| Results for the year | Results for the year 2.1 Net sales and rebates Gross-to-net sales reconciliation DKK million 2023 2022 2021 Gross sales 608,645 455,692 340,180 US Managed Care and Medicare (223,191) (161,123) (112,929) US wholesaler charge-backs (74,435) (56,443) (40,354) US Medicaid rebates (31,821) (24,667) (19,810) Other US discounts and sales returns (28,481) (18,300) (14,119) Non-US rebates, discounts and sales returns (18,456) (18,205) (12,168) Total gross-to-net sales adjustments (376,384) (278,738) (199,380) Net sales 232,261 176,954 140,800 Provisions for sales rebates DKK million 2023 2022 2021 At the beginning of the year 69,499 50,822 34,052 Additional provisions, including increases to existing provisions 285,266 206,354 155,602 Amount paid during the year (250,316) (189,580) (141,370) Adjustments, including unused amounts reversed during the year (2,364) (1,141) (284) Effect of exchange rate adjustment (2,207) 3,044 2,822 At the end of the year 99,878 69,499 50,822 Sales discounts and sales rebates are predominantly issued in the US. As such, rebates amount to 74% of gross sales in the US (75% in 2022 and 75% in 2021). Provisions for sales rebates include US Managed Care, Medicare, Medicaid, 340B Drug Pricing Program and other US rebate types, as well as rebates in a number of European countries and Canada. Pricing mechanisms in the US market In the US, sales rebates are paid in connection with public healthcare insurance programmes, including Medicare and Medicaid, as well as rebates to pharmacy benefit managers (PBMs) and managed healthcare plans. Key customers in the US include private payers, PBMs and government payers. PBMs and managed healthcare plans play a role in negotiating price concessions with drug manufacturers for both the commercial and government channels, and determine which drugs are covered on their formularies (or 'preferred drug lists'). US Managed Care and Medicare For Managed Care and Medicare, rebates are offered to a number of PBMs and managed healthcare plans. These rebate programmes allow the customer to receive a rebate after attaining certain performance parameters relating to formulary status or pre-established market share thresholds. Rebate provisions are estimated according to the specific terms in each agreement, historical experience, anticipated channel mix, growth rates and market share information. Novo Nordisk adjusts the provision periodically to reflect actual sales performance. Managed Care and Medicare rebates are generally settled around 100 days from the transaction date. US wholesaler charge-backs Wholesaler charge-backs relate to contractual arrangements between Novo Nordisk and indirect customers in the US whereby products are sold at contract prices lower than the list price originally charged to wholesalers. Chargeback provisions are estimated using a combination of factors such as historical experience, current wholesaler inventory levels, contract terms and the value of claims received but not yet processed. Wholesaler charge-backs are generally settled within 30 days after receipt of claim. In January 2021, Novo Nordisk changed its policy in the US related to the 340B Drug Pricing Program, whereby Novo Nordisk no longer provides 340B statutory discounts to certain pharmacies that contract with covered entities participating in the 340B Drug Pricing Program. Novo Nordisk has recognised revenue related to the 340B Drug Pricing Program to the extent that it is highly probable that its inclusion will not result in a significant revenue reversal in the future. Refer to note 3.5 for a more elaborate description of the ongoing litigation related to the 340B Drug Pricing Program. US Medicaid rebates Medicaid is a government insurance programme. Medicaid rebates have been estimated using a combination of historical experience, product and population growth, price changes and the impact of contracting strategies. The calculation also involves interpretation of relevant regulations that are subject to changes in interpretative guidance from government authorities. Novo Nordisk adjusts the provision periodically to reflect actual sales performance. Medicaid rebates are generally settled around 150 days from the transaction date. Other US and non-US discounts and sales returns Other discounts are provided to distributors, wholesalers, hospitals, pharmacies, etc. They are usually linked to sales volume or provided as cash discounts. Discounts are calculated based on historical data and recorded as a reduction in gross sales at the time the related sales are recorded. Sales returns relate to damaged or expired products. Other net sales disclosures In 2023, Novo Nordisk had 3 major wholesalers distributing products in the US, representing 22%, 17% and 15% respectively of global net sales (19%, 14% and 13% in 2022 and 18%, 13% and 13% in 2021). Sales to these 3 wholesalers are within both Diabetes and Obesity care and Rare disease. Net sales to be recognised from fulfilling existing customer contracts containing fixed or minimum sales volumes, with an original term greater than 12 months, are expected to be DKK 3,166 million within 12 months (DKK 1,835 million in 2022) and DKK 443 million thereafter (DKK 798 million in 2022). Novo Nordisk's sales are impacted by exchange rate changes. Refer to note 4.4 for development in key exchange rates. ACCOUNTING POLICIES Revenue from sale of goods is recognised when Novo Nordisk has transferred control of products sold to the buyer and it is probable that Novo Nordisk will collect the consideration to which it is entitled for transferring the products. Control of the products is transferred at a single point in time, typically on delivery. The amount of sales to be recognised is based on the consideration Novo Nordisk expects to receive in exchange for its goods. When sales are recognised, Novo Nordisk also records estimates for a variety of sales deductions; including product returns as well as rebates and discounts to government agencies, wholesalers, health insurance companies, managed healthcare organisations and retail customers. Sales deductions are recognised as a reduction of gross sales to arrive at net sales, by assessing the expected value of the sales deductions (variable consideration). Where contracts contain customer acceptance criteria, Novo Nordisk recognises sales when the acceptance criteria are satisfied. In some markets, Novo Nordisk sells products on a sale-or-return basis. Where there is historical experience or a reasonably accurate estimate of future returns, estimated product returns are recorded as a reduction in sales. Where shipments of new products are made on a sale-or-return basis, without sufficient historical experience for estimating sales returns, revenue is recorded based on estimated demand and acceptance rates for well-established products with similar market characteristics. If similar market characteristics do not exist, revenue is recorded when there is evidence of consumption or when the right of return has expired. Unsettled rebates are recognised as provisions when the timing or amount is uncertain (note 3.5). Where absolute amounts are known, the rebates are recognised as other liabilities. Wholesaler charge-backs that are absolute are netted against trade receivable balances. The impact of foreign currency hedging in the income statement is recognised as part of financial items. Refer to notes 4.4, 4.5 and 4.10 for more details on hedging. KEY ACCOUNTING ESTIMATES OF SALES DEDUCTIONS AND Sales deductions are estimated and provided for at the time the related sales are recorded. These estimates of unsettled rebate, discount and product return obligations is considered a key accounting estimate as not all conditions are known at the time of sale, for example total sales volume to a given customer. The estimates are based on analyses of existing contractual obligations and historical experience. Provisions are calculated on the basis of a percentage of sales for each product as defined by the contracts with the various customer groups. Provisions for sales rebates are adjusted to actual amounts as rebates, discounts and returns are processed. Revenue related to the 340B Drug Pricing Program can only be recognised to the extent that it is highly probable that a significant reversal of the recognised revenue will not occur. Significant estimation is required to determine the amount of revenue to recognise. Management has considered interpretations of applicable laws, whether the consideration is highly susceptible to factors outside Novo Nordisk's influence, as well as the experience of historical claims. Refer to note 3.5 for information on the ongoing litigation related to the 340B Drug Pricing Program. 2.2 Segment information Business segments – Key figures Diabetes and Obesity care Rare disease Total DKK million 2023 2022 2021 2023 2022 2021 2023 2022 2021 Net sales 215,098 156,412 121,597 17,163 20,542 19,203 232,261 176,954 140,800 Cost of goods sold (30,483) (23,405) (19,363) (5,282) (5,043) (4,295) (35,765) (28,448) (23,658) Sales and distribution costs (52,477) (42,392) (33,791) (4,266) (3,825) (3,217) (56,743) (46,217) (37,008) Research and development costs (28,073) (20,157) (15,600) (4,370) (3,890) (2,172) (32,443) (24,047) (17,772) Administrative costs (4,435) (3,955) (3,504) (420) (512) (546) (4,855) (4,467) (4,050) Other operating income and expenses (7) 892 199 126 142 133 119 1,034 332 Segment operating profit 99,623 67,395 49,538 2,951 7,414 9,106 102,574 74,809 58,644 Operating margin 46.3 % 43.1 % 40.7 % 17.2 % 36.1 % 47.4 % 44.2 % 42.3 % 41.7 % Depreciation, amortisation and impairment (8,195) (5,701) (4,895) (1,218) (1,661) (1,130) (9,413) (7,362) (6,025) Business segments Novo Nordisk operates in two business segments based on therapies: Diabetes and Obesity care and Rare disease, representing the entirety of the Group's operations. The activities of the segments include research, development, manufacturing and marketing of products within the following areas: • Diabetes and Obesity care: diabetes, obesity, cardiovascular and emerging therapy areas • Rare disease: rare blood disorders, rare endocrine disorders and hormone replacement therapy. Segment performance is evaluated on the basis of operating profit, consistent with the consolidated financial statements. Financial income and expenses and income taxes are managed at Group level and are not allocated to business segments. There are no sales or other transactions between the business segments. Costs have generally been split between business segments according to a specific allocation. Certain corporate overhead costs are allocated between segments based on overall allocation keys. Other operating income and expenses have been allocated to the two segments based on the same principle. ACCOUNTING POLICIES Operating segments are reported in a manner consistent with the internal reporting provided to Executive Management and the Board of Directors. We consider Executive Management to be the operating decision-making body. Geographical areas In 2023, Novo Nordisk operated in two main commercial units: • International Operations • EMEA: Europe, the Middle East and Africa. • China: Mainland China, Hong Kong and Taiwan. • Rest of World: All other countries except for North America. • North America Operations (the US and Canada). In 2023, the US contributed 10% or more of total net sales. In 2022, the US also contributed 10% or more of total net sales. The country of domicile is Denmark, which is part of EMEA. Denmark is immaterial to Novo Nordisk's activities in terms of sales as 99.2% of total net sales are realised outside Denmark (99.8 % in 2022). Sales are attributed to geographical areas according to the location of the customer. Out of total property, plant and equipment and intangible assets of DKK 151,367 million (DKK 117,610 million in 2022), DKK 82,274 million is located in Denmark (DKK 54,492 million in 2022) and DKK 46,609 million is located in the US (DKK 44,267 million in 2022) where the majority of production facilities and intangible assets are located. Refer to note 5.7 for an overview of companies in the Novo Nordisk Group based on geographical areas. Net sales – Business segments and geographical areas Total International Operations Total North America Operations Total Novo Nordisk Total IO EMEA China Rest of World Total NAO US DKK million 2023 2022 2021 2023 2022 2021 2023 2022 2021 2023 2022 2021 2023 2022 2021 2023 2022 2021 2023 2022 2021 Diabetes and Obesity care segment: Rybelsus ® 7,389 3,155 524 4,232 1,714 289 131 63 — 3,026 1,378 235 11,361 8,144 4,314 11,060 8,011 4,243 18,750 11,299 4,838 Ozempic ® 26,378 17,369 8,856 14,327 10,417 6,393 4,821 2,196 303 7,230 4,756 2,160 69,340 42,381 24,849 63,010 38,750 23,168 95,718 59,750 33,705 Victoza ® 4,850 5,672 6,726 2,166 2,724 3,527 1,256 1,478 1,544 1,428 1,470 1,655 3,814 6,650 8,328 3,613 6,406 8,031 8,664 12,322 15,054 Total GLP-1 38,617 26,196 16,106 20,725 14,855 10,209 6,208 3,737 1,847 11,684 7,604 4,050 84,515 57,175 37,491 77,683 53,167 35,442 123,132 83,371 53,597 Long-acting insulin 11,339 11,403 11,074 7,103 7,157 6,729 1,649 1,636 2,080 2,587 2,610 2,265 3,566 5,338 6,990 2,931 4,685 6,412 14,905 16,741 18,064 • of which Tresiba ® 5,864 6,092 5,486 3,435 3,485 2,979 848 1,050 1,095 1,581 1,557 1,412 1,888 3,261 4,243 1,333 2,723 3,793 7,752 9,353 9,729 • of which Xultophy ® 2,887 2,400 2,135 1,831 1,716 1,693 409 45 3 647 639 439 332 409 522 325 399 512 3,219 2,809 2,657 • of which Levemir ® 2,588 2,911 3,453 1,837 1,956 2,057 392 541 982 359 414 414 1,346 1,668 2,225 1,273 1,563 2,107 3,934 4,579 5,678 Premix insulin 9,342 10,023 10,512 2,570 2,622 2,879 4,441 4,912 5,224 2,331 2,489 2,409 232 539 691 216 517 665 9,574 10,562 11,203 • of which Ryzodeg ® 3,730 2,889 1,711 587 495 392 1,965 1,218 283 1,178 1,176 1,036 — — — — — — 3,730 2,889 1,711 • of which NovoMix ® 5,612 7,134 8,801 1,983 2,127 2,487 2,476 3,694 4,941 1,153 1,313 1,373 232 539 691 216 517 665 5,844 7,673 9,492 Fast-acting insulin 10,415 10,826 10,903 6,695 6,456 6,454 1,545 1,942 2,288 2,175 2,428 2,161 5,534 6,637 6,784 5,265 6,247 6,357 15,949 17,463 17,687 • of which Fiasp ® 1,512 1,354 1,106 1,266 1,138 965 — — — 246 216 141 661 649 642 618 606 605 2,173 2,003 1,748 • of which NovoRapid ® 8,903 9,472 9,797 5,429 5,318 5,489 1,545 1,942 2,288 1,929 2,212 2,020 4,873 5,988 6,142 4,647 5,641 5,752 13,776 15,460 15,939 Human insulin 6,134 6,508 7,453 1,919 1,983 2,152 1,213 1,812 2,692 3,002 2,713 2,609 1,460 1,678 1,599 1,406 1,605 1,515 7,594 8,186 9,052 Total insulin 37,230 38,760 39,942 18,287 18,218 18,214 8,848 10,302 12,284 10,095 10,240 9,444 10,792 14,192 16,064 9,818 13,054 14,949 48,022 52,952 56,006 Other Diabetes care 1,987 2,428 2,644 661 717 713 892 1,181 1,432 434 530 499 325 797 950 267 660 806 2,312 3,225 3,594 Total Diabetes care 77,834 67,384 58,692 39,673 33,790 29,136 15,948 15,220 15,563 22,213 18,374 13,993 95,632 72,164 54,505 87,768 66,881 51,197 173,466 139,548 113,197 Wegovy ® 1,913 54 — 1,913 54 — — — — — — — 29,430 6,134 1,386 29,430 6,134 1,386 31,343 6,188 1,386 Saxenda ® 6,402 5,832 3,117 3,780 3,561 1,809 146 133 61 2,476 2,138 1,247 3,887 4,844 3,897 3,306 4,368 3,526 10,289 10,676 7,014 Total Obesity care 8,315 5,886 3,117 5,693 3,615 1,809 146 133 61 2,476 2,138 1,247 33,317 10,978 5,283 32,736 10,502 4,912 41,632 16,864 8,400 Diabetes and Obesity care total 86,149 73,270 61,809 45,366 37,405 30,945 16,094 15,353 15,624 24,689 20,512 15,240 128,949 83,142 59,788 120,504 77,383 56,109 215,098 156,412 121,597 Rare disease segment: Rare blood disorders 6,432 6,671 5,784 4,021 3,795 3,712 372 604 222 2,039 2,272 1,850 5,344 5,035 4,433 5,070 4,710 4,170 11,776 11,706 10,217 • of which Haemophilia A 1,939 1,769 1,625 1,271 1,137 1,162 223 81 24 445 551 439 483 569 487 468 543 460 2,422 2,338 2,112 • of which Haemophilia B 584 479 400 377 294 268 13 13 4 194 172 128 477 280 237 336 152 102 1,061 759 637 • of which NovoSeven ® 3,789 4,335 3,673 2,285 2,311 2,225 136 510 194 1,368 1,514 1,254 4,169 3,973 3,548 4,065 3,811 3,461 7,958 8,308 7,221 Rare endocrine disorders 2,045 4,904 4,880 699 2,232 2,212 216 246 167 1,130 2,426 2,501 1,791 2,234 2,423 1,757 2,205 2,400 3,836 7,138 7,303 Other Rare disease 1,006 1,002 1,064 781 804 837 5 6 6 220 192 221 545 696 619 203 358 330 1,551 1,698 1,683 Rare disease total 9,483 12,577 11,728 5,501 6,831 6,761 593 856 395 3,389 4,890 4,572 7,680 7,965 7,475 7,030 7,273 6,900 17,163 20,542 19,203 Total sales by geographical area 95,632 85,847 73,537 50,867 44,236 37,706 16,687 16,209 16,019 28,078 25,402 19,812 136,629 91,107 67,263 127,534 84,656 63,009 232,261 176,954 140,800 Total sales growth as reported 11.4 % 16.7 % 11.7 % 15.0 % 17.3 % 9.9 % 2.9 % 1.2 % 13.7 % 10.5 % 28.2 % 13.5 % 50.0 % 35.4 % 10.1 % 50.6 % 34.4 % 9.0 % 31.3 % 25.7 % 10.9 % 2.3 Research and development costs DKK million 2023 2022 2021 Employee costs (note 2.4) 12,429 9,952 7,328 Amortisation and impairment losses, intangible assets (note 3.1) 1,757 1,364 744 Depreciation and impairment losses, property, plant and equipment (note 3.2) 1,313 922 736 Clinical trial cost 9,468 6,313 4,214 Other research and 7,476 5,496 4,750 Total research and development costs 32,443 24,047 17,772 As percentage of net sales 14.0 % 13.6 % 12.6 % Novo Nordisk's research and development is mainly focused on: • Insulins, GLP-1s and other therapeutic compounds for diabetes treatment • GLP-1s, combinations and new modes of action for Obesity care • Blood-clotting factors and new modes of action for treatment of haemophilia and other rare blood disorders • Novel targets within cardiovascular disease focusing on ASCVD and Heart failure • Human growth hormone and new modes of action for treatment of growth disorders and other rare endocrine disorders • New indications with existing assets within MASH, Alzheimer’s disease and chronic kidney disease • Research technology platforms including cell therapy and RNAi for treatment of MASH, cardiovascular disease, chronic kidney disease and Parkinson's disease, among others The research activities mainly utilise biotechnological methods based on advanced protein chemistry and protein engineering. These methods have played a key role in the development of the production technology used to manufacture insulin, GLP-1, recombinant blood-clotting factors and human growth hormone. Research activities further utilise new technology platforms including stem cells, gene therapy, small molecules and RNAi therapies. Research and development activities are mainly carried out by Novo Nordisk's research and development centres, in Denmark, the US, the UK and China. Clinical trials are carried out all over the world. Novo Nordisk also enters into partnerships and licence agreements. Other research and development costs mainly comprise external consulting fees, IT services, facilities, consumables and other internal costs. ACCOUNTING POLICIES Novo Nordisk expenses all research costs. Due to significant regulatory uncertainties and other uncertainties inherent in the development of new products, internal and subcontracted development costs are also expensed as they are incurred, in line with industry practice. This means that they do not qualify for capitalisation as intangible assets until marketing approval by a regulatory authority is obtained or considered highly probable. Costs for post-approval activities that are required by authorities as a condition for obtaining regulatory approval are recognised as research and development costs. Research and development costs primarily comprise employee costs as well as internal and external costs related to execution of studies, including manufacturing costs and facility costs of the research centres. The costs also comprise amortisation, depreciation and impairment losses related to intellectual property rights and property, plant and equipment used in the research and development activities. Amortisations of intellectual property rights related to marketed products are recognised in cost of goods sold. Royalty expenses paid to partners after regulatory approval are also expensed as cost of goods sold. Contractual research and development obligations to be paid in the future are disclosed separately as commitments in note 5.2. 2.4 Employee costs DKK million 2023 2022 2021 Wages and salaries 42,867 34,575 28,939 Share-based payment costs (note 5.1) 2,149 1,539 1,040 Pensions – defined contribution plans 3,267 2,472 2,022 Pensions – defined benefit plans 126 185 139 Other social security contributions 3,039 2,713 2,203 Other employee costs 4,066 3,105 2,189 Total employee costs for the year 55,514 44,589 36,532 Employee costs capitalised as intangible assets and property, plant and equipment (2,337) (1,451) (1,240) Change in employee costs capitalised (409) (70) (56) Total employee costs 52,768 43,068 35,236 Included in the income statement: Cost of goods sold 15,490 11,766 9,611 Sales and distribution costs 20,810 17,700 15,003 Research and development costs 12,429 9,952 7,328 Administrative costs 3,962 3,517 3,098 Other operating income and expenses 77 133 196 Total employee costs in the 52,768 43,068 35,236 Number of employees Number 2023 2022 2021 Average number of full-time employees 59,552 51,046 46,171 Year-end number of full-time employees 63,370 54,393 47,792 Year-end employees (total) 64,319 55,185 48,478 Remuneration to Executive Management and Board of Directors DKK million 2023 2022 2021 Salary and short-term incentive 173 141 126 Pension 17 13 12 Benefits 19 9 10 Long-term incentive 1 121 97 100 Severance payments — — 29 Executive Management in total 2 330 260 277 Fees to Board of Directors 3 22 20 17 Total 352 280 294 1. Refer to note 5.1 for further information on share-based payment schemes. 2. Total remuneration for persons registered as members of Executive Management with the Danish Business Authority amounts to DKK 195 million (DKK 175 million in 2022 and DKK 202 million in 2021). 3. All members of the Board of Directors are registered with the Danish Business Authority. ACCOUNTING POLICIES Wages, salaries, social security contributions, annual leave and sick leave, bonuses and non-monetary benefits are recognised in the year in which the associated services are rendered by employees of Novo Nordisk. Where Novo Nordisk provides long-term employee benefits, the costs are accrued to match the rendering of the services by the employees concerned. 2.5 Other operating income and expenses ACCOUNTING POLICIES Other operating income and expenses, comprises licence income and income of a secondary nature in relation to the main activities of Novo Nordisk. Licence income from royalties on net sales is recognised as the underlying customers' sale occurs and from sales milestones once the contingent sale milestone is achieved in accordance with the terms of the relevant agreement. Operating profit from the wholly owned subsidiary NNE A/S, not related to Novo Nordisk's main activities, is recognised as other operating income and expenses. Other operating income and expenses, also includes income from the sale of intellectual property rights as well as transaction costs incurred in connection with acquisition of businesses. 2.6 Income taxes and deferred income taxes Income taxes expensed DKK million 2023 2022 2021 Current tax on profit for the year 25,918 17,829 13,871 Deferred tax on profit for the year (4,464) (3,806) (1,528) Tax on profit for the year 21,454 14,023 12,343 Current tax adjustments recognised (916) 339 (603) Deferred tax adjustments recognised 453 (825) (417) Income taxes in the income statement 20,991 13,537 11,323 Tax on other comprehensive income 359 889 (1,005) Computation of effective tax rate DKK million 2023 2022 2021 Statutory corporate income tax rate in Denmark 22.0 % 22.0 % 22.0 % Deviation in foreign subsidiaries' tax rates compared to the Danish tax rate (net) (0.9 %) (1.1 %) (1.5 %) Non-taxable income less non-tax-deductible expenses (net) (0.7 %) (0.5 %) (0.3 %) Other adjustments (net) (0.3 %) (0.8 %) (1.0 %) Effective tax rate 20.1 % 19.6 % 19.2 % Income taxes paid DKK million 2023 2022 2021 Income taxes paid in Denmark for 16,242 9,181 9,703 Income taxes paid outside Denmark 8,906 5,647 3,439 Income taxes paid/(repayments) relating 749 (313) 1,296 Income taxes paid 25,897 14,515 14,438 The deviation in foreign subsidiaries' tax rates from the Danish tax rate is mainly driven by Swiss and US business activities. Other adjustments consist of tax related to acquisitions and adjustments to prior years. From 1 January 2024 Novo Nordisk will be subject to Global Minimum Tax (OECD BEPS Pillar 2 rules). The rules are not expected to have a material impact on the tax position of Novo Nordisk in 2024. ACCOUNTING POLICIES The tax expense for the period comprises current and deferred tax. It also includes adjustments to previous years and changes in provisions for uncertain tax positions. Tax is recognised in the income statement except to the extent that it relates to items recognised in equity or other comprehensive income. Provisions for ongoing tax disputes are included as part of deferred tax assets, tax receivables and tax payables. Deferred income taxes arise from temporary differences between the accounting and tax values of the individual consolidated companies and from realisable tax loss carry-forwards. Deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss and does not give rise to equal taxable and deductible temporary differences. The tax value of tax loss carry-forwards is included in deferred tax assets to the extent that these are expected to be utilised in future taxable income. The deferred income taxes are measured according to current tax rules and at the tax rates assumed in the year in which the assets are expected to be utilised. In general, the Danish tax rules related to dividends from group companies provide exemption from tax for most repatriated profits. In some countries withholding tax will be applied to dividends paid to Denmark. A provision for withholding tax is only recognised if a concrete distribution of dividends is planned. The unrecognised potential withholding tax amounts to DKK 1,026 million (DKK 567 million in 2022). The value of future tax deductions in relation to share programmes is recognised as a deferred tax asset until the shares are paid out to the employees. Any estimated excess tax deduction compared to the costs realised in the income statement is charged to equity. KEY ACCOUNTING ESTIMATES REGARDING DEFERRED INCOME TAX ASSETS AND PROVISIONS FOR UNCERTAIN TAX POSITIONS Management has considered future taxable income and has estimated the amount of deferred income tax assets that should be recognised. The estimate is based on an assessment of whether sufficient taxable income will be available in the future, against which the temporary differences and unused tax losses can be utilised. The total tax value of unrecognised tax loss carry-forwards amounts to DKK 360 million in 2023 (DKK 318 million in 2022). In the course of conducting business globally, tax and transfer pricing disputes with tax authorities may occur. Management has estimated the expected outcome of the disputes by using the ‘most likely outcome’ method to determine the provisions for uncertain tax positions. Management considers the provisions made to be adequate. However, the actual obligation may deviate and depends on the result of litigation and settlements with the relevant tax authorities. Development in deferred income tax assets and liabilities DKK million Property, Intangible Inventories Liabilities Other Offset Total 2023 Net deferred tax asset/(liability) at the beginning of the year (2,402) (8,279) 2,595 11,007 3,922 — 6,843 Income/(charge) to the income statement (213) (2,106) (645) 3,973 3,002 — 4,011 Income/(charge) to other comprehensive income — — (224) (6) (129) — (359) Income/(charge) to equity — — — — (120) — (120) Additions from acquisitions — — — — 62 — 62 Effect of exchange rate adjustment 54 144 (9) (547) 139 — (219) Net deferred tax asset/(liability) at the end of the year (2,561) (10,241) 1,717 14,427 6,876 — 10,218 Classified as follows: Deferred tax asset at the end of the year 433 245 1,820 14,792 6,986 (3,896) 20,380 Deferred tax liability at the end of the year (2,994) (10,486) (103) (365) (110) 3,896 (10,162) 2022 Net deferred tax asset/(liability) at the beginning of the year (1,980) (7,375) 3,195 6,932 2,629 — 3,401 Income/(charge) to the income statement (413) 674 (465) 3,999 836 — 4,631 Income/(charge) to other comprehensive income — — (130) (141) (608) — (879) Income/(charge) to equity — — — — 234 — 234 Additions from acquisition of businesses (note 5.3) 1 — (1,475) — — 766 — (709) Effect of exchange rate adjustment 1 (9) (103) (5) 217 65 — 165 Net deferred tax asset/(liability) at the end of the year 1 (2,402) (8,279) 2,595 11,007 3,922 — 6,843 Classified as follows: Deferred tax asset at the end of the year 1 579 195 2,627 11,027 4,646 (5,170) 13,904 Deferred tax liability at the end of the year (2,981) (8,474) (32) (20) (724) 5,170 (7,061) 1. Comparatives were restated to reflect change in the provisional valuation of net identifiable assets from a business combination completed in 2022. Reference is made to note 5.3. |
