Definitions
In the Annual Report and on the website Novo Nordisk use terms that have a specific meaning, either through consensus among professionals in the field or as a terminology adopted by Novo Nordisk.
See a list of the most commonly used financial and non-financial definitions in the left-hand menu.
For definitions of data and scope, please refer to Accounting policies.
Financial definitions
ADRS American Depositary Receipts.
Basic earnings per share (EPS) Net profit divided by the average number of shares outstanding.
Cash to earnings Free cash flow as a percentage of net profit.
Diluted earnings per share Net profit divided by the sum of the average number of shares outstanding, including the dilutive effect of share options ‘in the money’ in accordance with IAS 33. The dilutive effect of share options ‘in the money’ is calculated as the difference between the following:
1) the number of shares that could have been acquired at fair value with proceeds from the exercise of the share options; and
2) the number of shares that would have been issued assuming the exercise of the share options. The difference (the dilutive effect) is added to the denominator as an issue of shares for no consideration.
Effective tax rate Income taxes as a percentage of profit before income taxes.
Equity ratio Equity at year-end as a percentage of the sum of total liabilities and equity at year-end.
Free cash flowThe sum of cash flow from operating activities and cash flow from investing activities excluding net changes in marketable securities.
Gross margin Gross profit as a percentage of sales.
Net profit margin Net profit as a percentage of sales.
Number of shares outstanding The number of shares outstanding is the total number of shares excluding the holding of treasury shares.
Operating profit Earnings before tax, financial items and share of profit/loss in associated companies.
Operating profit margin Operating profit as a percentage of sales.
Payout ratio Total dividends for the year as a percentage of net profit.
ROIC (return on invested capital) Operating profit after tax (using the effective rate) as a percentage of average inventories, receivables, property, plant and equipment as well as intangible assets less non-interest-bearing liabilities including provisions (the sum of the above assets and liabilities at the beginning of the year and at year-end divided by two).
Please see the Accounting policies for financial and non-financial data here.
Non-financial definitions
AA1000 Framework is an accountability standard designed to improve accountability and performance by learning through stakeholder engagement. The building blocks are planning, accounting, auditing and reporting. The AA1000 Series adds specialised modules, including the AA1000 Assurance Standard, the world’s first assurance standard for social and sustainability reporting to complement GRI.
Accidental releaseis an irregular incident where potentially harmful substances, waste or GMO materials are released to the environment.
Balanced Scorecard is a management tool in which major issues are vision, values and business strategies. A basic principle is that management of a company has to be based on measurements of its score or performance in relation to different business perspectives: customer, economic, internal processes, and organisation and people.
Bioethics covers all ethical issues related to the use of life science technologies for the development and production of biotechnological and pharmaceutical products.
Biotechnology and genetic engineering refer to the application of living organisms and their cellular, sub-cellular or molecular components to create products and processes. Historically, the first use of biotechnology took place centuries ago with the discovery of fermentation of wine and beer. Today, the term biotechnology is often used synonymously with genetic engineering.
Contained use is a highly specific term from national and international regulation. It means that physical barriers (such as Novo Nordisk’s fermentation tanks) or a combination of physical, chemical or biological barriers are used to limit the contact of genetically modified microorganisms (GMMs) with the surrounding environment. The regulatory authorities set limits for emissions of GMMs. A chemical barrier might be chemical treatment to kill organisms. A biological barrier is an inherent characteristic of an organism which means that the organism’s ability to survive in nature is limited.
Corporate governance is the system or process by which companies are directed and controlled. It is based on the principle that companies are accountable for their actions and therefore broad-based systems of accountability need to be built into the governance structures of companies.
Diabetes results from defects of insulin secretion, insulin action or both. There are two major types of diabetes. Type 1 is due to a deficiency of insulin, whereas type 2 (which constitutes more than 80% of the cases) is primarily due to a resistance to insulin. Also, some women temporarily develop diabetes during pregnancy and this is called gestational diabetes. Whatever the type, the disease is characterised by a high level of sugar in the blood and it manifests itself by weight loss, the subject producing large volumes of urine containing high levels of sugar, and a resulting feeling of thirst which necessitates high liquid intake. The term ‘diabetes mellitus’ actually refers to the honeyed taste of the urine.
Eco-efficiency is the delivery of competitively priced goods and services that satisfy human needs and bring quality of life, while progressively reducing ecological impacts and resource intensity throughout the life cycle to a level at least in line with the Earth’s estimated carrying capacity.
Economics is the means by which society uses human and natural resources in the pursuit of human welfare. As such, economics extends beyond the boundaries of a single organisation and is inextricably linked to both the environmental and social elements of sustainable development.
Eco-Intensity Ration (EIR) is an expression of the ability to utilise resources. It is calculated by relating the consumption of water or energy to the total yield of product for the respective business areas.
Environmental responsibility covers our impact on the external environment and the bioethical implications of our activities.
Equal opportunities are when everyone enjoys and exploits the same opportunities with respect to recruitment, conditions at work, remuneration, career management and termination. Following international human rights conventions, no distinction, exclusion or preference is made on the basis of gender, sexual orientation, age, disability, marital status, religious belief, creed, colour, race or ethnic origin or political orientation, except when justified by requirements intrinsic to a specific job.
Global Compact is a United Nations-sponsored platform for encouraging and promoting good corporate practices and learning experiences in the areas of human rights, labour and the environment.
Global Reporting Initiative (GRI) was established in 1997 to develop globally applicable guidelines for reporting on economic, environmental and social performance. It is convened by the Coalition for Environmentally Responsible Economies (CERES) in partnership with the United Nations Environment Programme (UNEP). In 2002, GRI was established as a permanent, independent, international body with a multi-stakeholder governance structure. The Sustainability Reporting Guidelines were released as a second draft in September 2002. The third draft the GRI G3 Guidelines were released in October 2006.
GMMs and GMOsGenetically modified microorganisms (GMMs) are a subgroup of genetically modified organisms (GMOs). At Novo Nordisk, microorganisms such as bacteria (Bacillus, E. coli) and microfungi (yeast, Aspergillus) have been encoded with genes for producing pharmaceutical proteins. GMMs are classified as safe or demonstrating the lowest potential risk only if certain criteria are fulfilled according to the scientific risk analysis. The GMMs must not be pathogenic to humans, animals or plants, or in any way harmful to the environment. Furthermore, the original microorganism should be non-pathogenic, and the genes inserted should not be expected to cause any harm.
Clinical TrialsPhase 1 trials are human pharmacology trials conducted in healthy volunteers or in patients. Phase 2 trials are therapeutic exploratory trials with the primary purpose of demonstrating Clinical Proof of Concept (CPoC), ie efficacy and short-term safety. Phase 3 trials are therapeutic confirmatory trials, ie pivotal safety and efficacy trials based on the expected dose.
Social responsibility is about improving the quality of relations with key stakeholders. Novo Nordisk defines it as putting values into action in the perspective of human resources, human rights, health and safety, and our relations with society at large.
Stakeholders are individuals or organisations affected by or affecting the behaviour of a company or an organisation. Novo Nordisk’s most significant stakeholder groups are shareholders, employees, customers, suppliers, the media, authorities, NGOs and local communities around our production sites.
Sustainable development was defined in the Brundtland report of 1987 as ‘development that meets the needs of the present world without compromising the ability of future generations to meet their own needs’. Novo Nordisk interprets this definition as the Triple Bottom Line approach.
Triple Bottom Line reflects an integrated understanding of business performance in which social, environmental and economic bottom lines are interdependent. The aim of a Triple Bottom Line approach is to ensure business performance that is socially responsible, environmentally sound and economically viable.
Please see the Accounting policies for financial and non-financial data here.
This page has been reviewed by PricewaterhouseCoopers as part of its assurance of Novo Nordisk’s non-financial reporting. Please refer to Audit and assurance for a full description of the conclusions and the nature of assurance offered.
