Novo Nordisk Annual Report 2021
Part of Management's review - not audited
Non-IFRS financial
measures
(part of Management's review not audited)
-
In the Annual Report, Novo Nordisk discloses certain financial measures of
the Group's financial performance, financial position and cash flows that
reflect adjustments to the most directly comparable measures calculated
and presented in accordance with IFRS. These non-IFRS financial measures
may not be defined and calculated by other companies in the same manner,
and may therefore not be comparable.
The non-IFRS financial measures presented in the Annual Report are:
- sales and operating profit in constant exchange rates
- operating profit after tax to net operating assets (OPAT/NOA)
- financial reserves
- free cash flow
- cash to earnings
IFRS refers to an IFRS financial measure.
Novo Nordisk Annual Report 2021
83
Sales in constant exchange rates
DKK million
2021
Net sales IFRS
140,800
Effect of exchange rate
3,643
Sales in constant exchange rates
Net sales previous year
144,443
126,946
2020
126,946
3,254
130,200
122,021
2019
122,021
(3,923)
118,098
111,831
% increase/(decrease) in reported
Solely for the purpose of calculating average net operating assets for 2019,
year-end net operating assets for 2018 have been adjusted upwards by
DKK 3,778 million to DKK 40,541 million, reflecting the recognition by Novo
Nordisk of right-of-use assets of DKK 3,778 million as of 1 January 2019 in
accordance with IFRS 16.
The following table shows the reconciliation of operating profit after tax
to net operating assets with operating profit/equity in %, the most directly
comparable IFRS financial measure:
currencies
10.9%
4.0%
9.1%
% increase/(decrease) in constant
exchange rates
Operating profit/equity in %
13.8%
6.7%
5.6%
DKK million
2021
2020
2019
Operating profit IFRS
58,644
54,126
52,483
Operating profit in constant exchange rates
DKK million
/ Equity IFRS
70,746
63,325
57,593
2021
2020
2019
Operating profit/equity in %
82.9%
85.5%
91.1%
Operating profit IFRS
58,644
54,126
52,483
Effect of exchange rate
2,332
1,930
(2,607)
Operating profit in constant
Operating profit after tax to net operating assets
exchange rates
60,976
56,056
49,876
DKK million
2021
2020
2019
Operating profit previous year
54,126
52,483
47,248
% increase/(decrease) in reported
Operating profit after tax
47,384
42,922
42,091
currencies
8.3%
3.1%
11.1%
/ Average net operating assets
68,634
51,824
42,940
% increase/(decrease) in constant
exchange rates
12.7%
6.8%
5.6%
Operating profit after tax to net
operating assets in %
69.0%
82.8%
98.0%
Sales and operating profit growth in constant exchange rates
'Growth in constant exchange rates' means that the effect of changes in
exchange rates is excluded. It is defined as sales/operating profit for the
period measured at the average exchange rates for the same period of the
prior year compared with net sales/operating profit for the same period of
the prior year. Price adjustments within hyperinflation countries as defined
in IAS 29 'Financial reporting in hyperinflation economies' are excluded
from the calculation to avoid growth in constant exchange rates being
artificially inflated. Growth in constant exchange rates is considered to be
relevant information for investors in order to understand the underlying
development in sales and operating profit by adjusting for the impact
of currency fluctuations.
Operating profit after tax to net operating assets (OPAT/NOA)
'Operating profit after tax to net operating assets' is defined as 'operating
profit after tax' (using the effective tax rate) as a percentage of average
inventories, receivables, property, plant and equipment, intangible assets
and deferred tax assets, less non-interest-bearing liabilities including
provisions and deferred tax liabilities (where the average is the sum of the
above assets and liabilities at the beginning of the year and at year-end
divided by two).
Management believes operating profit after tax to net operating assets is
a useful measure in providing investors and Management with information
regarding the Group's performance. The calculation of this financial target
is a widely accepted measure of earnings efficiency in relation to total
capital employed.
OPAT/NOA numerator
Reconciliation of operating profit to operating profit after tax:
DKK million
2021
2020
2019
Operating profit IFRS
58,644
54,126
52,483
Tax on operating profit (using
effective tax rate)
Operating profit after tax
(11,260)
47,384
42,922
(11,204) (10,392)
42,091View entire presentation