Significant pending litigation
The Danish arbitration case brought by Danisco in 2001 concerning Novozymes’ alleged unlawful use of lipase-related inventions and alleged failure to fulfil some of its contractual obligations was settled in 2006 to both parties’ satisfaction.
The US lawsuit concerning Danisco’s infringement of a patent in the bioethanol industry has been partially decided in the court of first instance. In August 2006 it was established that Danisco’s subsidiary Genencor has infringed one of Novozymes’ patents. The matters of damages and injunctions are expected to be decided by the same court in the first quarter of 2007.
Potential business risks
Novozymes’ business builds largely on the contained use of gene technology for industrial applications. Society’s acceptance of the use of this technology is therefore of great importance. Novozymes strives for openness towards its stakeholders and works actively to communicate the advantages of using gene technology.
As a result of Novozymes’ global activities and substantial sales in foreign currencies, the company is exposed to movements in exchange rates. Currency exposure is therefore a significant financial risk factor for the Group. Novozymes hedges its currency exposure with the primary aim of reducing any negative impact of changes in exchange rates and increasing the predictability of the Group’s financial results.
Events occurring after the close of the financial year
In 2004 a share-based incentive programme was introduced for Novozymes’ Executive Management covering the period 2004-2006. A pool of 185,955 B shares was allocated for this purpose from the company’s holding of treasury shares. After the results for 2006, the total economic value added during the period was DKK 1,694 million. The full share bonus has therefore been released to the Executive Management following the Board’s approval of the annual report.
New incentive programmes for Executive Management and other employees
The Board of Directors has approved new incentive programmes for Executive Management and the company’s other employees with effect from 2007. Both programmes are based on share options and cover the years 2007, 2008, 2009 and 2010. It has also been decided to extend the existing incentive programme for managerial employees by two years, so that all the company’s incentive programmes now run up to and including 2010.
The three share option programmes are based on fulfilment of Novozymes’ ambition of achieving sales of DKK 10 billion in 2010 and of specified financial and non-financial targets. The new incentive programmes are described in detail in “Financial, environmental and social discussion”.
