Novo Nordisk Annual Report 2021
Part of Management's review - not audited
Novo Nordisk Annual Report 2021
84
DKK million
2021
2020
2019
Net cash generated from
operating activities IFRS
Net cash used in investing
activities IFRS
55,000
51,951
46,782
(31,605)
(22,436) (11,509)
Net purchase of marketable
securities IFRS
5,937
Addition on marketable securities
through acquisition of
business IFRS
861
Repayment on lease
OPAT/NOA denominator
DKK million
2021
2020
Intangible assets
43,171
20,657
Property, plant and equipment
55,362
50,269
Deferred income tax assets
8,672
5,865
2019
5,835
50,551
4,121
Other receivables and
267
674
841
prepayments (non-current)
Inventories
19,621
18,536
Trade receivables
40,643
27,734
17,641
24,912
Tax receivables
1,119
289
806
Other receivables and
5,037
4,161
3,434
prepayments (current)
Deferred tax liabilities
(5,271)
(2,502)
(80)
Retirement benefit obligations
(1,280)
(1,399)
(1,334)
Financial reserves
'Financial reserves at the end of the year' is defined as the sum of cash and
cash equivalents at the end of the year, marketable securities with original
term to maturity exceeding three months and undrawn committed credit
and loan facilities with a maturity of more than 12 months, less loans and
bank overdrafts classified as liabilities arising from financing activities with
obliged repayment within 12 months of the balance sheet date.
Management believes that financial reserves at the end of the year are an
important measure of the Group's financial strength from an investor's
perspective, capturing the robustness of the Group's financial position and
its financial preparedness for unforeseen developments.
The following table reconciles total financial reserves with cash and cash
equivalents, the most directly comparable IFRS financial measure:
Free cash flow
liabilities IFRS
Free cash flow
Other liabilities (non-current)
(360)
Financial reserves
Provisions (non-current)
(4,374)
(4,526)
(4,613)
Trade payables
(8,870)
(5,717)
DKK million
(6,358)
2021
2020
Tax payables
(3,658)
(3,913)
(4,212)
Cash and cash equivalents IFRS
10,719
12,226
2019
15,411
Other liabilities (current)
(19,600)
(17,005) (15,085)
Marketable securities IFRS
6,765
Provisions (current)
(51,520)
Net operating assets
Average net operating assets¹
78,959
68,634
(34,814) (31,120)
58,309
51,824
45,339
Undrawn committed credit facility
Undrawn bridge facility'
11,526
11,531
5,577
11,578
42,940
Borrowings1
Financial reserves¹
(12,861)
16,149
(576)
(595)
28,758
26,394
1. Average net operating assets for 2019 was calculated based on an adjusted net
operating assets figure for 2018, which was adjusted by the right-of-use assets of
DKK 3,778 million as of 1 January 2019, following the implementation of IFRS 16. As
a consequence, the net operating assets figure for 2018 was adjusted to DKK 40,541
million for the calculation of the average net operating assets for 2019.
Reconciliation of net operating assets to equity: IFRS
1. Financial reserves for 2020 include amounts undrawn under credit facilities and
overdrafts where the repayment of such facilities or overdrafts is not contractually
required within 12 months of the balance sheet date. Financial reserves for 2020 include
the DKK 5,577 million (EUR 750 million) undrawn portion of a bridge facility as the
terms of the facility provided that the maturity could be extended, at the option of Novo
Nordisk, through June 2022. In accordance with IFRS, the DKK 5,577 million (EUR 750
million) drawn portion of the bridge facility has nevertheless been classified as current
debt as it was Management's expectation that the facility would be repaid in 2021. The
loan was repaid in 2021.
Free cash flow
Free cash flow is a measure of the amount of cash generated in the period
which is available for the Board to allocate between Novo Nordisk's capital
providers, through measures such as dividends, share repurchases and
repayment of debt (excluding lease liability repayments) or for retaining in
the business to fund future growth.
Cash to earnings
(874)
29,319
(950)
28,565
(822)
34,451
Cash to earnings is defined as 'free cash flow as a percentage of net profit'.
Management believes that cash to earnings is an important performance
metric because it measures the Group's ability to turn earnings into cash.
Since Management wants this measure to capture the ability of the Group's
operations to generate cash, free cash flow is used as the numerator instead
of net cash flow.
The following table shows the reconciliation of cash to earnings to cash flow
from operating activities/net profit in %, the most directly comparable IFRS
financial measure:
Cash flow from operating activities/net profit in %
DKK million
Net cash generated from
operating activities IFRS
/ Net profit IFRS
2021
2020
2019
DKK million
2021
Equity
70,746
2020
63,325
Investment in associated
(525)
companies
Other financial assets
(916)
(582)
(1,066)
2019
57,593
(474)
(1,334)
55,000
51,951
46,782
47,757
42,138
38,951
Cash flow from operating
activities/net profit in %
115.2%
123.3%
120.1%
Marketable securities
(6,765)
Derivative financial instruments
(1,690)
(2,332)
Cash at bank
(10,720)
(12,757)
Borrowings - non-current
12,961
2,897
(188)
(15,475)
3,009
Cash to earnings
DKK million
2021
2020
2019
Free cash flow
29,319
28,565
34,451
Borrowings current
13,684
7,459
1,474
Derivative financial instruments
2,184
1,365
Net operating assets
78,959
58,309
734
45,339
The following table shows a reconciliation of free cash flow with net cash
generated from operating activities, the most directly comparable IFRS
financial measure:
/ Net profit IFRS
47,757
42,138
38,951
Cash to earnings
61.4%
67.8%
88.4%View entire presentation