Investor Presentaiton
Novo Nordisk Annual Report 2023
Introducing Novo Nordisk
Strategic Aspirations
Risks
Management
Consolidated statements
Additional information.
ACCOUNTING POLICIES
Provisions for sales rebates and discounts granted to government agencies, wholesal-
ers, retail pharmacies, Managed Care and other customers are recorded at the time
the related revenues are recorded or when the incentives are offered. Provisions are
calculated based on Management's interpretation of applicable laws and regulations,
historical experience and the specific terms in the individual agreements. Unsettled
rebates are recognised as provisions when the timing or amount is uncertain. Where
absolute amounts are known, the rebates are recognised as other liabilities. Refer to
note 2.1 for further information on sales rebates and provisions.
Provisions for legal disputes are recognised where a legal or constructive obligation
has been incurred as a result of past events and it is probable that there will be an
outflow of resources that can be reliably estimated. In this case, Novo Nordisk arrives
at an estimate based on an evaluation of the most likely outcome. Disputes for which
no reliable estimate can be made are disclosed as contingent liabilities.
Provisions are measured at the present value of the anticipated expenditure for
settlement. This is calculated using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the obligation. The
increase in the provision for interest is recognised as a financial expense.
Novo Nordisk issues credit notes for expired goods as a part of normal business.
Where there is historical experience or a reasonably accurate estimate of expected
future returns can otherwise be made, a provision for estimated product returns is
recorded. The provision is measured at gross sales value.
KEY ACCOUNTING ESTIMATES REGARDING ONGOING LEGAL DISPUTES,
LITIGATION AND INVESTIGATIONS
Provisions for legal disputes consist of various types of provisions linked to ongoing
legal disputes. Management makes estimates regarding provisions and contingencies,
including the probability of pending and potential future litigation outcomes. These
are by nature dependent on inherently uncertain future events. When determining
likely outcomes of litigation, etc., Management considers the input of external counsel
on each case, as well as known outcomes in case law. Although Management believes
that the total provisions for legal proceedings are adequate based on currently
available information, there can be no assurance that there will not be any changes
in facts or matters, or that any future lawsuits, claims, proceedings or investigations
will not be material.
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