Investor Presentaiton

Novo Nordisk Annual Report 2023 Introducing Novo Nordisk Strategic Aspirations Risks Management Consolidated statements Additional information 64 +9 Depreciation and impairment losses DKK million 2023 2022 2021 Cost of goods sold 3,968 3,229 2,836 Sales and distribution costs 504 424 409 Research and development costs 1,313 922 736 Administrative costs 354 408 386 Other operating income and expenses 26 20 19 Total depreciation and impairment losses Of which related to leased assets 6,165 1,251 5,003 4,386 1,052 899 Capital expenditure in the reporting period was primarily related to investments in facility upgrades and new production facilities for active pharmaceutical ingredients (API) for current and future diabetes and obesity care products, mainly in Kalundborg. The investments will establish additional capacity across the entire global value chain from manufacturing of API to assembly and packaging, with the majority being invested in API capacity. Leased property, plant and equipment DKK million Land and buildings Other equipment Total 2023 5,157 2022 3,544 768 5,925 587 4,131 Novo Nordisk mainly leases office buildings, warehouses, laboratories and vehicles. The right-of-use asset is presented in property, plant and equipment and the lease liability in borrowings. In 2023, the total amount recognised in the income statement related to leases was DKK 1,832 million (DKK 1,491 million in 2022 and DKK 1,303 million DKK 2021). The total cash outflow for leases amounted to DKK 2,022 million (DKK 1,438 million in 2022 and DKK 1,275 million in 2021). As of 31 December 2023, the lease liability of DKK 5,726 million excludes potential lease payments of DKK 4,051 million (undiscounted) related to optional lease term extension rights on properties that were not considered reasonably certain to be exercised (DKK 3,723 million in 2022). Refer to note 4.6 for a maturity analysis of lease payments and 5.2 for commitments not recognised in the balance sheet related to leases. ACCOUNTING POLICIES Property, plant and equipment is measured at historical cost less accumulated depreciations and any impairment loss. The cost of self-constructed assets includes costs directly attributable to the construction of the assets. Any subsequent cost is included in the asset's carrying amount or recognised as a separate asset only when it is probable that future economic benefits associated with the item will flow to Novo Nordisk, and the cost of the item can be measured reliably. Depreciation is based on the straight-line method over the estimated useful life of the assets (buildings: 12-50 years, plant and machinery: 5-25 years and other equipment: 3-10 years. Land is not depreciated). Climate-related matters, including the commitment to reach net zero emissions, were considered when estimating the useful lives of property, plant and equipment. Depreciation commences when the asset is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by Management. The asset's residual value and useful life is reviewed and adjusted, if appropriate, at the end of each reporting period. If an asset's carrying amount is higher than its estimated recoverable amount, it is written down to the recoverable amount. Plant and equipment with no alternative use developed as part of a research and development project are expensed. However, plant and equipment with an alternative use or used for general research and development purposes are capitalised and depreciated over the estimated useful life as research and develop- ment costs. For contracts which are, or contain, a lease, the Group recognises a right-of-use asset and a lease liability. The right-of-use asset is initially measured at cost, being the initial amount of the lease liability. The right-of-use asset is subsequently depreciated using the straight-line method over the lease term. The right-of-use asset is periodically adjusted for certain remeasurements of the lease liability and reduced by any impairment losses. The lease term determined by the Group is the non-cancellable period of a lease, together with extension/termination option, if these are reasonably certain to be exercised. For contracts with a rolling term (evergreen leases), the Group estimates the leasing period to be equal to the termination period, if no probable scenario exists for estimating the leasing period. If the lease liability is remeasured due to a change in future lease payments a corresponding adjustment is made to the right-of-use asset, or in the income statement when the right-of-use asset has been fully depreciated. For a description of accounting policies for lease liabilities, refer to note 4.9. 3.3 Inventories DKK million Raw materials Work in progress Finished goods Total inventories (gross) Write-downs at year-end 2023 2022 9,500 6,392 17,601 13,673 7,224 6,038 34,325 26,103 (2,514) (1,715) Total inventories (net) 31,811 24,388 Indirect production costs included in work in progress and finished goods Share of total inventories (net) 13,101 10,640 41% 44% Movements in inventory write-downs: Write-downs at the beginning of the year Write-downs during the year 1,715 2,256 1,808 1,110 Utilisation of write-downs (718) (1,482) (291) (169) Write-downs at the end of the year 2,514 1,715 All write-downs in both 2023 and 2022 relate to fully impaired inventory. ACCOUNTING POLICIES Reversal of write-downs Inventories are stated at cost or net realisable value, whichever is lower. Cost is determined using the first-in, first-out method. Cost comprises direct production costs such as raw materials, consumables and labour. Production costs for work in progress and finished goods include indirect production costs such as employee costs, depreciation, maintenance, etc. If the expected sales price less completion costs to execute sales (net realisable value) is lower than the carrying amount, a write-down is recognised for the amount by which the carrying amount exceeds its net realisable value. Inventory manufactured prior to regulatory approval (prelaunch inventory) is capitalised but immediately written down, until there is a high probability of regulatory approval for the product. The cost is recognised in the income statement as research and develop- ment costs. Once there is a high probability of regulatory approval being obtained, the write-down is reversed, up to no more than the original cost.

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