BAGSVAERD, Denmark, Aug. 11, 2005 (PRIMEZONE) -- Financial statement for the period 1 January 2005 to 30 June 2005. Novo Nordisk (NYSE:NVO) increased sales by 14% in the first half of 2005 Expectation for operating profit growth increased to around 10% for 2005
- In local currencies sales in the first half of 2005 increased by 15% o Sales of insulin analogues increased by 67% o Sales of NovoSeven(R) increased by 14% o Sales in North America increased by 28%
- Operating profit increased by 14% to DKK 3,853 million. Adjusted for the impact from currencies and changes in the level of non-recurring income, underlying operating profit increased by more than 15%.
- Net profit increased by 25% to DKK 2,916 million and earnings per share (diluted) increased by 28% to DKK 8.78.
- The expectation for operating profit growth is increased from around 5% to around 10% for the full year of 2005.
- The continued consultations with the European regulatory authorities (EMEA) have led Novo Nordisk to withdraw the phase 2-based registration file for NovoSeven(R) in trauma. It is expected that results from a confirmatory clinical study will enable a subsequent, updated European filing.
- Positive opinion has been received from EMEA on NovoMix(R) 50 and NovoMix(R) 70 filings in Europe. NovoLog(R) Mix 50/50 and NovoLog(R) Mix 30/70 have been filed for approval in the US.
- Lars Rebien Soerensen, president & CEO, said: "We are encouraged by the continued market success of our strategic products, in particular the full range of insulin analogues and NovoSeven(R). Moreover, the performance in our North American business has increased our confidence in the future growth potential for Novo Nordisk in the world's largest pharmaceutical market." Financial statement for the first six months of 2005
This interim report has been prepared in accordance with International Financial Reporting Standards (IFRS). The accounting policies used in the interim report are consistent with those used in the Annual Report 2004, which includes the expense impact of share-based payment schemes. The interim report has not been audited. Amounts in DKK million, except average number of shares outstanding, earnings per share and full-time employees.
Interim Results for Novo Nordisk-Tables
Income statement H1 2005 H1 2004 % change H1 2004 to H1 2005
Sales 15,541 13,679 14%
Gross profit 11,246 9,880 14%
Gross margin 72.4% 72.2%
Sales and distribution 4,406 3,877 14%
costs
Percent of sales 28.4% 28.3%
Research and development 2,303 2,023 14%
costs
Percent of sales 14.8% 14.8%
Administrative expenses 953 908 5%
Percent of sales 6.1% 6.6%
Licence fees and other 269 303 (11%)
operating income
Operating profit 3,853 3,375 14%
Operating margin 24.8% 24.7%
Share of profit in 195 (109) -
associated companies
Other net financial 83 216 (62%)
income
Profit before tax 4,131 3,482 19%
Net profit 2,916 2,325 25%
Net profit margin 18.8% 17.0%
Other key numbers
Depreciation, amortisation 834 767 9%
and impairment losses
Capital expenditure 1,458 1,034 41%
Cash flow from operating 3,448 3,060 13%
activities
Free cash flow 1,946 1,842 6%
Total assets 37,731 34,248 10%
Equity 25,620 24,827 3%
Equity ratio 67.9% 72.5%
Average number of 332.0 339.8 (2%)
shares outstanding
(million) - diluted
Diluted earnings per 8.78 6.84 28%
share (in DKK)
Full-time employees 21,246 19,631 8%
at the end of
the period
Sales development by segments
Sales in the first six months of 2005 increased by 15% measured in local currencies and by 14% in Danish kroner. Growth was realised both within diabetes care and biopharmaceuticals -- primarily driven by strategically important products such as the insulin analogues as well as NovoSeven(r). Furthermore, sales of growth hormone therapy products also contributed to growth.
Sales Growth Growth Share of
H1 2005 as in local growth
DKK reported currencies in local
million currencies
The diabetes care segment
Insulin analogues 3,140 63% 67% 62%
Human insulin and 4% 4% 15%
insulin-related sales 7,099
Oral antidiabetic products 767 (4%) (2%) (1%)
Diabetes care - total 11,006 15% 16% 76%
The biopharmaceuticals segment
NovoSeven(r) 2,338 11% 14% 14%
Growth hormone therapy 1,300 17% 19% 10%
Other products 897 (1%) 1% 0%
Biopharmaceuticals - total 4,535 10% 12% 24%
Total sales 15,541 14% 15% 100%
Sales growth was realised in all regions and North America now constitutes 28% of total sales.
Diabetes care
Sales of diabetes care products increased by 16% in local currencies compared to the first six months of 2004 and by 15% in Danish kroner to DKK 11,006 million.
Insulin analogues, human insulin and insulin-related products
Sales of insulin analogues, human insulin and insulin-related products increased by 18% measured in local currencies and by 17% to DKK 10,239 million in Danish kroner. All regions contributed to growth measured in local currencies as well as in Danish kroner.
Novo Nordisk continues to be the global leader in the insulin market with a total market share of 50% and an insulin analogue market share of more than 30%, measured in volume.
Sales of insulin analogues increased by 67% in local currencies and by 63% in Danish kroner to DKK 3,140 million in the first six months of 2005. Sales of insulin analogues contributed with 62% of the overall growth in local currencies and constitute more than 30% of Novo Nordisk's total sales of all insulin and insulin-related products.
North America Sales in North America increased by 45% in local currencies in the first six months of 2005 and by 39% in Danish kroner, reflecting solid penetration of the insulin analogues NovoLog(R) and NovoLog(R) Mix 70/30. In the US market, Novo Nordisk now holds more than 36% of the total insulin market and over 20% of the analogue market, measured by volume. Sales of human insulin products also increased due to increased volumes and higher average prices.
Europe Sales in Europe increased by 8% in local currencies and by 9% in Danish kroner, with growth primarily driven by the portfolio of insulin analogues, including Levemir(R), which has now been introduced in 11 European countries.
Japan & Oceania Sales in Japan & Oceania increased by 13% in local currencies and by 11% in Danish kroner, with growth primarily reflecting sales of NovoRapid(R) and NovoRapid(R) Mix 30, supported by the continued switch from durable to prefilled devices.
International Operations Sales in International Operations increased by 21% in local currencies and by 19% in Danish kroner. Sales were dominated by human insulin but insulin analogues continue to add to overall growth in the region. China was the primary growth driver and contributed more than 15% of total sales in International Operations in the first six months of 2005.
Oral antidiabetic products
Sales of oral antidiabetic products decreased compared to the same period in 2004 by 2% in local currencies and 4% in Danish kroner to DKK 767 million. While the sales development was positive both in Europe and International Operations, the overall decrease in sales compared to the same period last year mainly reflects lower sales to wholesalers in the US market during the first six months of 2005.
Biopharmaceuticals
Sales of biopharmaceutical products increased by 12% in local currencies compared to the first six months of 2004 and by 10% in Danish kroner to DKK 4,535 million.
NovoSeven(R)
Sales of NovoSeven(R) increased by 14% in local currencies compared to the same period last year and by 11% in Danish kroner to DKK 2,338 million, with sales growth primarily driven by North America, but also International Operations and Japan & Oceania contributed to growth. In Europe, sales growth resumed during the second quarter of 2005.
The sales growth of NovoSeven(R) was influenced by several factors during the first six months of 2005. Due to the high penetration within spontaneous bleeds in congenital inhibitor patients, the predominant part of the growth within the inhibitor segment has been generated by treatment of acquired haemophilia patients and usage of NovoSeven(R) in connection with elective surgery. Treatment of spontaneous bleeds for congenital inhibitor patients remains the largest area of use. In addition, sales are perceived to have been positively affected by increased investigational use of NovoSeven(R).
Growth hormone therapy (Norditropin(R) and Norditropin(R) SimpleXx(R))
Sales of growth hormone therapy products increased by 19% in local currencies and by 17% in Danish kroner to DKK 1,300 million. All regions contributed to the sales increase compared to the same period last year, with North America and Europe as the main growth drivers. Sales have been positively impacted by the NordiFlex(R) prefilled delivery device.
Other products
Sales of other products within biopharmaceuticals, which predominantly consist of hormone replacement therapy (HRT) related products, increased by 1% in local currencies and decreased by 1% in Danish kroner to DKK 897 million. While total sales of HRT products continue to be negatively impacted by challenging market conditions, sales in the US increased during the first six months due to higher market share and higher average prices.
Costs, licence fees and other operating income
The cost of goods sold increased by 13% to DKK 4,295 million, leaving the gross margin at 72.4%, compared to 72.2% in the first six months of 2004. The gains from an improved product mix and increased productivity were partially offset by an adverse currency impact, leaving the underlying gross margin improvement at 0.4 percentage point. The gross margin was negatively impacted by a write-down on inventories of animal insulin crystals, which has been included in the cost of goods sold.
Total non-production-related costs increased by 13% to DKK 7,662 million. The increase in non-production-related costs reflects especially costs related to sales and distribution, which increased in line with sales. This reflects the increase in the US diabetes care sales force implemented during the second quarter of 2004 as well as costs related to the launch of Levemir(R) in the European market.
Licence fees and other operating income in the first six months of 2005 were DKK 269 million, compared to DKK 303 million in the same period last year. In the second quarter of 2005 a non-recurring income of around DKK 100 million was realised from a sale-and-leaseback transaction involving certain office buildings in Denmark.
Net financials
Net financials showed an income of DKK 278 million in the first six months of 2005 compared to an income of DKK 107 million in the same period in 2004. A non-recurring gain of around DKK 250 million was recorded in the first quarter of 2005 from the sale of shares in Ferrosan A/S.
The foreign exchange gains were DKK 135 million compared to a gain of DKK 195 million in the same period last year. The lower level of foreign exchange gains mainly reflects lower income from foreign exchange hedging activities, which include forward contracts and foreign exchange options. The effect of these hedging activities has been negatively impacted by the higher level of the US dollar versus the Danish krone in the first six months of 2005 compared to the level prevailing in 2004. At the end of June 2005, an unrealised loss of DKK 386 million has, in accordance with IFRS, been deferred for profit and loss recognition in the period when hedged cash flows occur.
Outlook 2005
Reflecting the continued appreciation of the US dollar and related currencies, Novo Nordisk now expects to report Danish kroner sales growth in 2005 of 12-15%, and a similar level of growth measured in local currencies.
The expectation for reported operating profit growth is increased from around 5% to around 10%. This reflects the improved exchange rate environment as well as the non-recurring income from the sale-and-leaseback transaction and also the expected costs related to a planned employee share offering during the fourth quarter of 2005 - as further described below under 'Employee share programme'. Excluding the impact from currency movements and non-recurring items, underlying operating profit is still expected to grow by around 15%.
For 2005, Novo Nordisk now expects a net financial income of DKK 200 million. This reflects a non-recurring accounting gain of approximately DKK 200 million related to ZymoGenetics' public offering of new shares in August 2005, partly offset by a higher level of expected losses on foreign exchange hedging contracts, mainly as a consequence of the higher level of the US dollar versus the Danish krone.
Novo Nordisk now expects the tax rate for 2005 to be slightly below 29% as a consequence of the reduction in the Danish corporate income tax rate from 30% to 28%, effective for the income year 2005, which was formally approved by the Danish parliament (Folketinget) in June 2005.
As previously communicated, the expected tax rate for 2005 is reduced by close to two percentage points by two factors of a non-recurring nature, each of which account for close to one percentage-point reduction in the tax rate:
- the tax-exempt status of the capital gain on the sale of shares in Ferrosan A/S; and
- the re-evaluation of the company's deferred tax liabilities as a consequence of the reduction of the Danish corporate income tax rate.
Furthermore, the tax-exempt status of the accounting gain related to ZymoGenetics' public offering of new shares will reduce the expected tax rate for 2005 by around half a percentage point on a non-recurring basis.
Novo Nordisk still expects capital expenditure of close to DKK 4 billion in 2005. Depreciations, amortisation and impairment losses are still expected to be around DKK 1.9 billion, whereas free cash flow is now expected to be around DKK 3 billion.
All of the above expectations are provided that currency exchange rates remain at the current level for the rest of 2005.
Novo Nordisk has hedged expected net cash flows in relation to US dollars, Japanese yen and British pounds for 10, 9 and 9 months, respectively. In accordance with IFRS, the financial impact from foreign exchange hedging contracts will be included in 'Net financials' as the underlying future operational cash flow materialises.
Research and development update
Diabetes care
As previously communicated, Levemir(R) was approved by the U.S. Food and Drug Administration (FDA) in June 2005, and Novo Nordisk is thereby the only company with a complete range of insulin analogues approved in the US, encompassing rapid-acting NovoLog(R), premixed NovoLog(R) Mix 70/30 and now also the long-acting analogue Levemir(R). Novo Nordisk expects to launch Levemir(R) in the US market within 12 months following the approval.
In June 2005, Novo Nordisk received a positive opinion from the European regulatory authorities' Committee for Medicinal Products for Human Use (CHMP) for the premixed analogue insulin products NovoMix(R) 50 and NovoMix(R) 70. Following the positive opinion from CHMP, Novo Nordisk expects to receive marketing authorisation from the European Commission for NovoMix(R) 50 and NovoMix(R) 70 in the second half of 2005.
In June 2005, Novo Nordisk filed an application with the FDA for marketing approval of NovoLog(R) Mix 50/50 and NovoLog(R) Mix 30/70 (the US trade names for NovoMix(R) 50 and NovoMix(R) 70).
Biopharmaceuticals
As previously communicated, Novo Nordisk filed an application with EMEA (The European Medicines Agency) in January 2005 for marketing approval for the use of NovoSeven(R) in blunt trauma. The filing was based on results obtained from a phase 2 clinical study. As a consequence of subsequent feedback from EMEA, Novo Nordisk has, however, decided to voluntarily withdraw the registration file.
To support an updated European filing at a later stage, Novo Nordisk has, as previously announced, initiated a confirmatory phase 3 study in the EU and other countries outside the US. This study is now expected to encompass around 1,000 patients.
In the U.S., the current FDA-guided phase 3 study design for the use of NovoSeven(R) in trauma is being evaluated in terms of implied patient benefits versus potential number of patients in the study and related timelines. An update on the US clinical strategy is expected to be provided in connection with the release of financial results for the first nine months of 2005.
Novo Nordisk still expects to file an application in Europe for marketing approval for the use of NovoSeven(R) in connection with intracerebral haemorrhage (ICH). The filing, which will be based on clinical data from phase 2 studies, is now expected to take place during the fourth quarter of 2005. The filing may, as previously announced, be supported by additional safety data from the ongoing global confirmatory phase 3 study.
This phase 3 study has been initiated both in Europe and the U.S. It is now expected to encompass around 675 patients in clinical centres located in the U.S., Europe, South America and Asia. The clinical results from the study will be pivotal to the future filing with the FDA for U.S. marketing approval for the use of NovoSeven(R) in connection with ICH.
Within HRT Novo Nordisk has completed a successful phase 3 study and, based on this, expects to file in the fourth quarter of 2005 for marketing approval with EMEA and the FDA of an ultra-low dose version of Activelle(R) (Activella(R) in the U.S.), Novo Nordisk's continuous-combined HRT product. This is expected to support the move towards even lower-dose versions of HRT products.
Equity Total
equity was DKK 25,620 million at the end of the first six months of 2005, equal to 67.9% of total assets, compared to 70.8% at the end of 2004. Please refer to appendix 5 for further elaboration of changes in equity during 2005.
Treasury shares and share repurchase programme
As per 10 August 2005, Novo Nordisk A/S and its wholly-owned affiliates owned 28,268,127 of its own B shares, corresponding to 7.97% of the total share capital.
In 2005, Novo Nordisk has so far repurchased 5.9 million B shares at a cash value of DKK 1.8 billion, and the company still expects to repurchase additional B shares during the remaining part of 2005 equivalent to a cash value of DKK 1.2 billion.
Employee share programme
To stimulate the ownership interest in the company and to give an incentive to the employees, the Board of Directors has approved a global offering of shares to the employees in the autumn of 2005. The offering is expected to include approximately 1 million B shares (equivalent to around 0.3% of the total share capital), which will be sold from the company's holding of treasury shares at a price of DKK 150 per share. The shares in the programme will generally have a minimum restricted period of five years for employees in Denmark and three years for employees outside Denmark.
The accounting impact of the offering will be calculated based on the average market price in the offering period. The estimated pre-tax cost of the offering will be in the range of DKK 150-200 million.
Sustainability issues update
Clinical trials information
During the second half of 2004 there was an increasing demand from medical journals, industry associations and general media for investigators and pharmaceutical companies to ensure public access to clinical trial data. This includes information on study protocols for clinical trials to be initiated or presently ongoing and, furthermore, providing public access to results from all trials that have been executed for products marketed in at least one country.
Novo Nordisk has decided to fulfil these requirements by submitting the data to two external databases; www.clinicaltrials.gov and www.clinicalstudyresults.org.
Novo Nordisk posted the first clinical trial results in April 2005 and expects to achieve full compliance by 1 October 2005. All hypothesis testing clinical trials to be initiated after 1 July 2005 are being registered prior to patient enrolment, and registration of currently ongoing trials will be fully implemented by the deadline set by the ICMJE (International Committee of Medical Journal Editors) of 13 September 2005.
Conference call details At 14.00 CET today, corresponding to 8.00 a.m. New York time, a conference call will be held. Investors will be able to listen in via a link on novonordisk.com, which can be found under 'Investors -- Conference calls'. Presentation material for the conference call will be made available approximately one hour before on the same page.
Forward-looking statement
The above sections contain forward-looking statements as the term is defined in the US Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations or forecasts of events such as new product introductions, product approvals and financial performance.
Such forward-looking statements are subject to risks, uncertainties and inaccurate assumptions. This may cause actual results to differ materially from expectations. Factors that may affect future results include interest rate and currency exchange rate fluctuations, delay or failure of development projects, production problems, unexpected contract breaches or terminations, government-mandated or market-driven price decreases for Novo Nordisk's products, introduction of competing products, Novo Nordisk's ability to successfully market both new and existing products, exposure to product liability and other lawsuits, changes in reimbursement rules and governmental laws and related interpretation thereof, and unexpected growth in costs and expenses.
Risks and uncertainties are further described in reports filed by Novo Nordisk with the U.S. Securities and Exchange Commission (SEC) including the company's Form 20-F, which was filed on 21 February 2005. Please also refer to the section 'Risk Management' in the Annual Report 2004. Novo Nordisk is under no duty to update any of the forward-looking statements or to conform such statements to actual results, unless required by law.
Management statement
Today, the Board of Directors and Executive Management reviewed and approved the interim report and accounts of Novo Nordisk A/S for the first six months of 2005.
The interim report and accounts have been prepared in accordance with International Financial Reporting Standards and the additional Danish disclosure requirements applying to listed companies' interim reports and accounts. The interim report has not been audited. In our opinion the accounting policies used are appropriate and the overall presentation of the interim report and accounts is adequate. Furthermore, in our opinion the interim report and accounts give a true and fair view of the Group's assets, liabilities, financial position and of the results of the operations and consolidated cash flows for the period under review.
Bagsvaerd 11 August 2005 Executive Management: Lars Rebien Sorensen Jesper Brandgaard Lars Almblom Jorgensen President and CEO CFO Lise Kingo Kare Schultz Mads Krogsgaard Thomsen Board of Directors: Mads Ovlise Sten Scheibye Goran A Ando Chairman Vice chairman Kurt Briner Henrik Gurtler Johnny Henriksen Niels Jacobsen Anne Marie Kverneland Kurt Anker Nielsen Stig Strobak Jorgen Wedel
Appendix 1:
Quarterly numbers in DKK
(Amounts in DKK million, except number of employees, earnings per
share and number of shares outstanding.)
%
change
2005 2004 Q2
2004 -
Q2 Q1 Q4 Q3 Q2 Q1 Q2
2005
Sales 8,283 7,258 7,944 7,408 7,164 6,515 16%
Gross profit 6,073 5,173 5,783 5,318 5,219 4,661 16%
Gross margin 73.3% 71.3% 72.8% 71.8% 72.9% 71.5%
Sales and 2,267 2,139 2,364 2,039 1,991 1,886 14%
distribution costs
Percent of sales 27.4% 29.5% 29.8% 27.5% 27.8% 28.9%
Research and 1,197 1,106 1,243 1,086 983 1,040 22%
development costs
Percent of sales 14.5% 15.2% 15.6% 14.7% 13.7% 16.0%
Administrative 470 483 534 502 431 477 9%
expenses
Percent of sales 5.7% 6.7% 6.7% 6.8% 6.0% 7.3%
Licence fees and
other operating 202 67 213 59 71 232 185%
income (net)
Operating profit 2,341 1,512 1,855 1,750 1,885 1,490 24%
Operating margin 28.3% 20.8% 23.4% 23.6% 26.3% 22.9%
Share of
profit/(loss) in (43) 238 (20) 12 (40) (69) 8%
associated
companies
Financial income 238 114 491 125 104 178 129%
Financial expenses 193 76 186 52 44 22 339%
Profit before 2,343 1,788 2,140 1,835 1,905 1,577 23%
taxation
Net profit 1,684 1,232 1,462 1,226 1,272 1,053 32%
Depreciation,
amortisation and 422 412 549 576 387 380 9%
impairment losses
Capital 735 723 1,092 873 642 392 14%
expenditure
Cash flow from
operating 2,105 1,343 2,103 2,426 1,710 1,350 23%
activities
Free cash flow 1,332 614 903 1,533 956 886 39%
Equity 25,620 25,729 26,504 25,557 24,827 23,942 3%
Total assets 37,731 36,497 37,433 35,587 34,248 33,838 10%
Equity ratio 67.9% 70.5% 70.8% 71.8% 72.5% 70.8%
Full-time
employees at the 21,246 20,942 20,285 20,001 19,631 19,179 8%
end of the period
Diluted earnings
per share (in 5.09 3.70 4.37 3.63 3.74 3.10 36%
DKK)*
Average number of shares
outstanding (million)*
- used for diluted 330.8 333.2 334.7 338.2 339.8 339.8 -3%
earnings per share
Sales by business
segments:
Insulin 1,692 1,448 1,332 1,252 1,037 886 63%
analogues
Human insulin
and 3,753 3,346 3,944 3,593 3,640 3,206 3%
insulin-related
sales
Oral
antidiabetic 391 376 403 445 379 416 3%
products (OAD)
Diabetes care 5,836 5,170 5,679 5,290 5,056 4,508 15%
total
NovoSeven(r) 1,248 1,090 1,170 1,086 1,084 1,019 15%
Growth hormone 704 596 651 559 557 550 26%
therapy
Hormone
replacement 410 328 364 396 389 339 5%
therapy
Other products 85 74 80 77 78 99 9%
Biopharmaceuticals 2,447 2,088 2,265 2,118 2,108 2,007 16%
total
Sales by geographic segments:
Europe 3,405 3,006 3,364 3,057 3,106 2,884 10%
North America 2,282 2,092 1,816 2,098 1,837 1,727 24%
International 1,395 1,128 1,559 1,171 1,134 980 23%
Operations
Japan & Oceania 1,201 1,032 1,205 1,082 1,087 924 10%
Segment operating
profit:
Diabetes care 1,235 750 1,047 746 936 675 32%
1,106 762 808 1,004 949 815 17%
Biopharmaceuticals
(*) For Q2 2005 diluted earnings per share/ADR of a nominal value
of DKK 2, which include options on Novo Nordisk's treasury
shares with an exercise price below current market value, have
been based on an average number of shares of 330,804,579.
Appendix 2:
Quarterly numbers in EUR
(Amounts in EUR million, except number of employees, earnings
per share and number of shares outstanding.)
Key figures are translated into EUR as supplementary information -- the
translation is based on average exchange rate for income statement
and exchange rate at the balance sheet date for balance sheet items.
%
change
2005 2004 Q2
2004 -
Q2 Q1 Q4 Q3 Q2 Q1 Q2
2005
Sales 1,113 975 1,068 997 962 875 16%
Gross profit 816 695 778 715 701 626 16%
Gross margin 73.3% 71.3% 72.8% 71.8% 72.9% 71.5%
Sales and 305 287 318 274 268 253 14%
distribution costs
Percent of sales 27.4% 29.5% 29.8% 27.5% 27.8% 28.9%
Research and 160 149 167 146 132 140 22%
development costs
Percent of sales 14.5% 15.2% 15.6% 14.7% 13.7% 16.0%
Administrative 63 65 72 67 58 64 9%
expenses
Percent of sales 5.7% 6.7% 6.7% 6.8% 6.0% 7.3%
Licence fees and
other operating 27 9 28 8 10 31 185%
income (net)
Operating profit 315 203 249 236 253 200 24%
Operating margin 28.3% 20.8% 23.4% 23.6% 26.3% 22.9%
Share of profit in
associated R&D (6) 32 (1) - (5) (9) 8%
companies
Financial income 32 15 65 17 14 24 129%
Financial expenses 26 10 25 7 6 3 339%
Profit before 315 240 288 246 256 212 23%
taxation
Net profit 226 166 197 165 171 141 32%
Depreciation,
amortisation and 57 55 74 77 52 51 9%
impairment losses
Capital 99 97 147 117 86 53 14%
expenditure
Cash flow from
operating 283 180 283 326 230 181 23%
activities
Free cash flow 179 82 121 207 128 119 39%
Equity 3,438 3,454 3,563 3,434 3,340 3,216 3%
Total assets 5,064 4,899 5,033 4,782 4,608 4,545 10%
Equity ratio 67.9% 70.5% 70.8% 71.8% 72.5% 70.8%
Full-time
employees at the 21,246 20,942 20,285 20,001 19,631 19,179 8%
end of the period
Diluted earnings
per share (in 0.68 0.50 0.58 0.49 0.50 0.42 36%
EUR)*
Average number of shares
outstanding (million)*
- used for diluted 330.8 333.2 334.7 338.2 339.8 339.8 -3%
earnings per share
Sales by business
segments:
Insulin 227 195 179 169 139 119 63%
analogues
Human insulin
and 504 450 531 483 489 430 3%
insulin-related
sales
Oral
antidiabetic 52 51 54 60 51 56 3%
products (OAD)
Diabetes care 783 696 764 712 679 605 15%
total
NovoSeven(r) 168 146 157 147 145 137 15%
Growth hormone 95 80 87 75 75 74 26%
therapy
Hormone
replacement 55 44 49 53 52 46 5%
therapy
Other products 12 9 11 10 11 13 9%
Biopharmaceuticals 330 279 304 285 283 270 16%
total
Sales by
geographic
segments:
Europe 457 404 452 411 418 387 10%
North America 307 281 244 282 247 232 24%
International 187 152 210 157 152 132 23%
Operations
Japan & Oceania 162 138 162 147 145 124 10%
Segment operating
profit:
Diabetes care 166 101 141 101 125 91 32%
149 102 108 135 128 109 17%
Biopharmaceuticals
(*) For Q2 2005 diluted earnings per share/ADR of a nominal value of
DKK 2, which include options on Novo Nordisk's treasury
shares with an exercise price below current market value, have
been based on an average number of shares of 330,804,579.
Appendix 3:
Income statement
H1 H1 Q2 Q2
DKK million 2005 2004 2005 2004
Sales 15,541 13,679 8,283 7,164
Cost of goods sold 4,295 3,799 2,210 1,945
Gross profit 11,246 9,880 6,073 5,219
Sales and distribution
costs 4,406 3,877 2,267 1,991
Research and development
costs 2,303 2,023 1,197 983
Administrative expenses 953 908 470 431
Licence fees and other
operating income (net) 269 303 202 71
Operating profit 3,853 3,375 2,341 1,885
Share of profit/(loss) in
associated companies 195 (109) (43) (40)
Financial income 352 282 238 104
Financial expenses 269 66 193 44
Profit before taxation 4,131 3,482 2,343 1,905
Income taxes (*) 1,215 1,157 659 633
NET PROFIT 2,916 2,325 1,684 1,272
Basic earnings per share
(DKK) 8.81 6.87 5.11 3.76
Diluted earnings per share
diluted (DKK) 8.78 6.84 5.09 3.74
Segment sales:
Diabetes care 11,006 9,564 5,836 5,056
Biopharmaceuticals 4,535 4,115 2,447 2,108
Segment operating profit:
Diabetes care 1,985 1,611 1,235 936
Operating margin 18.0% 16.8% 21.2% 18.5%
Biopharmaceuticals 1,868 1,764 1,106 949
Operating margin 41.2% 42.9% 45.2% 45.0%
(*) The effective tax rate for the first half of 2005 of 29.4% is
based on the expected effective tax rate for the full year of 2005
including the effect of the reduction in the Danish corporate
income tax and including the tax-exempt status of the capital gain
on the sale of shares in Ferrosan A/S, but excluding the effect of
the tax-exempt status of the accounting gain related to
ZymoGenetics' public offering of new shares, which was concluded in
August 2005.
Appendix 4:
Balance sheet
DKK million 30 Jun 2005 31 Dec 2004
ASSETS
Intangible assets 411 314
Property, plant and equipment 18,799 17,559
Investments in associated
companies 770 883
Deferred tax assets 810 769
Other financial assets 189 159
TOTAL LONG-TERM ASSETS 20,979 19,684
Inventories 7,670 7,163
Trade receivables 4,681 4,062
Tax receivables 22 710
Other receivables 1,404 1,855
Marketable securities 524 526
Cash at bank and in hand 2,451 3,433
TOTAL CURRENT ASSETS 16,752 17,749
TOTAL ASSETS 37,731 37,433
EQUITY AND LIABILITIES
Share capital 709 709
Treasury shares (56) (45)
Share premium account - 2,565
Retained earnings 25,099 22,671
Other comprehensive income (132) 604
TOTAL EQUITY 25,620 26,504
Long-term debt 1,272 1,188
Deferred tax liabilities 1,328 1,853
Provision for pensions 300 250
Other provisions 267 358
Total long-term liabilities 3,167 3,649
Short-term debt 600 507
Trade payables 1,191 1,061
Tax payables 709 631
Other liabilities 4,678 3,721
Other provisions 1,766 1,360
Total current liabilities 8,944 7,280
TOTAL LIABILITIES 12,111 10,929
TOTAL EQUITY AND LIABILITIES 37,731 37,433
Appendix 5:
Statement of changes in equity
Other
compre-
hensive
income
De-
ferred
Ex- gain/
change loss Other
Share Trea- Share rate on cash ad-
capi- sury premium Retained adjust- flow just-
DKK million tal shares account earnings ments hedges ments Total
H1 2005
Balance at the
beginning of
the year 709 (45) 2,565 22,671 (40) 461 183 26,504
Exchange
rate
adjustment
of
investments
in
subsidiaries 98 98
Deferred
(gain)/loss
on cash flow
hedges at
the
beginning of
the year
recognised
in the
Income
statement
for the
period (461) (461)
Deferred
gain/(loss)
on cash flow
hedges at
the end of
the period (386) (386)
Other
adjustments 96 13 109
Net income
recognised
directly in
equity - - - 96 98 (847) 13 (640)
Net profit
for the
period 2,916 2,916
Total income
for the
period - - - 3,012 98 (847) 13 2,276
Cost of
share-based
payment 40 40
Purchase of
treasury
shares (11) (1,636) (1,647)
Sale of
treasury
shares - 41 41
Transfer of
share
premium
account to
retained
earnings (*) (2,565) 2,565 -
Dividends (1,594) (1,594)
Balance at
the end of
the period 709 (56) - 25,099 58 (386) 196 25,620
(*) In accordance with changes in the Danish Companies Act the share
premium account is transferred to retained earnings.
H1 2004
Balance at
the
beginning of
the year 709 (33) 2,565 20,925 (79) 513 176 24,776
Exchange
rate
adjustment
of
investments
in
subsidiaries (18) (18)
Deferred
(gain)/loss
on cash flow
hedges at
the
beginning of
the year
recognised
in the
Income
statement
for the
period (513) (513)
Deferred
gain/(loss)
on cash flow
hedges at
the end of
the period 77 77
Other
adjustments (3) (3)
Net income
recognised
directly in
equity - - - - (18) (436) (3) (457)
Net profit
for the
period 2,325 2,325
Total income
for the
period - - - 2,325 (18) (436) (3) 1,868
Cost of
share-based
payment 52 52
Purchase of
treasury
shares (3) (425) (428)
Sale of
treasury
shares - 47 47
Dividends (1,488) (1,488)
Balance at
the end of
the period 709 (36) 2,565 21,436 (97) 77 173 24,827
Appendix 6:
Condensed cash flow statement
DKK million H1 2005 H1 2004
Net profit 2,916 2,325
Net reversals with no effect on cash flow 2,145 2,540
Income taxes paid and net interest
received (926) (1,311)
Cash flow before change in working
capital 4,135 3,554
Net change in working capital (687) (494)
Cash flow from operating activities 3,448 3,060
Net investments in intangible assets and
long-term financial assets (44) (184)
Capital expenditure for property, plant
and equipment (1,458) (1,034)
Net change in marketable securities
(Greater than 3 months) - 1,304
Total cash flow from investing activities (1,502) 86
Cash flow from financing activities (3,219) (2,202)
NET CASH FLOW (1,273) 944
Unrealised gain/(loss) on exchange rates
in cash and cash equivalents 161 (16)
Net change in cash and cash equivalents (1,112) 928
Cash and cash equivalents at the
beginning of the year 2,963 841
Cash and cash equivalents at the end of
the period 1,851 1,769
Bonds with original term to maturity
exceeding three months 507 506
Undrawn committed credit facilities 6,706 6,689
FINANCIAL RESOURCES AT THE END OF THE
PERIOD 9,064 8,964
FREE CASH FLOW* 1,946 1,842
(*) Cash flow from operating activities + Cash flow from investing
activities -- Net change in marketable securities (greater than 3
months)
Further information on Novo Nordisk is available on the company's internet homepage at the address: novonordisk.com