Report 2017

Net working capital

  • Average net working capital in DKK million 2,056
  • Net working capital as % of sales 13.9%
  • Deferred income related to The BioAg Alliance released as revenue in 2017 in DKK million 202
DKK million Note 2017 2016
Other receivables, non-current 4.3 35 57
Inventories 4.1 2,586 2,488
Trade receivables 4.2 2,554 2,680
Other receivables 4.3 214 267
Deferred income 4.4 (542) (788)
Trade payables (1,341) (1,194)
Other liabilities 4.5 (1,483) (1,422)
Net working capital 2,023 2,088
Average net working capital 2,056 1,898
DKK million 2017 2016
Raw materials and consumables 308 327
Work in progress 727 671
Finished goods 1,551 1,490
Inventories at December 31


2,586 2,488
Cost of materials, included under Cost of goods sold 3,451 3,254
Write-downs expensed during the year 111 82
Reversal of write-downs during the year* 45 42
* Part of the reversal of write-downs can be attributed to written-down inventory being reused in production.

Work in progress and Finished goods are measured at cost including indirect production costs. The indirect production costs capitalized under inventories amounted to DKK 862 million at the end of 2017 (2016: DKK 815 million). The indirect production costs are assessed on an ongoing basis to ensure reliable measurement of employee costs, capacity utilization, cost drivers and other relevant factors. Changes in these parameters may have an impact on the gross margin and the overall valuation of Work in progress and Finished goods.


Inventories are measured at cost determined on a first-in first-out basis or net realizable value where this is lower.


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 production as well as indirect production costs such as employee costs, maintenance and depreciation of plants, etc.


If the expected sales price less any completion costs and costs to execute sales (net realizable value) of inventories is lower than the carrying amount, the inventories are written down to net realizable value.


Novozymes has entered into a few agreements 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 that they are consumed in the customer's production.

DKK million 2017 2016
Trade receivables 2,735 2,792
Allowances for doubtful trade receivables (226) (179)
2,509 2,613
Amounts owed by related companies 45 67
Trade receivables at December 31


2,554 2,680
Changes in allowances for doubtful trade receivables:
At January 1 179 179
Allowances during the year 128 66
Write-offs during the year (13) (18)
Reversed allowances (68) (48)
Allowances at December 31 226 179
Age of trade receivables that are past due but not impaired:
Up to 30 days 141 131
Between 30 and 90 days 33 36
More than 90 days 21 13
Trade receivables past due but not impaired at December 31 195 180
Novozymes has collateral held as security for trade receivables in selected countries of DKK 64 million (2016: DKK 50 million).

Allowances for doubtful trade receivables are made by Management when a loss has occurred due to expected inability of customers to make required payments. These allowances are estimated by Management based on an individual assessment of each receivable that includes the period overdue, payment history, changes to payment terms and the likelihood of receiving payments. This analysis is combined with an overall assessment of the total allowance compared with the outstanding trade receivable balance. The allowance for trade receivables is estimated based on the most recent information about the creditworthiness of the customers. If the financial circumstances of or surrounding the customers change in future periods, an additional allowance could be required.


Trade receivables are measured at amortized cost or net realizable value equivalent to nominal value less allowances for doubtful receivables, whichever is lower. The cost of allowances for doubtful trade receivables is included in Sales and distribution costs.

DKK million 2017 2016
Deposits 27 21
Prepaid expenses 97 114
Loans - 5
Other 125 184
Other receivables at December 31 249 324
Recognized in the balance sheet as follows:


35 57


214 267
Other receivables at December 31 249 324
DKK million Amortization ends (year) 2017 2016
The BioAg Alliance 2023 519 741
Other Up to 2022 23 47
Deferred income at December 31 542 788
Recognized in the balance sheet as follows:


337 540


205 248
Deferred income at December 31 542 788
Expected to be recognized in the income statement:
Within 1 year 205 248
Between 1 and 5 years 283 430
After 5 years 54 110
Deferred income at December 31 542 788

At December 31, 2017, deferred income amounted to DKK 542 million (2016: DKK 788 million). This relates mainly to payments from Monsanto in connection with the formation of The BioAg Alliance in 2014. The planned release of deferred income is based on an assessment of the earnings process and the underlying deliverables, which are reassessed annually. The reassessment in 2017 has not changed the planned release of deferred income.



Assessing the earnings process and the underlying deliverables for The BioAg Alliance requires judgment and is based on estimates of the future. These estimates are by nature subject to a high degree of uncertainty, and changes in such estimates may impact the timing of revenue recognition in future periods.


Deferred income reflects the portion of payments received that relates to future periods and deliverables, and for which the criteria for revenue recognition are not yet met. Deferred income is measured at nominal value.

DKK million 2017 2016
Employee costs payable 671 712
Stock-based payment settled in cash 29 24
Other payables 783 686
Other liabilities at December 31


1,483 1,422