Novo Nordisk Annual Report 2021
Contents
Introducing Novo Nordisk
Strategic Aspirations
Key risks Management
Consolidated statements
Additional information
Novo Nordisk Annual Report 2021 75
Fair value measurement
The fair values of quoted investments are based on current bid prices at
the end of the reporting period. Financial assets for which no active market
exists are carried at fair value based on a valuation methodology.
The fair value of derivative financial instruments is measured on the basis of
quoted market prices of financial instruments traded in active markets. If an
active market exists, the fair value is based on the most recently observed
market price at the end of the reporting period. If a financial instrument
is quoted in a market that is not active, Novo Nordisk bases its valuation
on the most recent transaction price. Adjustment is made for subsequent
changes in market conditions, for instance by including transactions in
similar financial instruments assumed to be motivated by normal business
considerations.
If an active market does not exist, the fair value of standard and simple
financial instruments, such as foreign exchange forward contracts, interest
rate swaps, currency swaps and unlisted bonds, is measured according to
generally accepted valuation techniques. Market-based parameters are used
to measure the fair value.
The fair value of trade receivables in a factoring portfolio is calculated based
on the net invoice amount (invoice amount less charge-backs) less the fee
payable to the factoring entity. The factoring fee is insignificant due to the
short period between the time of sale to the factoring entity and the invoice
due date and the rate applicable. Inputs into the estimate of US wholesaler
charge-backs are described in note 2.1.
The marketable securities are initially measured at fair value plus transaction
costs and subsequently changes to the carrying amount are recognised in
the income statement.
4.10 Financial income and expenses
Financial income
DKK million
Financial income
Financial impact from forward contracts, specified
DKK million
2021
2020
2019
2021
2020
2019
Income/(loss) transferred from
other comprehensive income
Value adjustment of transferred
contracts
1,802
(329)
(1,677)
(1,411)
79
(1,609)
231
337
65
Foreign exchange gain (net)
1,142
Unrealised fair value adjustments
of forward contracts
1,246
(835)
(217)
Realised foreign exchange gain/
(loss) on forward contracts
679
(804)
830
Financial income/(expense) from
forward contracts
2,316
(1,889)
(2,673)
Interest income¹
Financial gain from forward
contracts (net)
Capital gain on investments, etc.
Result of associated companies
Total financial income
Financial expenses
Interest expenses¹
Foreign exchange loss (net)
Financial loss from forward
contracts (net)
Capital loss on investments, etc.
Capital loss on marketable
securities
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2,316
340
149
2,887
1,628
65
289
390
1,972
220
539
1,889
195
2,673
145
44
Result of associated companies
24
137
Other financial expenses
122
150
Total financial expenses
2,451
2,624
281
3,995
1. Total interest income and expenses is measured at amortised cost for financial assets
and liabilities.
Accounting policies
As described in note 4.3, Management has chosen to classify the result of
hedging activities as part of financial items in the income statement except
for foreign currency-risk cash flow hedges on highly probable non-financial
asset purchases, where the cumulative value adjustments are transferred
directly from the cash flow hedge reserve to the initial cost of the asset when
recognised.
Financial items primarily relate to foreign exchange elements and are
mainly impacted by the cumulative value adjustment of cash flow hedges
transferred from other comprehensive income to the income statement
when the hedged transaction is recognised in the income statement.
In addition, value adjustments of fair value hedges are recognised in
financial income and financial expenses along with any value adjustments of
the hedged asset or liability that are attributable to the hedged risk. Finally,
value adjustments of foreign currency assets and liabilities in non-hedged
currencies will impact financial income and financial expenses.View entire presentation