the
subject of partnerships, joint ventures or licensing
collaborations may be subject to disputes between
the partners or may prove to be not as safe,
effective or commercially successful as UCB may
have believed at the start of such partnership.
UCB’s efforts to acquire other products or
companies and to integrate the operations of such
acquired companies may not be as successful as
UCB may have believed at the moment of
acquisition. Also, UCB or others could discover
safety, side effects or manufacturing problems
with its products and/or devices after they are
marketed. The discovery of significant problems
with a product similar to one of UCB’s products
that implicate an entire class of products may have
a material adverse effect on sales of the entire
class of affected products. Moreover, sales may be
impacted by international and domestic trends
toward managed care and health care cost
containment, including pricing pressure, political
and public scrutiny, customer and prescriber
patterns or practices, and the reimbursement
policies imposed by third-party payers as well as
legislation affecting biopharmaceutical pricing and
reimbursement activities and outcomes. Finally, a
breakdown, cyberattack or information security
breach could compromise the confidentiality,
integrity and availability of UCB’s data and
systems.
Given these uncertainties, the public is cautioned
not to place any undue reliance on such forward-
looking statements. These forward -looking
statements are made only as of the date of
publication of this Integrated Annual Report, and
do not reflect any potential impacts from the
evolving COVID-19 pandemic, unless indicated
otherwise. The company continues to follow the
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development diligently to assess the financial
significance of this pandemic to UCB.
UCB expressly disclaims any obligation to update
any forward-looking statements in this Integrated
Annual Report, either to confirm the actual results
or to report or reflect any change in its forward-
looking statements with regard thereto or any
change in events, conditions or circumstances on
which any such statement is based, unless such
statement is required pursuant to applicable laws
and regulations.
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Report language
Availability of the Integrated Annual Report
Financial calendar
Contacts
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