Novo Nordisk Annual Report 2021
Contents
Introducing Novo Nordisk
Strategic Aspirations
Key risks Management
Consolidated statements
Additional information
Novo Nordisk Annual Report 2021 65
3.3 Trade receivables
Movements in allowance for doubtful trade receivables
Gross
carrying
Loss
Net
carrying
DKK million
2021
2020
DKK million
amount allowance
amount
2021
Carrying amount at the beginning of the year
Reversal of allowance on realised losses
1,380
1,484
(62)
(108)
Not yet due
40,274
(844)
39,430
Net movement recognised in income statement
102
139
1-90 days
1,132
(93)
1,039
Effect of exchange rate adjustment
10
91-180 days
212
(74)
138
Allowance at the end of the year
1,430
(135)
1,380
181-270 days
87
(51)
36
271-360 days
63
(63)
More than 360 days past due
305
(305)
Trade receivables
42,073
(1,430)
40,643
EMEA
7,827
(852)
China
2,564
6,975
2,564
Rest of World
4,227
(558)
North America Operations
27,455
Trade receivables
42,073
(20)
(1,430)
3,669
27,435
40,643
2020
Not yet due
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.
The country risk ratings in 2021 have overall remained unchanged from
2020. However, despite the continued COVID-19 pandemic Novo Nordisk
has not experienced significant increases in collectability issues on individual
customers nor has it experienced significant deterioration in the ageing of
receivables.
Please refer to note 4.3 for 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 permits
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 the Dun & Bradstreet country risk
rating and an individual assessment. Please refer to note 4.3 for a general
description of credit risk.
27,511
(805)
1-90 days
91-180 days
1,000
(112)
188
(63)
26,706
888
125
181-270 days
44
(29)
15
271-360 days
51
(51)
More than 360 days past due
320
(320)
Trade receivables
29,114
(1,380)
27,734
EMEA
6,306
(781)
5,525
China
2,137
2,137
Rest of World
3,003
(580)
2,423
North America Operations
17,668
(19)
17,649
Trade receivables
29,114
(1,380)
27,734View entire presentation