Investor Presentaiton
Novo Nordisk Annual Report 2023
Introducing Novo Nordisk
Strategic Aspirations
Risks
Management
Consolidated statements
Additional information
65
59
3.4 Trade receivables
Movements in allowance for doubtful trade receivables
Gross
carrying
DKK million
2023
Not yet due
1-90 days
91-180 days
Loss
amount allowance
Net
carrying
DKK million
Carrying amount at the beginning of the year
2023
1,520
2022
1,430
amount
Reversal of allowance on realised losses
(39)
(15)
64,327
1,557
(1,095)
63,232
Net movement recognised in income statement
Effect of exchange rate adjustment
413
212
(100)
(107)
(160)
1,397
Allowance at the end of the year
1,794
1,520
211
(100)
111
181-270 days
111
(81)
30
271-360 days
90
(90)
More than 360 days past due
268
(268)
Trade receivables
66,564
(1,794)
EMEA
10,183
China
1,865
(859)
(9)
Rest of World
6,396
(843)
64,770
9,324
1,856
5,553
North America Operations
48,120
(83)
48,037
Novo Nordisk's customer base is comprised of government agencies, wholesalers,
retail pharmacies and other customers. Novo Nordisk closely monitors the current
economic conditions of countries impacted by currency fluctuations, high inflation
and an unstable political climate. These indicators, as well as payment history, are
taken into account in the valuation of trade receivables. Overall, the country risk
ratings in 2023 have remained unchanged from 2022. No loss allowance has been
recognised on trade receivables in factoring portfolios in 2023 and 2022. Refer
to note 4.4 for more information on the trade receivable programmes.
ACCOUNTING POLICIES
Trade receivables are initially recognised at transaction price and subsequently
measured at amortised cost using the effective interest method, less allowance
for doubtful trade receivables. The split of trade receivables and allowance for
trade receivables is based on the location of the customer.
Before being sold, trade receivables in factoring portfolios are measured at fair value
with changes recognised in other comprehensive income. The allowance for doubtful
receivables is deducted from the carrying amount of trade receivables, and the amount
of the loss is recognised in the income statement under sales and distribution costs.
Subsequent recoveries of amounts previously written off are credited against sales and
distribution costs.
Management makes allowance for doubtful trade receivables based on the simplified
approach to provide for expected credit losses, which requires the use of the lifetime
expected loss provision for all trade receivables. The allowance is an estimate based on
shared credit risk characteristics and the days past due. Generally, invoices are due for
payment within 90 days from shipment of goods. Loss allowance is calculated using an
ageing factor, geographical risk and specific customer knowledge. The allowance is
based on a provision matrix on days past due and a forward looking element relating
mainly to incorporation of Dun & Bradstreet country risk ratings and an individual
assessment. Refer to note 4.4 for a general description of credit risk.
Trade receivables
66,564
(1,794)
64,770
2022
Not yet due
1-90 days
91-180 days
50,649
(920)
49,729
729
(113)
616
194
(77)
117
181-270 days
149
(51)
98
271-360 days
57
(57)
More than 360 days past due
302
(302)
Trade receivables
52,080
(1,520)
50,560
EMEA
9,486
(859)
8,627
China
1,138
1,138
Rest of World
5,297
(632)
4,665
North America Operations
36,159
(29)
36,130
Trade receivables
52,080
(1,520)
50,560View entire presentation