Annual Report (ESEF) • Feb 8, 2024
Preview not available for this file type.
Download Source FileUntitled Novozymes A/S (Part of Novonesis) CVR-nr.: 10007127 Krogshoejvej 36, 2880 Bagsvaerd, Denmark Novozymes Annual Report 2023 The Novozymes Contents The big picture Five-year summary Novonesis: a new beginning Strategy & commitments Targets & progress Governance Corporate governance statements Notes Statements Glossary About the Report Reader’s guide This annual report has been released subse- quent to the approval of the combination of Novozymes and Chr. Hansen on January 29, 2024. The new combined group is called Novonesis. As an annual report is required to cover the activities of a group during a financial year, this report only discloses Novozymes’ finan- cial and non-financial performance in 2023. Non-financial elements concerning the com- bined group, Novonesis, are provided in sep- arate and clearly labeled sections. Read more about Novonesis in the section The next step on our strategic journey. This report does not include any realised, combined, proforma or stand-alone financials of Chr. Hansen or the combined entity Novonesis. Our corporate policies are available at www.novonesis.com. Visit “Two years aer launching our strategy “Unlocking growth – powered by biotech,” we are delivering solid growth and earnings in a volatile market environment, clearly demonstrating Novozymes’ return to higher growth rates.” Remuneration GovernanceThe big picture 2 ContentsNovozymes A/S The Novozymes Report 2023 Contents The big picture Five-year summary Novonesis: a new beginning GovernanceThe big picture The Novozymes Report 2023 % % % 1.5 1.5 * Frequency of occupational injuries with absence per million working hours. Targets Financial 67% Absolute greenhouse gas operations % renewable sources 1.5 Three-year rolling average 5% % 2.1 acquisitions 16.5% 36% Women in senior management % Women across 4Novozymes A/S GovernanceThe big picture The Novozymes Report 2023 Sales by business area 2022: 28% 22% 2022: 24% Bioenergy 25% 2022: 21% Grain & Tech Processing 13% 2022: 15% 12% 2022: 12% * Organic sales growth - - - growth. • Medley Unido L - - Visit % of total sales 28% of sales 5Novozymes A/S GovernanceThe big picture The Novozymes Report 2023 - - - - - tions in North America. • MenaquinGold™- • Vertera ® Probite – an innovative solution to the - - • ProSilience™ HU - • Lumista ® Gold – is a solution that helps brewers - the brewery. consumers to live healthier lives. Visit Bioenergy - - - - - - - growth. - - - Visit 25% of sales 22% of sales 6Novozymes A/S GovernanceThe big picture The Novozymes Report 2023 - • Protide ® L – a natural protease that helps cus- improving plants’ access to nutrients in the soil - - - Visit Grain & Tech Processing - subareas. • Quara ® LowP - - Visit 12% of sales 13% of sales 7Novozymes A/S GovernanceThe big picture The Novozymes Report 2023 - Sales by geography 13 % % 35% % * Organic sales growth 8Novozymes A/S GovernanceThe big picture The Novozymes Report 2023 Revenue Special items - - - () () Operating profit (EBIT) , , , , , Total assets No. % Women in senior management % Renewable electricity share % Five-year summary % % % Gross margin % % EBIT margin before special items % . . . . . % % % Return on equity % % . . . . % 9Five-year summaryNovozymes A/S GovernanceThe big picture The Novozymes Report 2023 Five-year summary Unleashing the biosolutions Ester Baiget, Cees de Jong, Chair GovernanceThe big picture The Novozymes Report 2023 10 - - - return to higher growth rates. - - - - ments. - that our biosolutions bring. - - - - - - global partnership with Carbios to enable biological - - alternative protein solutions. - - - - - - Novonesis builds on more than one hundred years of innovation, unparalleled biotech capabilities, and the ability to deliver high quality biosolutions at scale to meet customer needs across the world. 11Novozymes A/S GovernanceThe big picture The Novozymes Report 2023 - - - - over the long term enable us to accelerate custom- - ner to our customers. - - - - - - - - sectors. - - en our engagement in this space. - - - - - - - Cees de Jong Ester Baiget, 12Novozymes A/S GovernanceThe big picture The Novozymes Report 2023 Novonesis: a new beginning Novonesis: a new beginning 2023 financials and non-financials of Novozymes are disclosed in this annual report. Forward-looking elements represent Novonesis. 12.12.2022 Announcement of proposed combination of Novozymes & Chr. Hansen 30.03.2023 EGMs of Novozymes & Chr. Hansen vote in favor of the combination 10.10.2023 Executive leadership of the combined entity announced, effective as of Day 1 20.11.2023 Required EU remedy for anti- trust approval is announced. See also Note 4.5. 13.12.2023 New name of combined group introduced; Novonesis 26.01.2024 Combination approved by last anti-trust authority Financials and non-financials of Chr. Hansen up until September 2023 can be found at ChrHansen.com. Selected proforma financials will include calendar year financials released during 2024. Novonesis financial reporting will include Chr. Hansen financials and non-financials from 29 January, 2024. Completion of the combination between Novozymes and Chr. Hansen Novozymes and Chr. Hansen proposed on Dec. 12, 2022, to combine by way of a statutory merger, and the final registration with the Danish Business Authority was successfully completed on 29 January, 2024. The name, Novonesis, reflects a new era of biosolutions where innovation in biological sciences and technology will offer solutions to solve some of the biggest challenges facing humanity. The combined entity will create a leading global biosolutions partner with a broad biological toolbox and a diversified portfolio in attractive markets. Chr. Hansen’s shares were exchanged for a total of 187,298,646 Novozymes shares at the exchange ratio of 1.5326 for Chr. Hansen Shareholders, excluding stock held by Novo Holdings A/S, and at the exchange ratio of 1.0227 for Novo Holdings’ shares resulting in a total value of DKK 67.7 billion being paid out to former Chr. Hansen Shareholders. Novo Holding will remain the main shareholder of Novonesis, like for Novozymes and Chr. Hansen, and their long-term interest in Novonesis is reflected by their full support of the merger and the acceptance of a lower exchange ratio. * By Chr. Hansen Holding A/S being merged into the continuing legal entity of Novozymes A/S. ** The Novonesis and Novozymes A/S names will co-exist for an extended time to govern the regulation name change process. The combined group has been called and operated as Novonesis since January 29, 2024. 29.01.24 Day 1: Combined group is formed by merging Chr Han- sen group into Novozymes A/S legal entity and shares of Chr. Hansen are exchanged into Novozymes shares. 08.02.2024 Release of Novozymes annual report 13Novozymes A/S GovernanceThe big picture The Novozymes Report 2023 Novonesis: a new beginning business Strategy & commitments Targets & progress GovernanceThe big picture The Novozymes Report 2023 Novozymes’ business Novozymes is a world leader in biosolutions. We provide hundreds of biosolutions across numerous industries the world over. We use the power of biotech to help our customers grow their businesses while preserving the planet’s resources and enabling better lives. - use our resources. Visit Technical services Our technical service teams help our customers adopt innovations smoothly to ensure the expected value and effects. Distribution Our biosolutions are delivered to customers in various ways depending on the industry, e.g. directly from the company to customers or via industry partners. Commercial execution In-depth understanding of customer needs and markets enable us to deliver relevant biosolutions. Innovation Using our biotech toolbox of enzymes, specialized proteins and microorganisms, we innovate and patent biosolutions to meet the needs of our customers and of the world. Quality Our quality culture, capabilities, and systems ensure that we deliver the high-quality biosolutions our customers expect of us. Production With a global production setup, we produce high-quality biosolutions at large scale. We continuously optimize and innovate our production processes to get the most out of our capacity while reducing our environmental footprint. Suppliers Our trusted suppliers must ensure reliability, quality, integrity, and eciency with a passion for sustainability and innovation. We work together to build transparency and explore joint decarbonization opportunities. Customers Using our biosolutions, customers and consumers can produce more efficiently, make better use of raw materials and reduce greenhouse gas emissions, as well as create healthier, tastier and more nutritious foods and beverages. Together we find biological answers for better lives in a growing world – Let’s rethink tomorrow Novozymes We derive our revenue from the sale of biosolutions. Our business is driven by innovation, and in 2023, we invested 11% of our revenue in research and development. Partners To form partnerships and collaborations to enter new business areas faster and to drive market transformation towards a healthier planet. 15Novozymes A/S GovernanceThe big picture The Novozymes Report 2023 Novozymes External Strategy & commitments save on vital resources while enabling them to - that enable a healthy planet: gas emissions by helping - - als. We enable our customers - - biosolutions that enhance - - sugar. - - 32% 7% 16Strategy & commitments Novozymes A/S GovernanceThe big picture The Novozymes Report 2023 Strategy & commitments Explore New options for growth Expand BioHealth and Human Nutrition Evolve Our core business Transform food system Enable healthier lives Accelerate towards a climate-neutral society Commitments to a healthy planet 2023 strategy highlights The three growth pillars Evolve, Expand and Explore in our strategy, “Unlocking growth – powered by biotech” have guided our investments and priorities to grow Novozymes and direct the company’s next chapter. - - - - biosolutions. 17Strategy & commitments Novozymes A/S GovernanceThe big picture The Novozymes Report 2023 Evolve Our core business Expand BioHealth and Human Nutrition Strengthening our engagement with customers - - strate to customers the impact biosolutions can - - - corporate climate action across the private - - - - - - our biosolutions - - - - - cleaning. - 18Strategy & commitments Novozymes A/S GovernanceThe big picture The Novozymes Report 2023 Explore New options for growth Combining with Chr. Hansen is a significant step forward in the implementation of our strategy. The new company is a leading global biosolu- tions partner that is uniquely positioned to enable the transition to a more sustainable world. Novonesis will leverage its technology platform to bring biological innovations to scale and to market, addressing some of the world’s most pressing challenges. We are committed to delivering what the market demands, whether it be enzymes, microbes, proteins, or combinations of these different solu- tions. Our approach involves close collaboration with customers to tailor solutions that precisely meet their requirements. By leveraging the complementary skills of both companies, Novonesis will be even better posi- tioned to deliver solutions for healthier people and a healthier planet. Half of Novonesis’ portfo- lio focuses on enabling healthier lives and pro- ducing better foods. The other half addresses reducing chemical use and targeting climate neutral practices to create a healthier planet. Novonesis has a very diverse portfolio, a strong innovation muscle, world class fermentation capabilities and a global reach. This enables Novonesis to innovate, scale and meet evolving customer needs. Beyond our solutions, we will continue to hold ourselves accountable by having clear non- financial targets for our operations, supply chain and our employees. Building on the strong legacy of both compa- nies, Novonesis will continue on the path of sus- tainability leadership. As part of the combination announcement, we have already defined two specific commitments on climate action and diversity. The company marks the beginning of a new era of biosolutions. Based on our purpose of making the world better with biology, Novonesis will serve as a growth partner to customers, a value creator for shareholders, and a company that has a significant, positive impact on society and the planet. Learn more about Novonesis here Visit The next step on our strategic journey Accelerating a climate-neutral society - - - - - - - 19Strategy & commitments Novozymes A/S GovernanceThe big picture The Novozymes Report 2023 - - - as a responsible corporate citizen. - - - - - Science . Targets & progress CO Business travel climate neutral society. Visit - - - - - 20Targets & progressNovozymes A/S GovernanceThe big picture The Novozymes Report 2023 Targets & progress - - change. Learn more in the Notes on Climate change 1 electricity Targets 2023 performance 2025 target 2030 validated targetStatus 2050 validated target Climate is a key material issue for Novonesis, and we remain committed to our climate leadership position. Novonesis will retain the target of reaching net-zero GHG emissions by 2050 as verified by the Science Based Targets initiative. By 2030, we aim to achieve a 75% reduction in scopes 1 and 2 GHG emissions from Novonesis’ own operations, and a 35% reduction in scope 3 emissions from the full supply chain, all from a 2018 baseline. * As per guidelines from the Science Based Targets initiative (SBTi), we have combined the existing emissions data across scopes 1, 2 and 3 from Novozymes and Chr. Hansen. The combined emissions do not represent a significant change in the percentage contribution from scopes 1, 2, 3 and within scope 3 categories. Therefore, Novonesis’ target will have 2018 as the baseline year, and the targets will remain SBTi validated. Moving forward, Novonesis will merge the methodologies, improve emissions data, and consistently monitor progress following guidance from SBTi and GHG Protocol. 21Targets & progressNovozymes A/S GovernanceThe big picture The Novozymes Report 2023 - - - - - people. Learn more in the Note on Water global sites. Targets 2023 performance 2025 target 2030 long-term commitment Status 2035 long-term commitment 22Targets & progressNovozymes A/S GovernanceThe big picture The Novozymes Report 2023 - - - - Learn more in the Note on Waste Targets 2023 performance 2025 targetStatus 2030 long-term commitment 23Targets & progressNovozymes A/S GovernanceThe big picture The Novozymes Report 2023 - - unconscious bias. - teams about inclusion. - Learn more in the Note on Targets 2023 performance Status 2025 target 2030 long-term commitment Novonesis remains committed to diversity and inclusion. With a target of 45% women and 45% men across all pro- fessionals and in senior management by 2030, Novonesis aims to achieve gender balance across the organization. 24Targets & progressNovozymes A/S GovernanceThe big picture The Novozymes Report 2023 maintenance. - - opinion. Learn more in the Note on Targets 2023 performance Status 2025 target 2030 long-term commitment 25Targets & progressNovozymes A/S GovernanceThe big picture The Novozymes Report 2023 - - - live more sustainably. - - organizations. Learn more in the Note on Community engagement Qualitative reporting only Targets 2023 performance Status 2030 long-term commitment 26Targets & progressNovozymes A/S GovernanceThe big picture The Novozymes Report 2023 - - - - time. - 27Novozymes A/S GovernanceThe big picture The Novozymes Report 2023 Governance 29 Corporate governance 35 Board of Directors 38 Executive Management 39 Risk management 46 Summary of the Remuneration Report 50 The Novozymes stock Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Corporate governance Corporate governance Shareholder authority Shareholders hold the ultimate authority over the company and can at the Annual Shareholders’ Meet- ings exercise their right to make decisions, including through the appointment of the Board of Directors. The Board of Directors is accountable to the share- holders for the management of the company. to adopt the implementation of the statutory merger of Novozymes A/S and Chr. Hansen Hold- Board composition and responsibilities 2023 - of the Board of Directors and the Executive Man- We have a proactive and transparent corporate governance structure in place to ensure responsible business conduct and long-term value creation. diversity, independence and performance. In - tors also had four employee-elected members, The composition of the Board of Directors ensured that the combined competencies of the Board enabled it to inspire, guide and oversee Novo- zymes’ development, and diligently addressed and resolved the issues and challenges facing Novo- zymes at any given time. Board of Directors and the Executive Management is clearly outlined and described in the Rules of Procedure for the Board of Directors and the Rules of Procedure for the Executive Management. Visit Novozymes’ Articles of Association require the Board of Directors to consist of from four to ten increase the number of members from eight to - holder-elected members, each elected for a term - ation of various factors such as competencies, of the Danish Financial Statements Act is available on our Visit Governance structure the Rules of Procedure for the Board of Directors, the Board of Directors had a Chairmanship con- Chair. They assist in matters concerning the Execu- 2023 with Novozymes’ Board of Directors Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Ordinary board meetings Monthly reports Annual Shareholders’ Meeting Extraordinary General Meeting Organizational performance review and succession planning Next year's budget Strategy work Review of financial and non-financial performance Evaluation of collaboration between the Board of Directors and the Executive Leadership Team 29Corporate governanceNovozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 tive Leadership Team’s operational management and report back to the Board of Directors. The Chairmanship is also responsible for planning and preparing board meetings. Sustainability governance - ery of biosolutions to customers, and our engage- Sustainability has been governed from the highest level by the Board of Directors and the Executive - - porate performance on key environmental, social, - Please see our Renumeration Report for more details. Visit The Board of Directors is responsible for as part of the Executive Leadership Team’s day- responsible corporate conduct and a long-term perspective. Read more about our sustainability governance on the Visit The statutory reports required by the Danish Financial Statements Act are published on our website: • Corporate Governance (§107b) • Diversity (§107d) • Data ethics (§99d) • Corporate social responsibility (§99a) https://investors.novozymes.com/investors/ corporate-governance/articles-of-association-and- reports-on-corporate-governance/default.aspx Visit Gender diversity We are committed to nurture a culture of diversity, equity and inclusion, and have a policy for diversi- purpose of increasing diversity, including the share of the underrepresented gender, at all manage- ment levels. For more information about our policy on diversity, please see “Position on diversity and equal opportunities” and our of the Danish Financial Statements Act. Visit - strategic direction. Novozymes’ purpose and val- Board of Directors to ensure that they remain sound and relevant in steering the company for- responsible corporate citizen. The Board of Direc- tors has also focused on ensuring that purpose, values, and culture play a key role in future busi- ness operations, including in relation to the combi- nation of Novozymes and Chr. Hansen. 30Corporate governanceNovozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Measurements and impact The Executive Leadership Team is included in the monitoring of the targets for gender diversity glob- ally. The gender diversity targets are anchored in KPIs across the organization, and there are quar- terly follow-ups on gender diversity in promotions and new hires. Focus on gender diversity is includ- ed in core HR processes and regional roadmaps. Generally, we see an increased focus on gender diversity across our leadership teams, and as an example in 2023, our newest leadership program, Diversity on the Board of Directors Our policy for diversity and equal opportunities covers the workforce and the Board of Directors. Ambitious diversity targets have been in place for the Board of Directors to ensure the right mix of competencies to address the challenges of a large global company. The Board Competency Profile reflects the targets that have been defined for all competencies required on the Board of Directors. Visit According to Novozymes’ target on gender diversity for shareholder-elected board members, 40% or more must be female and 40% or more must be male. In 2023, 33% of Novozymes’ shareholder-elected board members were women. Please also refer to the overview of diversity targets for board members elected by shareholders. Despite not meeting our own gender diversity target, the composition of the Board of Directors met the gender diversity requirements set out in Danish legislation, see the table on statutory reporting of gender diversity. Gender diversity at other management levels Our targets on gender diversity aim to increase the share of the underrepresented gender at all management levels. In accordance with section 99b of the Danish Financial Statements Act, we have a target specifi- cally for “other management levels” at Novozymes A/S defined as a first management level, which we identify as the Executive Leadership Team, and a second management level comprising people man- agers of Novozymes A/S reporting to the Execu- tive Leadership Team. Here, we strive to achieve a minimum of 45% women and 45% men at other management levels by 2030. In 2023, the number of employees at other man- agement levels was 38, of which 40% were wom- en. We will continue to work towards a 2030 target for Novonesis. More information on our 2025 and 2030 gender diversity targets globally can be found in Note 8.2 Inclusion & diversity. Statutory reporting of gender diversity for Novozymes A/S 2023 Board of Directors Number of members 6 Minority gender in % 33% Target in % Not required Other management levels Number of members 38 Minority gender in % 40% Target in % 45% Year of target 2030 * Novozymes has set voluntary targets, despite not being legally required to. Leading Tomorrow, was oered to an equal num- ber of female and male leadership talents, which provides a gender-balanced leadership talent pool for the future. Furthermore, to promote gender diversity among leaders in the company, we intro- duced specific requirements in our succession management systems to monitor diversity among the potential successors for leadership positions. 31Corporate governanceNovozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 The Innovation Committee Morten Sommer, and Preben Nielsen. tasks, etc. can be found in the Charter of the Innovation Committee. Visit - Product and Process Development including key pipeline - The Audit Committee The Audit Committee assists the Board of Directors in over- seeing aspects relating to accounting, auditing, risks, internal and governance data. The Audit Committee meets as neces- - tasks, etc. can be found in the Charter of the Audit Committee. Visit - See more in the Note on Business ethics. companies. The Nomination and Remuneration Committee The Nomination and Remuneration Committee assists the Board of Directors in nominating candidates for the Board of Directors, board committees and the Executive Management, Executive Management, the board members and board com- mittee members. The Nomination and Remuneration Com- year. More information can be found in the Charter of the Nomination and Remuneration Committee. Visit - ment remuneration and various topics related to the pro- Board committees 32Corporate governanceNovozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Charters and recommendations Recommendations on Corporate Governance that form part of the disclosure requirements applica- ble to companies listed on Nasdaq Copenhagen. A detailed review of the corporate position on each of the recommendations, and a description of the internal control and risk management system relating to financial reporting, can be found in the report on corporate governance prepared pursuant to section 107b of the Danish Financial Statements Act. Visit These recommendations require companies to • Due to the limitations imposed by the Novo Nordisk Foundation’s Articles of Association Board of Directors reserves the right in certain - on corporate social responsibility. The Notes on Environmental data and Social and governance in in the Danish Financial Statements Act. The man- datory reporting is placed in the Notes as the con- auditors. Furthermore, the statutory report is available on our website. Visit Reporting according to the EU Taxonomy can be overall principles for the ethical management of data by the company and supplements our com- mitment to integrity and compliance. The statutory report on Novozymes’ policy for, and work with, data ethics pursuant to section 99d of the Danish Financial Statements Act can be found on our website. Visit Novozymes is also committed to the ten principles Our UNGC CoP reports can be found on the UNGC website. Visit Other governance-related information Any amendments to the Articles of Association require that shareholders representing at least - pany are represented at the Annual Shareholders’ - sented at the meeting, are cast in favor of the pro- posal to amend the Articles of Association. The Board of Directors has been authorized by the treasury stock on an ongoing basis, provided the nominal value of the company’s total holding of Companies Act. The purchase price must not devi- Nasdaq Copenhagen at the date of acquisition. addition, the Board of Directors is authorized to increase the share capital. Further, the Extraordinary General Meeting in - tion of the statutory merger of Novozymes and - merger. 33Corporate governanceNovozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Each year, one of the responsibilities of the Board the Board of Directors assessed that the share the company’s shareholders and other stakehold- ers. Regarding its capital structure, the company favored a rather modestly leveraged balance - Novozymes is party to several partnership con- tracts that can be terminated by the other party in contain provisions that restrict Novozymes’ licens- - ations. Board member Audit Committee member Nomination and Remuneration Committee member Innovation Committee member Board meetings attended % Board tenure End of Board tenure Share trading in 2023 Number of shares end of 2023 1,4 - - 1,2 1,2 - - Heine Dalsgaard 1 - 1,2 - - 1 Morten Sommer 1,2 Anne Breum 3 3 - - Preben Nielsen 3 - 3 - 1. Elected at the General Meeting. 2. Independent. 3. Employee representative. 4. Resigned from the Board on March 2, 2023. Evaluation of the Board of Directors The Board of Directors conducts an annual evalu- ation, and every three years, the evaluation is con- and the Executive Leadership Team. The evalua- tion revealed an overall good performance by the and the Executive Leadership Team. The recom- - - zymes and Chr. Hansen, maintaining the right Board and ensuring a strong focus by the Board on innovation strategy. 34Corporate governanceNovozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Board of Directors Cees de Jong Heine Dalsgaard CEO of Chr. Hansen. Chair of the Nomination and Remu- neration Committee and member of the Audit Commit- of one year. Board positions Chair: Oterra A/S, Oterra Operations ApS, Oterra Holding - able B.V. Special competencies Extensive international business and management expe- rience from a range of industries, such as the food, food sustainability into strategy, operating model and report- ing, ensuring a meaningful, positive corporate societal impact. and Remuneration Committee and the Innovation Com- term of one year. Board positions Member: Recordati S.p.A. Special competencies Broad global biopharmaceutical commercial experience, including emerging markets, innovation pipeline manage- Chair of the Audit Committee. Member of the Board Board positions None. Special competencies Extensive international business and management expe- - ence and accounting expertise. Experience in sustainabil- ity reporting, including assurance requirements. * This board member is not regarded as independent in the Corporate Governance that apply to Danish listed companies. four employee-elected members. The Board represents many years of international management experience, and the members’ competencies combined ensures expert management of the company. Board of Directors Kim Stratton 35Board of DirectorsNovozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Board of Directors Board of Directors Kasim Kutay Morten Otto Alexander Sommer one year. Board positions Member: Mölnlycke Health Care. Special competencies Broad international experience in commercial research and innovation pipeline management in the consumer goods and consumer products sector. Experience in sus- tainability integration into innovation processes. of the Nomination and Remuneration Committee. Mem- year. Board positions Member: Novo Nordisk A/S. Special competencies - - cial and accounting expertise. * This board member is not regarded as independent in the Corporate Governance that apply to Danish listed compa- nies. - and Manjin Holding ApS. Member of the Audit Commit- tee and the Innovation Committee. Member of the Board Board positions Member: Clinical-Microbiomics A/S, SNIPR Holdings ApS, SNIPR Biome ApS, UNION therapeutics A/S, UTILI- TY therapeutics Ltd. Special competencies Extensive experience in biotechnology research and entrepreneurship. Sharon James 36Board of DirectorsNovozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Board of Directors Board of Directors Anne Breum Anders Hentze Knudsen Preben Nielsen Jens Øbro Employee representative. Elected for a term of four years. Employee representative. Elected for a term of four years. Employee representative. four years. Member of the Innovation Committee. Employee representative. Elected for a term of four years. 37Board of DirectorsNovozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Executive Management Executive Management Our Executive Leadership Team comprises broad and international management experience, comprehensive Ester Baiget Rainer Lehmann Education Holds a chemical engineering degree and an MBA from the Rovira i Virgili University, Spain. Board positions Member of the AkzoNobel Supervisory Board. Special competencies strong business and technical background. With more and commercial business leader, Ester has driven trans- range of industries. Through her leadership, she develops and nurtures a culture of inclusion, engagement, and commitment to delivering strong results. Ester anchors sustainability across the company, ensur- ing it is integrated in the company’s commitments and strategy. She is also the company’s ambassador on the global stage and an advocate of biotech as an instrumen- tal enabler of a healthier planet. Among other positions held, Ester is a member of the Board of Trustees of the Education Holds a Master of Business Administration from the Private University of Applied Sciences in Goettingen, Germany. Special competencies Rainer Lehmann is responsible for Finance, Investor Relations, IT and Legal. - biotechnology industry. He has a successful track record in scaling businesses and building high-performing teams. In recent years, Rainer has gained valuable expe- - - ness acumen to drive value creation and ensures transparent disclosure of sustainability performance and adherence to company policies and standards. 38Executive ManagementNovozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Risk management Risk management identify, assess, and mitigate potential business risks that may impact our risks across categories such as sustainability and technology. Our approach is to consider both and holistic manner, treating all risks on similar terms. 2023 risk overview The key business risks described in this section are based on Novozymes’ Risk Management risks are based on Novozymes’ business. - - bination itself in Novozymes’ Risk Management - nation-related risks and mitigation actions under the period from pre-closing and up to three years Aside from this additional risk, the four key busi- - lating global political and economic instability and uncertainty. Novozymes’ key business risk and pages. the risks to our business. We address them in a in the same manner as other business risks. As per our commitment to the Taskforce on Cli- - nance, strategy, targets and risk management related to climate change. Read more about our reporting to the TCFD here - agement and capture ESG perspectives. Risk management framework The Novozymes Board of Directors has the overall responsibility for overseeing risks and for main- taining a robust risk management and internal control system. The company operates an Enter- - Leadership Team and a Risk Responsible. responsible for ensuring that senior management - ship across the organization. Risks are assessed - tem that estimates the potential impact of a given - - Executive Leadership Team and the Board of Directors. See - tors and risk management. Risk assessment heat map Volatility of agriculture-related business Data protection and cyber threats Global political and economic uncertainty Supply chain challenges and dynamic input prices Integration of Novozymes and Chr. Hansen Climate related risk Potential impact Probability 39Risk managementNovozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Description of risk Several of our businesses may poten- - modity prices, changes in the agricul- tural market cycle, and regulations for impact the agricultural value chain. - sure commodity prices and lead to commodity-related business areas and oil processing and bioethanol pro- duction. For example, reduced econom- ic activity in North America or Europe could lead to reduced demand for bioethanol blending and starch pro- commodity prices due to shortages could also impact our customers’ abili- ty to source and process commodities such as grains. This could put our sales of biosolutions under pressure. Mitigating actions Flexibility is key to adapting to changing markets. Our bio- solutions help producers achieve higher yields from the same inputs and to generate valuable co-products, such - proof their operations. We also continued to explore opportunities to use bioenergy feedstocks for other prod- Volatility of agriculture-related business Description of risk The threat of cyberattacks is considered to be high due to the increasing global demand for fast adaptation of digitaliza- - thermore, the use of cyberattacks as a increased that threat. - resents an additional exposure to cyber company name, domain, email address, and governance structures, there is an increased risk that cyber criminals may exploit any resulting confusion. We are a technology-driven and fully IT-supported business, and our supply chain, logistics and production capabili- ties are highly digitalized. Cyberattacks could have a negative impact on our pro- ductivity if systems are not accessible for an extended period. - ed if information about our unique technol- ogies or production strains is disclosed. It safeguard sensitive business data and criti- cal assets against this global threat. Mitigating actions It is essential to increase our ability to identify, protect, detect, numerous organizational and technical security controls to protect digital assets, including enhanced protection of PCs response to cyber and information security incidents. Further- - - Since the announcement of the combination, actions have - the combination. To protect our business opportunities from the threat of global - - ing patents. and monitoring platforms are continuously upgraded in order the detection and prevention of advanced cyberattacks. We - integrating Novozymes’ and Chr. Hansen’s systems and data in a safe manner. Data protection and cyber threats Climate related risk 40Risk managementNovozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Description of risk Novozymes’ global presence exposes our business to the consequences of global political and economic instabili- trade conditions and increasing volatili- During the year, other geopolitical events arose that could potentially have a similar impact. These conditions may impact our business and make it the short term. Mitigating actions countries. and a shared commitment to sustainability on the global We closely monitor political and economic developments - ed. We also deploy global versus local scenarios and con- siderations in short- and long-term capacity planning. scenarios and potential preparatory measures for our business, assets and people. Description of risk The geopolitical environment is dynamic and continues to be impacted by vola- Such factors could impact global sup- ply chains and, by extension, compa- nies. If prices remain volatile and at a our gross margin level, among other things. Mitigating actions - ture a fair share of value from our biosolutions. These increased input costs. We also continued to monitor our key material levels, con- Finally, productivity improvements during the year also - - als and energy. Global political and economic uncertainty Supply chain challenges and dynamic input prices 41Risk managementNovozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Long-term risks - itor strategic and fundamental risks that may potentially impact the business in the long term time. including sustainability and technology. Through our integrated sustainability trendspotting exer- the risks being also assessed through our Enter- prise Risk Management process. are prepared to take adequate action and respond Novozymes and Chr. Hansen. Description of risk While the combination of Novozymes and Chr. Hansen provides opportuni- ties, the complexity during the integra- tion period exposes the business to several risks. A strong emphasis on integration plan- ning and execution may lead to a risk of the company losing focus on ongo- emphasis could hinder synergy realiza- - tiatives. Uncertainty regarding job impact employee retention and talent attraction. Furthermore, the integration - ny to increased attempts of cyber-at- tacks. Mitigating actions - pany, focus has been on business continuity from day one. This involved establishing and maintaining the necessary - ed. - dedicated integration committee to oversee the integra- tion of Novozymes and Chr. Hansen and their respective businesses. In addition, the Novonesis Executive Leader- to ensure delivery on synergies and integration progress in Enterprise Management reporting already includes risk reporting related to the combination. Integration of Novozymes and Chr. Hansen 42Risk managementNovozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Description of risk Climate change is becoming increas- ingly visible through more extreme top concern. Our technology relies on the availabil- to produce. Increased long-term pres- - en by climate change. A severe meet customer demand by directly supply chain. Mitigating actions We continue addressing this long-term risk through our - informed by science and context, and enables collective - quality and quantity challenges at our priority sites. We also . and local authorities. This project is expected to improve We disclose more details annually in CDP’s Climate Change and Water Security questionnaires. Visit Water scarcity due to climate change Description of risk Industrial biotech is a key enabling - bon and biobased solutions. The com- pany’s research and business are based on innovation and delivering biosolu- tions that can tackle some of today’s biggest challenges. innovative uses of current technolo- - ture, sustainable food systems or solutions. could pose a risk to our technology base. Mitigating actions biotech. We are committed to continuously learn and its safe use. Economic Forum to advocate for science-based and inno- - - other companies to drive a transformative research agen- - - verting carbon dioxide into protein, bypassing the use of to mitigate any potential impacts. Learn more in our position statement on Industrial biotechnology. Visit Emerging technologies Climate related risk 43Risk managementNovozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Taskforce on Climate-related Financial Disclosures society. We actively invest in reducing the carbon footprint of our operations and supply chain as currently facing. step in addressing and taking action on current climate change. Change A List for our commitment to environmen- tal transparency and action on climate change. Novozymes strongly supports the recommenda- tions of the Taskforce on Climate-related Financial - cating climate-related impacts not only helps us understand and manage climate-related issues better, but that it also provides important insights for our stakeholders. The relevant sections for TCFD reporting are integrated in our annual report and outlined in the table and our CDP Climate Change response. Governance The organization’s governance around climate-related risks and opportunities. Sustainability is governed at the highest level by the Board of Directors and the Executive Leadership - formance as part of the Executive Leadership Team’s day-to-day running of the company. guided by climate-related impacts in terms of both opportunities and risks. They are also responsible for Corporate governance Visit Strategy The actual and potential impacts of climate-related risks and oppor- tunities on the organization’s is material. Climate-related risks and opportunities guide our strategic direction. to explore, invest in, and drive innovations in business areas critical for climate change mitigation, such as advanced protein solutions and carbon capture. - Targets and progress Visit Our climate journey. Visit Risk Management assesses, and manages climate-related risks. - - ferent levels of the organization. - Risk management Visit Metrics and Targets The metrics and targets used to assess and manage relevant cli- mate-related risks and opportunities We are also committed to the Science Based Targets initiative and to driving action on our decarboniza- - Targets and progress Our climate journey Visit Visit TCFD Recommended disclosures Learn moreSummary of our approach 44Risk managementNovozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 EU Taxonomy Regulation reporting EU Taxonomy Regulation reporting 2023 Revenue CAPEX OPEX Taxonomy-aligned activities Taxonomy-eligible activities but not Taxonomy-aligned Total Taxonomy- eligible activities 0% 3.4% 0.4% Taxonomy-non- eligible activities of the Regulation is to help the EU in guiding sus- tainable investments by requiring companies to report on the parts of revenue, capital expendi- - - mate change mitigation, climate change adaptation, resources, transition to a circular economy, pollution prevention and control, and protection and resto- - ing eligibility as the technical annexes for the last by the European Commission. This means that com- activities that qualify as eligible under the Regula- - ble activities. For economic activities included in - tion and climate change adaptation, companies must further assess the alignment of the eligible activities to the Regulation. Alignment is deter- mined by the technical screening criteria through “substantially contributing” to at least one of the objectives and ensuring to “do no substantial harm meeting the “minimum social safeguards”. Despite the positive environmental impact of Novozymes’ biosolutions and our focus on mini- mizing our environmental footprint, Novozymes’ the six environmental objectives to identify the proportion of any eligible and potentially aligned activities. We screened the activities listed in the technical annexes under the Delegated Regulations - identify eligible and aligned activities. Revenue - - the Note on Revenue. * The EU Taxonomy Regulation applies the term turnover. Capital expenditures (CAPEX) contribution to the objective for climate change tangible and intangible assets as included in the Property, plant, and equipment and Note on Intangible assets. Operational expenditures (OPEX) contribution to the objective for climate change related to “close to market research, development - - - - opment, building renovations, short-term leases, and the repair and maintenance of property, plant, and equipment. Full reporting tables our EU Taxonomy reporting disclosure on Novo- zymes.com. Visit 45EU Taxonomy Regulation reportingNovozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Summary of the Remuneration Report Summary of the Remuneration Report Each year Novozymes issues the Novozymes Remuneration Report as a separate report. The content of the Remuneration Report has been pre- the Danish Companies Act and holds information and details on the remuneration of the Board of Directors and the Executive Management. The presented for an advisory vote at the Annual approved at the Annual Shareholders’ Meeting in All remuneration of the Board of Directors and the scope of the approved remuneration policy. General remuneration policy Novozymes’ remuneration policy for managers and other employees is designed both to encourage strong individual performance and to support Novozymes’ overall value creation. Remuneration consists of a base salary, pension contributions, a cash bonus and stock-based incentive programs. These components are linked to employees’ indi- vidual performance and to the level of achieve- - mental targets. The remuneration policy aims to regularly against external benchmarks. except for an addition to our articles of associa- and Executive Management as approved at the Remuneration of the Board of Directors The remuneration of the Board of Directors com- ensures that the Board of Directors safeguards the value of incentive-based remuneration. The Board of Directors’ fee is set at a market-conformant level Board of Directors and committee memberships Board member Audit Committee Nomination and Remuneration Committee Innovation Committee Board meetings attended % 1,2 Heine Dalsgaard 1 1,2 1 1,2 Morten Sommer 1,2 3 Anne Breum 3 Preben Nielsen 3 3 1. Elected at the Annual Shareholders’ Meeting 2. Independent 3. Employee representative 46Summary of the Remuneration ReportNovozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 of the role, given the complexity of the Novozymes Board meetings held. increase. The Chair receives a fee that is three times the base fee, and the Vice Chair receives a - er committee members receive a further base fee and the Vice Chair of the Board do not receive such additional fee if appointed to the Nomination and employee-elected. The total remuneration paid to The decrease is a consequence of the reduced num- - any additional pay or fee to the Board of Directors. - - Chair, Vice Chair, and Board members, respectively. The individual Board members’ fees and their shareholdings Visit Remuneration of the Executive Management - • • Rainer Lehmann replaced Lars Green as CFO of Green for ten months and of Rainer Lehmann for The total remuneration of members of the Execu- • A base salary plus pension, company car and • A short-term incentive program • A long-term incentive program - salary. In addition to their regular remuneration, Ester Baiget and Lars Green received compensation for lost incentives from their previous employers. compensation for lost incentives from her previous - nary sign-on compensation for lost incentives from The targets for the short-term incentive program achieved for delivering an extraordinary perfor- - mance targets are set for each executive and The EBIT margin before special items achieved in - The level of achievement of individual performance targets, and thus the size of remuneration payment to the individual executive, is determined by the Board of Directors based on recommendations from the Nomination and Remuneration Committee. Based on its assessment, the Board determined that the pay-out based on individual targets are 47Summary of the Remuneration ReportNovozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 In addition to the STIP, Ester Baiget has been merger of Novozymes and Chr. Hansen being com- - the combined company. As the conditions for the bonus is not included in the reported remuneration Remuneration to the individual members of the Executive Management Fixed Variable 2023 2022 DKK million Salary Contribution based pension Other benets T o t a l x e d (% of total remuneration) Cash bonus (STIP) Incentive pro- grams (LTIP) Total variable (% of total remuneration) Total remuneration Compensation for lost incentives/sign- on fee Total remuneration Ester Baiget 27.7 23.7 (40%) (60%) Rainer Lehmann (42%) (58%) 3.3 - Former executives Lars Green (36% (64%) 16.6 17.9 Remuneration 16.2 1.8 0.6 18.6 11.6 17.4 29.0 47.6 8.3 41.6 the long-term incentive programs are expensed over the four-year vesting period. The long-term incentive included in the above table is the cost of the 2023 program measured at market value at the grant date. Short-term incentive program – Target achievement Target Weight Actual performance Ester Baiget Rainer Lehmann Lars Green EBIT margin before special items Contribution to strategy Individual targets Total, % of max 86% 81% 82% Total, DKK million 6.7 0.7 4.2 48Summary of the Remuneration ReportNovozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 - gets for each annual grant cycle to ensure the tar- - parameters covering environmental and social - place and Diversity. salary. Further, the program includes a maxi- to limit the total allocation of stock options and - al conditional grant. The LTIP program covering the performance peri- on sustainability targets. Average organic sales - Further information on the incentive programs for these employee groups can be found in the Note on Stock-based payment to the consolidated - Remuneration of senior leadership The remuneration of Novozymes’ senior leader- - - tive programs for vice presidents and directors program for the Executive Management. The real- ized target achievement for the LTIP program cov- For the current and former members of the Execu- - ized target achievement. The members of the Executive Management have contracts of employment containing standard con- - panies, including the periods of notice that both parties are required to give and noncompetition - - months’ base salary and pension contributions. Further details on the Executive Management’s remuneration and their shareholdings etc. can be found in the Novozymes Remuneration Report 49Summary of the Remuneration ReportNovozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 The Novozymes stock The Novozymes stock Stock performance Dividends dividend in respect of its earnings for the period - er agreement. Proposed dividend for the period announced by the Board of Directors of Novonesis - holders’ Meeting. Share price development 2023 Novozymes OMX C25 CAP Dec DecNovJan Feb Mar Apr May Jun July Aug Sep Oct 70 80 90 100 110 120 Total shareholder return including dividends % 202120202019 2022 2023 14% 9% 9% 55% -34% 50The Novozymes stockNovozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Share and ownership structure December 31, 2023 - investors, including Novo Holdings A/S, held - the Novo Nordisk Foundation, an independent objective of the Novo Nordisk Foundation is to provide a stable basis for the commercial and research activities of the companies of the Novo A stock B stock Total Number of shares Number of votes shares, increasing the common stock to further described in . Ownership structure Novo Nordisk Foundation Institutional and private investors Novo Holdings A/S 29.2% of total shares 74.0% of votes 70.8% of total shares 26.0% of votes Novozymes 51The Novozymes stockNovozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Accounts and performance 53 Performance and consolidated financial statements 61 Performance and consolidated environmental data 63 Performance and consolidated social and governance data 65 Notes 149 Statements 155 Financial statements for Novozymes A/S 170 Glossary 172 About the Report Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 EBIT before special items DKK million EBIT before special items EBIT magin before special items (%) 2020 2019 2021 2022 4,039 3,652 4,007 4,629 2023 4,552 28.1 26.1 26.8 26.4 25.4 Sales and sales growth DKK million 2020 2019 2021 2022 14,374 14,012 14,951 17,553 2023 17,899 Sales Sales growth, organic (%) (1) 0 6 9 5 Novozymes A/S 53Sales and earnings Sales and earnings Sales Total sales in 2023 were DKK 17,899 million, cor- responding to an increase of 5% organically and of 2% reported in DKK compared with 2022. Organic sales growth in 2023 was led by strong double-digit growth in Bioenergy driven by inno- vation and supported by expansion of corn- based ethanol production in Latin America and growth in solutions for biodiesel production and biomass conversion. Growth was further sup- ported by a solid development in Household Care driven by innovation and penetration of enzymatic solutions in emerging markets. The macroeconomic situation in 2023 with higher inflation and rising interest rates impacted con- sumer demand and led to inventory adjustments in many food-related industries, having a nega- tive impact on the food-related parts of Food, Beverages & Human Health, Grain & Tech Processing and Agriculture, Animal Health & Nutrition. Gross profit and gross margin Gross profit increased by 2% to DKK 9,722 mil- lion from DKK 9,577 million in 2022. The gross margin was 54.3%, down from 54.6% in 2022. The decrease in the gross margin compared to last year was driven by higher input and logistics costs, partly offset by a positive pricing impact. Operating costs Operating costs increased by 2% to DKK 5,341 million. Operating costs as a percentage of sales were 30%. • Sales and distribution costs increased by 4%, accounting for 13% of sales. • Research and development costs increased by 1%, accounting for 11% of sales. • Administrative costs increased by 1%, accounting for 5% of sales. The increase in operating costs in 2023 was mainly due to higher sales and distribution costs and strategic investments to support long-term growth. Other operating income Other operating income was DKK 171 million, compared with DKK 276 million in 2022. Other operating income in 2023 was positively impacted by DKK 88 million from the divestment of selected waste-water treatment solutions. In 2022, other operating income was positively impacted by DKK 201 million from the non-cash accounting gain related to the 21st.BIO transac- tion. EBIT before special items EBIT before special items was DKK 4,552 million, down from DKK 4,629 million in 2022. The EBIT margin before special items ended at 25.4%, down from 26.4%. The EBIT margin before spe- cial items was adversely impacted by a lower gross margin resulting from higher input prices, somewhat mitigated by higher selling prices. Additionally, currencies had a negative impact. EBIT EBIT decreased by 13% to DKK 3,976 million, down from DKK 4,561 million in 2022. The decline was driven by special items related to the combination with Chr. Hansen. The EBIT margin ended at 22.2%, down from 26.0% in 2022. Net finance Net financial costs were DKK 49 million in 2023, compared to net financial income of DKK 2 mil- lion in 2022. In 2023, a net loss of DKK 51 million on currency hedging/revaluation and other for- eign exchange losses was realized. Tax The effective tax rate was 22.3%, up from 19.1% in 2022. In 2023, the effective tax rate was nega- tively impacted by merger-related costs not deductible for tax purposes, while being posi- tively impacted by the settlement of a long-standing tax case. The effective tax rate for 2022 was positively impacted by various tax- exempt accounting gains that were one-offs. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 54Sales and earnings Income statement DKK million Note 2023 2022 Revenue 2.1, 2.2 17,899 17,553 Cost of goods sold 2.3, 3.1, 3.2, 4.1 (8,177) (7,976) Gross profit 9,722 9,577 Sales and distribution costs 2.3, 3.1, 3.2 (2,365) (2,271) Research and development costs 2.3, 2.4, 3.1, 3.2 (2,017) (2,001) Administrative costs 2.3, 3.1, 3.2 (959) (952) Other operating income, net 2.5 171 276 Operating profit (EBIT) before special items 4,552 4,629 Special items 2.6 (576) (68) Operating profit (EBIT) 3,976 4,561 Share of result in associates (18) (7) Financial income 5.2 282 533 Financial costs 5.2 (331) (531) Profit before tax 3,909 4,556 Tax 2.7 (870) (870) Net profit 3,039 3,686 Attributable to Shareholders of Novozymes A/S 3,024 3,676 Non-controlling interests 15 10 3,039 3,686 Proposed dividend per share, DKK 6.00 Earnings per share, DKK 2.8 10.92 13.29 Earnings per share, diluted, DKK 2.8 10.88 13.19 Statement of comprehensive income DKK million Note 2023 2022 Net profit 3,039 3,686 Items that may subsequently be reclassified to the income statement: Currency translation adjustments Subsidiaries and non-controlling interests (550) 155 Tax on currency translation adjustments 12 (15) Currency translation adjustments (538) 140 Cash flow hedges Fair value adjustments (81) (150) Tax on fair value adjustments 17 33 Cash flow hedges reclassified to costs of goods sold 86 - Cash flow hedges reclassified to financial costs (25) 295 Tax on reclassified fair value adjustments (13) (65) Cash flow hedges (16) 113 Other comprehensive income (554) 253 Comprehensive income 2,485 3,939 Attributable to Shareholders of Novozymes A/S 2,472 3,929 Non-controlling interests 13 10 2,485 3,939 Consolidated statements of income Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Cash flow from operating activities DKK million 2020 2019 2021 2022 3,196 4,355 4,062 4,006 2023 4,152 Free cash flow before acquisitions DKK million 2,205 3,419 2,946 1,144 2020 2019 2021 2,100 20232022 Net investments DKK million Net investments Net investments (% of sales) 6.9 6.7 7.5 16.3 991 936 1,116 2,862 2020 2019 2021 2022 11.5 2,052 2023 Novozymes A/S 55Cash Flow Cash Flow Cash flow from operating activities The cash flow from operating activities was DKK 4,152 million, up from DKK 4,006 million in 2022. The higher cash flow from operating activi- ties was mainly driven by less negative develop- ments in working capital, compared with 2022, and less tax paid. Net investments Net investments excluding acquisitions were DKK 2,052 million, down from DKK 2,862 million in 2022. Net investments in property, plant and equipment amounted to DKK 1,854 million, com- pared with DKK 2,732 million in 2022, as the majority of the investments related to the invest- ment in the new production line in Blair, Nebraska, U.S. were made in 2022. Free cash flow before acquisitions and divestments The free cash flow before acquisitions and divestments amounted to DKK 2,100 million, compared with DKK 1,144 million in 2022. The increase was mainly driven by lower net invest- ments. Free cash flow The free cash flow was DKK 2,019 million in 2023, compared with DKK 1,334 million in 2022. Financing activities The cash flow from financing activities was nega- tive at DKK 1,889 million, compared with a nega- tive cash flow of DKK 1,250 million in 2022. The negative cash flow from financing activities was mainly due to increased dividend payments due to interim dividend payments, which was partly offset by the fact that no stock buyback programs were executed in 2023 due to the combination with Chr. Hansen. Cash position Cash and cash equivalents at December 31, 2023, amounted to DKK 1,116 million, up from DKK 1,041 million at December 31, 2022. Undrawn committed credit facilities were DKK 5,256 million at December 31, 2023. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 56Cash Flow DKK million Note 2023 2022 Net profit 3,039 3,686 Reversal of non-cash items 6.7 2,155 1,935 Income tax paid 2.7 (790) (910) Interest received 77 18 Interest etc. paid (157) (131) Cash flow before change in working capital 4,324 4,598 Change in working capital (Increase)/decrease in receivables (177) (330) (Increase)/decrease in inventories 138 (787) Increase/(decrease) in payables, deferred income and contract liabilities (127) 534 Currency translation adjustments (6) (9) Cash flow from operating activities 4,152 4,006 Investments Purchase of intangible assets 6.7 (199) (130) Purchase of property, plant and equipment 6.7 (1,857) (2,760) Sale of intangible assets 1 - Sale of property, plant and equipment 3 28 Business acquisitions, divestments, purchase and sale of financial assets 6.7 (81) 190 Cash flow from investing activities (2,133) (2,672) Free cash flow 2,019 1,334 DKK million Note 2023 2022 Financing Borrowings 3,295 2,140 Repayment of borrowings (2,307) (1,602) Overdraft facilities, net (65) 193 Repayment of lease liabilities (123) (120) Shareholders: Purchase of treasury stock - (500) Sale of treasury stock 167 164 Dividend paid (2,856) (1,525) Cash flow from financing activities (1,889) (1,250) Net cash flow 130 84 Unrealized gain/(loss) on currencies and financial assets included in cash and cash equivalents (55) (6) Net change in cash and cash equivalents 75 78 Cash and cash equivalents at January 1 1,041 963 Cash and cash equivalents at December 31 1,116 1,041 Consolidated statement of cash flows Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 ROIC before special items and average invested capital DKK million Average invested capital ROIC before special items (%) 2020 2019 2021 2022 15,038 15,301 16,606 19,411 21.1 18.9 19.3 17.9 2023 21,097 16.5 Net interest-bearing debt (NIBD) and net interest-bearing debt-to-EBITDA DKK million NIBD NIBD/EBITDA 2020 2019 2021 2022 2023 0.8 0.8 1.0 1.0 4,049 3,871 5,225 5,807 1.2 6,617 Net working capital % of sales Inventories Net working capital Receivables Payables and deferred income 2021 2020 2019 2022 2023 -30 -20 -10 0 10 20 30 Novozymes A/S 57Balance sheet and financial position Balance sheet and financial position Total assets Total assets increased from DKK 27,983 million at December 31, 2022, to DKK 28,391 million at December 31, 2023. The increase was mainly driven by net investments, partly offset by amor- tization and depreciation. Invested capital Invested capital increased from DKK 20,703 mil- lion in 2022 to DKK 21,490 million in 2023. This was mainly a result of net investments and a slight increase in net working capital. ROIC before special items Return on invested capital (ROIC) before special items was 16.5%, down 1.4 percentage points from 17.9% in 2022. The decrease in ROIC before special items was mainly due to an increase in invested capital, and an increase in the effective tax rate. Net working capital Novozymes’ net working capital increased to DKK 4,710 million, up from DKK 4,244 million in 2022, due to an increase in trade receivables, assets held for sale and lower trade payables due to lower investments, partly offset by lower inventories. Net interest-bearing debt Novozymes had net interest-bearing debt of DKK 6,617 million at December 31, 2023, compared with DKK 5,807 million at December 31, 2022. Net interest-bearing debt was impacted by cash outflows from dividend payments of DKK 2,856 million, partly offset by the fact that no stock buyback programs were executed in 2023. Net interest-bearing debt-to-EBITDA Net interest-bearing debt-to-EBITDA was 1.2x at December 31, 2023, up from 1.0x at December 31, 2022. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 58Balance sheet and financial position Assets DKK million Note Dec. 31, 2023 Dec. 31, 2022 Intangible assets 3.1 4,532 4,698 Land and buildings 3.2 4,614 3,999 Plant and machinery 3.2 4,953 4,151 Other equipment 3.2 992 1,028 Assets under construction 3.2 1,766 2,896 Deferred tax assets 2.7 1,762 1,623 Other financial assets 62 92 Investments in associates 205 223 Other receivables 4.3 43 32 Non-current assets 18,929 18,742 Inventories 4.1 3,627 3,803 Trade receivables 4.2 3,702 3,454 Contract assets 4.2 70 151 Tax receivables 2.7 296 352 Other receivables 4.3 279 360 Other financial assets 40 80 Cash and cash equivalents 1,116 1,041 9,130 9,241 Assets held for sale 4.5 332 - Current assets 9,462 9,241 Assets 28,391 27,983 Liabilities and equity DKK million Note Dec. 31, 2023 Dec. 31, 2022 Common stock 5.5 562 562 Reserves and retained earnings 13,416 13,275 Equity attributable to shareholders of Novozymes A/S 13,978 13,837 Non-controlling interests 6.5 373 391 Total equity 14,351 14,228 Share purchase liability 6.5 - 760 Deferred tax liabilities 2.7 1,965 1,653 Provisions 3.4 100 119 Contingent consideration 3.6 - 224 Lease liabilities 5.3 232 288 Contract liabilities 152 129 Borrowings 5.3 4,329 3,619 Non-current liabilities 6,778 6,792 Share purchase liability 6.5 584 - Lease liabilities 5.3 137 123 Provisions 3.4 12 10 Contingent consideration 3.6 72 158 Borrowings 5.3 3,083 2,919 Trade payables 1,616 1,869 Contract liabilities 65 94 Deferred income 54 44 Tax payables 2.7 183 326 Other liabilities 4.4 1,456 1,420 Current liabilities 7,262 6,963 Liabilities 14,040 13,755 Liabilities and equity 28,391 27,983 Consolidated balance sheet Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Changes in equity 2023 DKK million Compre- hensive income Equity Jan. 1, 2023 Dividend Other Equity Dec. 31, 2023 14,228 2,485 (2,856) 494 14,351 Novozymes A/S 59Equity and shareholder return Equity and shareholder return Equity At December 31, 2023, equity was DKK 14,351 million, up from DKK 14,228 million at December 31, 2022. Equity ratio Equity accounted for 50.5% of total assets at December 31, 2023, down from 50.8% at December 31, 2022. Return on equity Return on equity was 21.7%, down 6.9 percent- age points from 28.6% in 2022. The decrease was a result of the reduced net profit. Treasury stock At December 31, 2023, the holding of treasury stock was 3.7 million B shares, equivalent to 1.3% of the common stock, compared to 4.4 mil- lon B shares, equivalent to 1.6% of the common stock in 2022. Dividend In October 2023, interim dividends of DKK 4.20 per share were paid out for the period January 1 - August 31, 2023. A proposed dividend for the period September 1 - December 31, 2023 will be announced by the Board of Directors of Novonesis in connection with the notice of the Annual Shareholders’ Meeting. Read more about the Novozymes stock in The Novozymes stock Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 60Equity and shareholder return Attributable to shareholders of Novozymes A/S DKK million Common stock Currency translation adjustments Cash flow hedges Retained earnings Total Non-controlling interests Total equity Equity at January 1, 2023 562 132 81 13,062 13,837 391 14,228 3,024 3,024 15 3,039 Other comprehensive income for the year (536) (16) (552) (2) (554) Total comprehensive income for the year (536) (16) 3,024 2,472 13 2,485 Sale of treasury stock 167 167 167 Dividends (2,825) (2,825) (31) (2,856) Stock-based payment 147 147 147 Non-controlling interests and share purchase liability 176 176 176 Tax related to equity items 4 4 4 Changes in equity - (536) (16) 693 141 (18) 123 Equity at December 31, 2023 562 (404) 65 13,755 13,978 373 14,351 Equity at January 1, 2022 564 (8) (32) 11,303 11,827 379 12,206 3,676 3,676 10 3,686 Other comprehensive income for the year 140 113 253 - 253 Total comprehensive income for the year 140 113 3,676 3,929 10 3,939 Purchase of treasury stock (500) (500) (500) Sale of treasury stock 164 164 164 Write-down of common stock (2) 2 - - Dividend (1,524) (1,524) (1) (1,525) Stock-based payment 123 123 123 Non-controlling interests and share purchase liability (43) (43) 3 (40) Tax related to equity items (139) (139) (139) Changes in equity (2) 140 113 1,759 2,010 12 2,022 Equity at December 31, 2022 562 132 81 13,062 13,837 391 14,228 Proposed dividend for the period September 1 - December 31, 2023 will be announced by the Board of Directors of Novonesis in connection with the notice of the Annual Shareholders’ Meeting. Consolidated statement of equity Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Five-year operational emissions (CO 2-eqv.) 1,000 tonnes Scope 1 Scope 2 2020 2019 2021 2022 161 330 234 218 2023 143 Steam 22% (22%) Energy by source 2023 (2022) % Electricity 9% (10%) conventional Electricity 47% (47%) renewable Fuel 17% (17%) conventional Heat 1% (1%) conventional Heat 4% (3%) renewable Novozymes A/S 61Environmental performance Environmental performance Operational ecoefficiency In 2023, sales increased organically by 5% driven by price increases, whereas production volumes decreased slightly. The consumption of energy and water decreased by 9% and 11% respectively compared to 2022. The decrease was driven by changes in product mix towards less resource consuming products, lower production volumes and implementation of efficiency-enhancing pro- jects. Novozymes strives to decouple environmental impact from business growth, and we define tar- gets and metrics that measure and drive our sus- tainability performance. Climate change Novozymes’ total scopes 1 and 2 GHG emissions were 143,000 tonnes in 2023, an 11% decrease from 161,000 tonnes in 2022. The major contribu- tor was Novozymes’ site in Blair, US, for which we procured green electricity during 2023. Energy In 2023, Novozymes’ energy consumption was 4,396,000 GJ, a decrease of 9% compared with 2022. Renewable sources accounted for 51% of the energy consumption in 2023 compared with 50% in 2022. Renewables made up 84% of the total electricity in 2023, up from 82% in 2022. The main contributor to this increase was our site in Blair, US which started to procure renewable energy certificates. Water Novozymes’ water withdrawal decreased by 11%, from 8,720,000 m in 2022 to 7,793,000 m in 2023. The total volume of wastewater generated in 2023 decreased by 7% compared to 2022. Waste Similar to 2022, 100% of our biomass was re-cir- culated as compost, fertilizer, feedstock for bio- gas or the like in 2023. For non-biomass waste, the rate of recycling across our global production sites increased to 74%, from 63% in 2022. Environmental compliance The number of breaches of regulatory limits recorded worldwide in the Novozymes organiza- tion increased to 23 in 2023 from 21 in 2022. Most of them were related to wastewater dis- charge and biomass processing, handling and distribution. Novozymes is addressing these incidents. Novozymes received 14 neighbor complaints in 2023, compared to 23 received in 2022. Most of them pertained to noise and light related to con- struction activities. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 62Environmental performance Note 2023 2022 Climate change 7.1 1,000 tonnes CO 143 161 Energy 7.2 4,396 4,840 7.2 51 50 Water 7.3 1,000 m3 7,793 8,720 7.3 1,000 m3 6,295 6,766 Waste 7.4 544 559 7.4 74 63 7.4 529 539 7.4 100 100 Environmental compliance, etc. 7.5 23 21 7.5 14 23 References to notes without data 7.6 n/a n/a 7.7 n/a n/a Consolidated environmental data Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Number of employees No. of employees 6,125 6,185 6,527 6,781 2020 2019 2021 2022 6,756 2023 Frequency of injuries Per million working hours 0.9 1.3 1.5 1.7 2020 2019 2021 2022 1.3 2023 Novozymes A/S 63Social and governance performance Social and governance performance Labor practices & human rights At December 31, 2023, the total number of employees was 6,756, compared with 6,781 in 2022. Innovation Novozymes is committed to delivering bioinnova- tion and launched 18 new products in 2023. In 2023, Novozymes had 917 active patent fami- lies, compared with 892 in 2022, which comprise the number of inventions that have active patent applications or active patents. Business ethics In 2023, Novozymes reinforced our commitment to business integrity. During the year, 98% of Novozymes’ employees in scope completed busi- ness integrity training. In 2022, that number was 97%. As in 2022, there were no breaches of competi- tion law in 2023. Customer engagement Novozymes conducts an annual customer satis- faction survey and tracks progress on its Net Promoter Score (NPS), which is assessed on a - firms that we continue to have a solid relation- ship with our customers. In 2023, the employee absence rate was in line with 2022 at 2.6%. Novozymes promotes equal opportunities and strengthens diversity in the global workplace. At December 31, 2023, 36% of senior management (directors and higher) were women compared to 33% in 2022. Occupational health & safety The frequency of occupational injuries with absence decreased to 1.3 per million working hours in 2023, compared with 1.7 per million working hours in 2022, corresponding to a decline from 20 injures in 2022 to 16 injuries in 2023. Our three-year rolling average frequency of occupational injuries with absence per million working hours was 1.5 similar to 1.5 in 2022. Novozymes will continue to drive a safety culture to ensure that safety behaviors are a part of the daily routines in our organization. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 64Social and governance performance Note 2023 2022 Labor practices & human rights 2.3 6,756 6,781 2.3 39.5 39.2 8.1 2.6 2.6 Inclusion & Diversity 8.2 36 33 Employee safety and well-being No. - - 8.3 1.3 1.7 8.3 0.3 0.1 8.3 1.5 1.5 Innovation New products 2.4 18 26 Active patent families 2.4 917 892 Business ethics Completion of business integrity training for employees in scope 8.4 98 97 Breaches of competition law 8.4 - - Customer engagement Customer satisfaction, Net Promoter Score (NPS) 8.5 71 69 Reference to notes without data Community engagement 8.6 n/a n/a Responsible sourcing 8.7 n/a n/a Consolidated social and governance data Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Notes 1 Basis of reporting 1.1 Significant changes and events 1.2 Basis of reporting 2 Net operating profit after tax 2.1 Segment 2.2 Revenue 2.3 Employees 2.4 Research and development costs 2.5 Other operating income, net 2.6 Special items 2.7 Tax 2.8 Earnings per share 3 Invested capital 3.1 Intangible assets and impairment test of goodwill 3.2 Property, plant and equipment 3.3 Leases 3.4 Provisions 3.5 Business acquisitions 3.6 Contingent consideration 4 Net working capital 4.1 Inventories 4.2 Trade receivables and contract assets 4.3 Other receivables 4.4 Other liabilities 4.5 Assets held for sale 5 Capital structure and financing 5.1 Financial risk factors and risk management 5.2 Financial income and Financial costs 5.3 Borrowings 5.4 Derivatives – hedge accounting 5.5 Common stock and treasury stock 5.6 Financial assets and liabilities by category 6 Other financial notes 6.1 Management remuneration 6.2 Stock-based payment 6.3 Contingent liabilities and pending litigation 6.4 Related party transactions 6.5 Non-controlling interests 6.6 Fees to statutory auditors 6.7 Cash flow 6.8 Events after the reporting date 6.9 Group companies 7 Environmental data 7.1 Climate change 7.2 Energy 7.3 Water 7.4 Waste 7.5 Environmental compliance 7.6 Bioethics & biodiversity 7.7 Product stewardship 8 Social and governance data 8.1 Labor practices & human rights 8.2 Inclusion & diversity 8.3 Employee safety & well-being 8.4 Business ethics 8.5 Customer engagement 8.6 Community engagement 8.7 Responsible sourcing Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Basis of reporting Note 1 1.1 Significant changes and events 1.2 Basis of reporting The Novozymes Report 2023 Accounts and performanceGovernanceOur businessThe big picture Novozymes A/S 67Notes 1.1 Significant changes and events Basis of reporting The following significant events impacted Accounts and performance in 2023. Completion of the combination of Novozymes and Chr. Hansen On January 29, 2024, the final regulatory approvals were obtained and the final registration of the statutory merger with the Danish Business Authority successfully com- pleted. The combination of Novozymes and Chr. Hansen will cre- ate a leading global biosolutions partner with a broad bio- logical toolbox and a diversified portfolio in attractive markets. Reference is made to Note 2.6, Note 3.5, Note 6.3 and Note 6.8. Divestment of part of the global lactase enzymes business The European Commission approval of the Combination is conditional upon the divestment of a part of the combined company’s global lactase enzyme business. In 2023, a definitive agreement to sell the lactase enzyme business was entered into with Kerry Group plc (“Kerry”). The sale was subject to the European Commission’s approval of Kerry as the purchaser, which was obtained on January 26, 2024. Reference is made to Note 4.5. Significant transactions In 2023, Novozymes divested selected waste-water treat- ment solutions, which had a positive effect of DKK 88 mil- lion on other operating income. Reference is made to Note 2.5 for further details. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 68Notes This section provides an overview of Novozymes’ principal accounting policies, the critical accounting estimates and judgments applied, a definition of materiality as well as the impact of new or amended IFRS standards and interpreta- tions. The symbols I/S , B/S and ESG show which amounts in the notes can be found in the income statement, the balance sheet, and in environ- mental data and social and governance data (ESG) respectively. The accounting policies described below apply to the consolidated financial statements as a whole. Accounting policies and critical accounting esti- mates and judgments are described in the notes to which they relate to enhance understanding. The descriptions of accounting policies in the notes form part of the overall description of accounting policies. ACCOUNTING POLICIES Consolidation The consolidated financial statements comprise the financial statements of Novozymes A/S (the Parent Company) and subsidiaries controlled by Novozymes A/S, prepared in accordance with Foreign currency transactions are translated into the functional currency defined for each com- pany using the exchange rates prevailing at the transaction date. Monetary items denominated in foreign currencies are translated into the func- tional currency at the exchange rates prevailing at the reporting date. Financial statements of foreign subsidiaries are translated into DKK at the exchange rates pre- vailing at the reporting date for assets and liabili- ties, and at average exchange rates for income statement items. The following exchange rate differences, arising from translation using the exchange rate prevail- ing at the reporting date, are recognized in Other comprehensive income: • Translation of foreign subsidiaries’ net assets at the beginning of the year. • Translation of foreign subsidiaries’ income statements from average exchange rates. iXBRL reporting Novozymes is required to file its annual report in the European Single Electronic Format (‘ESEF’) and The Novozymes Report is therefore prepared Group accounting policies. The consolidated financial statements are prepared by combining items of a uniform nature and subsequently elim- inating intercompany transactions, internal stockholdings and balances, and unrealized inter- company profits and losses. Non-controlling interests’ share of subsidiaries’ net profit for the year and equity are included in the Group’s net profit and total equity, but are disclosed separately. Consolidation of the environmental, social and governance data follows the same principles as the financial reporting. Translation of foreign currencies The consolidated financial statements are pre- sented in Danish kroner (DKK), which is also the functional and presentation currency of the par- ent company. Exchange rate differences arising between exchange rates at the transaction date and the reporting date are recognized as Financial income or Financial costs. in the XHTML format that can be displayed in a standard browser. The primary statements and notes in the consolidated financial statements are tagged using inline eXtensible Business Reporting Language (iXBRL). The iXBRL tags comply with the ESEF taxonomy, which is included in the ESEF Regulation and developed based on the IFRS taxonomy published by the IFRS Foundation. Where a financial statement line item is not defined in the ESEF taxonomy, an extension to the taxonomy has been created. Extensions are anchored to elements in the ESEF taxonomy, except for extensions which are subto- tals. The Novozymes Report submitted to the Danish Financial Supervisory Authority consists of the XHTML document together with certain technical files, all included in a file named NOVOZYMES- 2023-12-31-en.zip. 1.2 Basis of reporting Basis of reporting Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 69Notes Non-IFRS financial measures Novozymes uses certain financial measures that are not defined in IFRS to describe the Group’s financial performance, financial position and cash flows. These financial measures may there- fore be defined and calculated differently from similar measures in other companies, and may thus not be comparable. The non-IFRS financial measures presented in The Novozymes Report are: • Organic sales growth • Special items • Operating profit (EBIT) before special items • Operating costs • Economic profit • ROIC • ROIC before special items • Free cash flow before acquisitions Definitions of non-IFRS financial measures are provided in the Glossary section of The Novozymes Report. ROIC before special items is the adjusted operat- ing profit (NOPAT) before special items after tax for the last 12 months as a percentage of aver- age invested capital. 1.2 Basis of reporting (continued) Basis of reporting Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 ROIC before special items DKK million Note 2023 2022Adjusted operating profit (NOPAT) before special items 3,481 3,471DKK million Note 2023 2022Intangible assets 3.1 4,532 4,698Property, plant and equipment 3.2 12,325 12,074Investments in associates 205 223Net working capital 4,710 4,244Financial assets, non-interest-bearing 40 80Provisions 3.4 (112) (129)Contingent consideration 3.6 (72) (382)Derivatives (48) (101)Tax, net (90) (4)Invested capital 21,490 20,703Average invested capital 21,097 19,411ROIC before special items 16.5% 17.9% * Net working capital includes Inventories, Trade receivables, Contract assets, Other receivables, Assets held for sale, Deferred income, Trade payables, Contract liabilities and Other liabilities. Novozymes A/S 70Notes Note Critical accounting estimates and judgments Estimate/ judgment Potential impact from estimates and judgments 2.2 Revenue Revenue recognition Estimate 2.6 Special items Classification of special items Judgment 2.7 Tax Group tax charge and deferred tax assets Estimate 3.1 Intangible assets and impairment test of goodwill Impairment of intangible assets and goodwill Estimate 3.5 Business acquisitions 3.6 Contingent consideration Fair value measurement Estimate 6.5 Non-controlling interests 4.1 Inventories Cost of work in progress and finished goods Estimate 4.2 Trade receivables and contract assets Allowances for doubtful trade receivables Estimate Critical accounting estimates and judgments The preparation of the consolidated financial statements and environmental, social and gov- ernance data requires Management to make esti- mates and assumptions that can have a signifi- cant effect on the application of policies and reported amounts of assets, liabilities, income, expenses and related disclosures. The estimates and underlying assumptions are based on histori- cal experience and various other factors. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Changes in esti- mates may be necessary if there are changes in the circumstances on which the estimate was based, or if more detailed information becomes available. Such changes are recognized in the period in which the estimate in question is revised. The table shows critical accounting estimates and judgments and their level of potential impact on the consolidated financial statements: 1.2 Basis of reporting (continued) Basis of reporting The application of the Group’s accounting poli- cies may require Management to make judg- ments that can have a significant effect on the amounts recognized in the consolidated financial statements. Management judgment is required in particular when assessing the substance of trans- actions that have a complicated structure or legal form. The critical accounting estimates and judgments could potentially have a significant impact on the consolidated financial statements. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Selected material issues for Novozymes Issue category ComplianceInnovation Partnerships & customer engagement Profitable growth Solid capital structure Supply chain security Corporate governance Business ethics Labor practices and human rights Diversity & inclusion Employee safety & well-being Water Waste Climate change & Energy All Economic Environmental Governance Social Novozymes A/S 71Notes Basis of reporting The consolidated financial statements of the Group have been prepared in accordance with IFRS Accounting Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act. The financial year for the Group is January 1 – December 31. The financial statements were authorised for issue by the board of directors on 8 February 2024 and the general assembly, who has the power to amend and reissue the financial statements. The consolidated financial statements have been prepared on a going concern basis and under the historical cost convention, with the exception of derivatives, securities, contingent consideration and share purchase liability, which are measured at fair value. The accounting policies are unchanged from last year. The consolidated environmental, social and gov- ernance data have been prepared in accordance with policies that adhere to internationally recog- nized voluntary reporting standards and princi- ples such as the UN Global Compact (UNGC). Novozymes is a signatory to the Ten Principles and a member to the UNGC, a voluntary initiative for businesses committed to aligning their opera- tions and strategies with ten universally accepted principles in the areas of human rights, labor, the environment and anti-corruption. We also take inspiration from the Task Force on Climate Related Financial Disclosures (TCFD) framework for climate-related disclosures. Our reporting and materiality assessments were also inspired by the GRI framework. The policies are unchanged from last year. Defining materiality The Novozymes Report is based on the concept of materiality, to ensure that the content is mate- rial and relevant. If items are individually immaterial, they are aggregated with other items of a similar nature in the statements or in the notes. Novozymes pro- vides the specific disclosures required by IFRS unless the information is considered immaterial to the economic decision-making of the readers of The Novozymes Report. As for environmental, social and governance matters, we disclose information on issues that are identified by our materiality assessment. The disclosures in the notes include information on our management approach, targets, initiatives, and related progress. Novozymes’ materiality assessment is a system- atic and rigorous process that takes double materiality into account. It allows us both to eval- uate whether Novozymes has an impact on the environment and society and to identify how ESG issues affect the creation of long-term value. We have established a two-phased process compris- ing a comprehensive assessment every three years and a refresh (light-assessment) every year. The process integrates input from external stake- holders, trend analyses and internal engagement 1.2 Basis of reporting (continued) Basis of reporting Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 72Notes with relevant departments including Investor Relations, Risk Management & Controls, Quality, Sustainability and our commercial areas. This process results in a materiality matrix of financial and non-financial issues. The matrix reflects the importance of those issues to our key stakehold- ers versus their impact on Novozymes, and it is used to guide our strategy and reporting. In 2023, we conducted a light refresh of our materiality assessment. No new issues were added to our materiality matrix. Limited reporting scope The environmental data cover those activities that could have a significant impact on the envi- ronment. Sites with activities considered not to have a significant environmental impact are not included. Such sites comprise sales offices, R&D labs, and sites with limited blending and storage of products. However, measures are taken to ensure that at least 97% of the total Novozymes quantity of the measured environmental parame- ter is included in the reported numbers. 1.2 Basis of reporting (continued) Impact of new accounting standards Novozymes has adopted the following new or amended standards and interpretations from January 1, 2023: • Amendments to IAS 1 – Presentation of Financial Statements: Disclosure of Accounting Policies that requires an entity to disclose their material accounting policies rather than their significant accounting poli- cies. • Amendments to IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates clarifying the definition of accounting estimates and when changes in accounting estimates are a correction of an error and when it is a change in accounting estimate. Basis of reporting • Amendment to IAS 12 – Income Taxes: Deferred Tax related to Assets and Liabilities arising from a single transaction clarifying how to account for deferred tax on transactions such as leases and decommissioning obliga- tions. • Amendment to IAS 12 – Income Taxes: International Tax Reform – Pillar Two Model Rules implementing temporary relief from accounting for deferred taxes arising from the implementation of the Pillar Two rules issued by the OECD. The adoption of the new and amended standards and interpretations has not had a significant impact on recognition, measurement, or disclo- sures in the consolidated financial statements for 2023 and is not anticipated to have a signifi- cant impact on future periods. New standards and interpretations not yet adopted IASB has issued new or amended accounting standards and interpretations that have not yet become effective and have consequently not been implemented in the consolidated financial statements for 2023. Novozymes expects to adopt the accounting standards and interpreta- tions as they become mandatory. None of the new or amended standards or interpretations are expected to have a significant impact on the con- solidated financial statements. The new EU Corporate Sustainability Reporting Directive (CSRD) including the European Sustainability Reporting Standards developed by the European Financial Reporting Advisory Group (EFRAG) has not yet become effective and has consequently not been implemented in the Annual Report for 2023. Novozymes expects to report on the ESRS standards as part of the adoption of the directive in 2024 as it becomes mandatory. For more information, refer to: www.novozymes.com/en/about-us/sustainability/materiality Visit Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Note 2 Gross margin down from 54.6% in 2022 to Organic sales growth down from 9% in 2022 to EBIT margin before spe- cial items down from 26.4% in 2022 to Net operating profit after tax 2.1 Segment 2.2 Revenue 2.3 Employees 2.4 Research and development costs 2.5 Other operating income, net 2.6 Special items 2.7 Tax 2.8 Earnings per share Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Revenue 2023 (2022) DKK million Denmark 233 (211) Rest of Europe, Middle East & Africa 6,003 (5,884) North America 6,061 (5,829) Latin America 2,296 (2,063) Asia Pacific 3,306 (3,566) 17,899 (17,553) Intangible assets and property, plant and equipment 2023 (2022) DKK million Denmark 6,957 (6,747) Rest of Europe, Middle East & Africa 745 (788) North America 6,238 (5,804) Latin America 131 (121) Asia Pacific 2,786 (3,312) 16,857 (16,772) Net investments 2023 (2022) DKK million Denmark 877 (754) Rest of Europe, Middle East & Africa 11 (3) North America 994 (1,941) Latin America 23 (26) Asia Pacific 147 (138) 2,052 (2,862) 2,862 Novozymes A/S 74Notes Segment reporting The internal reporting framework used for reporting on revenue and expenses to the Executive Management and the Board of Directors has been established to reflect and report on the global functional responsibility setup at Novozymes. This setup consolidates functions by type, and Management reviews the results of the Group as a whole to assess perfor- mance. Thus, there is only one operating seg- ment. Worldwide operations The Group operates in four geographical regions: Europe, Middle East & Africa, North America, Asia Pacific and Latin America. From a revenue perspective, U.S. is the largest single country, contributing ~32% of the Group’s revenue (2022: ~31%). The geographical distribution of revenue is based on the country in which the goods are delivered. For a number of customers, central deliveries are made to specified locations and the final desti- nation is unknown. The stated geographical dis- tribution of revenue may therefore vary from one year to the next if delivery destinations for these customers change. Most of the Group’s intangible assets and prop- erty, plant and equipment are located in Denmark, U.S., India and China. Intangible assets and property, plant and equipment, largest single countries: 2023 2022Denmark 41% 40%U.S. 36% 33%India 10% 11%China 6% 9% 2.1 Segment Net operating profit after tax Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Sales growth 2023 DKK million M&A impact Organic growth 2022 Exchange rates 2023 (3%) 0% 5% 17,899 17,553 Sales by currency 2023 (2022) DKK million DKK 6% (6%) EUR 32% (33%) USD 39% (38%) CNY 7% (8%) Other 16% (15%) Novozymes A/S 75Notes 2.2 Revenue DKK million 2023 2022Consumer BiosolutionsHousehold Care 5,106 4,988Food, Beverages & Human Health 3,950 4,134Agriculture & Industrial BiosolutionsBioenergy 4,445 3,748Grain & Tech Processing 2,294 2,607Agriculture, Animal Health & Nutrition 2,104 2,076Revenue I/S17,899 17,553Emerging markets 6,348 6,441Developed markets 11,551 11,112Revenue I/S17,899 17,553Revenue to the five largest customers as a percentage of revenue 24% 23% * Developed markets comprise North America, Central Western Europe, Australia, New Zealand, Japan and South Korea. Rest of the world is classified as emerging markets. Most of Novozymes’ revenue is derived from the sale of goods to customers, with revenue being recognized when the goods are delivered. At January 1, 2023, contract liabilities amounted to DKK 223 million (2022: DKK 227 million), of which DKK 60 million was recognized as revenue in 2023 (2022: DKK 81 million). Novozymes has entered into various sales agreements, including agreements where Novozymes manufactures and sells products to a partner, who undertakes the sales to end customers, and where the profit on products sold to end customers is shared between the partner and Novozymes based on predetermined profit-sharing mechanisms. Recognition of revenue requires judgment and estimates by Management in connection with determining the appropriate revenue recognition as well as the timing of recogni- tion. Critical accounting estimates and judgments Net operating profit after tax Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 76Notes Novozymes produces a wide range of industrial enzymes, microorganisms and probiotics. Revenue includes the sale of goods and related services and royalties, and is recognized at an amount that reflects the consideration to which Novozymes expects to be entitled. Revenue from the straightforward sale of goods to cus- tomers is recognized when control of the goods is transferred to the customer, i.e. when goods are delivered. Variable considerations are included in revenue to the extent that they are not subject to significant uncertainty. The performance obligations in the contracts are to deliver enzymes, microorganisms and probiotics to customers, and each batch deliv- ered is considered a separate performance obligation, as each batch is distinct. Rebates Enzymes, microorganisms and probiotics are sometimes sold at a rebate. A rebate agree- ment can be set up in various ways, but com- mon to all agreements is that revenue is recognized based on the price specified in the contract, net of the estimated rebate. The rebates are estimated based on experience, as well as information related to expected orders 3–12 months in advance. The estimated rebates are reassessed at the end of each reporting period. Returns A few of Novozymes’ markets are granted a right of return. No revenue is recognized for the goods expected to be returned, as a refund liability is recognized. Estimates of the expected level of returns are based on analysis of historical returns and knowledge of the relevant markets/products. These estimates are updated at the end of each reporting period. As the goods returned are usu- ally scrapped, no inventory asset is recognized. Profit split Novozymes has entered into partnerships where Novozymes manufactures and sells products to a partner, who undertakes the sale to end customers. The profit on products sold to end customers is shared between the part- ner and Novozymes based on predetermined profit-sharing mechanisms. Revenue from these arrangements consists of the sale of products to the partner and the shared profit, and is recognized in full when the goods are delivered to the other contracting party. This is done by calculating the expected profit based on insights, experience and other input factors. The calculated profit is recog- nized as a contract asset or contract liability until an invoice is issued. The profit realized is settled periodically. Commission Novozymes has entered into commission agree- ments where agents undertake sales to third parties in return for a commission on realized sales. Revenue from such agreements is recog- nized when the goods are delivered, as the nature of the performance obligation is to pro- vide the specified goods. Other Revenue collected on behalf of third parties is not recognized as revenue. Novozymes’ obligation to provide a refund for products that are not of the agreed quality or according to agreed specifications under the standard warranty terms is recognized as con- tract liabilities. A trade receivable is recognized when the cus- tomer obtains control of the goods and an invoice is issued, as this is the point in time when the consideration becomes unconditional and only the passage of time is required before payment is due. Typical payment terms are around 60 days. Contract liabilities consist of advance pay- ments, deferred revenue and liabilities for refund goods. The contract liabilities are recog- nized as revenue as the performance obliga- tions under the contracts are fulfilled. Accounting policies 2.2 Revenue (continued) Net operating profit after tax Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Number of employees at year-end 2023 (2022) No. of employees Denmark 2,910 (2,883) Rest of Europe, Middle East & Africa 243 (238) North America 1,307 (1,303) Latin America 324 (319) Asia Pacific 1,972 (2,038) 6,756 (6,781) Employee costs 2023 (2022) DKK million Denmark 2,582 (2,383) Rest of Europe, Middle East & Africa 216 (205) North America 1,300 (1,244) Latin America 129 (123) Asia Pacific 629 (655) 4,856 (4,610) Novozymes A/S 77Notes DKK million 2023 2022Wages and salaries 3,897 3,721Pensions – defined contribution plans 364 348Other social security costs 301 263Other employee costs 143 151Stock-based payment 151 127Employee costs 4,856 4,610Recognized in the income statement under the following items:Cost of goods sold 1,773 1,654Sales and distribution costs 1,192 1,209Research and development costs 1,143 1,127Administrative costs 611 575Special items 76 -4,795 4,565Change in employee costs recognized in Inventories 61 45Employee costs 4,856 4,610 Employee costs in 2023 included severance pay, retention bonuses and other employee costs of DKK 76 million related to the combination between Novozymes and Chr. Hansen, recog- nized in Special items. 2.3 Employees Net operating profit after tax Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Employee gender distribution 2023 (2022) Women 40% (39%) Men 60% (61%) Senior management gender distribution 2023 (2022) Women 36% (33%) Men 64% (67%) Novozymes A/S 78Notes The number of employees is derived from contractual obligations, but does not include employees on unpaid leave, temporary replacements, student interns, agency employees, consultants or PhD students. In the calculation of the number of full-time employees, employees with a working time ratio of 95% or more are counted as full-time employees. The average number of employees is calcu- lated as the average of the number of perma- nent employees at the end of each month. Job categories are defined as follows: Senior management comprises the CEO, executive vice presidents, vice presidents and directors. Management comprises middle managers and specialists. Professional comprises employ- ees with academic backgrounds as well as team leaders. Process operators comprises operators and unskilled workers. All of the above classifications are based on internal job categories. Accounting policies 2.3 Employees (continued) Net operating profit after tax DKK million 2023 2022 Average number of employees in the Group 6,805 6,690 Average number of employees who work with R&D 1,208 1,279Number of employees outside Denmark as a percentage of total number of employees 57% 57%Part-time employees 359 343Full-time employees 6,397 6,438Employees at December 31ESG6,756 6,781Senior management 215 214Management 1,432 1,388Professional 1,912 1,894Administrative 711 737Skilled workers, laboratory technicians and other technicians 1,165 1,178Process operators 1,321 1,370Employees by category at December 31ESG6,756 6,781 Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 79Notes DKK million Note 2023 2022Internal and external research and development costs 592 528Employee costs 2.3 1,143 1,127Amortization and impairment losses, intangible assets 3.1 124 182Depreciation and impairment losses, property, plant and equipment 3.2 158 164Total research and development costsI/S2,017 2,001As a percentage of revenue 11.3% 11.4% Due to significant uncertainty associated with the development of new products, none of the development projects met the critieria for capi- talization in 2023 and 2022. In 2023, Novozymes launched 18 new products (2022: 26 new products). New products comprise products with new or improved characteristics. In 2023, Novozymes had 917 active patent fami- lies (2022: 892). Active patent families comprise the number of inventions for which Novozymes had one or more active patent applications or active patents at December 31. Research and development costs primarily comprise employee costs, internal and exter- nal costs related to the development of new products and to the ongoing optimization of production processes for existing products, and amortization, depreciation and impair- ment losses related to intangible assets and property, plant and equipment used in research and development activities. Research costs are expensed as incurred, while development costs are expensed as incurred unless the criteria for capitalization are deemed to have been met. Income received from research and collabora- tion agreements is recognized in Other oper- ating income. Accounting policies 2.4 Research and development costs Net operating profit after tax Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 80Notes DKK million 2023 2022Income and grants concerning research projects/collaborations 31 10stGain from 21.BIO transaction - 201Net gain from divestment of selected waste-water treatment solutions 88 -Other secondary income, net 52 65Other operating income, netI/S171 276 In 2023, Other operating income was impacted by DKK 88 million from the divestment of selected waste-water treatment solutions. In 2022, Other operating income was impacted by DKK 201 million from an accounting gain related to the 21 st .BIO transaction, in which Novozymes Biotechnology ApS merged with 21 st .BIO. Following the transaction, Novozymes obtained significant influence in 21 st .BIO, and 21 st .BIO is recognized as an associated company of Novozymes. Other operating income comprises income that is not product-related and that is not defined as special items. This includes income from research and collaboration agreements, government grants, sale of licenses, patents, etc., and other income of a secondary nature in relation to the main activities of the Group. This item also includes non-recurring income items in respect of damages, outlicensing, etc., and gains and losses on divestments. Accounting policies 2.5 Other operating income, net Net operating profit after tax Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 81Notes DKK million 2023 2022Costs related to the combination of Novozymes and Chr. Hansen: Transaction costs (220) (68)Integration costs (326) -Costs related to divestment of the lactase enzymes business (30) -Special itemsI/S(576) (68) Special items reconcile to the income statement as specified below: 2.6 Special items 2023 2022Reported Adjusted Reported Adjusted income Special income income Special income DKK millionstatementitemsstatementstatementitemsstatementRevenue 17,899 - 17,899 17,553 - 17,553Cost of goods sold (8,177) (56) (8,233) (7,976) - (7,976)Gross profit 9,722 (56) 9,666 9,577 - 9,577Sales and distribution costs (2,365) (381) (2,746) (2,271) (67) (2,338)Research and development costs (2,017) (10) (2,027) (2,001) - (2,001)Administrative costs (959) (129) (1,088) (952) (1) (953)Other operating income, net 171 - 171 276 - 276Operating profit (EBIT) before special items 4,552 (576) 3,976 4,629 (68) 4,561Special items (576) 576 - (68) 68 -Operating profit (EBIT) I/S3,976 - 3,976 4,561 - 4,561 Net operating profit after tax Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 82Notes 2.7 Tax Tax risks In many markets, Novozymes operates through sales companies and distributors, whereas produc- tion is located in only a few countries. This leads to transactions between group companies. Novozymes follows the OECD principles in setting internal transfer prices for these transactions. This is a complex area and entails a tax risk, because the transactions are subject to judgment in each country. The tax controversy risk for Novozymes is significantly reduced through the use of bilateral advance pricing agreements (APAs). Bilateral APAs As stated in our tax policy, Novozymes proactively engages in bilateral APAs negotiated at compe- tent authority level to increase predictability and to mitigate transfer pricing risks. Most of the inter- company transaction value within the Novozymes Group is covered by bilateral APAs. An APA is an agreement between a taxpayer and a tax authority determining the transfer pricing methodology for pricing the taxpayer’s interna- tional transactions for future years. The methodology is applied for a certain period based on the fulfilment of certain terms and con- ditions (called critical assumptions). An APA can be unilateral or bilateral. Novozymes only enters into bilateral APAs, meaning that they are negoti- ated between the competent tax authorities of the two countries involved in the transaction. An APA provides assurance with respect to the tax outcome of our international transactions, by determining in advance arm’s length pricing and the pricing methodology to be applied to the international transactions. Novozymes has entered into bilateral APAs with the tax authorities in the countries where inter- nal transactions are most significant. Included in APA-covered transactions are group internal transactions between Denmark and the U.S., China and India, respectively. Joint taxation Novozymes A/S and its Danish subsidiaries are jointly taxed with the Danish companies of the Novo Holdings A/S Group. Joint taxation also covers withholding taxes in the form of dividend tax, royalty tax and interest tax. The Danish com- panies are jointly and individually liable for the joint taxation liability. Any subsequent adjust- ments to income taxes and withholding taxes may increase the liability. Tax for the individual companies is allocated in full on the basis of the expected taxable income. Special items are used in the presentation of the income statement and include significant non-recurring income or costs not related to Novozymes’ recurring operating profit. These items are classified separately in the income statement as Special items in order to pro- vide a more transparent view of Novozymes’ operating profit. The use of special items entails management judgment in the separation from other items in the income statement. Management considers individual items in order to ensure that special items include sig- nificant non-recurring income or costs not related to Novozymes’ recurring operating profit. Special items include income or costs from the combination of Novozymes and Chr. Hansen. Critical accounting estimates and judgments 2.6 Special items (continued) Net operating profit after tax Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 83 2.7 Tax (continued) Tax in the income statement DKK million 2023 2022Tax payable on net profit (753) (818)Change in deferred tax (87) (105)Prior-year adjustments - current tax (25) 76Prior-year adjustments - deferred tax (5) (23)Tax in the income statementI/S(870) (870)Calculation of effective tax rate:Corporate tax rate in Denmark (22.0)% (22.0)%Non-taxable income less non-deductible expenses (1.1)% (0.3)%Difference in foreign tax rates (1.2)% (0.3)%Other adjustments 2.0% 3.5%Effective tax rate (22.3)% (19.1)% Tax in the income statement In 2023, the effective tax rate was negatively impacted by costs related to the combination, which are not deductible for tax purposes. There was a positive impact from the settlement of a long-standing tax case. The effective tax rate for 2022 was positively impacted by the accounting gain related to 21 st .BIO and the divestment of Novozymes’ minority ownership in Albumedix. In addition, As the Group operates across many different countries, the calculation of the Group’s total tax charge in the income statement inherently involves estimation. Tax and transfer-pricing disputes with authorities in various countries may occur, and Management’s assessment is applied to assess the possible outcome of such disputes. The Group recognizes deferred tax assets, including the expected tax value of tax loss carryforwards, if management assesses they can be offset against positive taxable income in the foreseeable future. This judgment is made annually and based on budgets and business plans for the coming years, includ- ing planned commercial initiatives. Payments in respect of tax liabilities for an accounting period result from payments on account and on the final resolution of open items. As a result, there may be substantial differences between the tax charge recog- nized in the consolidated income statement and actual tax payments. Critical accounting estimates and judgments Net operating profit after tax there was a positive impact from a fair value adjustment of contingent consideration. The total positive impact of 3.3 percentage points was rec- ognized in Other adjustments. Global minimum top-up tax The OECD has published Pillar Two model rules designed to implement a global minimum effec- tive tax rate. Pillar Two legislation has been enacted or substantively enacted in certain juris- dictions where the Group operates. The legislation will be effective for the Group’s financial year beginning January 1, 2024. Novozymes is in scope of the enacted or substan- tively enacted legislation and has performed an assessment of the Group’s potential exposure to Pillar Two income taxes. The assessment of the potential exposure to Pillar Two income taxes is based on the most recent tax filings, coutry- by-country reporting and financial statements for the constituent entities of the Group. Based on the assessment, the Pillar Two effective tax rates in most of the jurisdictions in which the Group operates are above 15%. There are a lim- ited number of jurisdictions where the transi- tional safe harbor relief does not apply. Novozymes does not expect any material expo- sure to Pillar Two income taxes in those jurisdic- tions. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 84Notes DKK million 2023 2022Deferred tax at January 1 (30) 300Currency translation adjustments (13) 3Effect of business acquisitions - (7)Tax related to the income statement (92) (128)Tax on equity items - (198)Transfer to/(from) other items (68) -Deferred tax at December 31 (203) (30)Deferred tax assetsB/S1,762 1,623Deferred tax liabilitiesB/S(1,965) (1,653)Deferred tax at December 31 (203) (30) Tax receivables and payablesDKK million 2023 2022Tax payables, net, at January 1 26 (200)Currency translation adjustments (13) 46Tax related to the income statement (778) (742)Tax on equity items 20 12Tax paid for the current year, net 790 910Transfers to/(from) other items 68 -Tax payables, net, at December 31 113 26Tax receivablesB/S296 352Tax payablesB/S(183) (326)Tax payables, net, at December 31 113 26Of which due within 12 months 23 5Of which due after more than 12 months 90 21Tax payables, net, at December 31 113 26Corporate income taxes paid are specified as follows:Income taxes paid in Denmark 622 610Income taxes paid outside Denmark 168 300Total income taxes paid 790 910 2.7 Tax (continued) Net operating profit after tax Deferred taxDeferred tax assets Deferred tax liabilitiesDKK million 2023 2022 2023 2022Intangible assets and property, plant and equipment 596 716 (1,397) (1,447)Inventories 226 295 (67) (93)Tax loss carry-forwards 16 85 - -Stock options 75 67 - -Other 408 406 (60) (59)1,321 1,569 (1,524) (1,599)Offsetting items 441 54 (441) (54)Deferred tax at December 31 B/S1,762 1,623 (1,965) (1,653) The tax value of the unrecognized share of tax loss carry-forwards, tax credits, etc. that do not expire amounted to DKK 55 million (2022: DKK 50 million). Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 85Notes 2.8 Earnings per share Corporation tax, comprising the current tax liability, change in deferred tax for the year and possible adjustments relating to prior years, is recognized in the income statement, unless it relates to items recognized either in Other comprehensive income or directly in equity. Uncertain tax positions are assessed individually and recognized if it is probable that an amount will be paid or received. Deferred tax is measured using the balance sheet liability method and comprises all tem- porary differences between the carrying amount and the tax base of assets and liabili- ties. No deferred tax is recognized for good- will, unless amortization of goodwill for tax purposes is allowed. The tax value of tax loss carry-forwards is included in the calculation of deferred tax to the extent that the tax losses can be expected to be utilized in the future. Deferred tax is measured according to cur- rent tax rules and at the tax rate expected to be in force on elimination of temporary dif- ferences. Changes in deferred tax due to tax rate changes are recognized in the income statement, unless they relate to items recog- nized either in Other comprehensive income or directly in equity. Novozymes is applying the temporary relief from accounting for deferred taxes arising from the implementation of the Pillar Two rules issued by the OECD. Earnings per share is calculated as net profit attributable to shareholders of Novozymes A/S divided by the average number of shares in circulation. Diluted earnings per share is calculated as net profit attributable to shareholders of Novozymes A/S divided by the average num- ber of shares in circulation, including the dilu- tive effect of stock options “in the money.” Accounting policies Accounting policies DKK million 2023 2022Net profit for the year 3,039 3,686Less net profit attributable to non-controlling interests (15) (10)Net profit attributable to the shareholders of Novozymes A/S 3,024 3,676Average number of sharesWeighted average number of shares in circulation 277,035,068 276,644,153Average dilutive effect of outstanding stock options and stock awards 839,903 2,089,765Average number of diluted shares 277,874,971 278,733,918Earnings per share, DKK 10.92 13.29Earnings per share, diluted, DKK 10.88 13.19 2.7 Tax (continued) Net operating profit after tax Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Note 3 Increase in average invested capital of DKK million ROIC before special items down from 17.9% in 2022 to Net investments excl. acquisitions down from DKK 2,862 million in 2022 to DKK million Invested capital 3.1 Intangible assets and impairment test of goodwill 3.2 Property, plant and equipment 3.3 Leases 3.4 Provisions 3.5 Business acquisitions 3.6 Contingent consideration The Novozymes Report 2023 Accounts and performanceGovernanceOur businessThe big picture Recognition of amortization and impairment losses by function 2023 (2022) DKK million Cost of goods sold 70 (117) Sales and distribution 73 (71) Research and development 124 (182) Administration 33 (37) 300 (407) Novozymes A/S 87Notes 3.1 Intangible assets and impairment test of goodwill Invested capital Impairment No impairment losses were recognized in 2023. In 2022, an impairment loss of DKK 28 million on a know-how asset was recognized as the use of this know-how asset ceased. The impairment loss was recognized in Cost of goods sold and Research and development costs at DKK 13 mil- lion and DKK 15 million respectively. Impairment test of goodwill An impairment test of goodwill of Novozymes’ cash-generating units (CGUs) is performed for the entire Group, as cost bases of the cash-gen- erating units cannot be measured at CGU level. As the market value of Novozymes is significantly higher than its equity, no further key assump- tions are used to determine whether impairment of goodwill exists (2022: no impairment). Acquired patents, trademarks, Completed IT IT development licenses and development projects in DKK million Goodwillknow-how, etc.projectsprogress TotalCost at January 1, 2023 2,007 4,969 941 180 8,097Currency translation adjustments (32) (45) - (1) (78)Additions during the year - 4 59 136 199Disposals during the year - (154) (8) - (162)Transfers to/(from) other items - - 50 (50) -Cost at December 31, 2023 1,975 4,774 1,042 265 8,056Amortization and impairment losses at January 1, 2023 (2,662) (737) (3,399)Currency translation adjustments 13 - 13Amortization during the year (198) (102) (300)Disposals during the year 154 8 162Amortization and impairment losses at December 31, 2023 (2,693) (831) (3,524)Carrying amount at December 31, 2023 B/S1,975 2,081 211 265 4,532 Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 88Notes 3.1 Intangible assets and impairment test of goodwill (continued) Invested capital Acquired patents, trademarks, Completed IT IT development licenses and development projects in DKK million Goodwillknow-how, etc.projectsprogress TotalCost at January 1, 2022 2,020 5,002 839 150 8,011Currency translation adjustments (11) (33) 1 2 (41)Additions from business acquisitions (2) - - - (2)Additions during the year - - 22 108 130Disposals during the year - - (1) - (1)Transfers to/(from) other items - - 80 (80) -Cost at December 31, 2022 2,007 4,969 941 180 8,097Amortization and impairment losses at January 1, 2022 (2,348) (639) (2,987)Currency translation adjustments (5) (1) (6)Amortization during the year (281) (98) (379)Impairment losses (28) - (28)Disposals during the year - 1 1Amortization and impairment losses at December 31, 2022 (2,662) (737) (3,399)Carrying amount at December 31, 2022 B/S2,007 2,307 204 180 4,698 Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 89Notes Intangible assets other than goodwill are meas- ured at cost less accumulated amortization and impairment losses. Goodwill and IT develop- ment projects in progress are not subject to amortization. Costs associated with large IT projects for the development of software for internal use are capitalized if incurred with a view to developing new and improved systems. Amortization is based on the straight-line method over the expected useful lives of the finite-lived assets, as follows: • Completed IT development projects are amortized over their useful lives. IT devel- opment assets are amortized over a period of 3–5 years. • Acquired patents, trademarks, licenses, know-how, customer relationships and brands are amortized over their useful lives. The useful lives of patents and trademarks are normally identical to the patent period. Licenses are amortized over the contractual period. Recognized patents, trademarks, licenses, know-how, customer relationships and brands are amortized over a period of 7–20 years. Expected useful lives are reassessed annually. The Group regularly reviews the carrying amounts of its finite-lived intangible assets to determine whether there is an indication of impairment. An impairment loss is recognized to the extent that the asset’s carrying amount exceeds its estimated recoverable amount. Impairment losses are reversed only to the extent of changes in the assumptions and esti- mates underlying the impairment calculation. Goodwill is tested for impairment annually or whenever there is an indication that it may be impaired. Accounting policies 3.1 Intangible assets and impairment test of goodwill (continued) Invested capital Management assesses the risk of impairment of the Group’s intangible assets. This requires judgment in relation to the identification of cash-generating units (CGUs) and the underly- ing assumptions in the Group’s impairment model. If there is any indication of impairment for intangible assets other than goodwill, value in use is estimated and compared with the carry- ing amount. The calculation of value in use is based on the discounted cash flow method using estimates of future cash flows from the continuing use. The key parameters are the expected revenue streams and the rate used to discount the cash flows. Critical accounting estimates and judgments Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Recognition of depreciation and impairment losses by function 2023 (2022) DKK million Cost of goods sold 824 (787) Sales and distribution 38 (37) Research and development 158 (164) Administration 69 (90) 1,089 (1,078) Novozymes A/S 90Notes Land and Plant and Other Assets under DKK millionbuildingsmachineryequipmentconstruction TotalCost at January 1, 2023 7,711 12,363 2,880 2,896 25,850Currency translation adjustments (167) (281) (62) (77) (587)Additions during the year 231 358 154 1,242 1,985Disposals during the year (53) (77) (156) - (286)Transfers to assets held for sale (323) (415) (5) - (743)Transfers to/(from) other items 950 1,260 85 (2,295) -Cost at December 31, 2023 8,349 13,208 2,896 1,766 26,219Depreciation and impairment losses at January 1, 2023 (3,712) (8,212) (1,852) (13,776)Currency translation adjustments 93 184 42 319Depreciation for the year (298) (555) (236) (1,089)Disposals during the year 37 67 137 241Transfer to assets held for sale 149 257 5 411Transfers to/(from) other items (4) 4 - -Depreciation and impairment losses at December 31, 2022 (3,735) (8,255) (1,904) (13,894)Carrying amount at December 31, 2023 B/S4,614 4,953 992 1,766 12,325 During the period 2021-2023, Novozymes was committed to establishing the new production line in Blair, Nebraska, U.S. An accumulated capital investment of DKK 2,130 million has been incurred since the investment was initiatied (2022: DKK 1,661 million). The production line was ready for production at the end of 2023. Capitalized interest and pledges Interest of DKK 45 million (2022: DKK 9 million) was capitalized under Additions during the year and recognized as Investing activities in the statement of cash flows. Capitalization rate: 2.28% (2022: 0.82%). Land and buildings with a carrying amount of DKK 1,296 million (2022: DKK 1,366 million) were pledged as security to credit institutions in respect of mortgage loans expiring in 2029 and 2039. 3.2 Property, plant and equipment Invested capital Impairment No impairment loss was recognized in 2023 or 2022. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 91Notes Land and Plant and OtherAssets under DKK millionbuildingsmachinery equipmentconstruction TotalCost at January 1, 2022 7,551 11,958 2,696 876 23,081Currency translation adjustments 86 185 38 25 334Additions from business acquisitions - (8) (1) - (9)Additions during the year 129 124 117 2,432 2,802Disposals during the year (178) (107) (73) - (358)Transfers to/(from) other items 123 211 103 (437) -Cost at December 31, 2022 7,711 12,363 2,880 2,896 25,850Depreciation and impairment losses at January 1, 2022 (3,571) (7,668) (1,657) (12,896)Currency translation adjustments (26) (90) (20) (136)Depreciation for the year (286) (550) (242) (1,078)Disposals during the year 171 96 67 334Depreciation and impairment losses at December 31, 2022 (3,712) (8,212) (1,852) (13,776)Carrying amount at December 31, 2022 B/S3,999 4,151 1,028 2,896 12,074 Contractual obligations Contractual obligations to third parties relating to property, plant and equipment amounted to DKK 252 million (2022: DKK 712 million). 3.2 Property, plant and equipment (continued) Invested capital Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 92Notes Property, plant and equipment is measured at cost less accumulated depreciation and impairment losses. Borrowing costs in respect of construction of major assets are capitalized. Depreciation is based on the straight-line method over the expected useful lives of the assets, as follows: • Buildings: 12–50 years • Plant and machinery: 5–25 years • Other equipment: 3–18 years The residual values and useful lives of the assets are reviewed on an annual basis and adjusted if necessary at each reporting date. The Group regularly reviews the carrying amounts of its property, plant and equipment to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is esti- mated in order to determine the extent of any impairment loss. If the recoverable amount of an asset is estimated to be lower than its car- rying amount, the carrying amount is reduced to the recoverable amount. Impairment losses are reversed only to the extent of changes in the assumptions and estimates underlying the impairment calculation. Accounting policies 3.2 Property, plant and equipment (continued) Invested capital DKK million 2023 2022Land and buildings 239 254Plant and machinery 82 87Other equipment 68 79Carrying amount of lease assets 389 420 DKK million 2023 2022Lease liabilitiesLess than 1 year 140 128Between 1 and 5 years 188 222More than 5 years 88 119Undiscounted lease liabilities at December 31 416 469 DKK million 2023 2022Amounts recognized in the income statement:Interest on lease liabilities 16 19Depreciation of lease assets per asset classLand and buildings 68 65Plant and machinery 5 5Other equipment 45 49Depreciation of lease assets 118 119Amounts recognized in the statement of cash flows:Total cash outflow for leases 139 139 Additions to the lease assets during 2023 amounted to DKK 128 million (2022: DKK 42 million). 3.3 Leases Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 93Notes Lease assets Lease assets are ‘right-of-use assets’ from lease agreements. If, at inception, it is assessed that a contract contains a lease, a lease asset is recognized. Lease assets are ini- tially measured at the present value of future lease payments, plus the cost of obligations to refurbish the asset. Payments include fixed payments, variable lease payments depending on an index or a rate and the exercise price of purchase options that are reasonably certain to be excercised. Lease assets are depreciated using the straight-line method over the shorter of the expected lease term and the useful life of the underlying asset. Lease assets are tested for impairment whenever there is an indication that the assets may be impaired. Lease assets are depreciated as follows: • Buildings: 1–12 years • Land: 10–90 years • Plant and machinery: 1–10 years • Other equipment: 1–10 years Short-term leases and leases of low value are recognized as expenses in the income state- ment on a straight-line basis over the lease term. Novozymes’ portfolio of leases covers leases of land, buildings, plant and machinery and other equipment such as cars and transporta- tion containers. Lease liabilities Lease liabilities are initially recognized at the present value of future lease payments includ- ing payments from extension or purchase options that are considered reasonably certain to be exercised. The lease liability is measured using the implicit borrowing rate in the contracts or, where this is not available, the marginal bor- rowing rate in the countries in which Novozymes operates. Novozymes applies a sin- gle discount rate to portfolios of leases in the countries in which Novozymes operates based on contract currency and loan periods. If a lease contract is modified, the lease liabil- ity is remeasured. For building leases, lease terms are estimated taking the size of the building and its strategic importance into con- sideration. Novozymes has entered into sev- eral open-ended building leases and building leases with extension options. Lease terms of such agreements are estimated based on the strategic importance of the buildings and the estimated time frame necessary to vacate the premises. The estimated lease term is reas- sessed at each reporting date. The estimated lease terms for such contracts do not exceed 12 years. Accounting policies 3.3 Leases (continued) Invested capital Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 94Notes Dismantling and restoration Dismantling and restoration relates to estimated future costs of environmental restoration. Novozymes aims for its production sites not to have a negative environmental impact. These lia- bilities relate to established circumstances, and the costs are expected to be incurred either when concrete measures are implemented or when a site is vacated. The expected costs and timing are inherently uncertain. Legal and other obligations Novozymes is involved in a number of ongoing legal disputes, and provisions are made for the estimated costs based on a current evaluation of the outcomes. Current ongoing cases are expected to be finalized in 2024–2025. In Management’s opinion, the outcomes of these cases are not expected to give rise to any signifi- cant losses beyond the amounts provided for at December 31, 2023. Provisions are recognized where a legal or constructive obligation has been incurred as a result of past events and it is proba- ble that it will lead to an outflow of finan- cial resources. Provisions are measured at the present value of the expected expend- iture required to settle the obligation. Accounting policies 2023 2022Dismantling Legal and other Dismantling Legal and other DKK millionand restorationobligations Totaland restorationobligations TotalProvisions at January 1 58 71 129 56 118 174Currency translation adjustments (2) - (2) 2 (2) -Additions from business acquisitions - - - - (35) (35)Additions during the year - 9 9 - 3 3Reversals during the year (5) (19) (24) - (13) (13)Utilization during the year - - - - - -Provisions at December 31 51 61 112 58 71 129Recognized in the balance sheet as follows:Non-current 46 54 110 52 67 119Current 5 7 12 6 4 10Provisions at December 31 51 61 112 58 71 129 Other obligations include other long-term employee benefits and other contractual obliga- tions. Other long-term employee benefits account for only a minor amount, as most of Novozymes’ pension plans are defined contribution plans, covering almost all employees. These obligations are mainly expected to be incurred over a rela- tively long period of time. 3.4 Provisions Invested capital Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 95Notes Acquisition after December 31, 2023 On January 29, 2024, the final regulatory approvals were obtained and the final registra- tion of the statutory merger between Novozymes A/S (“Novozymes”) and Chr. Hansen Holding A/S (“Chr. Hansen”) successfully completed with the Danish Business Authority. The combination of Novozymes and Chr. Hansen will create a leading global biosolutions partner with a broad biological toolbox and a diversified portfolio in attractive markets. The combination is an important step towards unlocking addi- tional growth opportunities as the combined scale, know-how, commercial strengths, and innovation excellence will drive value for the shareholders, customers, and society at large. The statutory merger was effected through an exchange of all shares of Chr. Hansen (“Chr. Hansen Shares”) with a total of 187,298,646 Merger Consideration Shares. The total consider- ation for Chr. Hansen Holding A/S amounts to DKK 67.7 billion based on a share price of DKK 361.4. The merger will be accounted for as a business combination using the acquisition method under IFRS 3 where Novozymes A/S was identifies as the acquirer and Chr. Hansen Holding A/S was identified as the acquiree. The combination of Novozymes and Chr. Hansen only just closed on January 29, 2024. Management has not had access to financial information in Chr. Hansen prior to closing and therefore a provisional purchase price allocation has not been prepared and no further disclo- sures are available. 3.5 Business acquisitions Fair value measurement of the acquired assets and liabilities as well as contingent consideration requires Management to make estimates and use assumptions, as observable market prices are not available. The deter- mined fair values are associated with uncer- tainty and may be subject to subsequent adjustments. Critical accounting estimates and judgments On acquisition of companies, the identifiable assets acquired and the liabilities and contin- gent liabilities assumed are recognized at their fair values at the acquisition date. The consideration transferred includes the fair value at the acquisition date of any contin- gent consideration arrangement. Non-controlling interests in an acquired com- pany is recognized either at fair value or at the non-controlling interest’s proportionate share of the acquired company’s net identifi- able assets. This decision is made on an acquisition-by-ac- quisition basis. Goodwill may subsequently be adjusted for changes in the fair value of the consideration transferred and/or changes in the fair value of the identifiable net assets acquired until 12 months after the acquisition date, to the extent such changes relate to facts and cir- cumstances present at the acquisition date. Acquired companies are consolidated from the date of acquisition. Acquisition-related costs are expensed as incurred. Accounting policies Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Invested capital Novozymes A/S 96Notes 3.6 Contingent consideration DKK million 2023 2022Contingent consideration at January 1 382 543Currency translation adjustments (3) 19Interest on contingent consideration 16 43Fair value adjustment of contingent consideration (165) (223)Contingent consideration paid (158) -Contingent consideration at December 31 72 382Recognized in the balance sheet as follows:Non-current B/S- 224Current B/S72 158Contingent consideration at December 31 72 382 PrecisionBiotics Group The purchase agreement for PrecisionBiotics Group includes a contingent consideration of up to DKK 242 million. The consideration is contingent on the achieve- ment of sales targets for 2023 and recognized at the anticipated fair value of DKK 72 million (2022: DKK 224 million). Based on the lower- than-expected realized sales in 2023, Management reassessed the value of the earn- out and reduced the contingent consideration by DKK 165 million (2022: DKK 0 million). Management’s long-term expectations for PrecisionBiotics Group remain intact. The fair value adjustment was recognized in Financial income. Fair value is assessed by using the earn-out from the realized sales in 2023 discounted at a rate of 7% (2022: 7%). An interest expense of DKK 12 million has been recognized in Financial costs (2022: DKK 14 million). The contingent liability related to PrecisionBiotics Group is denominated in EUR. Invested capital Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 97Notes Microbiome Labs The contingent consideration related to Microbiome Labs of DKK 158 million was paid in 2023. In 2022, the consideration was contingent on the achievement of realized sales for 2022 and was recognized at the anticipated fair value of DKK 158 million. In 2022, Management reassessed the value of the earn-out due to lower-than-expected sales and reduced the contingent consideration by DKK 223 million. The fair value adjustment in 2022 was partly offset by interest and currency translation adjustments. Fair value of contingent consideration is based on non-observable data (level 3 input) that requires Management to make estimates and use assumptions. Estimates are based on updated information after the initial recogni- tion of the liability, such as budgets, sales fore- casts, discount rates etc. The fair value of the contingent consideration is calculated as the present value of the most probable redemption amount using the discounted cash flow method. The determined fair value is associ- ated with uncertainty and may be subject to subsequent adjustments. Critical accounting estimates and judgments Management’s long-term expectations for Microbiome Labs remain intact. The fair value adjustment was recognized in Financial income. The fair value was assessed by using the earn-out from the realized sales in 2022 discounted at a rate of 8% (2022: 8%). An interest expense of DKK 4 million (2022: DKK 29 million) was recog- nized in financial costs. The contingent liability related to Microbiome Labs was denominated in USD and decreased by DKK 4 million (2022: increased by DKK 20 million) due to currency translation adjustments. Contingent consideration is remeasured at fair value at each reporting date. Interest and fair value adjustments resulting from events after the acquisition date are recognized in Financial income or Financial costs. Accounting policies 3.6 Contingent consideration (continued) Invested capital Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Note 4 Net working capital as % of sales up from 24% in 2022 to Average net working capital up from 3,890 DKK million in 2022 to DKK million Inventories decreased from DKK 3,803 million in 2022 to DKK million Net working capital 4.1 Inventories 4.2 Trade receivables and contract assets 4.3 Other receivables 4.4 Other liabilities 4.5 Assets held for sale Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 99Notes Net working capital DKK million 2023 2022Raw materials and consumables 446 603Work in progress 1,312 1,333Finished goods 1,869 1,867Inventories at December 31 B/S3,627 3,803Cost of materials, included under Cost of goods sold 4,792 4,770Indirect production costs capitalized in inventories at December 31 1,114 1,053Write-downs expensed during the year 182 102Reversal of write-downs during the year 58 44 * Part of the reversal of write-downs is attributable to written-down inventory being reused in production. Work in progress and Finished goods are meas- ured at cost, including indirect production costs. Indirect production costs are assessed on an ongoing basis to ensure reliable meas- urement of employee costs, capacity utilization, cost drivers and other relevant fac- tors. Changes in these parameters may have an impact on the gross margin and the overall val- uation of Work in progress and Finished goods. Critical accounting estimates and judgments Inventories are measured at the lower of cost determined on a first-in first-out basis and net realizable value. The cost of Work in progress and Finished goods comprises direct production costs such as raw materials and consumables, energy and labor directly attributable to pro- duction as well as indirect production costs such as employee costs, maintenance and depreciation of plants, etc. If the expected selling price less any comple- tion costs and costs to execute the sale (net realizable value) of inventories is lower than the carrying amount, inventories are written down to net realizable value. Novozymes has entered into a few agree- ments where Novozymes supplies goods to a customer’s premises but retains title to the inventory until the goods are consumed in the customer’s production. Such goods are derecognized from inventories in the period when they are consumed in the customer’s production. Accounting policies 4.1 Inventories Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 100Notes DKK million 2023 2022Trade receivables, gross 3,850 3,590Allowances (148) (136)Trade receivables at December 31 B/S3,702 3,454Aging of trade receivables, gross:Up to 30 days 3,598 3,350Between 30 and 90 days 74 74More than 90 days 178 166Trade receivables, gross, at December 31 3,850 3,590Changes in allowances for trade receivables:At January 1 136 151Allowances during the year 43 51Write-offs during the year (22) (35)Reversed allowances (9) (31)Allowances at December 31 148 136 Contract assets Contract assets amounted to DKK 70 million at December 31, 2023 (2022: DKK 151 million), and mainly related to goods delivered but not invoiced, and estimated profit splits arising from partner- ships that Novozymes has entered into. The contract assets are initially recognized as revenue when goods are delivered to the other contracting party. When invoiced, the contract assets are reclassified to trade receivables. No allowance for expected credit losses had been made for contract assets at December 31, 2023 (2022: no allowance). The allowance for expected credit losses for trade receivables and contract assets is based on historical credit loss experience combined with forward-looking information on macroeconomic factors affecting the credit risk. The expected loss rates are updated at each reporting date. Critical accounting estimates and judgments Trade receivables and contract assets are measured at amortized cost less allowance for lifetime expected credit losses. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and days past due. Furthermore, an allowance for life- time expected credit losses for trade receiva- bles is recognized on initial recognition. For contract assets, the credit risk is based on an individual assessment. Trade receivables and contract assets are written off when all possible options have been exhausted and there is no reasonable expectation of recovery. The cost of allowances for expected credit losses and write-offs for trade receivables and contract assets are recognized in Sales and distribution costs. Accounting policies Net working capital 4.2 Trade receivables and contract assets Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 101Notes 4.3 Other receivables 4.4 Other liabilities DKK million 2023 2022Deposits 42 32Prepaid expenses 157 174Other 123 186Other receivables at December 31 322 392Recognized in the balance sheet as follows:Non-current B/S43 32Current B/S 279 360Other receivables at December 31 322 392 DKK million 2023 2022Employee costs payable 797 672Stock-based payment settled in cash 23 21Other payables 636 727Other liabilities at December 31 1,456 1,420Recognized in the balance sheet as follows:Current B/S1,456 1,420Other liabilities at December 31 1,456 1,420 Net working capital DKK million 2023 2022Carrying amount of non-current assets held for sale:Land and buildings 174 -Plant and machinery 158 -Total B/S332 - Assets held for sale comprise assets related to the divestment of part of the global lactase enzyme business and the relocation of the head- quarter from Bagsværd to Lyngby following the combination with Chr. Hansen. A definitive agree- ment to sell the lactase enzyme business has been entered into with Kerry Group plc. Assets held for sale are expected to be sold in 2024. Non-current assets are classified as assets held for sale when their carrying amounts are to be recovered principally through a sale transaction and a sale is considered highly probable. Such assets are stated at the lower of the carrying amount and fair value less costs to sell. Accounting policies 4.5 Assets held for sale Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Note 5 Capital structure and financing 5.1 Financial risk factors and risk management 5.2 Financial income and Financial costs 5.3 Borrowings 5.4 Derivatives – hedge accounting 5.5 Common stock and treasury stock 5.6 Financial assets and liabilities by category NIBD/EBITDA increased from 1.0x in 2022 to Return on equity down from 28.6% in 2022 to Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 103Notes Foreign exchange sensitivity analysis 2023 2022Change inChange inIncrease inother other exchangeChangecomprehensiveChangecomprehensiveDKK millionratesin net profitincomein net profitincomeINR 5.0% (1) - 4 -CNY 5.0% (2) - (5) -USD 5.0% 1 (113) (3) (117)Other 5.0% (3) - 4 -Total (5) (113) - (117) Capital structure and financing Due to the international nature of Novozymes’ operations, our earnings and financial position are exposed to a number of financial risk factors. Financial risks are managed centrally for the entire Group. The Treasury Policy is approved by the Board of Directors and sets the limits for the various financial risks and the derivatives used to hedge risk. The Treasury Policy is adjusted on an ongoing basis and adapted to the market situa- tion. It contains rules for which derivatives can be used for hedging, which counterparties can be used, and the risk profile that is to be applied. Currency risk Currency risk arises due to imbalances between cash flows. Treasury will hedge expected net exposure (cash flow exposure), if it is determined that a move- ment in a foreign exchange rate will have a mate- rial impact on expected earnings/cash flow. Hedging of currency risk is carried out in the cur- rencies in which Novozymes has the largest expo- sures. Hedging is managed by entering into deriv- atives such as forward contracts, currency options and swaps. Loans and deposits in foreign currencies are also utilized for hedging purposes. Hedge effectiveness is assessed on a regular basis by comparing changes in the timing and value of the expected exposure in the relevant currencies with the timing and value changes for the designated cash flow hedging transaction. Where deemed appropriate, currency risk related to net investments in foreign subsidiaries is hedged by taking out loans and entering into swaps. Currently, there are no open transactions used to hedge equity investments. Foreign exchange sensitivity – 2023 The sensitivity analysis shows the impact on net profit and other comprehensive income of a 5% change in DKK versus the key currencies to which Novozymes was exposed on December 31, 2023. The sensitivity analysis comprises effects from the Group’s cash, trade receivables, trade paya- bles, loans, current and non-current financial investments, lease liabilities and derivatives. Anticipated currency transactions, investments in foreign subsidiaries and non-current assets are not included. The sensitivity analysis assumes that exchange rates change on December 31, 2023, while all other variables remain constant. The table shows the effect of an increase in exchange rates. A decrease in the exchange rates would have the opposite effect. Foreign exchange sensitivity – 2024 estimate Operating profit (EBIT) is exposed to exchange rate developments, as the effect of hedges is included in financial income/costs. EBIT is mainly exposed to USD and EUR. A movement of 5% in the USD/DKK exchange rate would result in a change in the expected EBIT for 2024 of around DKK 150-180 million (2023: DKK 130-160 million). A 5% movement in the EUR/DKK exchange rate would result in a change in expected EBIT for 2024 of around DKK 200 million (2023: DKK 200 million). Of the expected USD cash flows for 2024, 88% has been hedged by forward contracts at an average rate of DKK 6.75. As a result, the impact on net profit from changes in the USD/DKK exchange rate has been reduced significantly compared with the impact on EBIT. 5.1 Financial risk factors and risk management Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 104Notes 5.1 Financial risk factors and risk management (continued) Interest rate risk Interest rate risk arises in relation to interest- bearing assets and liabilities. In accordance with Novozymes’ Treasury Policy, a minimum of 30% of loans must be at fixed interest rates. Hedging of the interest rate risk is managed by entering into fixed-rate loans and interest rate swaps. At December 31, 2023, 53% (2022: 62%) of the loan portfolio carried fixed interest rates. With the current hedging of interest rate risk, an increase of 1 percentage point in the average interest rate on Novozymes’ net interest-bearing debt would have a negative effect on net profit of DKK 23 million (2022: negative effect of DKK 14 million). Credit risk Credit risk arises especially on cash and cash equivalents, derivatives, trade receivables and contract assets. The credit risk on trade receiva- bles is countered by thorough, regular analysis based on customer type, country and specific conditions. The credit risk on cash and cash equivalents as well as derivatives is mitigated by the Treasury Policy, which limits exposure solely to counterparties that have an investment-grade credit rating. The credit risk is calculated on the basis of net market values and is governed by the Treasury Policy. Novozymes has entered into net- ting agreements (ISDA or similar) with all the banks used for trading in financial instruments, which means that Novozymes’ credit risk is lim- ited to net assets. At December 31, 2023, the Group considered its maximum credit risk to be DKK 5,155 million (2022: DKK 5,036 million), which is the total of the Group’s financial assets. At December 31, 2023, the maximum credit risk related to one counterparty was DKK 440 million (2022: DKK 386 million). Liquidity risk In connection with the Group’s ongoing financing of operations, including refinancing, efforts are made to ensure adequate and flexible liquidity. This is guaranteed by using committed credit facilities and placing free funds in deposits, gov- ernment bonds or ultra-liquid mortgage bonds in accordance with the Treasury Policy. At December 31, 2023, Novozymes’ financial resources amounted to DKK 6,372 million (2022: DKK 18,543 million), consisting of net cash, cash equivalents, and undrawn committed credit facil- ities of DKK 5,256 million, which expire in 2024– 2027. The decrease in undrawn committed credit facilities compared to 2022 is related to the facil- ity obtained to refinance existing debt following completion of the combination of Novozymes and Chr. Hansen. The facility was reduced by DKK 12,000 million during 2023. With the exception of debt to credit institutions, the maturity dates are primarily within one year. Capital structure Novozymes favors having a conservative balance sheet, which is reflected by a target for net inter- est-bearing debt of around 1x EBITDA. The tar- get has been adjusted to 1.3-1.7x after the com- bination with Chr. Hansen in 2024. At December 31, 2023, the ratio was 1.2x and thus the target is considered as met in 2023. The capital struc- ture is mainly managed using two instruments: 1) Dividend payments, through which Novozymes aims for a payout ratio of around 50%. In October 2023, an interim dividend of DKK 4.20 per share was paid out for the period January 1 - August 31, 2023, and proposed dividend for the period September 1 - December 31, 2023 will be announced by the Board of Directors of Novonesis in connection with the notice of the Annual Shareholders’ Meeting. The payout ratio for 2023 based on reported net profit adjusted for special items is expected to be in line with the communicated target. 2) Stock buybacks. No pro- gram were executed in 2023 due to the combina- tion with Chr. Hansen. Capital structure and financing Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 105Notes DKK million 2023 2022Interest income 90 18Fair value adjustments of contingent consideration 165 223Gains on cash flow hedges 25 -Gains on minority ownership investments 2 267Fair value adjustments of cash-settled stock options - 25Financial income I/S282 533Interest costs (141) (40)Interest on lease liabilities (16) (19)Interest on contingent consideration (16) (43)Losses on cash flow hedges - (295)Losses on fair value hedges (60) (20)Losses on minority ownership investments (15) -Other financial costs (66) (99)Other foreign exchange losses, net (16) (15)Fair value adjustments of cash-settled stock options (1) -Financial costs I/S(331) (531)Financial income/(costs), net (49) 2 Financial income and Financial costs com- prise interest income and interest costs, real- ized and unrealized foreign exchange gains and losses, gains and losses on other finan- cial assets, as well as fair value adjustments of cash-settled stock-based incentive pro- grams and contingent consideration, which are offset against Other liabilities and fair value adjustments of Other financial assets. Interest income and Interest costs are meas- ured at amortized cost for financial assets and liabilities. Financial income and Financial costs also include fair value adjustments of derivatives used to hedge assets and liabilities, and income and costs relating to cash flow hedges that are transferred from Other comprehen- sive income on realization of the hedged item. Accounting policies 5.2 Financial income and Financial costs Capital structure and financing In 2022, Novozymes divested its minority share in Albumedix, a company built using Novozymes’ technology platform. The sale resulted in a finan- cial gain of DKK 267 million. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Capital structure and financing Novozymes A/S 106Notes DKK million 2023 2022Credit institutions 7,364 6,437Derivatives 48 101Borrowings at December 317,412 6,538Recognized in the balance sheet as follows:Non-current B/S4,329 3,619Current B/S3,083 2,919Borrowings at December 31 7,412 6,538 2023 2022Credit Lease Credit Lease DKK million institutionsliabilities Total institutionsliabilities TotalLiabilities from financing activities at January 1 6,437 411 6,848 5,706 482 6,188Financing cash flows 923 (123) 800 731 (120) 611Currency translation adjustments 4 (9) (5) - 10 10Other changes - 90 90 - 39 39Total liabilities from financing activities at December 31 7,364 369 7,733 6,437 411 6,848 * Other changes include changes in lease liabilities from new or terminated leases and accrued interest expenses which will be presented as operating cash flows in the statement of cash flows when paid. 5.3 Borrowings Credit institutions - currency 2023 (2022) DKK million EUR 2,329 (2,147) DKK 5,035 (4,290) 7,364 (6,437) Credit institutions - time to maturity 2023 (2022) DKK million Less than 1 year 3,036 (2,818) Between 1 and 5 years 2,496 (2,301) More than 5 years 1,832 (1,318) 7,364 (6,437) Loan portfolio - fixed or floating interest rate 2023 (2022) DKK million Fixed interest rate 3,884 (3,979) Floating interest rate 3,480 (2,458) 7,364 (6,437) Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 107Notes Fair value hedges The table above shows the derivatives the Group has contracted in order to hedge currency expo- sure on financial assets and liabilities that give rise to currency adjustments in the income state- ment. The forward exchange contracts mature in the period January 2024 to July 2024 (2022: January 2023 to August 2023). 2023 2022Contract amount based Contract amount based DKK millionon agreed rates Fair valueon agreed rates Fair value Forward exchange contractsCNH (655) (10) (618) (13)BRL 55 - 165 2USD 710 5 (228) (20)INR 278 5 374 23Other (purchase) (47) 1 (53) -Other (sale) 90 - 74 1Fair value hedges at December 31 431 1 (286) (7) * Positive contract amounts represent a sale of the respective currency, and negative amounts represent a purchase. The fair value hedges were 100% effective, as the loss on forward exchange contracts was DKK 60 million (2022: loss of DKK 20 million), com- pared with a gain on hedged items of DKK 60 mil- lion (2022: gain of DKK 20 million). 5.4 Derivatives – hedge accounting Capital structure and financing Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 108Notes 2023 2022Contract amount based Contract amount based DKK millionon agreed rates Fair value on agreed rates Fair valueForward exchange contractsUSD 2,268 20 2,344 162,268 20 2,344 16Interest rate swapsDKK/DKK – pays fixed rate of (0.1075%) / earns variable rate of 3.9% (2022: (2.42%)) 400 31 400 51DKK/DKK – pays fixed rate of 0.595% / earns variable rate of 4.1233 % (2022: (2.45%)) 174 7 243 12574 38 643 63ForwardsElectricity price agreements – average payment of DKK 1,021 / MWh 72 (30) 85 (31)72 (30) 85 (31)Cash flow hedges at December 31 2,914 28 3,072 48 * Positive contract amounts represent a sale of the respective currency, and negative amounts represent a purchase. 5.4 Derivatives – hedge accounting (continued) Capital structure and financing Hedge accounting consists of positive and negative fair values of derivatives, which are recognized in the balance sheet under Other financial assets and Borrowings respectively. Derivatives are recognized at the transaction date. Derivatives used for fair value hedges are measured at fair value at the reporting date, and value adjustments are recognized as Financial income or Financial costs. Derivatives used for cash flow hedges and hedges of net investments in subsidiaries are measured at fair value at the reporting date, and value adjustments are recognized in Other comprehensive income. Income and costs relating to cash flow hedges and hedges of net investments in subsidiaries are transferred from Other com- prehensive income. On realization, foreign exchange contracts and interest rate swaps are recognized as Financial income and Financial costs, and electricity price agree- ments covering production-related electricity are recognized as part of Cost of goods sold. Accounting policies Cash flow hedges The table above shows the derivatives the Group has contracted to hedge currency, interest rate and electricity price exposure in future cash flows. The forward exchange contracts mature in the period January 2024 to December 2024 (2022: January 2023 to December 2023), the swaps mature in May 2026 and December 2026 (2022: May 2026 and December 2026) and the electricity price agreements mature in the period January 2024 to December 2024 (2022: January 2023 to June 2023). At the end of 2023, the Group had hedged 88% of expected future cash flows in USD for 2024 at an average rate of DKK 6.75 (2022: 88% of expected future cash flows in USD for 2023 at an average rate of DKK 6.98). Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Treasury stock 2023 % of common stock Disposals during the year Treasury stock at Jan. 1, 2023 Treasury stock at Dec. 31, 2023 1.6 (0.3) 1.3 Treasury stock 2022 % of common stock Disposals during the year Additions during the year Treasury stock at Jan. 1, 2022 Cancellation of common stock Treasury stock at Dec. 31, 2022 1.7 0.4 (0.2) (0.3) 1.6 Novozymes A/S 109Notes 2023 2022Nominal valueNominal valueDKK million No.DKK million No.DKK millionCommon stockA common stock (shares of DKK 2) 53,743,600 107 53,743,600 107B common stock (shares of DKK 2) 227,256,400 455 227,256,400 455Common stock at December 31 281,000,000 562 281,000,000 562Treasury stock - B stockTreasury stock at January 1 4,401,011 9 4,894,362 10Additions during the year - - 1,134,982 2Disposals during the year (718,457) (2) (628,333) (1)Cancellation of common stock - - (1,000,000) (2)Treasury stock at December 31 3,682,554 7 4,401,011 9 No. 2023 2022Shares of common stock in circulationShares of stock at January 1 276,598,989 277,105,638Purchase of treasury stock - (1,134,982)Sale of treasury stock 718,457 628,333Shares of common stock in circulation at December 31 277,317,446 276,598,989 Each A share entitles the holder to 20 votes, while each B share entitles the holder to two votes. Each year, the Board of Directors assesses whether the ownership structure with A and B common stock is optimal. The Board of Directors continues to believe that this is the best way to safeguard Novozymes’ long-term development to the benefit of the company’s shareholders and other stakeholders. Treasury stock is used to reduce the common stock and to hedge employees’ exercise of granted stock awards and stock options. In 2024, Novozymes has issued 187,298,646 B shares, increasing the common stock to 468,298,646 million shares. The share issue relates to the combination with Chr. Hansen and is further described in Note 3.5. 5.5 Common stock and treasury stock Capital structure and financing Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 110Notes DKK million Note 2023 2022Trade receivables 4.2 3,702 3,454Contract assets 4.2 70 151Other receivables, excl. prepaid expenses 4.3 165 218Cash and cash equivalents 1,116 1,041Financial assets at amortized cost5,053 4,864Derivatives 14 28Other financial assets 25 30Fair value through profit and loss 39 58Derivatives 63 114Fair value through other comprehensive income 63 114Financial assets 5,155 5,036 DKK million Note 2023 2022Lease liabilities 5.3 (369) (411)Credit institutions 5.3 (7,364) (6,437)Trade payables (1,616) (1,869)Other payables 4.4 (636) (727)Financial liabilities at amortized cost(9,985) (9,444)Derivatives 5.3 (13) (35)Contingent consideration 3.6 (72) (382)Fair value through profit and loss (85) (417)Derivatives 5.3 (35) (66)Fair value through other comprehensive income (35) (66)Share purchase liability 6.5 (584) (760)Fair value through equity (584) (760)Financial liabilities (10,689) (10,687) Fair value hierarchy Novozymes has no financial instruments meas- ured at fair value on the basis of quoted prices (level 1 input). For financial assets and financial liabilities meas- ured at amortized cost (level 2 input), the carry- ing amounts approximate fair value. Derivatives are measured at fair value based on observable data (level 2 input). The derivatives are not traded in an active market based on quoted prices but on individual contracts. The fair value of these assets is determined using valuation techniques that utilize market-based data such as exchange rates, interest rates, credit risk, electricity prices and volatilities. Other financial assets, contingent considerations and share purchase liability are measured at fair value based on non-observable data (level 3 input). Reference is made to Notes 3.6 and 6.5 for a description of their fair value measurement. 5.6 Financial assets and liabilities by category Capital structure and financing Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Note 6 6.1 Management remuneration 6.2 Stock-based payment 6.3 Contingent liabilities and pending litigation 6.4 Related party transactions 6.5 Non-controlling interests 6.6 Fees to statutory auditors 6.7 Cash flow 6.8 Events after the reporting date 6.9 Group companies Grant date fair value of options granted in 2023 in DKK million Realized Group audit fee ratio during 2023 No. of Danish and foreign subsidiaries in the Group Other financial notes Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 112Notes 6.1 Management remuneration Other financial notes General guidelines for the remuneration of the Board of Directors and the Executive Management of Novozymes A/S, as assessed by the Board of Directors in accordance with the recommendations of the Nomination and Remuneration Committee, are approved at the Annual Shareholders’ Meeting. A summary of the Management remuneration can be found in the Governance section of The Novozymes Report. Executive Management Members of the Executive Management receive fixed remuneration comprising a base salary, pension, and benefits. Further, significant pro- portions of their remuneration packages are based on performance-related pay through short and long-term incentives. Most of the variable remuneration is weighted towards the long term, in line with Novozymes’ strategic focus and mir- roring the long-term nature of Novozymes’ investments in the business. The short and long-term incentive programs are designed to incentivize performance against selected financial, environmental, social and operational key performance indicators and indi- vidual objectives, which are directly linked to Novozymes’ strategy, and to incentivize long- term value creation and alignment with the long- term interests of shareholders, customers and other stakeholders. The annual cash bonus can- not exceed 9.5 months’ fixed base salary, of which 65% is expected to be payable at target performance. The stock-based incentive pro- grams are described in Note 6.2. Members of the Executive Management have contracts of employment containing standard conditions for executives of Danish listed compa- nies, including the periods of notice that both parties are required to give, and noncompetition clauses. If an executive officer’s contract of employment is terminated by the company with- out any misconduct on the part of the executive officer, the executive officer has a notice period of 12 months. In addition to the notice period, the executive officer has a right to termination compensation of 12 months’ base salary and pension contributions. Board of Directors The remuneration of the Board of Directors com- prises a fixed fee and is not based on incentives. Changes to the Executive Management In November 2023, Rainer Lehmann, joined Novozymes as new Chief Financial Officer. Rainer Lehmann replaced CFO Lars Green, who left Novozymes at the end of 2023 to pursue a non-executive career. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 2023 2022Board of Executive Board of Executive DKK million DirectorsManagement Total DirectorsManagement TotalSalaries and other short-term benefits 10 17 27 10 15 25Defined contribution plans - 2 2 - 2 2Cash bonus - 12 12 - 11 11Expensed stock-based incentive programs - 18 18 - 16 16Remuneration 10 49 59 10 44 54Compensation for lost incentives/Sign-on bonus 8 8 8 8Remuneration including additional payments 10 57 67 10 52 62No. of members at December 31 10 2 11 2 Novozymes A/S 113Notes New programs Novozymes has established stock-based incen- tive programs for the Executive Leadership Team, vice presidents, directors and other employees. The purpose of these programs is to ensure an alignment of interests of the Management, employees and shareholders. Allocation of pro- grams has been, and remains, dependent on profit, value creation and, in most cases, sustain- ability targets being achieved, and are made based on individual base salaries. The exercise price and the share price of a stock option are identical at the date of grant. In order to exercise the options, the employees must still be employed at the exercise date. This does not apply to persons who have retired, taken volun- tary early retirement or been given notice. The 2023 program for the Executive Leadership Team covering the performance period 2023-2025 is a combination of stock options and stock, with half of the incentive program allocated in stock options and half in stock. The total number of stock options and stock achievable is divided into two categories: ‘target stock options and target stock’ and ‘extra stock options and extra stock’. The target stock options, and target stock corre- spond to 65% of the maximum stock options and stock, and extra stock options and extra stock The total target-level fair value of the program at the date of grant was approximately DKK 42 mil- lion. The value of the stock will be expensed over the three-year qualifying period (2023–2025) and will be released in 2026. The stock options have a vesting period of four years, followed by an exercise period of five years. The fair value of the stock options will be expensed over the four- year vesting period. A new program was also established in 2023 for vice presidents and directors covering the perfor- mance period 2023–2025 (207 vice presidents and directors). The total target level fair value at grant date was approximately DKK 55 million and based on the same requirements and targets as for the Executive Leadership Team. The program is a combination of stock options and stock, with half of the incentive program allocated in stock and half in stock options. The stock options have a four-year vesting period, while the stock will be released in 2026. The program contains a maximum-value clause, allowing the Executive Leadership Team to choose to limit the total allocation of stock and stock options if the intrinsic value of the program exceeds twice the annual conditional grant. correspond to 35% of the maximum stock options and stock. The targets have 40% weight on organic sales growth, 20% weight on EBIT margin before special items, 20% weight on ROIC, and 20% weight on non-financial targets. The non-financial targets are measured in relation to Climate, Water stewardship, Workspace and Diversity. Each of the targets has a weight of 5%. The performance tar- gets are as protocolled in the minutes of the board meeting approving the annual group financial statement for the year prior to the performance period. • If Novozymes manages to outperform the tar- gets, some or all of the extra stock options and extra stock may be granted. • If Novozymes does not meet the targets for 2023–2025 or if Novozymes is significantly below the targets on one or more of the tar- gets, then none or only part of the target stock options and the target stock will be granted. The program contains a maximum-value clause, allowing the Board of Directors to choose to limit the total allocation of stock options and stock if the intrinsic value of the program exceeds twice the annual conditional grant. Finally awarded programs Awards in the programs covering the perfor- mance period 2021–2023 were finalized in 2023. Average organic sales growth during the three- year period was 6.7%, resulting in 100% of the sales growth pool (40% of the total program) being awarded. The accumulated economic profit generated in the three-year period (2021–2023) was DKK 7.1 billion, resulting in 100% of the eco- nomic profit pool (40% of the total program) being awarded. 82% of the sustainability targets were reached (20% of the total program). In total, 96% of the maximum of the program is being awarded. For the Executive Leadership Team, this means that a total of 57,324 shares will be released in February 2024. The number of stock options granted over the three-year period is 326,398 reflecting the realized target achievement. The program contains a maximum-value clause, allowing the Board of Directors to choose to limit the total allocation of stock and stock options if the intrinsic value exceeds twice the annual con- ditional grant at the end of the program. There will be no limitation on the total allocation, as the intrinsic value is DKK 26 million. 6.2 Stock-based payment Other financial notes Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 114Notes 6.2 Stock-based payment (continued) The program for vice presidents and directors fol- lows the same requirements and targets as the program for the Executive Leadership Team. The final number of shares allocated under this pro- gram is 92,816, which was released in February 2024. The number of stock options granted over the three-year period is 528,062, reflecting the realized target achievement of 96%. Awards in the program for other employees cover- ing the performance period 2021–2023 were also finalized in 2023. The number of stock options granted over the three-year period is 776,535, reflecting the realized target achievement of 96%. Other financial notes Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 115Notes 6.2 Stock-based payment (continued) Other financial notes Stock options The number of outstanding options (excl. stock awards) has developed as follows: Number of options DKK DKK million Executive Leadership Team Vice presidents and directors Other employees Total Avg. exercise price per option Grant date fair value per option Grant date fair value total Outstanding at January 1, 2023 1,154,235 3,577,131 2,544,891 7,276,257 331 Change in Management (170,285) 170,285 - - Granted 189,134 318,128 - 507,262 355 98 50 Allocation adjustment 105,399 170,568 252,676 528,643 382 67 35 Exercised (14,382) (404,669) (230,309) (649,360) 271 Forfeited - (26,553) (113,148) (139,701) 383 Expired - (2,326) (37,945) (40,271) 244 Outstanding at December 31, 2023 1,264,101 3,802,564 2,416,165 7,482,830 341 Outstanding at January 1, 2022 899,295 3,761,733 2,349,300 7,010,328 312 Granted 235,877 318,779 557,898 1,112,554 416 82 92 Allocation adjustment 19,063 19,439 32,382 70,884 351 48 3 Exercised - (414,669) (222,654) (637,323) 264 Forfeited - (98,188) (165,200) (263,388) 366 Expired - (9,963) (6,835) (16,798) 275 Outstanding at December 31, 2022 1,154,235 3,577,131 2,544,891 7,276,257 331 Number of exercisable options at December 31, 2023 2,775,168 279 Number of exercisable options at December 31, 2022 2,534,562 278 1. The allocation of stock options for 2023–2025 will be adjusted in January 2026 based on the cumulative level of target achievement for the period. 2. The allocation of stock options for 2021–2023 has been adjusted based on the realized level of target achievement for the period (96%). 3. The weighted average share price for stock options exercised during 2023 was DKK 352 (2022: DKK 433). 4. The allocation of stock options for 2022–2024 will be adjusted in January 2025 based on the cumulative level of target achievement for the period. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 116Notes For stock options outstanding at December 31, 2023, the range of exercise prices is DKK 249- 486 per option (2022: DKK 233-486 per option), and the weighted average remaining term to maturity is five years (2022: five years). During 2023, DKK 151 million arising from stock- based payment was recognized in the income statement (2022: DKK 127 million), DKK 147 mil- lion of which was from equity-settled programs (2022: DKK 123 million) and DKK 4 million was from cash-settled programs (2022: DKK 4 mil- lion). Most programs are equity settled, and no liability Stock awards The stock allocated under the programs is used for stock awards. In 2023, 137,305 stock awards with an aggregate fair value of DKK 49 million were granted (2022: DKK 45 million) which will be expensed over the three-year period (2023– 2025). is recognized for these. If allocations under the programs are made in countries where ownership of foreign stock is not permitted, the value of stock options is settled in cash instead, and a lia- bility of DKK 23 million was recognized for this in 2023 (2022: DKK 21 million). The intrinsic value of exercisable cash-settled programs in 2023 was DKK 9 million (2022: DKK 9 million). The fair value of employee services received is measured with reference to the fair value of the equity instruments granted. Fair value at grant date is measured in accordance with the Black– Scholes model, using the average exercise price, the option term and the following significant assumptions: The total number of outstanding stock awards at December 31, 2023 was 389,590 (2022: 314,029). The fair value of these at December 31, 2023 was DKK 145 million (2022: 111 million). DKK million Note 2023 2022Expected future dividends per share DKK 39.6 38.9Volatility % 32.0 25.9Annual risk-free interest rate % 2.3 0.3Weighted average share price at grant date DKK 355 416 The Group has established stock-based incentive programs comprising equity-settled and cash-settled programs. The fair value of the employee services received in exchange for the grant of stock options and stock awards is measured with reference to the fair value of the stock options and stock awards granted. The fair value is measured using the Black–Scholes option-pricing model. The fair value of stock-based payment at the grant date is recognized as an employee cost over the period in which the stock options vest. In measuring the fair value, account is taken of the number of employees expected to gain entitlement to the options as well as the number of options the employees are expected to gain. This estimate is adjusted at the end of each reporting period such that only the number of options to which employ- ees are entitled or expected to be entitled is recognized. The value of equity-settled programs is rec- ognized in equity. The value of cash-settled programs, which are recognized as Other lia- bilities, is adjusted to fair value at the end of each reporting period, and the subsequent adjustment is recognized in the income state- ment under Financial income or Financial costs. Accounting policies Furthermore, the options are assumed to be exercised two years after expiry of the vesting period, on average, or at the option’s expiry date if within one year. Volatility is estimated using the historical volatility over the last three years. The risk-free interest rate is based on Danish government bonds with a maturity equivalent to the option’s term to maturity. 6.2 Stock-based payment (continued) Other financial notes Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 117Notes Pending litigation and arbitration Novozymes is engaged in certain legal cases. The Board of Directors and Management believe that settlement or continuation of these cases will not have a significant effect on the Group’s financial position. A liability is recognized under Provisions when the risk of a loss on a legal case is considered more likely than not. Contingent liabilities At December 31, 2023 Novozymes had a contin- gent liability in the form of a break-up fee of up to DKK 2,348 million (EUR 315 million) in the unlikely event that the combination of Novozymes and Chr. Hansen did not obtain regu- latory approval. As the combination was completed on January 29, 2024, the liability did not materialize. At December 31, 2023, Novozymes had entered into consultancy agreements with fees contin- gent on the completion of the combination with Chr. Hansen. The expected fees amount to approximately DKK 250 million. 6.3 Contingent liabilities and pending litigation Other financial notes Transactions DKK million 2023 2022Novo Holdings A/SDividend payment to Novo Holdings A/S 803 396The Novo Nordisk GroupSale of services 112 92Sale of assets - 21Purchase of goods and materials (14) (29)Purchase of services (35) (49)The NNIT GroupPurchase of services (14) (34)The Chr. Hansen GroupSale of goods and materials 158 123Synergia Life Sciences Pvt. LtdPurchases (80) (36)Royalty income 8 6Royalty expense (12) (10)Dividend payment to non-controlling interests 30 -Microbiogen Pty. Ltd.Purchase of services (71) (38)st21. BIO A/SSale of services 7 14 * Novozymes A/S holds a 60% ownership interest in Synergia Life Sciences Pvt. Ltd. ** Associate of Novozymes A/S 6.4 Related party transactions Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 118Notes Other financial notes 6.4 Related party transactions (continued) Novozymes A/S is controlled by Novo Holdings A/S, domiciled in Hellerup, Denmark, which holds 74.0% of the votes in Novozymes A/S. The remaining stock is widely held. The ultimate par- ent of the Group is the Novo Nordisk Foundation (incorporated in Denmark). Related parties are considered to be Novo Holdings A/S and the Novo Nordisk Foundation, as well as the Board of Directors and Executive Management of these entities together with their immediate families. Other related parties are considered to be the Novo Nordisk Foundation’s subsidiaries and associates, such as the Novo Nordisk Group, the NNIT Group and the Chr. Hansen Group, associates of Novozymes A/S, as well as the Board of Directors and Executive Management of Novozymes A/S together with their immediate families. Related parties also include companies in which the above persons have control or joint control. All agreements relating to these transactions are based on market price (arm’s length). The major- ity of the agreements are renegotiated regularly. There were no transactions with related parties other than the transactions described and nor- mal remuneration of the Board of Directors and Executive Management, which is presented in Note 6.1. Guarantees, rental and other purchase commit- ments to related parties at December 31, 2023 amounted to DKK 27 million, compared with DKK 22 million at December 31, 2022. In 2022, Novozymes Biotechnology ApS merged with 21 st .BIO. As part of the merger, Novozymes received 40% of the shares in 21 st .BIO, corre- sponding to the value of the intellectual property rights from Novozymes Biotechnology ApS of DKK 201 million. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Outstanding balancesDKK million 2023 2022The Novo Nordisk GroupReceivables 22 10Payables (73) (79)The NNIT GroupPayables (1) (7)The Chr. Hansen GroupReceivables 34 22Synergia Life Sciences Pvt. Ltd.Receivables 1 6Payables (2) (13)Microbiogen Pty. Ltd.Payables (31) (12)st21. BIO A/SReceivables - 2 * Novozymes A/S holds a 60% ownership interest in Synergia Life Sciences Pvt. Ltd. ** Associate of Novozymes A/S Novozymes A/S 119Notes Fair value of the share purchase liability is based on non-observable data (level 3 input) that requires Management to make estimates and use assumptions. Estimates are based on updated information since the initial recognition of the liability, such as budgets, sales forecasts, discount rates etc. The fair value of the share purchase liability is calculated as the present value of the most probable redemption amount using the discounted cash flow method. The deter- mined fair value is associated with uncer- tainty and may be subject to subsequent adjustments. Critical accounting estimates and judgments Share purchase liability is Novozymes’s obli- gation to purchase non-controlling interests in subsidiaries and is remeasured at fair value at each reporting date. The fair value of the most likely redemption amount is initially recognized within liabilities with a corre- sponding charge directly to Equity. Interest and fair value adjustments resulting from events after the initial recognition are recog- nized in Equity under Retained earnings. Accounting policies Share purchase liability On December 10, 2021, Novozymes acquired 60% of the shares in Synergia Life Sciences, located in India. The remaining 40% of the shares in Synergia Life Sciences are held by non-controlling interests. The remaining 40% of the shares in Synergia Life Sciences are expected to be acquired in 2024 and a liability of DKK 584 million (2022: DKK 760 million) is recognized. The redemption amount is contingent on the achievement of realized sales for Synergia Life Sciences for the period January 1, 2023 to December 31, 2023 within the range of DKK 575 million to DKK 1,035 million. In 2023, Management reassessed the value of the redemption amount due to lower-than-expected realized sales and reduced the liability by DKK 197 million. The fair value adjustment is recognized in Equity and was partly offset by interest and currency translation adjustments. Fair value of the share purchase liability is assessed by using the most probable redemption amount, discounted at a rate of 11% (2022: 11%). Currency translation adjustments and interest of net DKK 51 million (2022: DKK 43 million) have been recognized in Equity. The share purchase liability is denominated in INR. The liability is reduced by DKK 30 million from dividend payment of the non-controlling inter- ests’ stake of the net working capital and cash balances at the acquisition date. 6.5 Non-controlling interests Other financial notes DKK million 2023 2022Share purchase liability at January 1 760 717Currency translation adjustments (29) (32)Interest 80 75Fair value adjustment (197) -Paid as dividend (30) -Share purchase liability at December 31 584 760 Transactions with non-controlling interests Dividend of DKK 30 million (2022: DKK 0 million) is paid to the non-controlling interests in Synergia Life Sciences. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 120Notes DKK million 2023 2022Statutory audit 11 9Other assurance engagements 2 -Tax assurance services 1 3Other services 6 10Fees to statutory auditors 20 22Group audit fee ratio 0.8 1.4 Audit fee policy It is Novozymes’ policy that the annual fee for nonaudit services provided by the statutory audi- tors should not exceed the annual fee for statu- tory audit services measured at Group level. The Group audit fee ratio may only exceed 1 with the approval of the Audit Committee. No such approval was given in 2023. In 2022, approval was given for advisory services and mandatory statements of DKK 9.6 million related to the combination of Novozymes and Chr. Hansen. Certain restrictions apply regarding the nonaudit services that the auditors elected at the Annual Shareholders’ Meeting may perform, including a 70% cap. The fee for nonaudit services per- formed for Novozymes by PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab was DKK 5 million (2022: DKK 4 million) and did not exceed the 70% cap. The services comprise tax advisory ser- vices concerning transfer pricing, advisory ser- vices related to the combination of Novozymes and Chr. Hansen and other general financial reporting and tax consultancy. The fee paid for the mandatory statements related to the combi- nation of Novozymes and Chr. Hansen are by definition not a nonaudit service in relation to the 70% cap. 6.6 Fees to statutory auditors Other financial notes DKK million Note 2023 2022Non-cash itemsAccrued interest income and interest costs 83 146(Gain)/loss on financial assets, etc., net (152) (248)Depreciation, amortization and impairment losses 3.1, 3.2 1,389 1,485Realized loss and allowances for doubtful trade receivables 36 15(Gain)/loss on sale and disposal of assets 2 (25)Unrealized foreign exchange (gain)/loss (139) 70Tax 2.7 870 870Stock-based payment 6.2 151 127Change in provisions (15) (44)Gain from divestment of selected waste-water treatment solutions (88) -Profit/loss in associates 18 7stGain from 21.BIO transaction - (201)Gain on divestment of minority ownership in Albumedix- (267)Non-cash items 2,155 1,935 6.7 Cash flow Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 121Notes DKK million Note 2023 2022Business acquisitions, divestments and purchases of financial assetsDivestment of selected waste-water treatment solutions 88 -Purchase of financial assets (11) -Contingent consideration paid 3.6 (158) -Acquisition of Synergia Life Sciences - (77)Divestment of minority ownership in Albumedix 5.2 - 267Cash flow from acquisitions, net (81) 190Additions of intangible assets 3.1 199 130Purchase of intangible assets 199 130Additions of property, plant and equipment 3.2 1,985 2,802Less additions to lease assets 3.3 (128) (42)Purchase of property, plant and equipment 1,857 2,760 Undrawn committed credit facilities amounted to DKK 5,256 million at December 31, 2023 (2022: DKK 17,502 million), all of which expire in 2024–2027. The decrease in undrawn committed credit facilities compared to 2022 is related to the facility obtained to refinance existing debt following completion of the combination of Novozymes and Chr. Hansen. The facility was reduced by DKK 12,000 million during 2023. 6.7 Cash flow (continued) Other financial notes The consolidated statement of cash flows, which is compiled using the indirect method, shows cash flows from operating, investing and financing activities, and the Group’s cash and cash equivalents at the beginning and end of the year. Cash flow from operating activities comprises net profit adjusted for non-cash items, paid financial items, corporate income tax paid and change in working capital. Cash flow from investing activities comprises payments relating to the acquisition and sale of companies and non-controlling interests, intangible assets, and property, plant and equipment. Cash flow from financing activities comprises proceeds from borrowings, repayment of principal on interest-bearing debt, repayment of lease liabilities, payment of dividends, pro- ceeds from stock issues, and the sale of treasury stock and other securities. Cash and cash equivalents comprises cash at bank and in hand less current bank loans due on demand. Accounting policies Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 122Notes 6.9 Group companies On January 29, 2024, the final regulatory approvals were obtained and the final registra- tion of the statutory merger with the Danish Business Authority was successfully completed. The combination of Novozymes and Chr. Hansen will create a leading global biosolutions partner with a broad biological toolbox and a diversified portfolio in attractive markets. Further information on the combination are described in Note 3.5. ISO 14001-certified sites. All major companies are ISO 9001 certified. Production Sales and marketing Research and development Holding companies, etc. Percentage of Activityshares ownedParent CompanyNovozymes A/S, Denmark Percentage of Activityshares ownedSubsidiariesNovozymes BioAg S.A., Argentina100Novozymes Australia Pty. Ltd., Australia100Novozymes Belgium BV, Belgium100Novozymes Latin America Ltda., Brazil100Novozymes BioAg Productos Para Agricultura Ltda., Brazil100Novozymes BioAg Limited, Canada100Novozymes Canada Limited, Canada100Nuocheng Trillion Food (Tianjin) Co., Ltd., China100Novozymes (China) Biotechnology Co. Ltd., China100Novozymes (China) Investment Co. Ltd., China100Novozymes (Shenyang) Biologicals Co. Ltd., China100Suzhou Hongda Enzyme Co. Ltd., China96Novozymes OneHealth Biotechnology (Shanghai) Co. Ltd., China100Novozymes Bioindustrial A/S, Denmark100Novozymes Bioindustrial China A/S, Denmark100Novozymes Biopharma DK A/S, Denmark100Novozymes BioAg A/S, Denmark100Novozymes EG SSC, Egypt100Novozymes France S.A.S., France100Novozymes Deutschland GmbH, Germany100Novozymes Berlin GmbH, Germany100Novozymes Greece Single Member SA, Greece100Novozymes Hong Kong Ltd., Hong Kong100 6.8 Events after the reporting date Other financial notes On January 26, 2024, the European Commission’s approved Kerry as the purchaser of the global lactase enzyme business. Reference is made to Note 4.5, Note 5.5 and Note 6.3 for further details. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 123Notes Percentage of Activityshares ownedNovozymes, Inc., U.S.100Physicians Exclusive LLC (d.b.a) Microbiome Labs, U.S.100Novozymes North America, Inc., U.S.100Novozymes US, Inc., U.S.100Joint operations/associatesGrundejerforeningen Smørmosen, DenmarkGrundejerforeningen Hallas Park, Denmarkst21.BIO A/S, Denmark 40.60Microbiogen PTY Ltd., Australia 23.10Tecnol s.r.l. in liqudiazione (formerly Beta Renewables S.p.A.), Italy 9.95MagnaBioAnalytics LLC, U.S. 19.35 * Owned directly by Novozymes A/S. ** Sales to Russia have been discontinued and the sales office in Russia has been closed. 6.9 Group companies (continued) Other financial notes Percentage of Activityshares ownedNovozymes South Asia Pvt. Ltd., India100Riata Life Sciences Pvt. Ltd., India60Synergia Life Sciences Pvt. Ltd., India60PT Novozymes Indonesia Biotechnology, Indonesia100PrecisionBiotics Group Ltd., Ireland100Novozymes Italia S.r.l., Italy100Novozymes Japan Ltd., Japan100Novozymes Kenya Ltd., Kenya100Novozymes Malaysia Sdn. Bhd., Malaysia100Novozymes Mexicana, S.A. de C.V., Mexico100Novozymes Mexico, S.A. de C.V., Mexico100Novozymes Nederland B.V., Netherlands100, Novozymes RUS LLC, Russia 100Novozymes Singapore Pte. Ltd., Singapore100Novozymes South Africa (Pty) Ltd., South Africa100Novozymes Korea Limited, South Korea100Novozymes Spain S.A., Spain100Novozymes Switzerland AG, Switzerland100Novozymes (Thailand) Ltd., Thailand100Novozymes Enzim Dis Ticaret Ltd. Sirketi, Türkiye100Novozymes UK Ltd., U.K.100Novozymes BioAg, Inc., U.S.100Novozymes Biologicals, Inc., U.S.100Novozymes Blair, Inc., U.S.100 Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Note 7 7.1 Climate change 7.2 Energy 7.3 Water 7.4 Waste 7.5 Environmental compliance 7.6 Bioethics & biodiversity 7.7 Product stewardship Water withdrawal decreased relative to 2022 by Renewable electricity share Biomass recovered: on par with 2022 Environmental data Mandatory statement on Corporate Social Responsibility The Notes on Environmental data and Social and Governance data form the reporting required under section 99a of the Danish Financial Statements Act. Topic Reference Pages Business model Our business p. 15 Content of commitments, management approach, targets, data, initiatives, and related progress on corporate social responsibility issues: Climate and environment Notes on Environmental data pp. 124-135 Social matters Notes on Social and Governance data pp. 136-148 Human rights Note on Labor practices and Human rights pp. 137-138 Anti-corruption and bribery Note on Business Ethics pp. 143-144 The Novozymes Report 2023 Accounts and performanceGovernanceOur businessThe big picture Novozymes A/S 125Notes Environmental data At Novozymes, we are fully committed to accele- rate towards a climate-neutral society. We actively invest to lower the carbon footprint of our operations and deliver low-carbon solutions to our customers. Our solutions play a key role in addressing many of the climate-related chal- lenges facing the world. Our approach Novozymes is committed to decarbonizing in line with a science-based pathway and to reaching net-zero greenhouse gas (GHG) emissions across our operations and value chain by 2050. - sions from our operations (scopes 1+2) and a by 2030 from a 2018 baseline. In addition, to deliver on our long-term ambition, we work with milestone targets. Thus, by 2025, we aim to from a 2018 baseline. In 2022, the Science Based Targets initiative (SBTi) re-validated our 2030 emissions reduction targets and our 2025 renewable electricity tar- gets. Novozymes was among the first companies in the world to receive validation of our net-zero targets by SBTi. Further information on our science-based targets is available in the Targets section of this report. We are committed to improve our climate data quality and transparency. We conduct peer- reviewed cradle-to-grave life cycle assessment (LCA) studies to document the environmental impact of our solutions. These studies are used to keep our stakeholders informed and to demonstrate to our customers ways to reduce their GHG emissions and leverage the positive impact on climate change that Novozymes’ bio- solutions can enable. Our published LCAs are available on our website. We also use this data to help our customers’ improve their climate trans- parency by providing product carbon footprint data on request. We disclose our climate change impacts through CDP every year. In 2023, Novozymes was recog- nized in CDP’s Climate Change A List (leadership ranking) for our commitment to environmental transparency and climate action. 2023 summary In 2023, the GHG emissions from our operations tonnes from 161,000 tonnes in 2022. This reduc- tion was mainly driven by changes in product mix towards less resource consuming products, slightly lower production volumes, and imple- mentation of efficiency-enhancing projects. We have reduced our absolute emissions from baseline and are thus on track to achieving our 2025 target. 7.1 Climate change CO-equivalent emissions 1,000 tonnes 2023 2022 Natural gas 35 40 Gas oil, light fuel oil, and diesel oil 4 4 HCFCs 1 2 Scope 1 40 46 District heat 1 1 Electricity 42 50 Steam 60 64 Scope 2 (market-based) 103 115 Scopes 1 and 2, total ESG 143 161 Market-based vs. location-based scope 2 emissions 1,000 tonnes 2023 2022 Scope 2 GHG emissions (market-based) 103 115 Scope 2 GHG emissions (location-based) 291 332 Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Five-yearoperational emissions (CO 2-eqv.) 1,000 tonnes Scope 1 Scope 2 2021 2020 2019 2022 2023 161 330 234 218 143 Novozymes A/S 126Notes Reported GHG (greenhouse gas) emissions comprise scope 1 and scope 2. GHG from internally generated energy (scope 1) is calculated based on the amount of fuel consumed using local emission factors. GHG from externally generated energy (scope 2) is reported in accordance with both the market-based and the location-based meth- ods, as defined by the Greenhouse Gas Protocol. The marked-based method assumes zero GHG emissions from the sourced renewable energy and uses CO 2 -eqv. factors from the International Energy Agency (IEA) for non-renewable energy. The location-based method uses third party validated CO 2 -eqv. factors or CO 2 -eqv. factors from IEA. The environmental impact potentials for global warming and ozone layer depletion are calculated on the basis of data published by the U.S. Environmental Protection Agency (EPA) and the Montreal Protocol published by the United Nations Environment Programme (UNEP). Accounting policies Environmental data 7.1 Climate change (continued) In 2023, we joined a new innovative consortium together with the Novo Nordisk Foundation, the Bill & Melinda Gates Foundation, and other rele- vant players to convert carbon dioxide into protein for human consumption. This is a long-term initia- tive which aims to address the rising global chal- lenges with food security and GHG emissions from agriculture. The aim is convert carbon dioxide into acetate, which will replace sugar in the fermenta- tion process used to produce proteins for food. We have also partnered with ALGIECEL, a com- pany focused on implementing microalgae-based carbon capture and utilization. Our Kalundborg site is suitable for demonstrating carbon capture by algae processes with nutrient and carbon dioxide streams available. During the demonstra- tion, we will explore whether ALGIECEL’s tech- nology can be combined with the carbon capture technology co-developed by Novozymes and Saipem. Moving forward, we will continue to execute on our transition plan to accelerate towards a climate neutral society. We will invest in renewa- ble energy, production efficiency and energy recovery opportunities. Additionally, we will expand our collaboration with suppliers and work towards meaningful and actionable engage- ments to decarbonize our common value chain. Our leaders will continue taking the global stage and advocating for change, and collaborating with our customers, policymakers, and partners to drive market transformation. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 127Notes Novozymes is committed to a net-zero future, and energy is an integral part of achieving this commitment. For its operations, Novozymes relies on electricity, heat, and steam. Many of our biosolutions enable downstream users to save energy in certain applications compared with conventional methods, such as in detergents and textile applications. Our approach We manage energy in our operations through a two-pronged approach: increasing the sourcing of renewable energy and reducing energy consump- tion in production by implementing optimization or energy-saving projects. Relevant targets drive our performance in these areas. All energy efficiency and renewable energy sourc- ing efforts are managed and monitored by our Operations, Supply and Quality function. In addi- tion to internal energy savings, Novozymes focuses on recovering energy from waste to use in operations and to distribute to our local commu- nities. able electricity by 2025. This target was re- validated by the Science Based Targets initiative (SBTi) in 2022 and is in accordance with the best practice guidance defined by the RE100 initiative. We take a holistic approach in our end-to-end sourcing process, ensuring high quality and impactful projects for local communities, and we strive to purchase from the best electricity pro- jects available. Further information on our science-based targets is available in the Targets section of this report. 2023 summary In 2023, our organic sales growth was recorded at compared to 2022 due to slightly lower produc- tion volumes, changes in product mix towards less resource consuming products, and the imple- mentation of energy saving projects. In 2023, projects driving process optimization and energy efficiency undertaken at our sites resulted in energy savings of approximately 56,000 GJ. The biggest drivers of this include heat recovery and installation of a heat pump at our site in China as well as energy savings from the reverse osmosis project in Kalundborg. Energy consumption by primary source 2023 2022 Natural gas 678 762 Biogas 30 30 Gas oil, light fuel oil and diesel oil 49 39 Internally generated energy, total 757 831 Electricity – conventional 392 506 Electricity – renewable 2,070 2,264 District heat - conventional 57 56 District heat - renewable 134 141 Steam 986 1,042 Externally purchased energy, total 3,639 4,009 Energy consumption, total ESG 4,396 4,840 Energy production from waste 15 66 Environmental data 7.2 Energy We also conducted smaller initiatives. For example, in Denmark, we initiated the ‘Freezer Challenge’ in collaboration with the NGO MyGreenLabs where lab teams were invited to come up with ideas to reduce the environmental footprint of cold storage units while maintaining the integrity of the samples stored in them. Five-year energy consumption 4,574 4,475 4,699 4,840 1,000 GJ 2021 2020 2019 2022 2023 4,396 Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Renewable electricity sources 2023 (2022) Wind power 62% (42%) Solar 19% (20%) Hydro 0% (3%) Biomass 19% (35%) Novozymes A/S 128Notes Energy consumption includes quantities con- sumed both in the production process and in other areas. Internally generated energy is measured as fuel consumption converted to energy based on the lower of combustion value and weight by volume, except in the U.S., where legal requirements for reporting carbon dioxide state that the higher of combustion value and weight by volume is to be applied. Fuel con- sumption comprises all types of fuel used to produce electricity, heat and steam on site and is converted to energy using factors sup- plied by utility providers or local authorities. Fuel for transportation purposes is not included. Externally generated energy is the input to Novozymes of externally generated elec- tricity, heat and steam. Energy produced from waste or wastewater is renewable and corresponds to the total energy (heat, electricity or steam) produced by an internal or external utility provider. An example is energy produced from biomass waste or biogas. Reported quantities are based on meter read- ings, with the exception of steam, which may be subject to calculation. The renewable energy percentage is calcu- lated by dividing renewable energy consumed by total energy consumption. Renewable energy used at Novozymes sites comprises energy generated from natural processes and continuously replenished. Sources include solar, wind and hydropower-based electricity and energy from biogas and biomass. District heat - renewable is primarily gene- rated from biomass. Accounting policies Environmental data 7.2 Energy (continued) Improvements included adjusting temperatures, storing only relevant samples and turning off empty freezers. In 2023, the share of renewables in our total in 2022. Electricity accounts for more than half of - tricity came from renewable sources, compared to improvement was our site in Blair, U.S., which began to procure green electricity in 2023, con- verting approximately 145,000 GJ from conven- tional to renewable electricity. In some of our sites we are still dependent on fossil-based steam and natural gas as a fuel source. We are exploring greener alternatives such as flex burners, electric boilers, and heat pumps to replace them. At our site Hongda, China, we now produce steam from a new high temperature heat pump technology which reduces the consumption of fossil-based heat at the site. We have also identified additional steam-saving projects in China that will be imple- mented in the coming years. Moving forward, we will seek to implement our strong portfolio of projects to further invest in renewable electricity, to find cleaner alternatives for natural gas and coal-based steam and to save and recover energy. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Five-year water withdrawal by primary source 1,000 m ³ Drinking water Industrial waterSteam 2021 2020 2019 2022 2023 7,845 7,998 8,538 8,720 7,793 Novozymes A/S 129Notes Water stewardship is essential for Novozymes. The production, development, and processing of our solutions depends on the availability of water. We use water as a coolant, solvent, clean- ing agent and as a component of our final prod- ucts. Additionally, many of the raw materials required in our operations are agriculture-based and depend on water for production. Many of our biosolutions in textile, brewing, household care, and grain processing enable customers to reduce their water consumption compared with conven- tional methods or prevent water pollution by reducing dependence on hazardous chemicals. Our approach Our approach towards water stewardship is driven by science and our ambition to manage water in balance with local conditions at all our sites. We are committed to achieving overall water security by preserving water as a resource, addressing water challenges through biosolutions, and driving collective action with communities. For our operations, we seek to reduce depen- dence on freshwater by implementing recycling and water efficiency projects, while ensuring compliance with local regulations. All our pro- duction sites have context-based water manage- ment plans drawn up based on site-specific risks and opportunities. These plans were developed in partnership with water experts and contain actions to improve the health of the water basins near our production sites and address site- specific challenges including scarcity, quality and changing regulations. Our wastewater is biologi- cally treated internally or externally before being discharged or before being recycled after sec- ondary filtration. We aim to improve freshwater 2035 from a 2021 baseline. At community level, we drive collective action with communities and organizations within our produc- tion basins. Our actions address shared water challenges such as flooding, impaired ecosystem services, water quality and scarcity, through col- lective action on Water, Sanitization and Hygiene (WASH), nature restoration, and watershed resto- ration. In addition, in basins close to our produc- tion sites where WASH is a challenge, we aim to restore 10 billion liters of water by 2025 and 30 billion liters by 2030 from a 2021 baseline. Water withdrawal by primary source 1,000 m 2023 2022 Drinking water 5,177 5,788 Industrial water 2,267 2,554 Steam 349 378 Water withdrawal, total ESG 7,793 8,720 Environmental data 7.3 Water 2023 summary compared with 2022 and wastewater discharge drivers of the decrease were changes in product mix towards less resource consuming products, slightly lower production volumes, and imple- mentation of efficiency projects. Our water withdrawal and discharge were also impacted by multiple water efficiency projects across sites. In 2023, we implemented three water recycling and efficiency projects which delivered water savings of approximately 86,000 mnanofiltration and reverse osmosis project in Kalundborg for water recycling and two water efficiency projects in Franklinton, U.S., and Tianjin, China. The reverse osmosis equipment installed in Kalundborg has a saving potential estimated at 370,000 m- ally and will also save energy and improve yields. In Franklinton, we announced a reverse osmosis project which seeks to upgrade our wastewater discharge process while addressing evolving re- gulatory requirements. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Five-year wastewater by treatment method 1,000 m ³ 2021 2020 2019 2022 2023 Novozymes-treated to external water recipient Novozymes-treated to external treatment Novozymes-treated to irrigation Untreated to external treatment 6,766 6,295 6,147 6,471 6,610 Novozymes A/S 130 Notes Water withdrawal refers to the sum of all water drawn into the boundaries of Novozymes from all sources. Water/freshwa- ter includes drinking water, industrial water, and externally supplied steam. Drinking water is water of drinking water quality. Industrial water is not of drinking water quality, but is suitable for certain industrial processes, for example for use in cooling towers. Industrial water may come from lakes or wells. The reported quantities are stated based on the metered intake of water to Novozymes and include quantities withdrawn both in the production process and in other areas. The reported quantities of steam are converted to volumes of running water and are therefore subject to calculation. Wastewater is measured as the volume dis- charged by Novozymes or calculated based on water withdrawal. Accounting policies Wastewater discharged 1,000 2023 2022 Wastewater to irrigation 634 825 Wastewater to surface water or treatment 5,661 5,941 Wastewater discharged, total ESG 6,295 6,766 Environmental data 7.3 Water (continued) With projects like these, we have moved closer to meeting our target of improving freshwater with- In the vicinity of our site in Patalganga, India, where WASH is a challenge, we have been work- ing with the Novozymes Water Opulence project since 2020 to improve water availability and address local water basin risks. Among the acti- vities, we build together loose boulder struc- tures, gabion bunds, check dams, and recharge trenches. Since its start, the project has bene- fited approximately 3,100 people across five vil- lages. In 2023, we continued restoring ground water in the region, and we are on track to meet our target of restoring 10 billion liters of water by 2025 in areas where WASH is a challenge. In light of our ambition to manage water in balance with local conditions at all our sites, we carried out a pilot internally of the science-based targets for water methodology at our Hongda site. This included having a dialogue with our key Chinese suppliers on water management. Here, we have integrated the actual situation of water resource management in the Taihu basin and have set site level targets for water with- drawal which are in alignment with local basin conditions. Moving forward, we will continue to have site specific initiatives and aim for active engagement to identify hotspots, develop water efficiency projects, and reduce our dependence on fresh- water. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 131Notes Novozymes is committed to managing resources and waste in a circular manner. In our opera- tions, we take a holistic approach towards circu- larity, by improving the recyclability of our pack- aging and by implementing site-specific initiatives to reduce and recover waste. In addi- tion, our biosolutions enable our customers to adopt practices that help minimize waste from their operations. For example, our grain and ve- getable oil processing biosolutions enable cus- tomers to optimize resource utilization by unlock- ing additional starch, protein, and oils from feedstock. Our approach Responsible packaging and waste management at Novozymes is a key element in reducing the environmental impact of our operations. We remain committed to ensuring zero waste to landfill from our operations by 2030. In addi- tion, we are committed to having three key circu- lar projects successfully implemented by 2030. To deliver on these long-term ambitions, we work with milestone targets. By 2025, we aim to have two key circular projects in pilot stage with demonstrated benefit. Guided by our aim to achieve zero waste to land- fill, we have a site-specific approach to waste management with clearly outlined risks, opportu- nities, and prioritized actions. Regulations on waste management are complex and vary by region. To ensure compliance, we actively work with local experts and service providers to explore localized opportunities to manage waste. We are also committed to minimizing the impact of the waste generated by our packaging materials. We strive to use less virgin plastic wherever possi- ble. We have clear processes to assess new materi- als on specific recyclability and reusability criteria before they are approved for enzyme packaging. 2023 summary In 2023, we continued to work towards our target to have zero waste to landfill from our operations by 2030. The total recycling and composting rate was sent to landfill or incineration without energy recovery. The total waste decreased to 544,000 tonnes in 2023 from 559,300 tonnes in 2022. The main driver for this change was the slightly reduced production volumes. Our waste is composed of biomass waste and non-biomass waste, and a small fraction of this non-biomass waste is treated as hazardous waste. Environmental data 7.4 Waste Biomass waste Most of the waste generated during the produc- tion of our biosolutions is biomass. It has essen- tial nutrients such as nitrogen and phosphorus, making it ideal for supporting agricultural activi- in a circular manner, just as in 2022. Our biomass waste is utilized as a raw material in fertilizer production for agriculture with or with- out prior biogas production. In Blair, U.S., we launched a disposal solution that will enable us to maintain our performance by disposing it towards land applications in spite of projected higher waste volumes due to ongoing plant expansion. The weight of the biomass upon exit from our facilities varies depending on the site and the biosolutions produced there. To facilitate trans- portation and application of biomass waste, we adjust its water content in accordance with local the total dry matter content for biomass used in agriculture was 61,000 tonnes. Moving forward, we will continue to focus on cir- cular management of all of our biomass. Biomass wet (actual) Biomass dry matter (excl. water) Biomass 1,000 tonnes 2023 2022 2023 2022 Used in agriculture 529 539 61 53 Landfill - - - - Biomass, total ESG 529 539 61 53 Total waste by disposal method 2023 (2022) Used in agriculture 97.3% (96.4%) Recycling 2.0% (2.3%) Incineration with energy recovery 0.4% (0.5%) Landfill and incineration without energy recovery 0.3% (0.8%) Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 132Notes Biomass is measured or calculated based on volume or weight produced. At each site, bio- mass is produced with a different dry matter to water ratio. The quantity of biomass dry matter is calculated based on spot checks of the dry matter content present in the wet biomass. Non-biomass waste is the registered volume of waste broken down into hazardous and non- hazardous waste, and by disposal method. The amount recycled is the quantity recycled inter- nally or sent to an external service provider for recycling. Accounting policies Environmental data 7.4 Waste (continued) Across regions, we implemented various initia- tives in waste management. At one of our North American sites, cross-functional collaboration has led to increased recycling and eliminated the majority of the waste generated locally, which previously was sent to landfills. At our sites in Denmark, in response to regula- tory requirements, household-like waste (from canteens, coffee stations and workspaces) is now sorted in up to 10 fractions. At our site in TEDA, China, we have reduced waste by quickly connecting departments digi- tally to enable them to exchange furniture, IT accessories, printers, etc. Moving forward, this initiative will be rolled out to other sites in China. Circular Packaging In 2023, we took action drawing from our previously developed circular packaging plans to make our key packaging recyclable, reusable or compostable. We have identified and started working on two strategic circular projects, and are on track to have both pro- jects in pilots with demonstrated benefit by 2025. Waste 1,000 tonnes 2023 2022 Biomass waste, total 529.0 538.8 Nonhazardous waste Incineration 1.9 2.2 Landfill 1.5 3.6 Recycling 9.5 11.4 Nonhazardous waste, total 12.9 17.2 Hazardous waste Incineration 0.5 1.4 Landfill - 0.2 Recycling 1.6 1.7 Hazardous waste, total 2.1 3.3 Waste, total ESG 544.0 559.3 Non-biomass waste Novozymes’ total waste and is further classified into hazardous and nonhazardous waste. In 2023, the recycling rate of non-biomass waste or incineration. To further reduce, recycle, reuse, and recover the waste generated in 2023, we have undertaken various initiatives such as process improvements, resource optimization, process planning and waste sorting in order to optimize waste manage- ment. For example, at our site in Saskatoon, Canada, we use sterilized peat as a substrate to grow our microbes used in production processes. However, bags that are damaged are no longer considered sterile and were previously discarded. In 2023, we started segregating damaged peat bags and re-sterilizing them, which has enabled us to recover waste and turn it back into raw material. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 133 Notes Compliance with environmental norms and regula- tions is a high priority for Novozymes to maintain business continuity and day-to-day running of operations. Novozymes is committed to complying with all environmental regulations and maintain- ing high standards of environmental management across its operations, including pollution preven- tion, resource conservation and waste reduction. We take the well-being of the communities we operate in seriously. We do our best to implement meaningful solutions effectively so as to address any complaints we may receive from our neigh- bors. Our approach Our commitment to environmental compliance is outlined in our Sustainability Policy. All activi- ties to ensure environmental compliance are anchored in the Quality, Environment & Safety function. Novozymes’ main production sites are certified to the ISO14001 Environmental Management System standard. Our management system is based on this standard and is applied to most of our operations. Further details on ISO-certified companies can be found in Note 6.9 Group Companies. Environmental incidents and neighbor com- plaints are recorded in CAPTURE, our global inci- dent management system. This system enables us to implement suitable remedial action to cor- rect and prevent re-occurrence in the future. We strive to minimize the number of non-compliance and neighbor complaints. A total of 23 environmental breaches of regula- tory limits were registered across our facilities in 2023, compared with 21 in 2022. Most of them were related to wastewater discharge and bio- mass processing, handling and distribution. None resulted in environmental fines. Plans for preven- tive action for these incidents have been agreed with the relevant authorities. Novozymes received 14 neighbor complaints in 2023, compared to 23 received in 2022. Most of them pertained to noise and light related to con- struction activities. The odor issues reported in 2022 have been resolved. To support the growth of our human health busi- ness, we purchased two small production facili- ties in India at the end of 2021. Some of their environmental permits and consents were incom- plete. We have begun the lengthy process of Breaches of environmental regulatory limits are measured as the number of incidents in the reporting year considered not to be in conformity with environmental permits or requirements under environmental law. Breaches related to annual control measure- ments of spills reported in previous years are not included, as they are not indicative of performance during the reporting year. Neighbor complaints refer to the number of registered environmental complaints, prima- rily odor and noise related. Accounting policies Environmental data 7.5 Environmental compliance amending these permits to align with production expectations, and implementing the actions needed to fulfil current and future environmental conditions. For example, in 2023, we broke ground on a new wastewater treatment facility, which is expected to be operational in 2024. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 134Notes Novozymes is on a mission to find biological solu- tions that enable better lives in a growing world. The foundation of our business is based on ana- lyzing bacteria and fungi at molecular level to create biosolutions that can help solve some of the world’s biggest challenges, focusing on cli- mate, food systems, and health. We have inter- faces with nature and biodiversity across our business from research and development to operations and product use. Our approach Novozymes’ approach to biodiversity and nature is guided by the principles of the United Nations’ Convention on Biological Diversity. We have defined systems and processes, housed by an internal committee, that ensure compliance with local and global regulations, guidelines, and pro- tocols. Together with our stakeholders, we work to ensure that guidance and requirements from regulatory authorities on biotech innovation is duly followed. We adhere to the globally recognized principles on the utilization of genetic resources. Our scientists are committed to using scientifically sound tools and developing solutions that are safe for humans, animals, and the environment. As the world’s leading biotech powerhouse, we are fully aware of our responsibility to see beyond the possibilities of our solutions and understand the broader impact we may have on nature and biodiversity as a company. This is why we support a science-based approach and follow developments in this area to take action on nature and biodiversity. We regularly assess how to incorporate best practices into our solutions, operations, and reporting through constant dia- logue with relevant business groups and UN organizations. 2023 summary In 2023, we continued to closely monitor and par- ticipate in ongoing discussions and dialogues on nature and biodiversity loss across the globe. This includes discussions around the post-2020 Global Biodiversity Framework, a global vision and roadmap to halt and reverse biodiversity loss and live in harmony with nature. This framework was adopted by global leaders at the 2022 United Nations Biodiversity Conference As an active member of multilateral organiza- tions, we follow developments of new methodolo- gies for companies to monitor and establish tar- gets to prevent and reverse nature and biodiversity loss. For example, we continued to Environmental data 7.6 Bioethics & biodiversity be a part of the technical dialogues on the chang- ing reporting landscape through industry and business groups such as the International Chamber of Commerce. We established a cross functional working group to understand how these developments could impact the way we develop, produce, and market our biosolutions. The group includes representa- tives from Operations, Public Affairs, Research & Development, and Sustainability, and it reports to the Corporate Sustainability Committee when relevant. As a responsible producer, we take action in our efforts to restore water and biodiversity. In the TEDA industrial park, we are making an innova- tive attempt to improve overall water steward- ship by fostering collaboration across companies to increase the use of recycled water within the park. Moving forward, we will explore additional ways to support the implementation of the post-2020 Global Biodiversity Framework. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 135Notes At Novozymes, we ensure our biosolutions are produced responsibly and that they are safe for humans, animals, and the environment. Product stewardship is a priority for our business given that many of our biosolutions serve as ingredi- ents in consumer products such as detergents or are used to manufacture consumer products such as food, textiles, paper, dietary supple- ments, and cosmetics. Our approach Product stewardship is an integral part of Novozymes’ Quality Management System, and our approach is outlined in our Quality and Product Safety Policy. Procedures ensuring product stewardship for cus- tomers and end-users are enforced globally and audited by an independent external body. We col- laborate with our customers, suppliers, and vari- ous trade associations to drive product safety and stewardship. Novozymes has internal targets on product ste- wardship that guide our progress. We evaluate performance in the areas of product safety and hazardous substance management and constantly strive to reduce risks for humans, animals, and the environment. For example, we seek to improve our products to ensure enzymes release a minimum amount of dust and prevent allergies. We also educate our employees and customers on the safe handling of our products using multiple communication chan- nels, such as safety data sheets, videos, posters, brochures, and safety catalogues. Wherever feasible, we substitute hazardous sub- stances in our operations with safer alternatives. Through a rigorous and comprehensive cross- functional process, new and existing chemicals are screened annually for human health and envi- ronmental safety aspects, followed by risk and feasibility assessments to determine candidates for potential phase-out from our products. To make it easier for our customers to ensure com- pliance of their products, we have a structured approach to key topics such as product informa- tion, labeling, and traceability. Novozymes’ pro- ducts comply with regulatory requirements such as REACH (Registration, Evaluation, Authorization and Restriction of Chemicals), one of the most advanced chemical legislations in the world, and food legislations such as FIAP (Food Improvement Agents Package). 2023 summary In 2023, we completed the implementation of our new Regulatory Information Management System, allowing us to retire legacy tools for product ste- wardship activities across Regulatory Affairs. It means that documents, communication, and regis- tration activities are now digitally linked, enabling more transparency and smoother communication on regulatory compliance internally. To address increasing societal concerns about Endocrine Disruptors (EDs), we decided to phase out both EDs and potential EDs from our pro- ducts and have begun to screen relevant materials. We continued to expand the list of our OEKO- TEX® certified products, which is key for our tex- tile and leather customers to bring certified greener products to the market. It requires prov- ing the absence of unwanted chemicals such as carcinogens, volatile organic compounds, heavy metals, organotins, and flame retardants. Chemical legislations similar to REACH are being implemented in other countries. In 2023, Novozymes successfully registered under such new legislation in Türkiye. In response to new regulations in South Korea, Novozymes estab- lished a new process with Only Representatives (OR) that simplifies the regulatory obligations for customers. Novozymes is also a leading member of the South Korean Enzyme REACH Council, contributing to the discussion with authorities based on our own experience. Novozymes continued to lead discussions on enzyme safety implementation across the enzyme industry and customers’ industries through various trade associations globally. As an outcome of these discussions, the association of enzyme producers, AMFEP (Association of Manufacturers Fermentation Enzyme Products), launched an updated guideline on safe handling of industrial enzyme preparations as well as a specific guideline for the safe handling of enzymes within the feed industry. AMFEP also launched a state-of-the-art module for support- ing and managing the development of product claims and hazardous substance management. In addition, Novozymes was part of the develop- ment of a new guideline on how to conduct risk assessments of enzyme-containing products for professional cleaning. It is being developed col- laboratively by AMFEP, AISE (European deter- gent industry), ACI (American Cleaning Institute), and HCPA (Household & Commercial Product Association). Environmental data 7.7 Product stewardship Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S The Novozymes Report 2023 Accounts and performanceGovernanceOur businessThe big picture Note 8 8.1 Labor practices & human rights 8.2 Inclusion & diversity 8.3 Employee safety & well-being 8.4 Business ethics 8.5 Customer engagement 8.6 Community engagement 8.7 Responsible sourcing Completion rate of business integrity training for employees Decrease from 1.7 in 2022 in frequency of occupational injuries with absence (per million working hours) to Women in senior management up Social and governance data Mandatory statement on Corporate Social Responsibility The Notes on Environmental data and Social and Governance data form the reporting required under section 99a of the Danish Financial Statements Act. Topic Reference Pages Business model Our business p. 15 Content of commitments, management approach, targets, data, initiatives, and related progress on corporate social responsibility issues: Climate and environment Notes on Environmental data pp. 124-135 Social matters Notes on Social and Governance data pp. 136-148 Human rights Note on Labor practices and Human rights pp. 137-138 Anti-corruption and bribery Note on Business Ethics pp. 143-144 Novozymes A/S 137Notes At Novozymes, we take responsibility to ensure we follow proper labor practices and that human rights are respected both within our organization and throughout our value chain. Our approach We have adopted a common management approach and reporting structure for labor prac- tices and human rights. Our People and Organization (P&O) function, together with lead- ers across Novozymes, are responsible for ensur- ing equal rights for all employees. We are committed to ensuring equal opportuni- ties and avoiding discrimination in our global organization based on age, sex, gender identity, race, national origin, ethnicity, disability, educa- tion, sexual orientation, and religious beliefs. We recognize and respect our workers’ rights to form and join unions and associations and to bargain collectively. Novozymes respects human rights as defined by the U.N. Guiding Principles on Business and Human Rights and has implemented them in our operational policies and procedures. We respect the International Bill of Human Rights, the International Labor Organization’s Declaration on Fundamental Principles and Rights at Work, and, since 2001, we have been a signatory to the United Nations Global Compact. Novozymes is also a signatory to the U.N. Women’s Empowerment Principles. We publish an annual statement under the U.K. Modern Slavery Act. We conduct focused human rights impact assess- ments to identify and assess human rights risks and impacts in our business and supplier base. 2023 summary Labor practices In 2023, the rate of employee turnover was It continues to be higher than pre-pandemic levels, likely due to new leave regulations and behavioral change. The rate of absence has been broken down in the table below into grouped job categories. 8.1 Labor practices & human rights Social and governance data Employee statistics 2023 2022 Rate of employee turnover - retirement 0.8 1.0 Rate of employee turnover - dismissal 2.7 2.1 Rate of employee turnover - voluntary 7.1 8.3 Rate of employee turnover, total 10.6 11.4 Rate of absence Senior management, management, professional and administrative 1.7 1.7 Skilled workers, laboratory technicians, other technicians, and process operators 4.0 4.1 All employees ESG 2.6 2.6 Other employee statistics Average age years 42.4 41.9 Average seniority years 9.5 9.2 Number of expatriates no. 24 18 Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 138Notes Absence is defined as time lost due to an employee’s illness, including leave, and occu- pational injuries and diseases. The rate of absence is calculated as the num- ber of registered days of absence as a per- centage of the total number of normal work- ing days in one year, less vacation and public holidays. The rate of employee turnover is calculated as employee turnover divided by the average number of permanent employees. Employee turnover is measured as the number of permanent employees leaving the Group dur- ing the preceding year excluding employees at divested entities transferred to the acquir- ing company. Average age and seniority are calculated as the sum of the employees’ aggregate age/ seniority in whole years at the reporting date divided by the number of employees. Expatriation refers to Novozymes employees temporarily reassigned within Novozymes from the country of original employment for periods of more than six months. Accounting policies 8.1 Labor practices & human rights (continued) Social and governance data Human rights As a responsible corporate citizen, we recognize our role in seeking to prevent or mitigate adverse human rights impacts, not just in operations but also through our business relationships. In 2023, we launched a new code of conduct for our business partners in the supply chain, which enables us to communicate our expectations on different aspects of sustainability, human rights, and inclusion to a wider audience than in the past. It will be further rolled out in 2024. In 2023, we conducted a Human Rights Impact Assessments focused on global policies and governance. We identified no systematic human rights violations within our global operations. We also followed up on recommendations from pre- vious years, and those have either been addressed or are no longer relevant. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 139Notes At Novozymes, we foster a collaborative atmos- phere, bringing together individuals with varied and complementary skills. Our employees embrace shared values to form a vibrant culture. Nurturing an inclusive and diverse organization where employees thrive is the foundation from which we continue to bring the power of biosolu- tions to the world. Our approach We are committed to nurture a culture of diversity, equity, and inclusion. By 2030, we aim to achieve gender balance. This means that we will strive for a minimum of 45% women and 45% men across all professionals and in senior management. We recognize that focusing on diversity of rep- resentation alone is not enough. For diverse teams to succeed, people need to feel that they are valued, respected, and have a shared sense of purpose, and thus we focus on inclusion. We take a regional approach to developing and defining programs based on local demographics to address diversity dimensions beyond gender. Many of our sites have Employee Resource Groups which aim to foster Diversity, Equity, and Inclusion (DE&I) locally. At Novozymes, we have a policy for diversity and equal opportunities, which applies to our entire workforce. Our People and Organization (P&O) function, together with regional leaders across Novozymes are responsible for ensuring equal opportunities and for promoting DE&I. 2023 summary In 2023, our senior management consisted of 215 employees of which 36% were women, an increase compared to 33% in 2022. In addition, gender balance across all professionals remained at 43% women and 57% men, as in 2022. In 2023, we promoted gender diversity among leaders in the company. As an example, our new- est leadership program, Leading Tomorrow, was offered to an equal number of female and male leadership talents, which provides a gender balanced leadership talent pool for the future. Furthermore, we introduced specific require- ments in our succession management systems to monitor diversity among the potential successors for leadership positions. 8.2 Inclusion & diversity Social and governance data Gender diversity 2023 2022 Women Men Women Men In senior management ESG % 36 64 33 67 In management % 41 59 40 60 At professional levels % 46 54 45 55 Across all professionals % 43 57 43 57 Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 140Notes Gender diversity in senior management measures the percentage of women and men in director positions or higher (i.e. director, vice president or executive vice president). Gender diversity in management measures the percentage of women and men in middle man- agement and specialist manager positions. Gender diversity at professional levels meas- ures the percentage of women and men in positions typically requiring an academic background or team lead positions. Gender diversity across all professional levels measures the percentage of women and men across professional, manager, and senior leadership levels. All of the above classifications are based on internal job categories. Accounting policies 8.2 Inclusion & diversity (continued) Social and governance data In 2023, Novozymes signed up to the United Nations Foundation’s “Five for 5 initiative”, a five-year program to implement specific policies that advance gender equality in workplaces. We conducted different regional initiatives to promote a diverse and inclusive workforce, covering hiring, parental leave, parent care leave, and diversity trainings. For example, across Asia Pacific, we initiated local cultural festivals to cre- ate opportunities for employees to learn from, respect, and appreciate each other’s countries in nurturing an inclusive regional workforce. The festivals included trainings on cultural awareness and unconscious bias along with hosting Country Cultural Shows. In the Middle East and India, the focus on gender equity included a mentoring program focusing on leadership development for female employees. We hosted educational events, especially during Pride Month and International Women’s Month, to enable greater understanding. In these coun- tries, we also made changes to our benefits policy with regards to medical, bereavement, and parental leave. In North America, managers were trained in inclusive leadership and asked to host inclu- sion-related team talks across the region. In Latin America, employee resource group leaders received training on effective sponsorship of DE&I, and all employees were encouraged to join a training session on the importance of promot- ing minority groups. In addition, an entire week in September was dedicated to workshops and engagements on DE&I. In Denmark, we discontinued the nine-month seniority requirements for full pay during paren- tal leave (birth and adoption) to provide equal access to all employees to this benefit. Our employees volunteered during Copenhagen Pride week, which raised awareness of human rights, equity, diversity, and inclusion through a series of workshops and seminars with external speak- ers. We also facilitated a “girl takeover” initiative in cooperation with Plan Børnefonden where a young woman gets to be leader for a day. Moving forward, we will continue our region spe- cific approach and focus on being an inclusive and diverse organization. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 141Notes Novozymes is steadfast in helping employees thrive across various stages of their professional pathway, whether it is staying safe, healthy, hav- ing meaningful work contributions, or learning new skills to advance their careers. We want them to have a positive work-life synergy and bring out their best at work and beyond. This is crucial to our success as a business and for sus- taining our reputation as a great place to work. Our approach Our ambition is to have a workplace where employees stay safe, thrive, and grow. To deliver on this long-term ambition, we have a health & safety strategy toward 2030 that includes initia- tives on leadership, culture, behaviors, work- place, tools, and training. To support our culture, our People and Health & Safety Policies set the guidelines, and our employee survey serves as an important tool to track the organization’s disposition and support better team conversations that focus on how we work together at Novozymes. Our Health & Safety management system aims to ensure that robust safety processes, equipment, standards, tools, and training are fully integrated into the way we work. Our global incident handling system, CAPTURE, enables us to moni- tor incidents and anchor improvements, correc- tive actions, and inspections. The data helps us develop targeted, theme-based safety initiatives, relevant to a specific site. Injury prevention is a focal point for Novozymes, and our preventive programs for enzyme and biological safety aim to protect both employees and customers. Our global and regional health and well-being groups address local challenges, using our Wellbeing Portal to roll out relevant initiatives. Learning and development is a key managerial responsibility with support from the People & Organization function. 2023 summary Our Thrive Index showed a score of 84, which is three points higher than the industry benchmark, indicating that our employees are learning, devel- oping and feel connected to Novozymes’ purpose and strategy. Safety Our three-year rolling average frequency of occu- pational injuries with absence per million working hours was 1.5, equal to 1.5 in 2022. We are also on In 2023, we conducted an analysis of incidents from previous years to develop a new strategy for health and safety with strengthened targets and several defined initiatives. For example, we had a global mandatory safety e-learning for all employees. We launched three new tools focused on safety during maintenance as well as perform- ing and documenting risk assessments. These aim to ensure we have a 360-degree view of safety conditions and can take appropriate action, specific to each location and jobs being performed. Consequences of occupational injuries No. 2023 2022 Return to original job 11 17 Return to a different job in the same department - 1 Out of work or early retirement - 2 Case pending 5 - Occupational injuries with absence, total 16 20 Occupational injuries 2023 2022 Days of absence due to occupational injuries No. 500 745 Frequency of occupational injuries with absence ESG Per million working hours 1.3 1.7 The results of our employee survey on safety were very positive, indicating that our employees feel physically safe and secure in their work envi- ronment. Moving forward, we will continue to drive a safety culture, to ensure that safety behaviors are part of our organization and to proactively prevent injuries. Well-being In 2023, we continued to roll out our research- based e-learning program called Mindstrain. It has shown positive results in improving mental well- being and reducing stress. 8.3 Employee safety & well-being Social and governance data Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 142Notes 8.3 Employee safety & well-being (continued) Social and governance data Consequences of occupational diseases No. 2023 2022 Return to original job - - Return to a different job 3 1 Out of work or early retirement - - Case pending - - Occupational diseases, total 3 1 Occupational diseases 2023 2022 Days of absence due to occupational diseases No. - - Frequency of occupational diseases ESG Per million working hours 0.3 0.1 Training costs 2023 2022 Average training cost spent per employee DKK 3,586 4,441 Percentage of total employee costs 0.5 0.7 In addition, as part of the Psychological Safety Team Program, we added a combination of videos, workbooks, and team exercises to help us commu- nicate better within a team while improving inclu- sion and well-being. 2023 was also a year of change at Novozymes in light of the combination with Chr. Hansen. For this reason, we focused on ensuring consistent and clear communication to our employees to help them navigate the changing landscape and minimize uncertainty as much as possible. At the same time, we equipped our leaders with the necessary know- ledge and tools to lead during a period of change and uncertainty. Growth Our strategic leadership development tools ensure that Novozymes has leaders that under- stand the behaviors needed to deliver results in accordance with our strategy. Throughout 2022 them anchored the development areas into “Individual Development Plans”. We continue to encourage employees to discover and to learn while building skills and competen- cies needed for success in existing job roles and career growth. Occupational injuries are defined as the reported number of incidents that occur in the performance of job duties at or between Novozymes locations that prevents the indi- vidual from assuming working activities on the next day of their scheduled shift. Occupational diseases are defined as the number of diseases contracted as a result of an exposure to risk factors arising from work activity and acknowledged as work related in accordance with national legislation. The consequences of occupational injuries with absence and occupational diseases are measured by recording the work situation once the situation resulting from an incident has stabilized, for example whether the employees have returned to their original jobs, and the total number of calendar days of absence. Frequencies of occupational injuries with absence and frequencies of occupational dis- eases are stated per million working hours. The Thrive Index is derived from specific questions in the annual employee question- naire. The resulting score is a value of between 0 and 100. Training costs express the costs of external training courses and seminars, translated into Danish kroner at average exchange rates. Training spend is also shown as a percentage of total employee costs. Accounting policies Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 143Notes We are committed to conducting business in a responsible, ethical, and transparent manner, and meeting stakeholders’ expectations of high business integrity standards across our opera- tions. Our approach We live and act as a responsible corporate citi- zen. Business ethics is integrated into everything we do and plan for the future. It is reflected in our purpose, values, policies, and position state- ments. We promote a strong compliance culture and take relevant measures to ensure compliance to the highest standards across all material envi- ronmental, social, governance, and financial- related issues. Our purpose, values, and business integrity prin- ciples act as our code of conduct in business integrity matters. Our code of conduct forms the basis of our efforts to ensure a compliant busi- ness and eliminate all forms of corruption. It applies to all employees across the world and lays the ground rules for conducting business with honesty and fairness in compliance with laws and recognized standards for responsible and ethical business practices. 8.4 Business ethics Social and governance data It contains principles, which among other things underline our zero tolerance position towards bri- bery and define clear rules for gifts and hospitality. All employees have access to relevant guidance on business integrity and are encouraged to raise any concerns through the relevant grievance channels. In addition, annual compliance training in business integrity and competition law is con- ducted, which is mandatory for employees in scope. It focuses on anti-corruption, and it is based on questions raised during the year, including real-life case studies, to ensure rele- vance and applicability. We also provide targeted training on an ad-hoc basis, depending on needs or risks detected or foreseen. We have a Committee responsible for the over- sight of business integrity matters across the company. Members include executive and senior management representatives from both business and compliance functions. They meet on a regu- lar basis to make strategic decisions and to fol- low up on the state of business integrity compli- ance and relevant initiatives. The committee also engages with external advi- sors, when relevant, for a thorough and qualified decision-making process. We work proactively to prevent, detect, and respond to fraud, corruption, and other business integrity violations. We have a global corporate whistleblower hotline which allows employees and external partners to report any concerns on illegal or unethical misconduct or other business integrity violations. The whistleblower hotline is supplemented by various internal reporting chan- nels and screening activities. All allegations of fraud, corruption, and other business integrity cases are thoroughly investigated. Substantiated violations lead to proportionate disciplinary sanctions for the parties involved and an internal review on compliance gaps or potential improve- ments of policies and procedures. Our responsibility for ensuring ethical business practices also extends to our business partners. Our third-party due diligence processes seek to ensure that our commercial partners conduct business with integrity and share our values regarding legal compliance. 2023 summary This year, Novozymes’ business integrity training a general reminder of the principles we abide by to mitigate the risk of bribery and corruption, with a particular focus on conflicts of interest. The competition law compliance training in 2023 served as a general reminder of do’s and don’ts and had a focus on competition law aspects asso- ciated with interactions with customers, which may also be competitors. As in previous years, Novozymes had no reported violations of competition law in 2023. Advanced data analytics remains the main chan- nel for revealing potential fraud, and we have greatly enhanced our ability to rapidly detect and respond to cyberattacks. Read more in our Risk Management section. In 2023, investigations based on whistleblower reports and tip-offs increased compared to 2022. The increase is impacted by an increase in non-fraud related whistleblower reports. None of the substantiated cases had material business or financial impact for Novozymes. The increased threat from cyber- crime led to an increase in the number of detected cybercrime cases in 2023 to 29 from 23 in 2022. The Audit Committee reviews quarterly informa- tion on all whistleblower reporting and other tip- offs on potential fraud and corruption. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Reporting channels for potential fraud 2023 (2022) Whistleblower 64% (25%) Internal tip-off 31% (55%) External tip-off 5% (20%) 45 (40) Investigation outcome for whistleblows and in-/external tip-offs 2023 (2022) Substantiated 27% (38%) Not substantiated 44% (45%) Other 29% (17%) * Not fraud investigations. 45 (40) Novozymes A/S 144Notes Completion of business integrity training refers to the percentage of employees in scope who completed business integrity training in the last training period. New enti- ties are included within six months of acquisi- tion. Business integrity training is conducted for employees who could potentially influ- ence third-party interactions or decisions as part of their job role. This comprises employ- ees in professional, managerial or administra- tive positions. The reporting criteria for a competition law violation is whether it has been established by an authority, which is a member of the International Competition Network, or by a competent court anywhere in the world that a company in the Novozymes Group has vio- lated applicable anti-trust regulations. Novozymes defines fraud including corruption, as deliberate misconduct with the intent to gain a direct or indirect personal advantage. Accounting policies 8.4 Business ethics (continued) Social and governance data The charts provide further details of the report- ing channels and consequences for fraud and corruption cases. In 2023, Novozymes’ Corporate Business Integrity Committee had a particular focus on compliance policies and programs within the areas of anti-corruption and data privacy. Selected cases concerning matters of principle were reviewed by the committee for the purpose of providing additional and targeted guidance to the organization, e.g., conflicts of interest and acceptable hospitality. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 145Notes Together with customers, partners, and the global community, we use our biosolutions to help cus- tomers grow their businesses while preserving the planet’s resources and enabling better lives. Therefore, customer engagements and partner- ships are material to us. We seek to continue being a trusted business partner that delivers reli- able products and innovative solutions. Our approach To meet increasing customer needs, Novozymes proactively engages with customers in various ways. Customer co-creation and commercial leadership are some of the main drivers behind our strategy. Our technical services and customer co-creation teams have in-depth understanding of our cus- tomers’ needs, and they help optimize product use by making necessary adjustments tailored to the needs of individual customers such as finding novel solutions and applications to help improve their processes and final products. We also bring value through our online services and digital tools that are designed to be easy to use, inspirational, and available whenever our cus- tomers need them. We aim to increase our digital offerings to customers by providing more 8.5 Customer engagement Social and governance data transparency on our product offerings, easy access to purchasing, as well as digital collabora- tion with technical services. We believe that getting feedback from our cus- tomers is crucial to determining our performance. It assists us in assessing customer expectations and driving improvements to our products and service offerings. Over the year, we gather feed- back and rapidly respond to customer concerns and suggestions as they arise. Throughout the year, we respond to several infor- mation requests from customers in areas such as governance, strategy, sourcing practices, safety, quality, and sustainability. We provide them with information on our products, services, corporate policies, commitments, targets, and initiatives in a transparent manner. 2023 summary The Customer Satisfaction Survey resulted in a Net Promotor Score (NPS) of +71 in 2023, an increase from the score of +69 in 2022. The NPS score shows that our customers still strongly value the continuous support provided by Novozymes, the high quality of our products, long-term relation- ship, and close collaboration, despite the challeng- ing business environment experienced in 2023. In 2023, we expanded our customer co-creation (CCC) offering by strengthening capabilities such as formulation and prototyping, sensory, design thinking, and nutritional science. A key milestone this year has been the launch of two new Food & Health co-creation centers in Franklinton, U.S. and Copenhagen, Denmark. We also have plans for a customer co-creation center in China. Additionally, we already had a Baking Innovation Technology Center in Türkiye and a Detergent Design Center in India. Our new centers offer the ideal environment to collaborate with customers from ideation to product launch. CCC is integrated with our com- mercial team and works hand in hand with them. The centers have the space and tools to make high-quality prototypes in-house and help us col- laborate faster with our customers. A key highlight was the Nutrition Claims tool that we developed to give customers a quick and simple overview of the regulatory scenario for potential nutritional claims on food labels in each EU member state, based on nutritional data from customer or pilot products. Learn more about customer co-creation in the Strategy & commitments section of this report. This year, we also invested in seamless digital solutions and advanced analytical tools to enable commercial teams to deliver on targets. Further, we started a program to refresh our go-to-market strategy to increase growth, improve customer satisfaction, and build a stronger commercial model. We continued to invest in artificial intelligence and machine learning capabilities to secure insights, create efficiency, and develop better digital solutions and self-service options for our employees and customers. When it comes to sustainability disclosures, we received more requests in 2023 than previous years for sustainability data and information from our customers. It represents a clear signal of the growing importance of sustainability to companies today. In addition to these requests, Novozymes also worked closely with a few strategic partners on innovating together for sustainability. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Financial statements for Novozymes A/S 146 8.5 Customer engagement (continued) Social and governance data As an example, LIBY, one of our leading partners for household care in China for over 30 years, is focused on creating a localized environmental cal- culator and shaping national green standards to guide China’s detergent industry. Novozymes sup- ports LIBY’s initiatives with advisory and data, where possible. In 2023, the collaboration between both companies were among the Top 100 Cases in the “2023 Chinese Enterprises Report on Low Carbon Transition and High-Quality Development”. In 2023, Novozymes was one of the first compa- nies to sign Unilever’s Climate Promise, signaling our commitment to support their net-zero journey. We have championed their supplier engagement program at two separate Unilever supplier events. We conducted a joint decarbonization workshop to share knowledge and identify additional oppor- tunities for Unilever to leverage biosolutions to deliver on their net-zero journey. Together with our partners, we are shaping the future of energy. Raízen is a leader in the produc- tion of low-carbon fuels and power from sugar cane, biomass, biogas, and biomethane. In 2023, Raízen launched its second biomass ethanol plant with a capacity of producing 75 million liters of cellulosic ethanol per year with a minimal carbon footprint, powered by Novozymes’ biosolutions. This is the first of many new plants they plan to build and operate by 2031. FS, one of our biofuels partners in Brazil, aims to be the largest producer of negative carbon biofuel in the world by building ethanol refineries with carbon capture and storage. These plants produce bioenergy, while removing carbon dioxide perma- nently from the atmosphere, by capturing the emissions released during the fermentation pro- cess and storing them underground. We provided vital carbon footprint data and supported their certification process because we strive to help our customers achieve their sustainability goals. The Net Promoter Score (NPS) is derived from an annual questionnaire measuring on a scale from 1-10 how likely the customer is to recommend Novozymes to others. The NPS is calculated as the share of promoters (rating us 9 or 10) less the share of detractors (rating us 1-6). The resulting score is a value between -100 and +100. Accounting policies Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 147Notes At Novozymes, we pride ourselves on having a cul- ture of changemakers with employees who want to leave a positive mark on the world. We believe we have a responsibility for the well-being of the communities we operate in and to invest strategi- cally in programs that create value to society. We inspire each other to make change happen and deliver on our promise of better lives in a growing world, both inside and outside the workplace. Our approach As part of our strategy, we aim to nurture a work- ing environment that empowers employees to give back to society and nature. We encourage this by - ties that support community needs, help educate the next generation, and enable our employees to live more sustainably. Novozymes’ global community outreach initiative “Inspire” is driven by passionate employees, who are encouraged to contribute to better lives via initiatives which they are enthusiastic about. All regions have groups coordinating the local agenda with the regional leadership team. Further philanthropic contributions are done indi- rectly through our dividend payments to the Novo Nordisk Foundation, through Novo Holdings A/S, Novozymes (see The Novozymes Stock). The Foundation’s objective is to support scientific, social, and humanitarian purposes, and it contrib- utes to communities in large scale through dona- tions and impact investments. In addition, all employee-elected candidates serv- ing on the Board of Directors donate the majority of their board remuneration to a foundation in the Novo Group called “Medarbejdernes Honorarfond”. The excess capital of the founda- tion is granted for urgent humanitarian purposes or to humanitarian relief organizations. 2023 summary Engaging with our local communities To support the people affected by the earth- quake in February in Türkiye and Syria, employ- ees in Türkiye purchased and packed supplies and in Germany, they raised funds for relief organizations. Novozymes also donated mone- tary support to Türkiye Red Crescent and the Turkish NGO, Ahbap Platformu Resmi Sitesi. As part of the welcome package, Novozymes Kenya introduced an initiative where every new employee plants 10 trees at a local high school to help the school become self-reliant in food for students. In North America, employees contin- ued to facilitate numerous donations as well as volunteering at a food bank and a nursery. Helping to educate the next generation Novozymes engaged with students all over the world to share the story about biosolutions, spread knowledge about study and career oppor- tunities within STEM and by being passionate role models breaking prejudices and other barriers. In Denmark, South Korea, Japan, South Africa and other countries, employees engaged with students from high school to university level, showcasing and teaching them the captivating aspects of our work with biosolutions, as well as engaging in career talks. In China, employees developed courses for the public to raise aware- ness on biology and sustainable development. In North America, employees hosted demos at local libraries or schools, staffed a mobile innova- tion lab, and we also hosted over 100 elementary school children participating in STEM activities in our labs in Davis, U.S. In Brazil, we joined the “Impulsione um Jovem” initiative, which provides support and mentorship to students in vulnerable situations to ensure continuity of their studies and reinforce their professional development. Empowering employees to live more sustainably Sustainable living is a common theme for team building activities. In China, employees organized a street survey to raise awareness about food security and build an understanding of the com- munity’s needs. In Denmark, employees went sailing in kayaks to collect trash across the har- bor in Copenhagen, while others joined an initia- tive that promoted carpooling to and from our site to reduce traffic and personal carbon foot- print. Across our Asia Pacific region, more than 800 employees joined an internal physical exer- cise campaign to raise awareness about environ- mental issues such as Earth Overshoot Day, as well as promoting healthy and sustainable living. 8.6 Community engagement Social and governance data Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 148Notes Novozymes’ responsible sourcing practices are focused on environmental, social, and gover- nance issues across our value chain. Agricultural raw materials are a major component of our pro- duction processes and having a responsible and secure supply of them is crucial for production at Novozymes. Our approach Novozymes’ sourcing department drives our sup- plier management and responsible sourcing pro- gram, anchored within Novozymes’ Operations, Supply and Quality function. Our approach to responsible sourcing is defined by our Responsible Purchasing Standards (RPS) and managed through our Supplier Performance Management (SPM) process and the Supplier Ethical Data Exchange (SEDEX) platform. Through the SPM process, Novozymes monitors suppliers and classifies their risk based on spend, country, and category. Novozymes uses the SEDEX colla- boration platform to engage with suppliers and manage sustainability risks in our supply chain. In addition, our suppliers of directly sourced agri- cultural raw materials are required to adhere to our requirements on zero net deforestation and zero tolerance for land grabbing. In case a sup- plier does not meet our assessment criteria, either an action plan is established, or an alter- nate supplier is identified. Responsible sourcing is a key driver of Novozymes’ journey towards becoming net-zero - tricity by 2025. We are committed to reducing our supply chain (scope 3) greenhouse gas emis- Furthermore, we recognize that the climate matu- rity of suppliers is critical for Novozymes’ efforts to reduce emissions, and therefore engage with them on their own decarbonization efforts. Further information on our efforts can be found in Note 7.1 Climate change. 2023 summary We are continuing to focus on progressing the existing opportunities to purchase renewable energy and identifying further long-term solu- tions. These initiatives require years of prepara- - sumption came from renewable sources, and we are well on track to meet our target for 2025. As a member of the Roundtable on Sustainable ducts we sourced in 2023 were RSPO’s mass balance (MB) or Segregated (SG) certified. In 2023, Novozymes received its first RSPO supply chain (MB) certification in Denmark. We have now started working towards getting our Franklinton site certified in 2024. This certifica- tion further enables our customers to sell RSPO certified products themselves. As part of our Human Rights commitments, our sourcing teams are given sustainability training on an annual basis, with a focus on human rights and modern slavery issues that may exist in our supply chain. In 2023, through this interactive training, the teams engaged with various online tools to improve our understanding of reporting violations, work with suppliers to resolve issues, and find common sustainability themes for engagement. Throughout 2023, our sourcing teams have initi- ated various activities to promote sustainability across our sites. For example, in India, we imple- mented new initiatives to reduce the amount of paper used, lower the carbon footprint of employee commuting, and by partnering with a warehouse partner to convert over half of their electricity consumption to renewable sources. Our suppliers of conference venues in Denmark are required to comply with high sustainability standards, such as acquiring a Green Key certifi- this requirement, and the rest have concrete action plans to fulfill it. At the end of 2023, we introduced a code of con- duct for our external business partners. The document covers broader themes such as busi- ness ethics, human and labor rights, occupa- tional health and safety and environmental stewardship, including climate action. Going for- ward, it will replace our Responsible Purchasing Standard (RPS), and we will require all our exter- nal business partners, not just suppliers, to com- ply with this code of conduct. This year, we adopted a new platform, ARAVO, which has now taken over the SPM process, which will enable better responsible sourcing data integration in the years to come. In 2024, we will work to deliver on our responsible sourc- ing strategy while ensuring compliance with emerging supply chain regulations. 8.7 Responsible sourcing Social and governance data Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 149Statements Statement of the Board of Directors and Executive Management The Board of Directors and the Executive Management have today considered and approved the Annual Report of Novozymes A/S for the financial year January 1 – December 31, 2023. The Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act, and the Parent Company Financial Statements have been pre- pared in accordance with the Danish Financial Statements Act. Management’s Review has been prepared in accordance with the Danish Financial Statements Act and Article 8 of Regulation (EU) 2020/852 (EU Taxonomy Regulation). In our opinion, the accounting policies used are appropriate, and the Group’s internal controls rel- evant to the preparation and presentation of the Annual Report are adequate. The Consolidated Financial Statements and the Parent Company Financial Statements give a true and fair view of the financial position at December 31, 2023 of the Group and the Parent Company and of the results of the Group and the Parent Company operations and consolidated cash flows for the financial year January 1 – December 31, 2023. In our opinion, Management’s Review includes a true and fair account of the development in the operations and financial circumstances of the Group and the Parent Company, of the results for the year, and of the financial position of the Group and the Parent Company as well as a description of the most significant risks and elements of uncer- tainty facing the Group and the Parent Company. Novozymes’ consolidated environmental data and the consolidated social and governance data and the related notes have been prepared in accordance with the reporting principles of mate- riality, inclusivity, responsiveness and the accounting policies. In our opinion, they give a true and fair view of the organisation’s environ- mental, social and governance performance in accordance with these principles and policies. In our opinion, the Annual Report of Novozymes A/S for the financial year January 1 - December 31, 2023 with the file name NOVOZYMES-2023- 12-31-en.zip has been prepared, in all material respects, in compliance with the ESEF Regulation. We recommend that the Annual Report be adopted at the Annual Shareholders’ Meeting. Bagsvaerd, February 8, 2024 Executive Management Ester Baiget President & CEO Rainer Lehmann CFO Board of Directors Cornelis (Cees) de Jong Chair Kim Stratton Vice Chair Heine Dalsgaard Sharon James Kasim Kutay Morten Otto Alexander Sommer Anne Breum Anders Hentze Knudsen Preben Nielsen Jens Øbro Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 150Statements Independent Auditor’s Reports To the shareholders of Novozymes A/S Report on the audit of the Financial Statements and the Environmental, Social and Governance Data Our opinion In our opinion, the Consolidated Financial Statements give a true and fair view of the Group’s financial position at December 31, 2023 and of the results of the Group’s operations and cash flows for the financial year January 1 to December 31, 2023 in accordance with IFRS Accounting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act. Moreover, in our opinion, the Parent Company Financial Statements give a true and fair view of the Parent Company’s financial position at December 31, 2023 and of the results of the Parent Company’s operations for the financial year January 1 to December 31, 2023 in accord- ance with the Danish Financial Statements Act. In our opinion, the Consolidated environmental data and the Consolidated social and governance data for the financial year January 1 to December 31, 2023 are prepared in accordance with the accounting policies for the Consolidated environmental data and the Consolidated social and governance data. Our opinions are consistent with our Auditor’s Long-form Report to the Audit Committee and the Board of Directors. What we have audited The Consolidated Financial Statements of Novozymes A/S, pages 52-60 and 65-123 for the financial year January 1 to December 31, 2023 comprise the consolidated income statement and statement of comprehensive income, the consolidated balance sheet, the consolidated statement of equity, the consolidated cash flow statement and the notes, including material accounting policy information. The Parent Company Financial Statements of Novozymes A/S, pages 155-169 for the financial year January 1 to December 31, 2023 comprise the income statement, the balance sheet, the statement of equity and the notes, including material accounting policy information. These are collectively referred to as the “Financial Statements”. The Consolidated environmental data and the Consolidated social and governance data of Novozymes A/S, pages 61-64 and124-148, for the financial year January 1 to December 31, 2023 comprise the environmental performance and consolidated data, the social and govern- ance performance and consolidated data and the related notes, including material accounting pol- icy information. These are collectively referred to as the “Environmental, Social and Governance Data.” Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in Denmark. Our responsibilities under those stand- ards and requirements are further described in the Auditor’s responsibilities for the audit of the Financial Statements and the Environmental, Social and Governance Data section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (IESBA Code) and the additional ethical requirements applicable in Denmark. We have also fulfilled our other ethical responsibilities in accordance with these require- ments and the IESBA Code. To the best of our knowledge and belief, prohib- ited non-audit services referred to in Article 5(1) of Regulation (EU) No 537/2014 were not pro- vided. Appointment We were appointed as auditors of Novozymes A/S for the first time after the initial public offer- ing on March 21, 2001. We have been reap- pointed annually by shareholder resolution for a total period of uninterrupted engagement of 23 years, including the financial year 2023. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 151Statements Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Financial Statements for 2023. These matters were addressed in the con- text of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter How our audit addressed the key audit matter Revenue recognition Novozymes has entered into various sales agreements that are sub- ject to interpretation, which increases the inherent complexity of rev- enue recognition. Additionally, the volume of transactions and geo- graphical spread of the Group’s operations increase complexity, including in respect of occurrence and timing of revenue. We focus on this area because of the significance to the Consolidated Financial Statements, as well as the inherent complexity in both reve- nue recognition and individual sales agreements including different terms therein. Refer to Note 2.2 to the Consolidated Financial Statements. We considered the appropriateness of the Group’s accounting poli- cies for revenue recognition and assessed compliance with applicable financial reporting standards. We performed risk assessment procedures with the purpose of achieving an understanding of IT-systems, business procedures and relevant controls regarding recognition of revenue. In respect of con- trols, we assessed whether they were designed and implemented effectively to address the risk of material misstatement. For selected controls, which we planned to rely on, we tested whether these con- trols had been performed on a consistent basis. We discussed the judgments related to the recognition and classifica- tion of revenue with Management. We performed substantive procedures regarding returns, delivery terms and rebates in order to assess the principles applied for occur- rence and timing of revenue. We applied data analysis in our testing of revenue transactions in order to identify and test transactions outside the ordinary transac- tion flow. Finally, we assessed the adequacy of disclosures relating to revenue recognition. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 152Statements Statement on Management’s Review Management is responsible for Management’s Review, pages 3-51 and 170-171. Our opinion on the Financial Statements and on the Environmental, Social and Governance Data does not cover Management’s Review, and we do not express any form of assurance conclusion thereon. In connection with our audit of the Financial Statements, our responsibility is to read Management’s Review and, in doing so, consider whether Management’s Review is materially inconsistent with the Financial Statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. Moreover, we consider ed whether Management’s Review includes the disclosures required by the Danish Financial Statements Act and Article 8 of Regulation (EU) 2020/852 (EU Taxonomy Regulation). Based on the work we have performed, in our view, Management’s Review is in accordance with the Consolidated Financial Statements, the Parent Company Financial Statements and the Environmental, Social and Governance Data and has been prepared in accordance with the requirements of the Danish Financial Statements Act and the disclosure requirements of Article 8 of Regulation (EU) 2020/852 (EU Taxonomy Regulation). We did not identify any material mis- statement in Management’s Review. Management’s responsibilities for the Financial Statements and the Environmental, Social and Governance Data Management is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with IFRS Accounting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act and for the preparation of parent company financial statements that give a true and fair view in accordance with the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Furthermore, Management is responsible for pre- paring the Environmental, Social and Governance Data in accordance with the accounting policies for the Environmental, Social and Governance Data, and for such internal control as Management determines is necessary to enable the preparation of Environmental, Social and Governance Data that are free from material mis- statement, whether due to fraud or error. In preparing the Financial Statements, Management is responsible for assessing the Group’s and the Parent Company’s ability to con- tinue as a going concern, disclosing, as applica- ble, matters related to going concern and using the going concern basis of accounting unless Management either intends to liquidate the Group or the Parent Company or to cease opera- tions, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Statements and the Environmental, Social and Governance Data Our objectives are to obtain reasonable assur- ance about whether the Financial Statements and the Environmental, Social and Governance Data as a whole are free from material misstate- ment, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assur- ance, but is not a guarantee that an audit con- ducted in accordance with ISAs and the addi- tional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements and the Environmental, Social and Governance Data. As part of an audit in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material mis- statement of the Financial Statements and the Environmental, Social and Governance Data, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, inten- tional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the cir- cumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Parent Company’s inter- nal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management. • Conclude on the appropriateness of Management’s use of the going concern basis of accounting and based on the audit evi- dence obtained, whether a material uncer- tainty exists related to events or conditions that may cast significant doubt on the Group’s and the Parent Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 153Statements report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group or the Parent Company to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the Financial Statements, including the disclosures, and whether the Financial Statements represent the underly- ing transactions and events in a manner that gives a true and fair view. • Obtain sufficient appropriate audit evidence regarding the financial information, environ- mental, social and governance data of the entities or business activities within the Group to express an opinion on the Consolidated Financial Statements and the Environmental, Social and Governance Data. We are responsi- ble for the direction, supervision and perfor- mance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with gov- ernance regarding, among other matters, the planned scope and timing of the audit and signif- icant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with rel- evant ethical requirements regarding independ- ence, and to communicate with them all relation- ships and other matters that may reasonably be thought to bear on our independence and, where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclo- sure about the matter. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 154Statements Report on compliance with the ESEF Regulation As part of our audit of the Financial Statements we performed procedures to express an opinion on whether the annual report of Novozymes A/S for the financial year January 1 to December 31, 2023 with the filename NOVOZYMES-2023-12- 31-en.zip is prepared, in all material respects, in compliance with the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation) which includes requirements related to the preparation of the annual report in XHTML format and iXBRL tagging of the Consolidated Financial Statements including notes. Management is responsible for preparing an annual report that complies with the ESEF Regulation. This responsibility includes: • The preparing of the annual report in XHTML format; • The selection and application of appropriate iXBRL tags, including extensions to the ESEF taxonomy and the anchoring thereof to ele- ments in the taxonomy, for all financial infor- mation required to be tagged using judgment where necessary; • Ensuring consistency between iXBRL tagged data and the Consolidated Financial Statements presented in human-readable for- mat; and • For such internal control as Management determines necessary to enable the prepara- tion of an annual report that is compliant with the ESEF Regulation. Our responsibility is to obtain reasonable assur- ance on whether the annual report is prepared, in all material respects, in compliance with the ESEF Regulation based on the evidence we have obtained, and to issue a report that includes our opinion. The nature, timing and extent of proce- dures selected depend on the auditor’s judg- ment, including the assessment of the risks of material departures from the requirements set out in the ESEF Regulation, whether due to fraud or error. The procedures include: • Testing whether the annual report is pre- pared in XHTML format; • Obtaining an understanding of the company’s iXBRL tagging process and of internal control over the tagging process; • Evaluating the completeness of the iXBRL tagging of the Consolidated Financial Statements including notes; • Evaluating the appropriateness of the compa- ny’s use of iXBRL elements selected from the ESEF taxonomy and the creation of extension elements where no suitable element in the ESEF taxonomy has been identified; • Evaluating the use of anchoring of extension elements to elements in the ESEF taxonomy; and • Reconciling the iXBRL tagged data with the audited Consolidated Financial Statements. In our opinion, the annual report of Novozymes A/S for the financial year January 1 to December 31, 2023 with the file name NOVOZYMES-2023- 12-31-en.zip is prepared, in all material respects, in compliance with the ESEF Regulation. Hellerup, February 8, 2024 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab CVR No 3377 1231 Lars Baungaard State Authorised Public Accountant mne23331 Michael Groth Hansen State Authorised Public Accountant mne33228 Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Financial statements Income statement Balance sheet Statement of equity 1.1 Accounting policies 2.1 Revenue 2.2 Employee costs 2.3 Other operating income, net 2.4 Income from investments in subsidiaries 2.5 Special items 3.1 Intangible assets 3.2 Property, plant and equipment 3.3 Leases 3.4 Investments in subsidiaries 3.5 Investments in associates 3.6 Other receivables 3.7 Deferred tax 3.8 Other provisions 3.9 Payables to Group enterprises 4.1 Financial income and costs 4.2 Credit institutions 4.3 Derivatives 4.4 Proposed appropriation of net profit 5.1 Related party transactions 5.2 Fees to statutory auditors 5.3 Common stock and treasury stock 5.4 Contingent liabilities and pending litigation 5.5 Events after the reporting date Financial statements for Novozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Financial statements for Novozymes A/S 156 Income statement DKK million Note 2023 2022 Revenue 2.1 10,115 10,806 Cost of goods sold 2.5 (5,065) (4,963) Gross profit 5,050 5,843 Sales and distribution costs 2.5 (2,462) (1,906) Research and development costs 2.5 (1,852) (1,773) Administrative costs 2.5 (733) (663) Other operating income, net 2.3 1,893 1,352 1,896 2,853 Income from investments in subsidiaries 2.4 842 1,529 Share of result in associates 3.5 (18) (7) Financial income 4.1 214 260 Financial costs 4.1 (366) (533) 2,568 4,102 Tax (416) (557) Net profit 2,152 3,545 Dividend to shareholders 1,686 Retained earnings 2,152 1,859 4.4 2,152 3,545 Proposed dividend per share, DKK 6.00 Proposed dividend for the period September 1 - December 31, 2023 will be announced by the Board of Directors of Novonesis in connection with the notice of the Annual Shareholders’ Meeting. Income statement, Novozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Financial statements for Novozymes A/S 157 Assets DKK million Note Dec. 31, 2023 Dec. 31, 2022 Intangible assets 3.1 3,432 4,061 Property, plant and equipment 3.2 4,811 4,501 Investments in subsidiaries 3.4 10,298 10,342 Investments in associates 3.5 205 223 Other financial assets 14 2 Other long-term receivables 3.6 38 13 Receivables from Group enterprises 302 302 10,857 10,882 19,100 19,444 Raw materials and consumables 202 293 Work in progress 645 620 Finished goods 939 931 1,786 1,844 Trade receivables 1,392 1,344 Receivables from Group enterprises 400 88 Tax receivables 208 66 Other receivables 3.6 193 415 2,193 1,913 Cash at bank and in hand 253 213 Current assets 4,232 3,970 Assets 23,332 23,414 DKK million Note Dec. 31, 2023 Dec. 31, 2022 Common stock 562 562 Treasury stock (3,181) (3,348) Reserve for development costs 282 260 Cash flow hedges 65 81 Retained earnings 14,515 13,374 Proposed dividend 1,686 12,243 12,615 Provisions for deferred tax 3.7 609 650 Other provisions 3.8 83 264 692 914 Lease liabilities 116 130 Borrowings 4,329 3,619 4,445 3,749 Lease liabilities 63 47 Borrowings 3,081 2,909 Trade payables 734 830 Payables to Group enterprises 3.9 1,238 1,751 Other liabilities 836 599 5,952 6,136 11,089 10,799 23,332 23,414 Balance sheet, Novozymes A/S Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Financial statements for Novozymes A/S 158 Statement of equity, Novozymes A/S DKK million Common stock stock costs Retained 562 260 81 13,374 1,686 12,615 Net profit for the year 2,152 2,152 Capitalized development costs 22 (22) - Dividend paid (1,661) (1,661) Dividend paid relating to treasury stock 25 (25) - Interim dividend paid (1,164) (1,164) Sale of treasury stock 167 167 Fair value adjustments (16) (16) Other adjustments 150 150 B/S 562 282 65 14,515 - 12,243 Proposed dividend for the period September 1 - December 31, 2023 will be announced by the Board of Directors of Novonesis in connection with the notice of the Annual Shareholders’ Meeting. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Financial statements for Novozymes A/S 159 1.1 Accounting policies Note section 1 The financial statements of Novozymes A/S have been prepared in accordance with the Danish Financial Statements Act (accounting class D). The accounting policies are consistent with those applied for the consolidated financial statements except as described below. For a description of the Group’s accounting policies, please refer to the consolidated financial statements. The accounting policies are unchanged from 2022. No separate statement of cash flows has been prepared for Novozymes A/S; please refer to the consolidated statement of cash flows. Income is recognized in the income statement as earned. All costs incurred in generating the year’s reve- nue are also recognized in the income statement, including depreciation, amortization and impair- ment losses. Value adjustments of financial assets and liabili- ties measured at fair value or amortized cost are also recognized in the income statement. Assets are recognized in the balance sheet when it is considered probable that future economic benefits will flow to the company and the value of the asset can be reliably measured. Liabilities are recognized in the balance sheet when they are con- sidered probable and can be reliably measured. On initial recognition, assets and liabilities are meas- ured at cost. Assets and liabilities are subsequently measured as described below for each item. The accounting policies for intangible fixed assets follow those of the Group with the excep- tion of goodwill, which is amortized over a period of 10 years using the straight-line method. An amount equal to the total capitalized develop- ment costs after tax is recognized under Equity in Reserve for development costs. Financial assets Investments in subsidiaries are recognized ini- tially at cost and subsequently measured using the cost method. Dividends from investments in subsidiaries are recognized in the income statement of the Parent Company in the financial year in which the dividend is declared. If the car- rying amount of an investment in a subsidiary exceeds the carrying amount of the net assets in the subsidiary’s financial statements, or the divi- dend exceeds the total comprehensive income of the subsidiary in the period in which the dividend is declared, the carrying amount of the subsidi- ary is tested for impairment. Share-based payments granted to employees of the Company’s subsidiaries are recognized as contributions to the investment in the respective subsidiaries. Investments in associates are initially recognized at cost and subsequently measured using the equity method. If the equity of associates is neg- ative and Novozymes A/S has a legal or construc- tive obligation to cover their negative equity, a provision is recognized. Share purchase liabilities are obligations to invest in subsidiaries and are disclosed as a con- tractual obligation. The derivative embedded in the share purchase obligation is measured at fair value through the income statement. The dividend proposed for the financial year is shown as a separate item under Equity. Treasury stock is used to reduce the common stock and to hedge employees’ exercise of granted stock awards and stock options. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Financial statements for Novozymes A/S 160 2.1 Revenue 2.2 Employee costs Note section 2 DKK million 2023 2022 Geographical distribution: Denmark 233 211 Rest of Europe, Middle East & Africa 5,812 5,662 North America 1,489 1,878 Latin America 1,082 1,109 Asia Pacific 1,499 1,946 I/S 10,115 10,806 Reference is made to Note 2.1 to the consolidated financial statements segment information. DKK million 2023 2022 Wages and salaries 2,182 1,965 Pensions - defined contribution plans 209 196 Other social security costs 23 23 Other employee costs 206 181 2,620 2,365 Average number of employees in Novozymes A/S 2,931 2,849 Employee costs in 2023 included severance pay, retention bonuses and other employee costs of DKK 71 million related to the combination of Novozymes and Chr. Hansen. Reference is made to Note 6.1 to the consoli- dated financial statements concerning remunera- tion of the Board of Directors and the Executive Management. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Financial statements for Novozymes A/S 161 2.3 Other operating income, net 2.4 Income from investments in subsidiaries DKK million 2023 2022 Royalty income relating to subsidiaries 1,757 1,310 Net gain from divestment of selected waste-water treatment solutions 88 - Other operating income 48 42 I/S 1,893 1,352 DKK million 2023 2022 Dividends from subsidiaries 1,037 1,262 Impairment of subsidiaries (322) - Reversal of impairment of subsidiaries 127 267 I/S 842 1,529 Note section 2 2.5 Special items In 2023, costs included DKK 543 million related to the combination of Novozymes and Chr. Hansen, of which DKK 34 million were recog- nized in Cost of goods sold, DKK 373 million in Sales and distribution costs, DKK 8 million in Research and development costs and DKK 128 million in Administrative costs (2022: DKK 68 million in Sales and distribution costs). Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Financial statements for Novozymes A/S 162 3.1 Intangible assets Note section 3 Impairment No impairment loss was recognized in 2023 and 2022. 2023 2022 DKK million patents, licenses and Completed projects projects in Cost at January 1 4,375 3,023 919 136 8,453 8,330 Additions during the year - 4 13 113 130 123 Disposals during the year - (117) (8) - (125) - Transfers to/(from) other items - - 47 (47) - - 4,375 2,910 971 202 8,458 8,453 Amortization and impairment losses at January 1 (2,002) (1,670) (720) (4,392) (3,572) Amortization for the year (469) (192) (98) (759) (820) Disposals during the year - 117 8 125 - B/S 1,904 1,165 161 202 3,432 4,061 Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Financial statements for Novozymes A/S 163 Capitalized interest Interest of DKK 5 million was capitalized under Additions during the year (2022: DKK 0 million). Capitalization rate: 2.3% (2022: 0.8%). Land and buildings with an aggregate carrying amount of DKK 1,296 million (2022: DKK 1,366 million) were pledged as security to credit institu- tions in respect of mortgage loans expiring in 2029 and 2039. Contractual obligations to third parties relating to property, plant and equipment amount to DKK 138 million (2022: DKK 259 million). Impairment No impairment loss was recognized in 2023 and 2022. 2023 2022 DKK million Land and under construction Cost at January 1 3,526 5,459 1,485 608 11,078 10,646 Additions during the year 52 34 79 568 733 627 Disposals during the year (2) (34) (24) - (60) (195) Transfers to/(from) other items 51 108 54 (213) - - 3,627 5,567 1,594 963 11,751 11,078 Depreciation and impairment losses at January 1 (1,602) (4,004) (971) (6,577) (6,373) Depreciation for the year (108) (194) (117) (419) (388) Disposals during the year 2 32 22 56 184 B/S 1,919 1,401 528 963 4,811 4,501 3.2 Property, plant and equipment Note section 3 Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Financial statements for Novozymes A/S 164 DKK million 2023 2022 Land and buildings 33 38 Plant and machinery 82 87 Other equipment 56 43 171 168 Additions to lease assets during 2023 amounted to DKK 47 million (2022: DKK 9 million). DKK million 2023 2022 Less than 1 year 63 47 Between 1 and 5 years 53 61 More than 5 years 63 71 179 179 DKK million 2023 2022 Interest on lease liabilities 3 4 Depreciation of lease assets per asset class Land and buildings 8 9 Plant and machinery 5 6 Other equipment 29 30 Depreciation of lease assets 42 45 3.3 Leases Note section 3 Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Financial statements for Novozymes A/S 165 DKK million 2023 Cost at January 1, 2023 12,086 Additions during the year 151 Disposals during the year (32) 12,205 Impairment losses at January 1, 2023 (1,744) Impairment losses (322) Reversal of impairment losses 127 Disposals during the year 32 B/S 10,298 DKK million 2023 Cost at January 1, 2023 329 329 Revaluation reserve at January 1, 2023 (106) Share of result in associates (18) B/S 205 Reference is made to Note 6.9 to the consolidated financial statements concerning investments in subsidiaries, joint operations and associates. 3.4 Investments in subsidiaries Note section 3 DKK million 2023 2022 Prepaid expenses 112 206 Derivatives 77 142 Other receivables 42 82 231 430 Recognized in the balance sheet as follows: Non-current B/S 38 15 Current B/S 193 415 231 430 3.6 Other receivables 3.5 Investments in associates Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Financial statements for Novozymes A/S 166 3.7 Deferred tax DKK million 2023 2022 2023 2022 Intangible assets - - (296) (295) Property, plant and equipment - - (269) (312) Inventories - - (30) (30) Stock options 59 51 - - Other - - (73) (64) 59 51 Offsetting items (59) (51) 59 51 B/S - - DKK million 2023 2022 Deferred tax at January 1 (650) (483) Prior-year adjustments 31 21 Tax related to the income statement 2 (26) Tax on equity items 8 (162) B/S Note section 3 3.9 Payables to Group enterprises Other provisions include contingent considera- tion related to the acquisition of PrecisionBiotics Group. Current payables for Group enterprises included an internal transfer of assets from Microbiome Labs. The payable of DKK 158 million was paid in 2023 and contingent on the final purchase price for Microbiome Labs. In 2022, Management reassessed the value of the earn-out due to lower-than-expected sales and reduced the contingent consideration by DKK 223 million.The fair value adjustment was recognized as Financial income. Reference is made to Note 3.6 to the consoli- dated financial statements concerning contin- gent consideration, as the figures and informa- tion related to PrecisionBiotics Group applying to Novozymes A/S are identical to the informa- tion provided there. Reference is made to Note 3.6 to the consoli- dated financial statements concerning contin- gent consideration, as the figures and informa- tion related to Microbiome Labs applying to Novozymes A/S are identical to the information provided there. 3.8 Other provisions Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Financial statements for Novozymes A/S 167 Note section 4 4.2 Credit institutions DKK million 2023 2022 Interest income relating to subsidiaries 30 23 Fair value adjustment of payables relating to subsidiaries 165 223 Other financial income 19 14 Financial income I/S 214 260 Interest costs relating to subsidiaries (59) (32) Other financial costs (307) (501) Financial costs I/S DKK million 2023 2022 Long-term debt to credit institutions falling due after 5 years 1,832 1,318 4.1 Financial income and costs 4.3 Derivatives Reference is made to Note 5.4 to the consoli- dated financial statements concerning deriva- tives, as the figures and information applying to Novozymes A/S is identical to the information provided there. 4.4 Proposed appropriation of net profit DKK million 2023 2022 Dividend to shareholders 1,686 Retained earnings 2,152 1,859 Net profit 2,152 3,545 Proposed dividend for the period September 1 - December 31, 2023 will be announced by the Board of Directors of Novonesis in connection with the notice of the Annual Shareholders’ Meeting. Undrawn committed credit facilities amounted to DKK 5,256 million at December 31, 2023 (2022: DKK 17,502 million), all of which expire in 2024– 2027. Reference is made to Note 5.1 to the consolidated financial statements concerning undrawn committed credit facilities, as the infor- mation applying to Novozymes A/S is identical to the information provided there. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Financial statements for Novozymes A/S 168 Note section 5 DKK million 2023 2022 Dividend payment to Novo Holdings A/S 803 396 Sales 112 113 Purchases (49) (78) Purchases (14) (34) Sales 128 114 Purchases (80) (36) Royalty income 8 6 Royalty expenses (12) (10) Purchases (71) (38) DKK million 2023 2022 Receivables 22 10 Payables (73) (79) Payables (1) (7) Receivables 28 20 Receivables 1 6 Payables (2) (13) Payables (31) (12) * Novozymes A/S holds a 60% ownership interest in Synergia Life Sciences Pvt. Ltd. ** Associate of Novozymes A/S There were no transactions with related parties other than the transactions described herein and the ordinary remuneration of the Board of Directors and Executive Management, which is presented in Note 6.1 to the consolidated finan- cial statements. Reference is made to Note 6.4 to the consoli- dated financial statements concerning transac- tions with related parties. Novozymes A/S is included in the consolidated financial statements of Novo Nordisk Foundation. Novozymes A/S has commitments and guaran- tees to related parties in the amount of DKK 341 million (2022: DKK 343 million), that primarily relate to guarantees issued for subsidiaries. 5.1 Related party transactions Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S Financial statements for Novozymes A/S 169 5.3 Common stock and treasury stock 5.5 Events after the reporting date DKK million 2023 2022 Statutory audit 7 6 Other assurance engagements 2 - Tax advisory services - 2 Other services 6 10 15 18 Reference is made to Note 6.6 to the consoli- dated financial statements concerning fees to statutory auditors. Reference is made to Note 5.5 to the consoli- dated financial statements concerning common stock and treasury stock. Reference is made to Note 6.8 to the consoli- dated financial statements concerning events after the reporting date. Note section 5 5.2 Fees to statutory auditors 5.4 Contingent liabilities and pending litigation Reference is made to Note 6.3 to the consoli- dated financial statements concerning pending litigation and arbitration. Novozymes A/S has a contingent liability to pur- chase the remaining 40% of the shares in Synergia Life Sciences in 2025, but the purchase is expected to be effected in 2024. Reference is made to Note 6.5 to the consolidated financial statements concerning non-controlling interests. At December 31, 2023, Novozymes A/S had a contingent liability in the form of a break-up fee of up to DKK 2,348 million (EUR 315 million) in the unlikely event that the combination of Novozymes and Chr. Hansen did not obtain regu- latory approval. As the combination was com- pleted on January 29, 2024, the liability did not materialize. At December 31, 2023, Novozymes A/S had entered into consultancy agreements with fees contingent on the completion of the combination with Chr. Hansen. The expected fees amount to approximately DKK 250 million. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 170Management Review Glossary (Part of the Management Review) Net profit (attributable to shareholders of Novozymes A/S) divided by the weighted average number of shares outstanding (diluted). Profit before interest and tax. Profit before interest and tax as a percentage of revenue. Profit before special items, interest and tax. Profit before special items, interest and tax as a percentage of revenue. Profit before interest, tax, depreciation and amortization. Profit before interest, tax, depreciation and amortization as a percentage of revenue. Economic profit is defined as adjusted operating profit (NOPAT) less (average invested capital * WACC). Income tax expense as a percentage of profit before tax. Total equity as a percentage of total assets at year end. The Executive Leadership Team consists of the Executive Management and Executive Vice Presidents. Executive Management consists of the regis- trered executives. Cash flow from operating activities less cash flow from investing activities. Cash flow from operating activities less cash flow from investing activities, business acquisitions, divestments, purchase and sale of financial assets. Total assets excluding interest-bearing assets and minority investments less non-interest-bear- ing liabilities. iXBRL tags is hidden meta-information embed- ded in the source code of an XHTML document in accordance with the Inline XBRL specification, which enables the conversion of XHTML- formatted information into a machine- readable XBRL data record by appropriate software. Taxonomy is an electronic dictionary of business reporting elements used to report business data. A taxonomy element is an element defined in a taxonomy that is used for the machine-readable labeling of information in an XBRL data record. The market value of interest-bearing liabilities (financial liabilities) less the market value of cash at bank and in hand and other readily convertible interest-bearing current assets. Net interest-bearing debt as a percentage of last 12 months’ EBITDA. Current assets less current liabilities used in, or necessary for, the company’s operations. The main components are inventories, trade receiva- bles and trade payables. Operating profit adjusted for exchange gains/ losses, share of profit in associates less tax on adjusted operating profit using the effective tax rate. EBIT before special items adjusted for exchange gains/losses, share of profit in associates less tax on adjusted EBIT before special items using the effective tax rate. Operating costs consist of Sales and distribution costs, Research and development costs and Administrative costs. Sales growth from existing business, excluding divestments, measured in local currency. For acquisitions, pro forma sales for the prior year are included in the calculation. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 171Management Review Glossary (Part of the Management Review) Net profit attributable to shareholders of Novozymes A/S as a percentage of average Equity attributable to shareholders of Novozymes A/S. Adjusted operating profit (NOPAT) after tax for the last 12 months as a percentage of average invested capital. special items NOPAT before special items after tax for the last 12 months as a percentage of average invested capital. Special items include income and costs related to the combination of Novozymes and Chr. Hansen. XHTML (eXtensible HyperText Markup Language) is a text-based markup language used to struc- ture and mark up content such as text, images, and hyperlinks in documents that are displayed as Web pages in an updated standard Web browser like Chrome and Internet Explorer. 2 CO 2 -equivalent expresses the total effect that various greenhouse gases (GHG) emitted to the atmosphere (e.g. CO 2 , CH4, N2O) have on the cli- mate, in a quantity of carbon dioxide (CO 2 ) that has the same effect on the climate. Climate neutral or net-zero Climate neutral or net-zero emissions are achieved when anthropogenic emissions of greenhouse gases to the atmosphere are bal- anced by anthropogenic removals over a speci- fied period. For Novozymes, the state of net-zero emissions covers both our operations and our supply chain, as defined by our science-based targets. The International Panel on Climate Change (IPCC) defines climate neutrality as a state in which human activities result in no net effect on the climate system. Gender balance means that, as a minimum, we will have 45% women and 45% men across all professionals and in senior management. The Greenhouse Gas Protocol defines Scope 3 emissions as all indirect emissions (not included in scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions. For Novozymes, our Scope 3 target boundary is composed of pur- chased goods and services (Category 1), fuel- and energy-related activities, not included in scopes 1 or 2 (Category 3), upstream transporta- tion and distribution (Category 4), waste gener- ated in operations (Category 5) and business travel (Category 6). Defined as (1) ≥ 99% (by weight) of the biomass being re-circulated as compost, fertilizer, feed- stock for biogas or the like; and (2) ≥ 90% (by weight) of hazardous and nonhazardous waste being either composted, reused, recycled or incinerated with energy recovery. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Novozymes A/S 172About the Report About the Report Editor in chief Nanna Christine Worsaae [email protected] Tel. +45 3077 2259 Anders Enevoldsen [email protected] Tel. +45 5350 1453 The website contains links to a PDF version of The Novozymes Report 2023 as well as the XHTML version submitted to the Danish Financial Supervisory Authority. PwC has not audited the Management’s Review, nor the sections of the report under the head- ings: The big picture, Our business and Governance. The audit covers financial, environmental, social and governance data. See also the Independent Auditor’s Reports in the statements section of The Novozymes Report. The report has been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU, additional require- ments of the Danish Financial Statements Act and additional requirements of Nasdaq Copenhagen A/S for the presentation of finan- cial statements by listed companies. It is also inspired by the Task Force on Climate Related Financial Disclosures (TCFD) and GRI Framework. See Basis of reporting in the report for more details. The Novozymes Report contains forward-looking statements, including statements about future events, future financial performance, plans, strategies and expectations. Forward-looking statements are associated with, but not limited to, words such as “believe”, “anticipate”, “expect”, “estimate”, “intend”, “plan”, “project”, “could”, “may”, “might” and other words of simi- lar meaning. Forward-looking statements are by their very nature associated with risks and uncertainties that may cause actual results to differ materially from expectations, both positively and nega- tively. Such risks and uncertainties may, among other things, include unexpected developments in i) the ability to develop and market new prod- ucts; ii) the demand for Novozymes’ products, market-driven price decreases, industry consolidation, and launches of competing prod- ucts or disruptive technologies in Novozymes’ core business areas; iii) the ability to protect and enforce the company’s intellectual property rights; iv) significant litigation or breaches of contract; v) the materialization of the company’s growth platforms; vi) political conditions, such as acceptance of enzymes produced by genetically modified organisms; vii) global economic and capital market conditions, including, but not lim- ited to, currency exchange rates (USD/DKK and EUR/DKK in particular, but not exclusively), interest rates and inflation; viii) significant price decreases for input and other materials that com- pete with Novozymes’ biological solutions. The company undertakes no obligation to update any forward-looking statements as a result of future developments or new information. Novozymes’ reporting ambition is to provide a single integrated report connecting our business model, strategy, targets and performance through integrated financial and non-financial data. Accounts and performanceGovernanceOur businessThe big picture The Novozymes Report 2023 Annual reportAuditor's report on audited financial statementsParsePort XBRL Converter2023-01-012023-12-312022-01-012022-12-31529900T6WNZXD2R3JW38Reporting class D10007127OpinionBasis for Opinion529900T6WNZXD2R3JW382023-01-012023-12-31cmn:ConsolidatedMember529900T6WNZXD2R3JW382023-01-012023-12-31529900T6WNZXD2R3JW382022-01-012022-12-31529900T6WNZXD2R3JW382022-12-31529900T6WNZXD2R3JW382023-12-31529900T6WNZXD2R3JW382021-12-31529900T6WNZXD2R3JW382022-12-31ifrs-full:IssuedCapitalMember529900T6WNZXD2R3JW382023-01-012023-12-31ifrs-full:IssuedCapitalMember529900T6WNZXD2R3JW382023-12-31ifrs-full:IssuedCapitalMember529900T6WNZXD2R3JW382022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900T6WNZXD2R3JW382023-01-012023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900T6WNZXD2R3JW382023-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900T6WNZXD2R3JW382022-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900T6WNZXD2R3JW382023-01-012023-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900T6WNZXD2R3JW382023-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900T6WNZXD2R3JW382022-12-31ifrs-full:RetainedEarningsMember529900T6WNZXD2R3JW382023-01-012023-12-31ifrs-full:RetainedEarningsMember529900T6WNZXD2R3JW382023-12-31ifrs-full:RetainedEarningsMember529900T6WNZXD2R3JW382022-12-31ifrs-full:EquityAttributableToOwnersOfParentMember529900T6WNZXD2R3JW382023-01-012023-12-31ifrs-full:EquityAttributableToOwnersOfParentMember529900T6WNZXD2R3JW382023-12-31ifrs-full:EquityAttributableToOwnersOfParentMember529900T6WNZXD2R3JW382022-12-31ifrs-full:NoncontrollingInterestsMember529900T6WNZXD2R3JW382023-01-012023-12-31ifrs-full:NoncontrollingInterestsMember529900T6WNZXD2R3JW382023-12-31ifrs-full:NoncontrollingInterestsMember529900T6WNZXD2R3JW382021-12-31ifrs-full:IssuedCapitalMember529900T6WNZXD2R3JW382022-01-012022-12-31ifrs-full:IssuedCapitalMember529900T6WNZXD2R3JW382021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900T6WNZXD2R3JW382022-01-012022-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember529900T6WNZXD2R3JW382021-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900T6WNZXD2R3JW382022-01-012022-12-31ifrs-full:ReserveOfCashFlowHedgesMember529900T6WNZXD2R3JW382021-12-31ifrs-full:RetainedEarningsMember529900T6WNZXD2R3JW382022-01-012022-12-31ifrs-full:RetainedEarningsMember529900T6WNZXD2R3JW382021-12-31ifrs-full:EquityAttributableToOwnersOfParentMember529900T6WNZXD2R3JW382022-01-012022-12-31ifrs-full:EquityAttributableToOwnersOfParentMember529900T6WNZXD2R3JW382021-12-31ifrs-full:NoncontrollingInterestsMember529900T6WNZXD2R3JW382022-01-012022-12-31ifrs-full:NoncontrollingInterestsMember529900T6WNZXD2R3JW382023-12-31cmn:ConsolidatedMember529900T6WNZXD2R3JW382023-01-012023-12-31cmn:ConsolidatedMember1529900T6WNZXD2R3JW382023-01-012023-12-31cmn:ConsolidatedMember2529900T6WNZXD2R3JW382023-01-012023-12-31cmn:ConsolidatedMember1529900T6WNZXD2R3JW382023-01-012023-12-31cmn:ConsolidatedMember2529900T6WNZXD2R3JW382023-01-012023-12-31cmn:ConsolidatedMember3529900T6WNZXD2R3JW382023-01-012023-12-31cmn:ConsolidatedMember4529900T6WNZXD2R3JW382023-01-012023-12-31cmn:ConsolidatedMember5529900T6WNZXD2R3JW382023-01-012023-12-31cmn:ConsolidatedMember6529900T6WNZXD2R3JW382023-01-012023-12-31cmn:ConsolidatedMember7529900T6WNZXD2R3JW382023-01-012023-12-31cmn:ConsolidatedMember8529900T6WNZXD2R3JW382023-01-012023-12-31cmn:ConsolidatedMember9529900T6WNZXD2R3JW382023-01-012023-12-31cmn:ConsolidatedMember10529900T6WNZXD2R3JW382023-01-012023-12-31cmn:ConsolidatedMember1529900T6WNZXD2R3JW382023-01-012023-12-31cmn:ConsolidatedMember2529900T6WNZXD2R3JW382022-01-012022-12-31cmn:ConsolidatedMemberiso4217:DKKiso4217:DKKxbrli:sharesxbrli:pure
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.