Rethink tomorrow
The Novozymes
Report 2020
2 Novozymes A/S
– Let’s rethink tomorrow
Our purpose
3 ContentsNovozymes A/S
Message from the Chair
and the CEO
“This year has proven to us
that Novozymes has strong
partnerships with customers,
a resilient portfolio and
committed employees”
Collaborating with
communities during
COVID-19

oral use which helps reduce


The highlights of the
Novozymes Report 2020
– at report2020.novozymes.com
01
The big picture
5 2020 in brief
15 Five-year summary
16 Message from the Chair
and the CEO
19 This is Novozymes
20 Working with the SDGs
02
Our business
23 Strategy
25 Risk management
30 Targets
34 Outlook for 2021
03
Governance
38 Corporate governance
42 Board of Directors
44 Executive Leadership Team
46 Summary of the
Remuneration report
50 The Novozymes stock
04
Accounts and performance
53 Performance and consolidated

61 Performance and
consolidated
environmental data
63 Performance and
consolidated social
and governance data
65 Notes
138 Statements
143 Financial statements for
Novozymes A/S
159 Glossary
160 About the report
Contents
Together we find
biological answers
for better lives in
a growing world
Product Launch
Explore
Inspire
The big picture
01
The
big picture
5The big picture In briefNovozymes A/S
(2019: -1%)
(2019: 28.1%) (2019: 2.2 DKKbn)
(2019: 21.1%)


of 3% in DKK compared with 2019.
Resilient 2020 performance despite
the COVID-19 pandemic.
Return on invested capital (ROIC), including goodwill, was 18.9%, down
2.2 percentage points from 21.1% in 2019. The decrease was mainly

The increase of DKK 1.2 billion was

operating activities. Driven by higher
cash conversion from better earnings
quality, a settlement related to the
former BioAg setup and positive changes

0%
18.9%
26.1% 3.4
Organic sales growth
ROIC
EBIT margin 
2020
realized
2020
outlook
1
Sales growth, organic 0% 0%
EBIT margin 26.1% 26-27%
ROIC (including
goodwill)
18.9% 18-19%

before acquisitions,
DKKbn
 2.6-3.0
1. Outlook guided as of December 11, 2020.
The EBIT margin ended at 26.1%,
down from 28.1% in 2019. Excluding

former BioAG setup, reorganization
costs, acquisition-related transaction
costs and an impairment loss, the
underlying EBIT margin was ~27%
in 2020, which was ~1 percentage
point higher than the underlying
EBIT margin of ~26% in 2019. The
improvement was driven by a higher
underlying gross margin and lower
operating costs.

Financial highlightsIn brief
See more details on performance
in Accounts and performance
Outlook
2021
6The big picture In briefNovozymes A/S
(three-year rolling average 2018-2020)
Electricity from renewable sources
accounted for 69% of our total
electricity use in 2020. At our site in
Franklinton, USA, we sourced 100% of
our electricity from renewable sources
by purchasing renewable energy

In 2020, we reached 3.98 billion people with our
laundry solutions that replace chemicals and
contribute to cleaner water.

CO in global transport. The savings achieved are equivalent

In 2020, 33% of our senior
management (directors or higher)

a diverse workforce will drive change
and a thriving culture.
We are within our 2022 target for
lost time injuries per million working
hours. We will continue to prioritize
safety across the organization.
69%
3.98 billion 
33%
1.5
Electricity from
renewable sources
Number of people reached Tons of CO emissions saved
Women in senior
management
Lost time injuries/
million working hours
2020
realized
2022
targets
Gain food by improving

table
136,000
tons of
food
500,000
tons of
food
Reduce absolute CO

from operations
 
Develop context-based
water management
programs
13% of
sites*
100% of
sites*
Develop zero waste
programs
20% of
sites*
100% of
sites*
Manage biomass in
circular systems
97% 100%
Develop circular
management plans for
key packaging materials
Roadmap

100%
Enable learning 78 80
Nurture diversity 83 86
Pledge employee time to
local outreach
Program
launched
~ 1% of
time
Excite employees 81 81
* The target does not include sites with activities


See more details on performance
in Accounts and performance
For more information on our

In brief Sustainability highlights

7The big picture In briefNovozymes A/S
North America
The severe eects of COVID-19 restrictions
on US ethanol production was the primary
cause of the 4% organic sales decline in North
America for the full-year. Also, sales in Grain
& Tech Processing declined during the year,
whereas the other business areas grew.
Latin America
Sales in Latin America grew 6% organically
in 2020, driven by increased enzymatic
penetration in Household Care, ethanol capacity
expansion in Bioenergy and market penetration
of solutions for vegetable oil processing in Grain
& Tech Processing. Performance in Agriculture,
Animal Health & Nutrition was weak due
to lower in-market demand and inventory
adjustments in animal nutrition.
Europe, the Middle East & Africa
Full-year sales grew 3% organically compared
to 2019. Growth in the region was primarily
driven by a strong performance in Household
Care but with contributions from most of the
other business areas as well.
Asia Pacic
Organic sales declined 1% in 2020 primarily
due to the COVID-19 related eects on the
textile industry, which had a negative eect on
Grain & Tech Processing. Sales in Agriculture,
Animal Health & Nutrition also declined,
whereas Bioenergy and Household Care both
grew.
Sales by geography
Europe, Middle East & Africa
Asia Pacic
Latin America
9%
of sales
6%
Organic sales
growth
39%
of sales
3%
Organic sales
growth
20%
of sales
-1%
Organic sales
growth
North America
32%
of sales
-4%
Organic sales
growth
8The big picture In briefNovozymes A/S
Sales by business area

grew in 2020. Household Care delivered
solid organic sales growth. Sales in Food,




which reduced ethanol and textile production.
35%
14%
20%
13%
18%
of sales
2019: 33%
of sales
2019: 15%
of sales
2019: 19%
of sales
2019: 13%
of sales
2019: 20%
Household Care

Processing

Human Health


Bioenergy
*-1%
*5%
*1%
*-9%
*1%
* Organic sales growth
9The big picture In briefNovozymes A/S
2020 performance
Household Care sales grew 5%
organically and 3% in reported DKK
in 2020.
Sales performance was mainly
driven by the rollout of the
Freshness technology in Europe and
broader enzymatic penetration of
detergents, especially in emerging
markets. Growth from the Freshness
platform was additionally fueled by
the introduction of a new liquid and
pod format.
Increased consumer focus on
cleanliness and more at-home dish
washing induced by the COVID-19
pandemic also contributed to sales
growth.
2021 outlook
Organic sales growth is expected to
be driven by market penetration,
focusing on emerging markets and
a continued rollout of the Freshness
technology, with a broad-market
launch in the second half of the
year. The broad-market launch is
an important milestone, that is
expected to become a signicant
growth contributor in future years.
The 2021 outlook for Household
Care builds on improving the
underlying performance on top of a
better than expected performance
in 2020.
Product launches in 2020
Remify® Everis – our rst
enzyme solution for cleaning
surgical instruments and
devices to help prevent
healthcare associated
infections
Microvia™ - a bacterial bio-
cleaning solution for hard
surface cleaners
Key trends
Strong interest in freshness
solutions for the removal of
malodor and grime in clothing
Renewed industry focus on
sustainable detergents by
replacing chemicals with
biological alternatives
Increased focus on household
cleaning during COVID-19
pandemic
Compaction of laundry
detergents remains a strong
trend, driven in part by
increased sales through online
retailers
Growing consumer and
professional interest in
microbial and bio-based
cleaning solutions
Our solutions in Household Care are
being used by more than half the world’s
population to improve the overall
cleaning of clothes and dishes while
reducing the consumption of water,
energy and the usage of traditional
chemicals.
Read more about our
contributions to the SDGs
Household Care
Read more about our
Household Care solutions
at Novozymes.com
SDG impact
35%
of 2020 sales
10The big picture In briefNovozymes A/S
2020 performance
Full-year sales in Food, Beverages
& Human Health grew 1% both
organically and in reported DKK.
Sales benetted from moderate
growth in the food-related business
areas which was to a large extent
oset by declining sales in
beverages. The growth in food was
mainly driven by increased market
penetration and the success of
tailored solutions in baking as well
as higher demand for low-lactose
solutions, such as Saphera
®
, in dairy.
COVID-19 restrictions resulted
in more at-home and less out-of-
home consumption of foods and
beverages. This had a minor positive
eect on the food business but
resulted in declining beverage sales
as especially the global brewing
industry was adversely aected.
The human health opportunity
progressed well during the year
and contributed positively to sales
although from a small base.
2021 outlook
2021 organic sales growth is
expected to be broad-based.
Innovation and emerging market
penetration, supported by
increasing consumer dietary-health-
awareness, are the main drivers of
growth in the food business.
Beverages is expected to gradually
recover following a 2020 severely
aected by COVID-19 implications.
The PrecisionBiotics Group and
Microbiome Labs acquisitions are
both estimated to contribute to
growth in reported DKK and to grow
organically by solid double-digits.
Product launches in 2020
Saphera
®
Fiber - a new solution
for dairy products to increase
ber content while reducing
sugar, providing added value
to brands of yoghurt and
functional milk
Protana
®
Prime - a new
biological solution that brings
out the natural umami avor
from plant proteins and enable
food manufacturers to produce
tasty, label-friendly meat
alternatives with less salt
Gluzyme
®
Fortis - Enhances
dough handling and allows for
salt reduction. The high product
stability even at high storage
temperatures makes it perfect
for warm climates
BioFresh
®
4+ - Clinically
proven enzymatic solution that
eliminates bad breath for up to
four hours
Optiva
®
LS - Cuts costs on
added sugar by >30% for every
loaf of bread
Key trends
Strong consumer demand
for new plant-based proteins
drives industry innovation
Focus on improved product
quality and taste
Consumers demand better and
more convenient food with
attention to natural, healthy
and sustainable ingredients
The healthcare industry is
pivoting from symptoms
treatment towards preventive
measures with biology as a key
part of the solution
Our solutions in Food, Beverages &
Human Health make food consumption
more sustainable by reducing food
waste and enabling the use of local raw
materials. In addition, our solutions
enable consumers to live healthier
lives free from additives, unwanted
compounds and by adding dietary
benecial bacteria and enzymes for
improved gut health.
Read more about our
contributions to the SDGs
SDG impact
Food, Beverages & Human Health
Read more about our Food,
Beverages & Human Health
solutions at Novozymes.com
35%
of 2020 sales
20%
of 2020 sales
11The big picture In briefNovozymes A/S
2020 performance
Bioenergy sales declined 9%
organically and 13% in reported
DKK in 2020. COVID-19 restrictions,

severely disrupted US gasoline and

ethanol production and Bioenergy
sales. Monthly US ethanol


still ended the year well below 2019
levels.




penetration with yeast solutions,

expansion of corn-based ethanol
production capacity in Brazil and
China contributed positively to full-
year sales.
2021 outlook
Organic sales growth in 2021 is
expected to be driven by a gradual
recovery in the US ethanol industry,
following the severe disruption


organic sales range roughly

digit growth in the US ethanol
production. The growth contribution

expected to be positive.
Product launches in 2020
Fortiva
®
Hemi



starch for ethanol conversion
Key trends
US ethanol industry is under
strong pressure due to the





due to trade barriers

public agendas, leading to

energy
Follow-through on increased





the transport sector.

converting grains and straw into fuel
ethanol, enabling a saving of 1,100–

liters of gasoline.
Read more about our
contributions to the SDGs
SDG impact
18%
of 2020 sales
Bioenergy
Read more about our
Bioenergy solutions at
Novozymes.com
12The big picture In briefNovozymes A/S
Our solutions in grain processing
improve yields and save energy. Our
solutions for technical industries
help save chemicals, water, steam
and electricity. For example, one of
our solutions for textile production
saves 350 kg of CO2 per ton of fabric
produced.
Read more about our
contributions to the SDGs
SDG impact
2020 performance
Sales in Grain & Tech Processing
declined 1% organically and 4% in
reported DKK in 2020. Solid growth
in grain did not fully compensate for
a decline in tech.
The broad-based growth in grain
was driven by strong performance
in grain milling and vegetable oil
processing.
COVID-19 severely aected
the global textile industry and
subsequently also resulted in a
signicant downturn in sales of
enzymes for textile production,
which was the main reason for the
decline in tech.
2021 outlook
Organic sales growth is expected to
be broad-based, with both grain and
tech contributing positively.
The grain business is expected to
outgrow a roughly at underlying
market, driven by innovation and
increased local presence across key
regions.
Tech is expected to gradually
recover aer the signicant
disruption of the global textile
industry in 2020.
Product launches in 2020
Quara
®
Boost - a solution for
vegetable oil processors to
increase their protability by
retaining oil that is usually
wasted in the gum fraction
LpHera - next generation
enzyme (alpha amylase) for
starch processing that reduces
the need for chemicals and
drives higher fermentation
yields
Frontia
®
GlutenEx - Better
wheat separation increases
gluten protein recovery by 2%
in grain milling
Key trends
Focus on cost reductions,
process optimization and
yield enhancement including
increased protein extraction
from grain processing
Increased demand for sugar
replacements
Water scarcity and pollution
driving legislation and demand
for solutions that reduce water
consumption and improve
water quality
Increased public interest
for sustainability in fashion
leading to consumer pull and
renewed interest for biological
alternatives to the harsh
chemicals currently being used
Grain &
Tech Processing
Read more about our Grain
& Tech Processing solutions
at Novozymes.com
18%
of 2020 sales
14%
of 2020 sales
13The big picture In briefNovozymes A/S


2020 performance
Full-year sales in Agriculture,

grew 1% organically and declined
2% in reported DKK. Organic sales
increased slightly as solid growth in


nutrition.
Growth in agriculture was driven by
increased demand across solutions.


the second quarter related to the
former BioAg setup.
The continued rollout of
Balancius™ contributed to the sales

nutrition, but it was not enough to
compensate for lower in-market
demand and inventory adjustments
in animal nutrition.
Novozymes did not recognize any
deferred income as revenue in 2020

in 2019. As the BioAg Alliance was
terminated in April of 2019, the
remaining and related balance of
the deferred income of DKK 287
million was recognized as other
operating income in the second
quarter of 2019.
2021 outlook
Organic sales performance in 2021
will be driven by the continued
expansion of the BioAg business
across crops and regions, resulting
in solid underlying double-digit
organic sales growth when adjusted

the second quarter of 2020.

Nutrition includes some uncertainty
as to stocking levels in the value
chain, further accentuated by the
pandemic. A strong innovative
product portfolio and partnership
setup coupled with signs of
improving farmer economics make
us carefully optimistic about the
years to come.
Product launches in 2020
Taegro
®
- a microbial foliar
fungicide launched by Syngenta
in Europe and Latin America,
enabling fruit and vegetable
growers to protect against
diseases such as powdery
mildew and botrytis, while
reducing the chemical load of
crop protection programs

World population growth
and changing dietary habits

and other food sources
Stricter regulatory
requirements for more
sustainable farming practices
and animal welfare with less
use of antibiotics
Continued focus on animal
nutrition, soil health and

Our bio-based solutions improve yields
in agriculture by improving plants’
access to nutrients in the soil and by
improving animals’ access to energy,
proteins and minerals in the feed. This
saves agricultural land for food and
feed production and reduces emissions
to the environment from manure in
livestock production. Enzymes can save
approximately 130 kg of CO emissions
per 1,000 chickens by increasing the
animals’ access to starch in the feed.
Read more about our

13%
of 2020 sales


solutions at Novozymes.com

14The big picture In briefNovozymes A/S

was returned to society. The remaining 10% was reinvested in Novozymes to

future value generation for distribution among key stakeholders.
Economic Contribution
I
n 2020 Novozymes returned 12% of the
value generated to our capital providers. The
main part of this was our dividend payment

Novozymes bought back shares worth 1,500
million in 2020.
At the end of 2020, the Novo Nordisk
Foundation owned - through Novo Holdings
A/S - 25.5% of the share in Novozymes (see
The Novozymes Stock). The Novo Nordisk

social and humanitarian purposes, and the
Foundation contributes to communities in
large scale through donations and impact
investments, to which we indirectly contribute
through our dividend payments.
A responsible approach to tax
Novozymes’ tax policy supports a positive
tax contribution to society and governments.

obligations in the countries in which it operates.
We seek to obtain a competitive tax level in
a responsible manner, and with full regard to
national and international laws and regulations.
Besides taxes, our economic contributions
include duties, VAT, employee taxes, employee

from local vendors and job creation.
In 2020, Novozymes incurred corporate
income taxes and other taxes and duties that

In addition, Novozymes collected and withheld
tax contributions on dividends and wages

Novozymes’ total tax contribution therefore
amounted to approximately DKK 2,850 million,
compared with approximately DKK 3,000
million in 2019.
Tax transparency
Tax is a core part of corporate responsibility
and governance at Novozymes. The Board
of Directors approves the tax policy and is
accountable for it. Novozymes is committed to
being open and transparent about its tax policy

to our stakeholders about our approach to tax
and taxes paid.
Novozymes supports and complies with
the transparency requirements on taxes,
including the OECD Country-by-Country tax
initiative. The Country-by-Country reporting
is submitted to the tax authorities and not
made public. Novozymes is transparent about
the total tax contribution of the Novozymes
Group, divided into taxes paid by Novozymes
and taxes collected on behalf of employees
and shareholders. Further, Novozymes is
transparent about the entities owned around
the world and the activity of each subsidiary,
see note 6.8. We also provide information on
taxes paid in Denmark vs rest of the World, see
Note 2.6.
43%
Suppliers
used to
purchase
goods and
services from
our suppliers
99%
Sales
1%
Financial &
other income
25%
Employees
used for
employee wages,
pensions, etc.
12%
Capital providers
in dividends and
financial costs for our
capital providers
10%
Community
returned to the community
by paying corporation tax,
other taxes and duties
10%
Reinvested in
Novozymes
reinvested in
Novozymes for future
value generation
14,094
million DKK
DKK
15The big picture Five-year summaryNovozymes A/S
 2016 2017 2018 2019 2020
Income statement
Revenue     
 8,126  8,255  7,853
EBITDA   5,158 5,292 
     3,652
Financial items, net  (157) (117) (235) (127)
 3,050 3,120 3,227 3,155 2,826
Balance sheet
Total assets 18,659 18,373 19,697  20,510
Shareholders’ equity  11,267   
Invested capital  12,880 13,953 15,507 
Net interest-bearing debt 990  2,535  3,871

   3,679 3,196 
Purchases of property, plant and
equipment 1,076 1,593 1,332 862 
Net investments excluding acquisitions 1,188 1,665 1,388 991 936

and securities 2,652 2,398 2,291 2,205 
Business acquisitions, divestments
 (161) (3)   (588)
  2,395 2,287 2,635 2,831

Revenue growth, DKK % 1 3 (1) 0 (3)
Revenue growth, organic % 2 (1) 0
 % 13.2 13.2 13.0 13.7 13.8
Gross margin % 57.5 57.9  55.3 56.0
EBITDA margin % 35.1 35.2 35.8 36.8 35.1
Five-year summary
2016 2017 2018 2019 2020

EBIT margin % 27.9 27.9 28.3 28.1 26.1
 %  19.5 18.0 17.0 19.7
Equity ratio % 62.9 61.3 58.1 56.2 
NIBD/EBITDA x 0.2 0.3 0.5 0.8 0.8
Return on equity % 26.1 27.1  27.5 
ROIC including goodwill % 25.1 25.6  21.1 18.9
Earnings per share (EPS), diluted DKK 10.06  11.03 11.01 10.02
Dividend per share (2020 proposed) DKK   5.00 5.25 5.25


as described in the Glossary.

2018 have not been restated.
2016 2017 2018 2019 2020
Total number of employees No.    6,125 6,185
Rate of employee turnover %  11.9 8.8 12.7 8.7
Frequency of occupational injuries with
absence per million working hours 2.2 1.6  0.9 1.3
Women in senior management % 25 26 30 31 33

16The big picture Message from the Chair and the CEONovozymes A/S
Unlocking
Novozymes’
potential
Novozymes delivered a resilient 2020

pandemic. We have reorganized the
company intending to move even
closer to our customers and solidify
our position as the leading provider
of biotech solutions. Having laid the

believe Novozymes is in a strong
position going into 2021.
Message from the Chair and the CEO
Jørgen Buhl Rasmussen
Chair
Ester Baiget
CEO
Message from the Chair and
the CEO continues on the next
page
Message from the Chair and the CEO
17The big picture Message from the Chair and the CEONovozymes A/S
T
here has not been a year like 2020 in
recent memory. And while we did not see
the sales growth we wanted, we’re extremely
proud of the way our employees have handled

we made during the year are a testament to
Novozymes' strong purpose, culture and well-



business helped us to withstand at least

Household Care delivered solid growth driven
by the rollout of the Freshness platform,
growth in emerging markets and COVID-19
induced changes to consumer behavior. In

human health grew while beverages declined.
At the same time, organic sales declined in


and textile production.
Our organic sales growth came in at 0% for
the year, and the reported EBIT margin was
a solid 26.1% despite currency headwinds.
We also achieved very strong cash generation

acquisitions.
In 2020, the COVID-19 pandemic
overshadowed many things, but at Novozymes
we did not lose focus on creating the best
possible foundation for a business that is here
for the long term.
Customer-focused and solutions-driven
We reorganized Novozymes in September,
refocusing the company around our customers
and geographies. As we continue to build on
our strategy, Better business with biology,
this new setup leads to reduced complexity,
increased accountability, faster decision-
making and empowers our employees to a
greater degree.
We now organize around two new divisions,

Industrial Biosolutions, headed by Anders
Lund and Tina Sejersgård Fanø respectively to


wide range of industries we serve.
For years, Novozymes has been associated
mainly with the production of enzymes, but the
reality is that we provide a range of solutions
within the biotech space. What our customers
need may be an enzyme, a microbe, a yeast
or even a digital solution. For example, in
Bioenergy, we not only supply customers with
enzymes or yeast for bioethanol production,
we also have the digital tools to ensure optimal
conditions for applying our solutions during
our customer’s production process. We always
take a holistic approach to market needs and
provide our customers with the exact solution
- or combination of solutions – that will help
them succeed.
As part of the reorganization, we aligned our
regional commercial set-up and created new
roles, especially in emerging markets, to get
closer to where our customers are. We have
also ensured a stronger regional voice in
core decision-making processes. As a global
company, it is vital that employees in all
regions are able to accelerate decisions and

Changes to the Executive
Leadership Team composition
We brought in new members to the Executive
Leadership team. Claus Crone Fuglsang, Head

and Graziela Chaluppe dos Santos Malucelli,

both appointed executive vice president and
joined the Executive Leadership Team this year,
creating a stronger connection between the
back and front ends of our company.
We also announced the appointment of Amy
Byrick as Executive Vice President of Strategy

Enggaard Rasmussen as Executive Vice

They will join Novozymes in April 2021, and we
look forward to seeing them make their mark
on these very important areas for Novozymes’
future. They will both succeed Thomas
Videbæk, who will be leaving Novozymes in
2021. We are immensely grateful for everything
Thomas has contributed to Novozymes during
his many years with the company and we wish
him well in the future.
Embracing our responsibility
At Novozymes, sustainability is at the root of
our solutions. We use biotechnology to enable
our customers to deliver more sustainable
solutions to society. Every day, in over 30
industries and 130 countries, our enzymes and
microbes help reduce energy, water, chemical
and raw material consumption, help improve
performance of customer products and give
people healthier and more sustainable choices
for living better lives. By laying the foundation
for a sound business and future growth we are,
by default, also ensuring a more sustainable
future for the world.

I see a healthy and well-
positioned company with a
strong technology platform
and impressive innovation
capabilities. I also see a

my goal is to fully unleash
the true potential of the
company.”
Ester Baiget
CEO
18The big picture Message from the Chair and the CEONovozymes A/S
In 2020, for example, we launched Taegro
®
in Europe and Latin America in collaboration
with Syngenta, providing farmers with a
chemical-free fungicide that protects fruit and
vegetables from disease, thereby reducing
waste in the food production cycle. We also


based products, thereby enabling producers
to accommodate consumer demand for tasty,
greener alternatives to meat-based foods.
But our responsibility does not stop with
delivering innovative, sustainable solutions
to our customers. In our own production, we
continue to do everything we can to reduce the
negative impact of our production processes.
We are proud to have ensured that, in 2020,
69% of our electricity globally came from
renewable sources. We also partnered with
WWF to assess and address water risks at our
sites by setting up targets for the sustainable
management of water in our production.
These achievements are steps on our journey
towards becoming even more sustainable,
and we need to keep up a determined pace
to honor our commitments to our customers,
consumers and the world.
Working together
In 2020, the COVID-19 pandemic had a

as a responsible corporate citizen, Novozymes
stepped in where possible. We worked together
with the Novo Nordisk Foundation to get the
COVID-19 testing capacity up and running in
Denmark. In other parts of the world, we made
direct donations to NGOs, either monetary or
in the form of essential equipment.
Our primary focus during this uncertain year
has been to keep our employees safe whether
they were working in production, in labs or
from home. Novozymes’ employees have
shown so much care for each other, and we
want to acknowledge what a fantastic job
they have done. Through our Inspire program,
our employees have also managed to reach
out to their communities and help those
in need, whether it be collecting funds for

educate children virtually.
The promotion of equal opportunities for all
people has been on Novozymes’ agenda for
many years, but we can still do more. There are
always new aspects or new groups of people
and backgrounds to consider when prioritizing
diversity. It is important to consider diversity
and inclusion in all aspects of business.
That also applies in times of change, so to
strengthen the collective capabilities of our
dedicated employees, we set diversity criteria
for everyone involved in the formation of new
roles and teams during our re-organization
in September. We also collaborated with
America’s Job Exchange to reach a more
diverse pool of candidates with our job ads,
and we set up focus groups with employees to
discuss where we are, where we want to be,
and how we intend to get there. A truly diverse
workforce will contribute to driving change and
building a thriving culture.
Thank You
We want to thank all our stakeholders for what
we were able to achieve together in a year
unlike any we have ever seen before. In times

it is your weaknesses or your strengths. This
year has proven to us that Novozymes has
strong partnerships with customers, a resilient
portfolio and committed employees who are
able to adapt and be innovative in challenging
times. That’s a great foundation from which to
grow.
We expect that we will return to growth in 2021,
supported by a more streamlined organization,
stronger commercial presence, innovation,
as well as a gradual recovery in those areas

this, we have set a sales growth expectation of
between 2% to 6% in 2021, provided we do not
see another extended global lockdown.
We look forward to working with our customers

solutions to the challenges we all face.
Ester Baiget CEO
Jørgen Buhl Rasmussen Chair
”While the pandemic we are
currently facing is an urgent

must not lose sight of the
long-term needs of the world.
Novozymes’ purpose is now

in 2020 we moved closer to
unlocking the full potential of
the company.”
Jørgen Buhl Rasmussen
Chair
19The big picture This is NovozymesNovozymes A/S
New organization to
strengthen customer focus
and innovation process.
This is
Novozymes
A
t Novozymes, we produce enzymes and
microorganisms for a diverse range of
industries. In fact, our biological solutions can
be found everywhere, from the products that
clean your clothes, to the food you eat, and the
ethanol that powers your car.
So, it goes without saying that the industries


consumer demands, including the need for
more sustainable solutions, while others
focus on how to save resources, optimize
performance and improve sustainability in their
production processes.
In order to best meet customer needs and
bring more customer-generated ideas into
our innovation process, we created two new
divisions in September 2020: Consumer

Biosolutions.

In Agriculture and Industrial Biosolutions, we focus
on improved performance in agriculture and industrial
processes, including higher yields, less waste and better
health for plants and animals.
We strive to translate our customers’ needs into solutions
that improve their return on investment and increase

of an improved understanding of our customers

businesses. We meet customers’ needs
through a combination of a world class
product portfolio, digital solutions and
a comprehensive service package.
Consumer
Biosolutions
Consumer Biosolutions unites
consumer-facing industries at the front
of the value chain such as Household
Care, Baking, Beverages, Food and Protein,
with a focus on making consumer products
better, healthier and higher performing, based on
clear end-consumer needs.
We have a strong understanding of our customers and the consumer
groups they serve. This understanding enables us to guide our
customers on a journey towards the perfect biological solution for
them by activating a combination of our existing products, new
technology, marketing support and know-how that can help them

help grow their market share.
Read more about our business
model at Novozymes.com
20The big picture Novozymes A/S
Sustainability has been integral to Novozymes for
decades. We are proud that our solutions contribute



business and right through our operations.
W
hen 193 UN member states created
the SDGs in 2015, we immediately
saw the SDGs as a common framework that
could enable the world to work towards the
sustainable future we all want. The SDGs have
inspired our purpose, strategy and targets and,
by the very nature of our business, we have

goals since then.
Novozymes produces a wide range of enzymes
and microorganisms for many applications.
Our solutions enable our customers to produce

energy and chemicals as well as CO emissions.
We live our purpose when we help our
customers make their production processes
and products better for the world, thereby
contributing to the SDGs as well.
Through our strategy, Better business with
biology, we are committed to developing
Working with

See also “Novozymes and the global
goals” for more details about how we

solutions that can contribute to solving
three global challenges: Climate, Water
and Production and Consumption. We are
also committed to operating our business
responsibly and investing to minimize our
negative environmental footprint. We are
investing in new strategic opportunity

and Specialty Alternative Proteins. These
are opportunities that are inspired by the
challenges embodied in the SDGs. They cater
to a growing desire among consumers to live
lives that are better for themselves and the
environment.
Here are some examples of how our business
and solutions contributed to the SDGs in 2020.

Supporting sustainable
food production and
resilient agricultural
practices

cleaner water
Enabling a
low carbon future
Enabling our
customers to produce
more from less
Partnering
for impact
21The big picture Novozymes A/S
Supporting
sustainable food
production and
resilient agricultural
practices
Goal 2:
Zero hunger
Our solutions enable our
agriculture customers to improve
performance across the value
chain from farm to table.
Microbial solutions for agriculture
help farmers increase the

production, reduce environmental
impacts and improve climate
resilience. In 2020, we launched

for fruit and vegetables which
enables farmers to protect their
yield while reducing the use of
fossil-based chemical fertilizers.

cleaner water
Goal 6:
Clean water and sanitation
Goal 14:
Life below water
Our solutions help our customers
reduce their consumption
of water, reduce wastewater
and reduce aquatic pollution
by reducing the use of harsh

aquatic environments.

a bacterial bio-cleaning solution
for hard surface cleaners which
reduces the use of chemicals. Our
launches in agriculture and food
production also reduce the use
of chemicals and the resulting
nutrient pollution impact from
our customers. We also partnered
with WWF to help us develop
programs for water management

challenges and current and future
conditions of water – at all our
sites.
Enabling a
low carbon future
Goal 7:
Aordable and clean energy
Goal 13:
Climate action
Novozymes is committed to help
the world limit global warming
through our actions across the
value chain. We are committed
to playing our part to limit the
increase in global warming to
1.5°C. and to making Novozymes
carbon-neutral by 2050. Many of
our solutions reduce the carbon
intensity of the processes they are
applied in.
Our solutions enable the
development of low-carbon fuels
for the transport sector, which

of the global energy mix and
related CO emissions. In 2020,
our bioenergy solutions helped
. We
are also a member of the RE100,
a global initiative working with
companies that have committed
to 100% renewable electricity.
Enabling our
customers to produce
more from less
Goal 12:
Responsible production
and consumption
Our solutions enable our
customers to produce more from
less across many industries. In

®
and Lphera
®
which help food
processors produce more oils
and starch from their feedstocks,
while reducing their use of energy
and processing chemicals.
We celebrated the 30th
anniversary of our baking solution
Novamyl
®
in 2020. Over the years,
it has saved 80 billion loaves of
bread from being thrown out,
which - in addition to the reduced
food waste – has also saved an
.
Partnering
for impact
Goal 17:
Partnership for the goals

contributions to society are
driven through collaborations
with our customers, governments,
suppliers and academia to learn,
develop and deliver solutions
to the most pressing needs of
society.
In the EU, Novozymes has worked
strategically with the EU Green
Deal through various industry
organizations and supported the
EU Commission's action plan
to address climate change and
environmental degradation. In
2020, we joined the ‘Climate

Biotech’ partnership, one of many
climate partnerships put forward
by the Danish government.
We also co-drive an open
innovation platform, Hello
Science, where we invite partners
and innovators to solve the key

Our business
02
Our
business
23Our business StrategyNovozymes A/S
Strategy
We believe the future is
shaped by the promise of

day to make good on this


business and the world.
T
he year 2020 was unlike what anyone
could have predicted. However, while it
was a year characterized by uncertainty, at
Novozymes we remain certain of one thing:
the world needs sustainable solutions and our
ambition for a more sustainable future remains
intact.

answers for better lives in a growing world
– Let’s rethink tomorrow” – serves as the
guiding principle for the way we do business.
By continually expanding the reach of our
solutions, we can ensure we remain true to
our purpose and to rethinking the world of
tomorrow.
Our strategy, Better business with biology,
guides clear priorities as well as growth and

areas. We strive to maximize value creation
through the commercialization of our core
business while investing in a more focused

areas outside the core. In 2020, we prioritized
enhancing a value-chain focused and customer-
centric approach. This was the year of aligning
more with the needs of customers, focusing on
the most important innovations and advancing
promising new business areas.
Moving
even
closer to
customers
I
n September, our organization was reshaped
to better address customer needs across the
full value chain. Our two divisions, Consumer

Biosolutions, allow for a more integrated

common characteristics and value drivers.
Consumer Biosolutions caters to industries
that supply sustainable solutions with clear

Biosolutions cover industries that supply
sustainable solutions focused on maximizing
yields and optimizing processes for our
customers.
In Consumer Biosolutions, we announced a
joint launch with Firmenich, the world's largest
24Our business StrategyNovozymes A/S
amid the pandemic. We hosted livestreams
on the Alibaba 1688 online platform which
attracted thousands of unique visitors, and
we will continue to strengthen the partnership
between Novozymes and Alibaba. The launch
of Microvia™, our bacterial bio-cleaning
solution for hard surface cleaners, addresses

for cleaning at home and at work during
the pandemic and is a showcase for our
capabilities in the relatively new space of
probiotic cleaners.
Several of our bioethanol customers saw
the demand for ethanol rise as the need for
hand sanitizers and disinfectants increased
dramatically during the pandemic. We
supported customers who donated ethanol
for the production of hand sanitizers and

products for the ethanol production.
Although 2020 was a unique year, there have
been learnings we take with us to stay agile,

S
ince 2019, we have been investing in what
we call strategic opportunity areas – or
SOAs. Finding biological solutions for improved
human oral and gut health is one such SOA
and has been a key focus in 2020.
Maturing
human
health
Accelerating
the digital
agenda
privately-owned perfume and taste company,
of a solution that brings unprecedented sugar-
reduction in dairy products. The partnership is
an example of how to bring new solutions to
market faster while also tapping into a growing
global consumer trend. We also entered into
a research partnership with Givaudan, the

to work on the research and development of

Beverages and Household Care.

we launched our Fiberex
®
platform, a new
platform for enzymes and yeast strains that

Fiberex
®
, customers are able to expand the
boundaries of corn-based ethanol by extracting
more corn oil from kernels and converting


streams for ethanol producers.
We also forged a stronger connection
between the back and front ends of our
company by having the heads of our Research


Leadership Team.
In the new divisional structure, we allocate
more resources to our regions. Stronger
geographical representation in our core
decision processes will improve decision-
making and bring more tailor-made solutions
to our customers.
T
he COVID-19 pandemic has accelerated
the need for digital communication in
order to overcome lockdowns and travel
restrictions, and this is a development we
embrace. By enhancing and expanding the
use of digital tools, we were able to improve
collaboration within the organization,
strengthen customer relationships and drive
new leads without notable interruption.
Our webinar platform – a tool to help our
employees conduct webinars for existing and

gaining leads that would previously have been
hard to reach. The data and insights collected
from webinars have been used to nurture new
and existing customers along the customer
decision journey.
In Brewing, we strived to reach out to more,
smaller breweries using digital tools. On the
website Brewing with enzymes, we share the

brewing process and potential customers can
enter a live chat with experts.
COVID-19 is also on the minds of many of
our customers, and we reached out to the
American laundry market with articles and
webinars about cleaning and buying habits
and trends shaped by the pandemic. In


BioFresh
®

the Novozymes OneHealth brand. Novozymes
established the Novozymes OneHealth brand
to market solutions within human health
under one umbrella, with consumer insights
at the heart of product development. Studies
show that up to 50% of consumers have been
concerned about bad breath at some point in
their life*. BioFresh
®



of its kind on the market, it addresses a
growing gap between consumers’ expectations

available on the market.
In June, Novozymes acquired PrecisionBiotics
Group Limited. Based in Cork, Ireland,
PrecisionBiotics Group holds a leading position
within probiotics for human gut health and is
well positioned with several clinically backed
products already on the market.
In January 2021, we acquired Microbiome
Labs, based in Illinois, US. With Microbiome
Labs’ comprehensive portfolio of proprietary
probiotic and microbiome solutions, Novozymes
gains a broader portfolio and a strong position
in the North American probiotics market.
The combined capabilities and our innovation
portfolio serve as a promising foundation for
future growth.
*Source: Novozymes OneHealth proprietary
insights 2019 “In which situations are you most
concerned about bad breath?”
25Our business Risk managementNovozymes A/S
Risk management




N
ovozymes’ risk management process
is designed to ensure that we identify,
assess and mitigate key business risks in a
timely manner. We do this to ensure risks do

targets and deliver value to our stakeholders.
In addition to monitoring and addressing our
risks, we also monitor longer-term threats
and trends. The Board of Directors has the
overall responsibility for overseeing risks and
for maintaining a robust risk management and
internal control system.
Risk management framework
Novozymes operates an Enterprise Risk
Management (ERM) process whereby the


organization. We monitor most risks by means
of biannual reviews, although some risks may
materialize within a short period of time and
require more frequent updates, the COVID-19
pandemic in 2020 being a case in point.

responsible for identifying risks in collaboration
with the organization and for ensuring that
senior management promotes risk awareness,
engagement and ownership across the
organization. Risks are assessed based on a
two-dimensional heat map rating system that
estimates the potential impact of a given risk on

that risk materializing. Each key risk is assigned
a risk owner from the Executive Leadership
Team and a Risk Responsible, usually a Vice
President, responsible for mitigating all risks
relevant to their respective areas.

assessed by the Executive Leadership Team
and the Board of Directors, who are also

of the risk management and internal control
processes throughout the year. In 2020, the
Audit Committee, on behalf of the Board of
Directors, made deep dives into selected risks
and risk processes.
Although the COVID-19 pandemic had a

risk on ‘worldwide pandemic disease’ is not
included as a key risk. In general, pandemic
outbreaks are rare events and so have not
rated highly on likelihood. The COVID-19

will continue to do so in 2021. The Executive
Leadership Team will continue to monitor
and address potential business risks arising
from the COVID-19 situation, e.g., changed
consumer behaviors, declining GDP growth,
while our global and local crisis response
teams safeguard our people and communities.
Our four key
risks for 2021
are unchanged
from 2020:
Competition
and market
consolidation;
Volatility of
agriculture-
related business;
Cyberattacks
and Global
political and
economic
instability.
See note 5.1 for information on

management
Potential impact
Probability
Volatility of
agriculture-
related
business
Competition
and market
consolidation
Cyberattacks
Global political
and economic
instability
Risk assessment heat map
26Our business Novozymes A/S

Competition and market consolidation
Novozymes is the market leader in the global enzyme market, which remains highly
competitive. Our position in the market may be challenged by competition from both existing
and potential new competitors, sometimes formed through consolidation. We continue to see
a risk of competitors operating under less regulated market conditions.
Potential impact
We could face increased competition
from other enzyme manufacturers

players with technology platforms that
are broader than ours. With increased
digitalization, competition could also
relate to how solutions are implemented
in customer production. Although
consolidation can make the market
more stable, it could also increase a

bargaining power.
Mitigating actions
In 2020, we preserved our market-leading position
by introducing new innovations, strengthening
our commercial relationships – even during global
lockdowns – and re-shaping our organization to
be even more customer-centric and value chain
focused. As part of our organizational changes
in September 2020, we increased regional
empowerment to ensure further agility in markets
where we see strong potential for our solutions.
In 2021, we will continue to improve our go-to-
market strategies, accelerate regional innovations
to strengthen our position in certain markets,
nurture partnerships and build on our strong
relationships with key customers.
Volatility of agriculture- related business

conditions, commodity prices, political mandates for ethanol blends, etc. In addition, ongoing
geopolitical uncertainty adds to the overall volatility of the industry.
Potential impact
In 2020, our bioenergy business in the
US experienced a steep decline from
a sharp drop in gasoline consumption
due to COVID-19 restrictions. If global
lockdowns, volatility of the agricultural-
related markets, and poor global farm
economics persist, it could challenge
our ability to grow in the industry.
Mitigating actions
In 2020, we worked to leverage our industry-
leading enzyme portfolio in combination with
yeast technologies to strengthen our position
in the bioethanol industry. In September 2020,
we launched Fiberex
®
, a platform solution


low-carbon fuel.

go-to-market approach in our agriculture

still. However, we are seeing good traction with

launch of the biocontrol product Taegro
®
in
Europe and South America, in partnership with
Syngenta.
In 2021, we remain focused on building
strong relations with our customers in the
agriculture-related business, while also increasing
our internal commercial competences, including
technical sales support.
27Our business Novozymes A/S
Cyberattacks
As for most major companies, the threat of cyberattacks to our business operations has grown


Preserving business continuity and safeguarding sensitive business data and critical assets
against this global threat is extremely important to Novozymes.
Potential impact
As a technology-driven company, we
rely on the integrity and availability
of computers and networks, and
the sharing of data. Cybercrime and
hacker attacks may negatively impact
Novozymes’ productivity if systems
are inaccessible for an extended
period. Furthermore, fast digitalization
continuously exposes Novozymes
to cybersecurity threats. Business
opportunities with customers could be
adversely impacted if information about
Novozymes’ unique technologies or
production strains is stolen.
We actively seek to learn from other
companies’ experiences and, upon
reviewing incidents of cyberattacks
and technology developments, we have
reassessed and adjusted the potential
impact of this risk.
Mitigating actions
Our ability to identify, protect, detect and

improved in recent years. In 2020, we gained
more quantitative insights into potential security
threats and vulnerabilities at Novozymes, enabling

of security. Key focus areas have been to test and
improve our IT emergency response, implement
comprehensive and consistent information
risk management and expand our detection
capabilities and automation of cyber incident
handling to mitigate the impact of cyberattacks.
While cyberattacks can be seen to raise

granted or pending patents remain a strong
defense of our solutions.
In 2021, we will continue to mitigate the
risk of cyberattacks through an updated


protection and data.
As our operations become even more
dependent on digitization and data analytics,
we will increase the focus on operational
technologies in our production facilities to ensure
they stay operational at all times.
Global political and economic instability


to mitigate risk. Adding to this, the COVID-19 pandemic has a potential negative impact on
global economic growth.
Potential impact
As a global company, polarization
and trade protectionism can have
an adverse impact on Novozymes’
ability to operate. Long-term decision-
making is complicated, both for us
and for our customers, if world leaders
struggle to agree and to work together
to strengthen global and regional
institutions.
We have yet to see the full global
economic impact of the COVID-19
pandemic, but we have already felt the

We could ultimately see price sensitivity
grow among customers and consumers.
There is also a risk of exchange

partners and suppliers risking or facing
insolvency.
Mitigating actions
In 2020, Novozymes closely monitored political
and economic developments, such as the
US–China trade negotiations. We emphasized

e.g., handling bilateral relations and image/
perception. In addition, we focused on customs
handling to ensure fast response and optimizing
of customs paid.
Pricing continues to be an area of focus in our
commercial organization. We have strengthened

which includes increased pricing transparency

strengthened in 2021 with a cross divisional
global focus on pricing.
We remain engaged in global forums on

globalization and shared commitments, and we
continuously promote the importance of working
together globally for a sustainable future.
For 2021 and beyond, the global outlook
remains uncertain, as the full impact of e.g. Brexit
and COVID-19 remains unclear at the time of

to ensure political stability and free trade. We
will further seek to improve our data analysis and
general monitoring for better predictability and
speed of reaction.
28Our business Emerging risksNovozymes A/S
E
merging risks are mainly assessed through
our enterprise risk management process
and integrated sustainability trendspotting
exercise. We engage with relevant stakeholders
in a timely manner to develop strategies and
ensure that we are prepared to take adequate
action and respond to those risks.
There is a renewed focus on the risk climate
change poses to the world. Businesses
face increased scrutiny on climate-related
disclosures and actions, and this is an area of
continued focus for Novozymes. Science has
long proved that the impact of climate change
is already being felt across the world, for

etc. To tackle climate change, the world needs
to limit the increase in global warming to 1.5°C.
At Novozymes, we are committed to doing our
part and to helping the world reach the goals


business and we disclose details on this in our
annual response to the CDP Climate Change
questionnaire.
Novozymes is also closely monitoring the
ongoing dialogue on nature and biodiversity
loss. Going forward, we will seek to understand
the implications of this trend and understand
the potential impact on our business.
Additionally, the following continue to be our
key emerging risks:
Concerns regarding new and
emerging technologies
There is growing consumer demand for natural
products, low-carbon solutions and bio-
based innovation. Industrial biotechnology
is a key enabling technology for delivering
these solutions. At the same time, we also see
tighter regulatory control in the biotechnology
and chemical sectors. Over the coming years,

innovation, including gene editing, and to face
increasing government and NGO scrutiny,
which can limit or slow the application of
biotechnology.
Emerging risks


sustainability that have the potential to impact our
business in the longterm.
We see tighter regulatory control in the
biotechnology and chemical sectors in
the coming years
29Our business Emerging risksNovozymes A/S
Novozymes’ research and business are
based on bio-innovation and through these

answers to some of the planet’s most pressing
challenges. We are committed to sharing our
knowledge about the potential of biology
and industrial biotechnology with the public,
as well as other stakeholders outside of
Novozymes. Our position statement on
industrial biotechnology describes how
industrial biotechnology and gene technology
can contribute to sustainable development.
We acknowledge the concerns related to the
use of gene editing, so we apply and promote
safe and sustainable use of gene editing
technology. We support a science-based
regulatory framework for products involving
gene editing and operate in compliance with
legislation. Novozymes is committed to using

to humans, animals and the environment. We
are open about what we do, and we engage in
dialogue on any concerns raised.
As we explore the increased use of
biotechnology, we will continue to engage in

while also developing best practices together
with stakeholders to mitigate the potential
risks.
Water-constrained future
Global freshwater resources have come
under pressure due to climate change,
industrialization, urbanization and a growing
population. According to the World Economic
Forum, water crises have for many years been

impact. Governments are responding with
stricter regulations and the private sector
is driving action through various initiatives
such as the CEO Water Mandate, World Wide
Fund for Nature (WWF) and Science Based
Targets Network (SBTN). Novozymes recognizes

local approach that is informed by science,
context and collective action from a number of
stakeholders.
Water is material for Novozymes across our
entire value chain. Many of the raw materials
required in our operations are agriculture-
based and thus water-intensive to produce.

assessments to identify water-stressed sites
and regions and included analysis of upcoming
regulation related to water to inform about our
water stewardship strategy.
Besides the risk that water-related issues pose
to our operations, increasing demand for clean
water solutions also serves as an opportunity
for our business as some of our solutions can
contribute to solving several water-related

is how we enable our customers to reduce
water consumption and improve wastewater
quality by replacing chemicals with biological
solutions.
The COVID-19 pandemic validated the

responses. Though a pandemic risk was not top
of mind going into 2020, we had considered the
possibility of such an event. Our crisis response
setup proved robust, with a global task force that
outlines and coordinates Novozymes’ global instructions,
and local task forces that ensure actions and guidelines
aligned with local authorities’ and the local situation. This

employees, business, and customers as well as support our
communities, and to proactively prepare as the pandemic
grew in intensity.
Overall, our production has not been disrupted by the
pandemic. Our production setup is structured to minimize the

allowing us to honor our commitment to our customers.
Our employees have been working in a safe setting, either

to meet the personal and community challenges that have
arisen due to COVID-19 restrictions and concerns. We have
also emphasized Novozymes’ contribution and role as a good

with the pandemic.
Risk management during a pandemic
“Global freshwater resources
have come under pressure


and a growing population.”
30Our business TargetsNovozymes A/S
A
t Novozymes, we measure progress
towards our 2022 targets, which focus on
the world, our business, our employees and our
own operations.
A sound business
To shape a future of better business for us,
our customers and the world, we need to have
Targets



to enable our customers to be more sustainable while at
the same time reducing our own environmental footprint.

mitigating climate change by enabling low-
carbon fuels for the transport sector, as this
sector accounts for about 25% of global
energy-related CO emissions.
Climate change is also considered in our own
operations, as industrial production processes
are energy-intensive. Therefore, we have set a

absolute CO emissions in line with the most
ambitious decarbonization pathway.

water use by providing solutions that
replace chemicals, particularly in laundry.
Water is also a fundamental resource for
our production processes. We are committed
to pioneering a context-based approach
to water management across all sites and
have therefore set a target to have all our
sites manage water in balance with local
conditions.
We know we will only be able to achieve

the help of a healthy, diverse and engaged
workforce, so we have also set 2022
employee targets.
While most of our solutions enable improved

solutions that let us enable sustainable

Consumption target.
We also aim to drive our business towards
more circularity. Therefore, all our key
materials and waste will be managed in
circular systems by 2030.
Climate
Water
Employees

Consumption
Our focus areas
Go to Novozymes.com for a full
list of our 2030 commitments

a sound, balanced and growing business.
This will allow us to continue investing in our
leadership position within biotechnology and
capture new opportunities in the industries
we serve.
By 2022, we aim to have an EBIT margin of
28% or higher, and ROIC including goodwill of

growth per year.
Looking ahead into 2021, we expect to grow
sales by 2% to 6% organically. The guidance
is wide and based on a gradual recovery from
the pandemic impact in 2020 but would not
cover a situation with another extended global
lockdown. We also expect a solid reported EBIT
margin of 25% to 26% in 2021 (2020: 26.1%),
which includes a negative year-on-year impact

to 1 percentage point each.
ROIC, including goodwill, in 2021 is expected
at around 19% (2020: 18.9%) which includes

totaling roughly 2 percentage points.


put us on the path to accomplish our 2030
commitments. Our commitments and targets

Consumption and Employees and are guided
by the Sustainable Development Goals (SDGs).
Within each of these areas, we have set 2022

believe our solutions have on the world, as well
as the care we know we must show to ensure
we minimize the environmental impact of our
production processes and our operations in
general.
In addition to the areas highlighted by
the targets, we are committed to being a
responsible corporate citizen and engage
locally as well as globally for a better world
with biology.
On the following pages, we elaborate on

targets.
31Our business TargetsNovozymes A/S
T

the world is rapidly moving towards an
unsustainable rise in temperature. To halt this
development, we must reduce CO emissions
in the atmosphere. Novozymes’ commitment
to provide the world with biological solutions
that can help limit global warming to 1.5°C
has been validated by the Science Based
Targets Initiative.
2020 highlights
•  by
enabling low carbon fuels in the transport
sector in 2020. The COVID-19 pandemic
caused a slowdown in the use of liquid
transportation fuels. Hence, the demand
for ethanol and the resulting reduction of
CO emissions has declined this year.
• In 2020, our Franklinton site in North
Carolina, USA purchased Green-e
®

(RECs) from two local solar farms. This
purchase covers the full annual electricity
consumption of the site and supported
renewables on the local grid in North
Carolina. With this, we are now sourcing
69% of our electricity globally from
renewables.
• At our Fuglebakken site in Denmark,
a newly installed heat pump will be
used to transfer excess heat from
our operations to the district
heating network, delivering
heat to around 2,000
households.
W
ater is a scarce resource, and, in

lack of access to clean water. Water is also a
fundamental component of our production
processes, so we must manage our water use
responsibly.
2020 highlights
• In 2020, we progressed towards our
Reach target and managed to reach 3.98
billion people with our laundry solutions.
This development was mainly driven
by increased penetration of enzymatic
detergents in Africa and Latin America.
• We developed context-based water
management plans for two sites in China.
• In September, we partnered with WWF to
assess water risks and develop contextual
water targets and action plans for our
sites globally.
• Novozymes now endorses the UN Global
Compact’s CEO Water Mandate which is
the leading multi-stakeholder platform
driving action on water stewardship. This


focus today than we did in previous years.
* The target does not include sites with
activities not considered to have



Climate Water
World: Save 60 million tons of CO
by enabling low-carbon fuels in the
transport sector in 2022
Operations: By 2022, reduce absolute
CO

World: 
providing laundry solutions in 2022 that
replace chemicals
Operations: By 2022, develop
context-based water management
programs at 100% of our sites*

32Our business TargetsNovozymes A/S
T
he world’s resources are under
pressure, not least due to unsustainable
consumption patterns and the large amounts
of waste this consumption leads to.
2020 highlights
• We estimate that 136,000 tons of food
was gained in 2020 using our solutions.
We will continue to deliver improved gains
through our solutions but foresee that the
prolonged impacts of COVID-19 will limit
our contributions towards this target.
• In 2020, we secured a new contract
to increase the amount of biomass to
be recovered by local farmers for land
applications.
• 
for three of our sites in Denmark.
• We increased our capacity to process
solid waste both in TEDA, China and
in Kalundborg, Denmark, transforming
enzyme waste into a form which can be
used to generate biogas or be converted
into fertilizer.
* The target does not include sites with


labs, etc.
T
o continue to grow as a company and
contribute to a better world, Novozymes
must enable its employees to thrive, grow and
perform. This will ensure that we have the
skills needed to deliver on our purpose.
2020 highlights
• In our annual employee survey, we
achieved a score of 78 on learning.
Throughout the year we encouraged
learning and development through a new
online learning platform, through our
leadership development programs and
through webinars on learning culture.
• On our diversity index, which is based on
gender and nationality, we achieved a
score of 83.
• Occupational injuries were at 1.5,
measured as a three-year rolling average
of lost time injuries per million working
hours.
• Our Inspire target focuses on helping
our communities respond to local
challenges, by pledging 1% of our time
to local outreach. In 2020, the COVID-19
pandemic was the biggest global crisis,
and employees in all regions contributed
time, resources and creativity to help
communities deal with the pandemic. See
the following page for more details.
• We achieved a score of 81 on our Zymer
Spirit index.

time injuries per million working hours
 Employees
World: Gain 500,000 tons of food

to table in 2022
Operations: By 2022, achieve 100%
circular management of our biomass,
develop plans for circular management
of 100% of key packaging materials and
develop programs to reach zero waste by
2030 at 100% of our sites*

Enable learning: Achieve a score of 80
on learning in our annual employee
survey by 2022
Nurture diversity: Achieve a score of 86
on our diversity index by 2022
Ensure safety and wellbeing:

Inspire the world: Pledge 1% of our time
to local outreach activities by 2022
Excite employees: Achieve a score of 81
on our Zymer Spirit index by 2022

33Our business TargetsNovozymes A/S
A
s 
societies all over the world in 2020, we focused


challenge to raise money for daily-wage earners.
Observing local rules and guidelines, our employees
walked almost 2.3 million steps in a day, each step
sparking a proportional contribution towards a
donation totaling INR 1.7 million. The sum was
donated to state funds and organizations in Mumbai
and Bangalore engaged in disaster management
and eradication of hunger.
In Brazil, we collaborated with Contagious Smiles
(Contagiando Sorrisos), a project that works with
local artists to design face masks to bring hope and
positivity to the local community.
In North America, employees have developed

for at-home schooling for families enduring
school closures. In North Carolina, Novozymes
partnered with North Carolina State University’s

(BTEC) to produce hand sanitizer, helping to keep
students and faculty at NC State University healthy.
In Denmark, employees were encouraged to partake
in a national COVID-19 antibody test, which could
be done on Novozymes’ premises. We also donated
lab coats to healthcare assistants as well as
essential equipment to a new testing facility at SSI,
the national serum institute.
In China, we donated RMB 1 million via Red
Cross to help build hospitals in Huoshenshan and
Leishenshan, procure supplies, and provide support
for frontline workers battling the pandemic.


our communities - giving back when possible. This has now
been formalized through our Inspire target of pledging 1%
of our time to local outreach.
34Our business Outlook for 2021Novozymes A/S
Novozymes expects to grow sales by 2% to 6%
organically in 2021. The outlook is based on
a gradual recovery from the pandemic impact
in 2020. An incremental pickup or a further
slowdown of the expected gradual recovery,
Outlook for 2021
Sales outlook
Household Care organic sales
growth is expected to be driven by
market penetration, focusing on
emerging markets and a continued
rollout of the Freshness technology,
with a broad-market launch in the
second half of the year. The broad-
market launch is an important
milestone, that is expected to
become a signicant growth
contributor in future years. The
2021 outlook for Household Care
builds on improving the underlying
performance on top of a better than
expected performance in 2020.
Food, Beverages & Human Health
2021 organic sales growth is expected
to be broad-based. Innovation
and emerging market penetration,
supported by increasing consumer
dietary-health-awareness, are the
main drivers of growth in the food
business. Beverages is expected to
gradually recover following a 2020
severely aected by COVID-19
implications. The PrecisionBiotics
Group and Microbiome Labs
acquisitions are both estimated to
contribute to growth in reported
DKK and to grow organically by solid
double-digits.
Bioenergy organic sales growth
in 2021 is expected to be driven
by a gradual recovery in the US
ethanol industry, following the
severe disruption caused by the
COVID-19 pandemic. The mid-point
of the Bioenergy organic sales range
roughly corresponds to mid-single
digit growth in the US ethanol
production. The growth contribution
from regions outside of the US is
expected to be positive.
Grain & Tech Processing organic
sales growth is expected to be broad-
based, with both grain and tech
contributing positively. The grain
business is expected to outgrow
a roughly at underlying market,
driven by innovation and increased
local presence across key regions.
Tech is expected to gradually recover
aer the signicant disruption of the
global textile industry in 2020.
Agriculture, Animal Health &
Nutrition organic sales performance
in 2021 will be driven by the
continued expansion of the BioAg
business across crops and regions,
resulting in solid underlying double-
digit organic sales growth when
adjusted for the DKK ~60 million one-
o in the second quarter of 2020. The
outlook for Animal Health & Nutrition
includes some uncertainty as to
stocking levels in the value chain,
further accentuated by the pandemic.
A strong innovative product portfolio
and partnership setup coupled with
signs of improving farmer economics
make us carefully optimistic about the
years to come.
especially in the areas most impacted by the
pandemic in 2020, would imply a performance
in the high- respectively low-end of the outlook
range. However, the outlook range would not
cover a situation with another extended global
lockdown. Sales in reported DKK are expected
to be ~1 percentage point less, net of currency
and M&A-related eects, compared to the
2-6% organic sales growth outlook. Organic
sales in the rst quarter is expected to decline
by mid-single digits year-on-year following the
relatively high comparator of the rst quarter
of last year, especially in Household Care,
Bioenergy and in Food, Beverages & Human
Health.
Food, Beverages & Human Health and Grain
& Tech Processing are both expected to grow
organically by mid-single-digits while Bioenergy
is expected to grow by mid-to-high single digits
in 2021. The growth outlook for Household
Care is in the low-single-digits following the
better than expected performance in 2020.
Agriculture, Animal Health & Nutrition is
expected at at to low-single-digit growth.
35Our business Outlook for 2021Novozymes A/S
For 2021, Novozymes expects a solid reported
EBIT margin of 25 - 26% (2020: 26.1%), which
includes a negative year-on-year impact from
currency and M&A-related eects of around
1 percentage point each. Hence, the implied
underlying EBIT margin for 2021 of 27- 28%
should be compared with the underlying 2020
EBIT margin of ~27%, and the underlying
2019 EBIT margin of ~26%. Supportive
margin contributions from sales growth and
productivity improvements are expected to be
partly oset by slightly higher input costs and
continued re-investment in the business.
Return on invested capital (ROIC), including
goodwill, is expected at around 19% (2020:
18.9%; underlying ~20%) and includes negative
currency and M&A-related eects totaling
roughly 2 percentage points.
Free cash ow (FCF) before acquisitions is
expected to be in the DKK 2.7-3.1 billion range
(2020: DKK 3.4 billion), supported by higher
sales and an improved operational cash ow.
Cash ow is expected to be somewhat lower
than in 2020 as higher net investments and
the timing of working capital will lower the
2021 cash generation following a stronger than
expected performance in 2020.
For modeling purposes, the
following is provided:
The eective tax rate is expected at around
20% for 2021 (2020: 19.7%).
2021 outlook
Sales growth, organic % 2 to 6
EBIT margin % 25 to 26
ROIC (including goodwill) % ~19
Free cash ow before
acquisitions, DKKbn
DKKbn 2.7 to 3.1
For modelling purposes:
Eective tax rate % ~20
Net nancials, DKKm DKKm ~50
Net investments, DKKbn DKKbn 1.0 to 1.2
Stock buyback program DKKbn up to 1.5
* Assuming the exchange rates for the
company's key currencies remain at the rates
prevailing on February 1 for the rest of 2021.
Prot outlook
Net nancial costs are expected to be DKK ~50
million (2020: DKK 127 million), with roughly
DKK 150 million relating to interest expenses,
banking fees, leasing and nancial costs
related to acquisition earn-outs. This is oset
by a positive eect from USD/DKK currency
hedging.
Net investments in 2021 are expected to be
DKK 1.0-1.2 billion (2020: DKK 0.9 billion). This
reects maintenance as well as expansion and
optimization investments.
A stock buyback program of up to DKK 1.5
billion has been initiated for 2021.
36Our business Outlook for 2021Novozymes A/S
Climate Water 
In 2021, we will continue to invest in developing
solutions that support better lives in a growing world
and progress on our 2022 targets on:
 2022 targets Status
World Save CO emissions by enabling low carbon fuels in the transport sector 60 million tons of CO On track
Reach people by providing laundry solutions that replace chemicals  On track
 500,000 tons of food More to do
Operations Reduce absolute CO  On track
Develop context-based water management programs 100% of sites
2
On track
Develop zero waste programs 100% of sites
2
On track
Manage biomass in circular systems 100% On track
Develop circular management plans for key packaging materials 100% On track
Employees Enable learning
3
80 On track
Nurture diversity
86 On track
Occupational injuries
5
 On track
Pledge employee time to local outreach
6
~ 1% of time On track
Excite employees
3
81 On track
1
Compared to 2018 baseline.
2

3
Measured by score to relevant questions in annual survey.
Index calculated based on gender and national representation at various professional levels.
5

6

Sustainability outlook
We will work to further expand the reach and

deliver an even greater impact by replacing
chemicals and enabling CO
2
reductions. We
foresee that a prolonged impact of COVID-19
may limit our contributions towards our target
to GAIN 500,000 tons of food by improving

2022, but we will continue to strive to deliver
improved gains also in 2021. We will further
develop our employee programs focused
on learning, well-being and improving their
engagement towards our sustainability
commitment.
Governance
03
Governance
38Governance Corporate governanceNovozymes A/S
Corporate governance
A proactive and transparent corporate governance
structure promotes responsible sustainable business
behavior and long-term value creation.
B
oard composition and responsibilities
In accordance with Danish legislation,
Novozymes has a two-tier management
system comprising the Board of Directors
and the Executive Leadership Team, with
no individual being a member of both. The
division of responsibilities between the Board
of Directors and the Executive Leadership
Team is clearly outlined and described in the
Rules of Procedure for the Board of Directors
and the Rules of Procedure for the Executive
Leadership Team. Both of these rule sets are
available at Novozymes.com

responsibilities are to:
• Ensure the right management and
organizational structure
• 
performance, and the Executive Leadership
Team’s operational management of
Novozymes
• Supervise the overall management and
strategic development of Novozymes
Novozymes’ Articles of Association require the
Board of Directors to have from four to eight
members elected at the Annual Shareholders’
Meeting. The Board currently has seven
members elected by the shareholders.
Individuals are elected for terms of one year

reaching the age of 70.
Nominations are based on an evaluation
of factors such as competencies, diversity,
independence and performance. In accordance
with Danish law, the Board also has three
employee-elected members, who serve
four-year terms. The Board of Directors is
accountable to the company’s shareholders
for the management of the company. The
composition of the Board must therefore be
such that the combined competencies of the
Board enable it to inspire, guide and oversee
Novozymes’ development, and diligently
address and resolve the issues and challenges
facing Novozymes at any time.
The individual competencies of the members
of the Board are shown in the presentation of
At least 50% of the shareholder-
elected board members must be

Danish Recommendations on
Corporate Governance
At least 40% of the
shareholder-elected board
members must have substantial
international experience from
the management of large
corporations or institutions
headquartered outside
Denmark
At least 33% of the shareholder-
elected board members must
be female, and at least 33% of
the shareholder-elected board
members shall be male
All three targets were met in
2020, and the composition of
the Board of Directors meets the
gender diversity requirements set
out in Danish legislation. Further,
reporting on gender diversity at
other management levels can be
found in Note 8.1 Labor practices

governance data section. The
competencies and targets are


personal characteristics, skills and
experience.
Targets
The composition of the
Board must be such that the
combined competencies of

guide and oversee Novozymes’

address and resolve the
issues and challenges facing
Novozymes at any time.
39Governance Corporate governanceNovozymes A/S
the Board of Directors. Novozymes' statutory
report on diversity pursuant to section 107d
of the Danish Financial Statements Act is
available at https://investors.novozymes.
com/investors/corporate-governance/
articles-of-association-and-reports-on-
corporate-governance/default.aspx.
Governance structure
In accordance with the Articles of Association
and the Rules of Procedure for the Board
of Directors, the Board has a Chairmanship
consisting of two members – the Chair and the
Vice Chair – who are responsible for assisting
the Board in matters concerning the Executive
Leadership Team’s operational management
and for reporting back to the Board. The
Chairmanship is also responsible for planning
and preparing the meetings of the Board. The
Board of Directors has three committees: The
Nomination and Remuneration Committee,
the Audit Committee and the Innovation
Committee. The Nomination and Remuneration
Committee assists the Board in the nomination
of candidates for the Board of Directors, Board
committees and the Executive Management
as well as in determining the remuneration of
Board members, Board committee members
and members of the Executive Management.
The Audit Committee assists the Board in
overseeing aspects relating to accounting,

environmental, social and governance data.
The Innovation Committee was created in
2020 and assists the Board with the review of
Novozymes’ overall capabilities and strategic
direction in matters of technology, science and
innovation. The Innovation Committee held its
inaugural meeting in 2020, where focus was on
the corporate innovation pipeline and on the
innovation strategy for the OneHealth Brand.
Further information about the three Board
committees can be found at Novozymes.com
Charters and recommendations
W
hen laying down the management principles
for Novozymes, the Board of Directors
followed the Recommendations on Corporate
Governance that form part of the disclosure
requirements applicable to companies listed on
Nasdaq Copenhagen. These recommendations
are available at corporategovernance.dk. A
detailed review of Novozymes’ position on each
of the recommendations and a description
of the internal control and risk management

found in the statutory report on corporate
governance prepared pursuant to section 107b
of the Danish Financial Statements Act at
https://investors.novozymes.com/investors/
corporate-governance/articles-of-association-
and-reports-on-corporate-governance/
default.aspx. These recommendations require
companies to explain any deviations. Novozymes

exception being:
• Due to the limitations imposed by the Novo
Nordisk Foundation’s Articles of Association
and Novozymes’ ownership structure, the
Board of Directors reserves the right in
certain circumstances to reject takeover
bids without consulting shareholders.
(Recommendation 1.3.1)
Furthermore, under the Danish Financial
Statements Act (sections 99a and 99b), it
is mandatory for large companies to report
on corporate social responsibility and

Novozymes is committed to the ten principles
of the UN Global Compact (UNGC) and as a
Audit Committee meetings
Committee member Meetings attended
Heine Dalsgaard
Cees De Jong
Agnete Raaschou-Nielsen
2
Jørgen Buhl Rasmussen
Nomination and Remuneration Committee meetings
Committee member Meetings attended
Jørgen Buhl Rasmussen
Cees De Jong
Kasim Kutay
1
Agnete Raaschou-Nielsen
2
Kim Stratton
1. New member as of February 26, 2020. 2. Resigned from the Board on February 26, 2020

Extraordinary board meetings
Board meetings
Monthly reports
Annual Shareholders' Meeting
Strategy work
Review of financial performance
Evaluation of collaboration
between the Board of Directors
and the Executive Leadership Team
Organizational performance
review and succession planning
Next year's budget
January
February
March
April
May
June
July
August
Sep
tember
October
November
December
40Governance Corporate governanceNovozymes A/S
continuing member of the UNGC we prepare
a Communication on Progress (CoP). Our
integrated annual report together with our
Sustainability Report 
com/en/about-us/sustainability/transparency-
 serves as our CoP and meets
the requirements of sections 99a and 99b of
the Danish Financial Statements Act.
Other Board-related information
The Board of Directors held 10 meetings in
2020, with an overall attendance rate of 99%.
Since March, all meetings have been held
virtually due to restrictions brought on by the
COVID-19 pandemic. This has worked well, but
the Board looks forward to meeting up again
when circumstances allow it.
Any amendments to the Articles of Association
require that shareholders representing at least
two-thirds of the total number of votes in the
company are represented at a shareholders’
meeting, and that at least two-thirds of the
votes, as well as two-thirds of the voting
capital represented at the meeting, are cast in
favor of the proposal to amend the Articles of
Association.
The Annual Shareholders’ Meeting has
authorized the Board of Directors to allow
the company to acquire treasury stock on an
ongoing basis, provided the nominal value of
the company’s total holding of treasury stock
does not exceed 10% of its share capital at any
time, cf. section 198 of the Danish Companies
Act. The purchase price must not deviate
by more than 10% from the price quoted
on Nasdaq Copenhagen A/S at the date of
acquisition. This authorization applies until
April 1, 2021. In addition, the Board of Directors
is authorized to reduce the share capital.
Each year, one of the responsibilities of the
Board of Directors is to assess whether the
1. From industrial biotechnology or related industries (but not pharma). 2. From industrial biotechnology, pharma or related industries. 3. Within or outside industrial biotechnology.
Nationality - board members
elected by shareholders
Danish 29%
Swedish 14%
British 29%
Australian 14%
Dutch 14%
Tenure - board members
elected by shareholders
1-4 years 71%
+4 years 29%
Gender - board members
elected by the shareholders
Men 71%
Women 29%
Board governance structure
(elected by the shareholders)
Independent
boardmembers
57%
Non-independent
boardmembers
43%
Primary experience – board members elected by shareholders
(number of board members)
General board and/or executive management¹
R&D executive management²
B2B and industry marketing and sales
Governance and risk management³
Stakeholder relations management
(beyond customers and investors)³
Financial management and investor relations³
Alliance strategy and acquisitions³
Total value and supply chain management³
Innovation and pipeline management³
Emerging market strategy³
Digitalization strategy and/or management³
4
5
6
4
2
5
7
6
4
6
0
41Governance Corporate governanceNovozymes A/S
In 2020, the annual evaluation of the Board was conducted by the Chair interviewing each
Board member and member of the Executive Leadership Team. The evaluation revealed an
overall good performance by the Board of Directors and good collaboration between the Board
of Directors and the Executive Leadership Team. The recommendations from the interviews
included keeping a high focus on sales growth, innovation pipeline and strategy implementation.

capital and share structure of Novozymes is
optimal. The Board of Directors believes that
the share structure with A and B common
stock continues to be the best way in 2020 to
safeguard Novozymes’ long-term strategy and

shareholders and other stakeholders.
Regarding capital structure, Novozymes will
continue to favor a rather conservative balance

bearing debt of around 1x EBITDA. Thus the
capital structure is in line with the target.
Novozymes is party to a number of partnership
contracts that can be terminated by the other

ownership or control of Novozymes. A few of
these contracts contain provisions that restrict

technology in such situations.

Board
member
Audit Committee Nomination and Remuneration
Committee
Innovation
Committee
Nationality Board meetings
attended
Board
tenure
Election
period
Share
trading in
2020
Number of
shares end
of 2020
Jørgen Buhl Rasmussen (Chair)
1,2
Danish
2011 1 year 3,500 5,500
Agnete Raaschou-Nielsen

Danish
2011 1 year - -
Cees de Jong
1,2,5
Dutch
2020 1 year 2,000 2,000
Heine Dalsgaard
1,5
Danish
2020 1 year 3,000 3,000
Sharon James
1, 2, 5
British
2020 1 year - -
Kasim Kutay
1
British
2017 1 year - -
Kim Stratton
1,2
Australian
2017 1 year - -
Mathias Uhlén
1
Swedish
2007 1 year - 650
Lena Bech Holskov
3
Danish
2013  - 1,100
Anders Hentze Knudsen
3
Danish
2013  (356) -
Lars Bo Køppler
3
Danish
2010  - 360
42Governance Novozymes A/S

Jørgen Buhl Rasmussen
Born 1955. Chair of the Board
since 2017. Adjunct Professor at
Copenhagen Business School.
Member of the Audit Committee
and chair of the Nomination and
Remuneration Committee. Member
of the Board since 2011. Elected for
a term of one year.
Board positions
Chair: F. Uhrenholt Holding A/S and
advisory Board of Blazar Capital
Member
Special competencies
Extensive international business and

within sales, marketing, branding,

accounting expertise across many
businesses, sectors and geographies.
Cees de Jong
Born 1961. Vice Chair of the Board
since 2020. Member of the Audit
Committee and the Nomination and
Remuneration Committee. Member
of the Board since 2020. Elected for
a term of one year.
Board positions
Chair: Mediq B.V., ForFarmers N.V.
and A-Mansia Biotech S.A.
Special competencies
Extensive international business
and management experience from
a range of industries, such as the
food, food ingredient and industrial
biotech industries, as well as


Born 1971. CFO, Carlsberg A/S.
Chair of the Audit Committee.
Member of the Board since 2020.
Elected for a term of one year.
Board positions
Chair: Carlsberg Ejendomme Holding
A/S and Carlsberg Global Business
Services A/S
Member: Carlsberg Breweries A/S,
Carlsberg Byen Komplementar ApS
and Carlsberg Byen P/S
Special competencies

experience and accounting expertise,
as well as extensive experience
in driving strategic results for
international businesses.
*This board member is not regarded
as independent in the sense

Recommendations on Corporate
Governance that apply to Danish listed
companies
Sharon James
Born 1961. Former Senior Vice

Consumer Health. Chair of the
Innovation Committee. Member of
the Board since 2020. Elected for a
term of 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
product sector.

Born 1965. CEO, Novo Holdings
A/S. Member of the Nomination and
Remuneration Committee. Member
of the Board since 2017. Elected for
a term of one year.
Board positions
Member: Novo Nordisk A/S and
Evotec SE
Special competencies
Broad experience within
biotechnology, strategy, business
development, mergers and

accounting expertise.
*This board member is not regarded
as independent in the sense

Recommendations on Corporate
Governance that apply to Danish listed
companies

Meeting and three employee-elected members. The Board represents many years of international management

43Governance Novozymes A/S

Born 1962. Member of the
Nomination and Remuneration
Committee and the Innovation
Committee. Member of the Board
since 2017. Elected for a term of one
year
Board positions
Member: Vifor Pharma AG
Special competencies
Broad global commercial experience,
including emerging markets,
innovation pipeline management

Mathias Uhlén*

Institute of Technology (Sweden),
Karolinska Institutet (Sweden) and
the Technical University of Denmark
(DTU). Member of the Innovation
Committee. Member of the Board
since 2007. Elected for a term of one
year.
Board positions
Chair: Antibodypedia AB, ScandiBio
Therapeutics AB and ScandiEdge
Therapeutics
Vice Chair: 
Member: Atlas Antibodies AB
Special Competencies
Broad experience in research
and biotechnology. His research
interests cover antibody engineering,
proteomics and precision medicine.
*This board member is not regarded
as independent in the sense

Recommendations on Corporate
Governance that apply to Danish listed
companies
Lene Bech Holskov*
Born 1967. Employee representative.
Safety Adviser. Member of the Board
since 2013. Elected for a term of four
years.
*In accordance with Danish law, the
Board of Directors includes three
employee-elected members, who serve
four-year terms.

Born 1959. Employee representative.
Senior Operator. Employee
representative. Member of the Board
since 2013. Elected for a term of four
years.
*In accordance with Danish law, the
Board of Directors includes three
employee-elected members, who serve
four-year terms.

Born 1962. Employee representative.
Technician. Member of the Board
since 2010. Elected for a term of four
years.
*In accordance with Danish law, the
Board of Directors includes three
employee-elected members, who serve
four-year terms.

44Governance Executive Leadership TeamNovozymes A/S
Executive Leadership Team
Ester Baiget
Born 1971. President and CEO
Education
Holds a chemical engineering degree and an
MBA from the Rovira i Virgili University, Spain.
Special competencies
Novozymes’ CEO since 2020. Ester Baiget is an
experienced international leader with a strong
business and technical background.
With more than 25 years of international
experience as a technical and commercial
business leader, Ester has driven
transformational change and enhanced

businesses. Her leadership develops a culture
of inclusion, engagement and of delivering

Tina Sejersgård Fanø
Born 1969. Executive Vice President,

Education
Holds an M.Sc. in Chemical Engineering from
the Technical University of Denmark (DTU) and
a diploma degree in Innovation, Strategy and

SIMI (CBS executive, Copenhagen, Denmark).
Board positions
Chair: Danish Innovation Fund
Member:
Special competencies
Tina Sejersgård Fanø is responsible for
application research, technical service, sales

Biosolutions.

developing and managing global partnerships
and has been instrumental in negotiating
several major business deals for Novozymes
over the years. She has gained strong biotech

sales.
Claus Crone Fuglsang
Born 1968. CSO and Executive Vice President,

Education
Holds an M.Sc. in Biochemistry from the
University of Copenhagen and an MBA from
Heriot-Watt University, Edinburgh Business
School, Scotland.
Board positions
Member: Microbiogen Ltd. Australia,
Biobased Industries Consortium, EuropaBio,
Erhvervspræsidiet for TekTanken and the
Danish governmental panel on Bio-economy
Special competencies
Claus Crone Fuglsang is responsible for




Claus has strong leadership experience

leading partnership innovation programs. He

business experience from working in the US for
several years.
Lars Green
Born 1967. CFO and Executive Vice President
Education
Holds an M.Sc. in Business Administration from
Aarhus University, Denmark.
Board positions
Member: Board of trustees of the LEO
Foundation and LEO Holding A/S
Special competencies

legal functions.
Lars has in-depth knowledge of the Novo
Group’s business, international experience
from managing global biotechnology and
biopharma companies, and leverages his

across the company.
Our seven-member Executive Leadership Team comprises broad and

expertise and in-depth knowledge of Novozymes’ business.
45Governance Executive Leadership TeamNovozymes A/S
Anders Lund
Born 1973. Executive Vice President,
Consumer Biosolutions
Education
Holds an M.Sc. in Economics from Aarhus
University, Denmark.
Special competencies
Anders Lund is responsible for application
research, technical service, sales and marketing
in Consumer Biosolutions.
Anders has a strong commercial and
strategic background and has played a

Novozymes’ strategies over the last two
decades. He also has extensive experience in
building customer relationships in several of
Novozymes’ business areas.
Graziela Chaluppe dos Santos Malucelli
Born 1973. COO and Executive Vice President,

Education
Holds an M.Sc. in Food Engineering from

Special competencies
Graziela Chaluppe dos Santos Malucelli is
globally responsible for production, supply
chain and quality.
Graziela has extensive experience from
international leadership roles in Brazil,
Denmark and China and has been heading up
Supply Operations since 2016. She has been
driving continuous productivity at all levels in
the production and customer focus in supply
operations.
Thomas Videbæk
Born 1960. Executive Vice President, Strategy


Education
Holds a Ph.D. and an M.Sc. in Chemical
Engineering from the Technical University
of Denmark (DTU), as well as a B.Com. in
International Business from Copenhagen
Business School.
Board positions
Member: The Danish Chamber of Commerce
Special competencies
Thomas Videbæk is responsible for our people
agenda, sustainability leadership and brand, as
well as business building, strategy and digital
transformation.
Thomas has extensive leadership experience
and knowledge spanning both the commercial
and operational side of the business. He has
been responsible for developing a broad range
of key functions within the organization, with a
keen interest in new business development.
In April 2021, Amy
Byrick and Morten
Enggaard Rasmussen
will join Novozymes as
Executive Vice President
of Strategy & Business
Transformation and
Executive Vice President
of People, Sustainability
& Brand respectively.
Executive Leadership Team
46Governance Summary of the Remuneration report Novozymes A/S
Summary of the
Remuneration report


and established a new long-term incentive program for the
management and all other employees. Novozymes delivered



ratio of the short-term cash-based incentive program for the
Executive Management.
I
n 2020, Novozymes adopted a new policy
for the remuneration of Novozymes’ Board
of Directors and Executive Management. In
designing the policy, we collected external
benchmarks and sought independent
advice from external experts on executive
remuneration in Denmark and Europe
and consulted a representative group of
shareholders for input. We believe the new
remuneration policy ensures alignment with
the best practice expectations of investors,
creates a strong link between performance
and remuneration and provides clarity and
simplicity of the remuneration arrangements.
General remuneration policy
Novozymes’ remuneration policy for managers
and other employees is designed to both
encourage strong individual performance and
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' individual
performance and to the level of achievement of

targets. The remuneration policy aims to
provide managers and other employees with a

regularly against external benchmarks.
47Governance Summary of the Remuneration report Novozymes A/S
New remuneration report
In 2020, we have prepared the Novozymes
Remuneration Report 2020, which is disclosed
as a separate report. The content of the
report has been prepared so as to meet the
requirements of section 139b of the Danish
Companies Act and holds information and
details on the remuneration of the Board of
Directors and the Executive Management.
The Novozymes Remuneration Report 2020
will be presented for an advisory vote at the
Annual General Meeting to be held in 2021.
The following is a summary of the Novozymes
Remuneration Report 2020.

The remuneration of the Board of Directors

based. This ensures that the Board of Directors
safeguards the company’s long-term interests
without taking into consideration what this
may mean in terms of the value of incentive-
based remuneration. The Board of Directors’
fee is set at a market-conformant level that

of the role, given the complexity of the
Novozymes Group, the scope of the work, and
the number of Board meetings held.
Overview of Committee members
Audit Committee
Nomination and
Remuneration Commitee Innovation Committee
Chair Heine Dalsgaard Jørgen Buhl Rasmussen Sharon James
Members Jørgen Buhl Rasmussen
Cees de Jong
Cees de Jong
Kasim Kutay
Kim Stratton
Kim Stratton
Mathias Uhlén

the same as it has been since 2015. The Chair
receives a fee that is three times the base fee
and the Vice Chair a fee that is two times the
base fee.
For committee work on the Audit Committee
and the Nomination and Remuneration
Committee, the committee chair and other
committee members receive a further base fee
and half a base fee respectively. However, the
Chair and the Vice Chair of the Board do not
receive such additional fee if appointed to the
Nomination and Remuneration Committee.
In August 2020, the Board of Directors decided
to establish an Innovation Committee. The
Board of Directors determined that the
Chair of the Innovation Committee would
receive a further base fee (for 2020 pro rata
adjusted to the relevant part of the year) and
that members of the Innovation Committee
would each receive half a base fee (similarly
adjusted).
During 2019, Patricia Malarkey and Lars Green
resigned from the Board, and at the Annual
General Meeting held in February 2020, Agnete
Raaschou-Nielsen, resigned from the Board
as well. Cees de Jong, Sharon James and
Heine Dalsgaard were elected as new board
members. Cees de Jong was appointed Vice
Chair.
The number of board members was thereby
reestablished at seven member elected at the
Annual General Meeting which, together with
the newly established Innovation Committee,
resulted in an increase of the total fees paid to
the Board of Directors from DKK 7.0 million in
2019 to DKK 8.2 million in 2020.
The individual board members' fees and their
shareholdings can be found in the Novozymes
Remuneration Report 2020.
Remuneration of the Executive Management
As per 31 December 2020, the Executive
Management of Novozymes A/S consisted of:
• 

• 

• Thomas Videbæk, Executive Vice President
Ester Baiget replaced Peder Holk Nielsen as
CEO on February 1, 2020.
Thomas Videbæk will transition his roles
as Executive Vice President of People,

Transformation during the second quarter of

We are immensely grateful for Thomas’
contributions to Novozymes during his many
years with the company.
The total remuneration to members of
Executive Management comprises:
• A base salary plus pension, company car

• A short-term incentive program (cash
bonus) - STIP
• A long-term incentive program (stock-based
program) - LTIP
In 2020, the members of the Executive
Management received a 2.3% increase in their
base salary. The increase was only given to
executives with an employment start date prior
to January 1, 2020.
Ester Baiget and Lars Green will in addition
to their ordinary remuneration receive
compensation for lost incentives from their
previous employers. The compensation is
48Governance Summary of the Remuneration report Novozymes A/S
subject to certain conditions. Over the period
2020-2023, Ester Baiget may receive up to a
total of DKK 9.6 million in extraordinary sign-
on compensation for lost incentives from her

was paid out in 2020. Over the period 2020-
2023, Lars Green may receive up to a total

compensation for lost incentives from his
previous employer, of which DKK 0.7 million
was paid out in 2020.
Thomas Videbæk will leave Novozymes during
2021. His severance package, totaling DKK
35 million, was fully expensed in 2020. The
severance package consists of salary, pension
and bonuses during the notice period (12
months) as well as termination compensation

part of a stock-based program in 2020 and
2021. Severance pay of DKK 9 million was
paid out in 2020, while the remaining DKK 26
million will be paid out in 2021. Furthermore,
the remaining value of awarded stock and
stock options, DKK 2 million, has been
expensed.

31, 2020. The severance payment of DKK 32
million was made in 2020.

contribution pension scheme of 11% of their
base salary. In 2019, the pension scheme was
between 25% and 27.6% of the base salary
and short-term cash-based incentive.
The targets for the short-term incentive
program (STIP) are set by the Board of
Directors in connection with the review of the
business plan for the year. Good performance
will result in target payout (65%) while
maximum payout is only achieved for delivering
an extraordinary performance. Maximum
payout equals 9.5 months’ salary.
In 2020 the targets for the STIP were split on


15% weight) and targets for the individual


Novozymes resulted in the EBIT target being

The payout related to these targets was 65%
and 100%, respectively.
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 would be 90% for Ester
Baiget, 80% for Lars Green and 67% for
Thomas Videbæk.
The total payout ratio on the STIP 2020 is
shown on the next page.
Remuneration paid to individual members of the Executive Management
Fixed Variable
 Salary
Contribution
based pension
Other

Cash bonus

Incentive

2020
Total
Remuneration
Compensation
for lost
incentives
Severance
Package
2019
Total
Remuneration
Severance
Package*
Ester Baiget (from 1/2-2020) 6.9 0.8 0.2  7.1 19.4  - - -
Lars Green 5.9 0.6 0.2 3.6 5.9 16.2 0.7 - 5.5 -
Thomas Videbæk 6.8 0.7 0.2 3.9 - 11.6 - 35.2  -
Former executives
Peder Holk Nielsen (to 31/1-2020) 0.7 0.2 - - - 0.9 - - 19.1 31.9
Prisca Havranec-Kosicek
(to 30/8-2019) - - - - - - - -  16.2
20.3 2.3 0.6 11.9 13.0 48.1  35.2 42.7 

on IFRS recognition principles where the long-term incentive programs are expensed over the year of grant and the subsequent years of vesting. The long-term incentive included in the above table is the cost of the
2020 program measured at market value at the grant date.
* Peder Holk Nielsen and Prisca Havranec-Kosicek’s severance packages were fully expensed in 2019. The severance packages consisted of salary, pension and bonuses during the notice period as well as
termination compensation and compensation for not being part of the stock-based incentive program in 2020.
49Governance Summary of the Remuneration report Novozymes A/S
The targets for the long-term incentive program
covering the period 2017-2019 were partly
met, and 61% of the program was awarded
in January 2020. As a result, 38,857 shares
associated with the program were released to
the Executive Management in January 2020.
Going forward, the Board of Directors will
issue annual long-term incentive program
(LTIP) grants with overlapping three-year
performance periods. This allows the Board of
Directors to re-assess targets for each annual

demanding and aligned with the strategy.
In 2020, the new LTIP for the Executive
Management began covering the performance
period 2020-2022. The LTIP consists of 50%
shares and 50% share options. Relative to the
previous long-term incentive program (2017-


of LTIP), a lower but still prominent weight on

LTIP), and an explicit weight on sustainability
(weight of 20% of LTIP). The targets are aligned
with the updated strategy and the measures of
business success for the period 2020-2022.
The stock was allocated in March 2020
and will be released in the beginning of
2023 in accordance with the level of target
achievement, while the stock option program
is a three-year incentive program with annual
allocations. In 2020, 135,280 stock options
were granted to the Executive Management.
The allocations for 2020-2023 will be adjusted
in the beginning of 2023 in relation to the level
of target achievement.
The annual LTIP cannot exceed 19 months’
base salary. Further, the program includes 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
exceeds twice the annual conditional grant.
The members of the Executive Management
have contracts of employment containing

Danish listed companies, including the periods
of notice that both parties are required to give
and noncompetition clauses. If an executive

by the company without any misconduct on


addition to the notice period, the executive

of 12 months’ base salary and pension
contributions. However, as Thomas Videbæk
was appointed before 2016 he was entitled to
termination compensation of two years' base
salary and pension contributions.
Remuneration of senior leadership
The remuneration of Novozymes’ senior
leadership (195 vice presidents and directors) is
consistent with the general remuneration policy.
Incentive programs for vice presidents and
directors have been established for the 2020-
2022 period. The programs follow the same
mechanisms as the program for the Executive
Management. Further information on the
incentive programs for these employee groups
can be found in Note 6.2 to the consolidated

overview of outstanding stock options.
Short-term incentive program – Target achivement
Weight Target  Ester Baiget Lars Green Thomas Videbæk
 EBIT
% of maximum / (index compared to
target performance)
65 (100) 65 (100) 65 (100)
15%  100  100  100 
 Individual targets 90 (138) 80 (123) 67 (103)
Total, % of max 80% (123) 76% (117) 71% (109)
Total, DKK million 4.4 3.6 3.9
50Governance The Novozymes stockNovozymes A/S
The Novozymes stock
The total shareholder return in 2020 was 9% with the share price increasing




S
tock performance
The Novozymes total market cap reached

share price (NZYM B) increased by 7% from the
closing price of DKK 326 at the end of 2019 to

The total shareholder return was 9% including
the share price appreciation and dividend
payments made during the year. Over the past

annual return (compounded) to shareholders
of 6%.
The average daily trading volume of the stock
was 557,617 shares or DKK 198 million, making
it the 13th most actively traded company on
Nasdaq Copenhagen, down one spot from 12th
place in 2019.
Share and ownership structure
Novozymes’ common stock consists of


carry 20 votes each and B shares carry 2 votes
each. Both A and B shares have a nominal
value of DKK 2 per share.
At the end of 2020, Novozymes had more than

shares were held outside Denmark mainly

investors, including Novo Holdings A/S, held
approximately 60% of the B shares. Novo
Holdings A/S held 25.5% of the total common

of the votes. Novo Holdings A/S is wholly
owned by the Novo Nordisk Foundation,
an independent Danish foundation whose
objectives are to provide a stable base for
the companies within the Novo Group and to

A stock B stock Total
Share capital (DKK)   570,000,000
Number of shares   285,000,000
Held by Novo Holdings A/S (%) 100.0% 8.2% 25.5%
Number of votes   
Voting rights (%) 69.9% 30.1% 100.0%
Held by Novo Holdings A/S (%) 69.9% 2.5% 
Share price development 2020
Novozymes OMX C25 CAP
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
Dec
75
85
95
105
115
125
135
51Governance The Novozymes stockNovozymes A/S
Stock buyback programs

from February 10 to August 21, as part of the
DKK 1.5 billion stock buyback program for
2020. The repurchased shares were added to

treasury shares, or 2.0% of the total stock
capital, at the end of 2020.
A new stock buyback program worth up to a
total of DKK 1.5 billion or a maximum of 15
million shares will be initiated in 2021.

The Board of Directors proposes that the
Annual Shareholders’ Meeting approve a
dividend of DKK 5.25 per share for a total


corresponds to a payout ratio of 51.9% which

proposal is in line with the previously stated
plan to increase the payout ratio to ~50%.
If approved, the 2020 dividend will be
disbursed on March 16, 2021, with March 11,
2021, as the last trading day cum dividend for
2020.
The Novo Nordisk Foundation is an independent Danish foundation
with corporate interests. The objective of the Novo Nordisk Foundation
is twofold: to provide a stable base for the commercial and research
activities conducted by the companies within the Novo Group and to

Investor Relations
Novozymes’ Investor Relations maintains an ongoing dialogue with sell-side equity
analysts as well as major institutional and retail shareholders.
Ownership structure
A list of the current analysts covering Novozymes
can be found at Investors.novozymes.com.
Novo Nordisk
Holding A/S
Novo Nordisk
Foundation
Institutional and
private investors
74.5% of total shares
27.6% of votes
25.5% of total shares
72.4% of votes
Total shareholder return
including for dividends %
0
10
20
30
40
50
(30)
(20)
(10)
2016 2017 2018 2019 2020
-25%
47%
-16%
14%
9%
Ownership by geography
(B shares)
Denmark 24%
UK & Ireland 30%
Rest of Europe 20%
North America 22%
Rest of World 4%
Accounts and performane
04
Accounts and
performance
52Novozymes A/S Accounts and performanceAccounts and performance
Sales
Total sales in 2020 were DKK 14,012 million,
at organically and a decline of 3% in DKK
compared with 2019.
“Resilient 2020 performance
despite the COVID-19 pandemic.”
The overall eect from COVID-19 on
Novozymes’ sales performance was negative,
however, with a dampened eect as a result of
diversied end-market exposure. Solutions for
Household Care benetted from an increased
demand for cleaning solutions, whereas
solutions for Bioenergy and Textile production
declined due to the COVID-19 pandemic
induced drop in gasoline consumption,
especially in the US, and lower demand and
production of textiles.
Salesandsalesgrowth
DKK million %
• Sales
• Sales growth, organic (%)
Gross prot and margin
Gross prot decreased by 1% to DKK 7,853
million from DKK 7,954 million in 2019, driven
by lower sales. The gross margin was 56.0%, up
from 55.3% in 2019. The increase was mainly
due to lower input costs, improved production
eciency and a one-o settlement related to
the former BioAg setup that was partly oset
by adverse currency developments.
Operating costs
Operating costs decreased by 4% to DKK 4,257
million. Operating costs as a percentage of
sales were 30%. 
• Sales and distribution costs decreased by
3%, accounting for 11.3% of sales
• Research anddevelopment costs decreased
by 1%, accounting for 13.8% of sales
• Administrative costs decreased by 12%,
accounting for 5.3% of sales 
Operating costs were negatively impacted
by reorganization costs, acquisition-related
transaction costs and an impairment loss, and
positively impacted by savings on employee
and travel costs.
Other operating income
Other operating income was DKK 56 million,
compared with DKK 520 million in 2019.
Other operating income in 2020 was positively
impacted by DKK 42 million from the
contingent income related to the divestment of
the pharma-related royalty. 2019 was impacted
by the termination of The BioAg Alliance and
the divestment of the pharma-related royalty.
EBITDA
EBITDAdecreased by 7% to DKK 4,918
million, down from DKK 5,292 millionin 2019.
Depreciation, amortization and impairment
losses were DKK 1,266 million in 2020, up 1%
from DKK 1,253 million in 2019.
EBIT and EBIT margin
EBIT decreased by 10% to DKK 3,652 million,
down from DKK 4,039 million in 2019. The EBIT
margin ended at 26.1%, down from 28.1% in
2019. Excluding the one-o settlement related
to the former BioAG setup, reorganization
costs, acquisition-related transaction costs
and an impairment loss, the underlying EBIT
margin was ~27% in 2020, which was ~1
percentage point higher than the underlying
EBIT margin of ~26% in 2019.
EBITandEBITmargin
DKK million %
• EBIT
• EBITmargin (%)
Net nance
Net nancial costs were DKK 127 million
in 2020, compared with DKK 235 million in
2019. In 2020, Novozymes realized a DKK 35
million currency hedging/revaluation net loss,
compared with a net loss of DKK 205 million
in 2019.
Tax
The eective tax rate was 19.7%, up from
17.0% in 2019. In 2019, Novozymes had a
positive impact from reduced uncertain tax
positions related to bilateral advance pricing
agreements.
Earnings per share (diluted)
Earnings per share (diluted) were DKK 10.02,
compared with DKK 11.01 in 2019.
53Novozymes A/S
Sales and earnings
Accounts and performanceSales and earnings
54Novozymes A/S
Consolidated statements of income
Income statement
DKK million Note 2020 2019
Revenue 2.1, 2.2 14,012 14,374
Cost of goods sold 2.3, 3.1, 3.2, 4.1 (6,159) (6,420)
Gross prot 7,853 7,954
Sales and distribution costs 2.3, 3.1, 3.2 (1,581) (1,631)
Research and development costs 2.3, 2.4, 3.1, 3.2 (1,937) (1,966)
Administrative costs 2.3, 3.1, 3.2 (739) (838)
Other operating income, net 2.5 56 520
Operating prot / EBIT 3,652 4,039
Share of result in associates (4) (5)
Financial income 5.2 26 112
Financial costs 5.2 (153) (347)
Prot before tax 3,521 3,799
Tax 2.6 (695) (644)
Net prot 2,826 3,155
Attributable to
Shareholders in Novozymes A/S 2,825 3,154
Non-controlling interests 1 1
2,826 3,155
Proposed dividend per share DKK 5.25 DKK 5.25
Earnings per share 2.7 DKK 10.07 DKK 11.06
Earnings per share, diluted 2.7 DKK 10.02 DKK 11.01
Statement of comprehensive income
DKK million Note 2020 2019
Net prot 2,826 3,155
Items that may subsequently be reclassied to the
income statement:
Currency translation adjustments
Subsidiaries and non-controlling interests (786) 143
Tax on currency translation adjustments 1 (1)
Currency translation adjustments (785) 142
Cash ow hedges
Fair value adjustments 154 (107)
Tax on fair value adjustments (34) 24
Cash ow hedges reclassied to nancial costs 5.2 (15) 164
Tax on reclassied fair value adjustments 3 (36)
Cash ow hedges 108 45
Other comprehensive income (677) 187
Comprehensive income 2,149 3,342
Attributable to
Shareholders in Novozymes A/S 2,149 3,342
Non-controlling interests - -
2,149 3,342
Accounts and performanceSales and earnings
Cash ow from operating activities
The cash ow from operating activities was
DKK 4,355 million, up from DKK 3,196 million
in 2019, an increase of DKK 1,159 million. The
improvement in operating cash ow was mainly
due to higher cash conversion from better
earnings quality, a settlement related to the
former BioAg setup and positive changes and
timing eects in working capital. The change
in net working capital was caused by lower
receivables and lower inventories, partly oset
by lower other liabilities.
Net investments
Net investments excluding acquisitions were
DKK 936 million, down from DKK 991 million
in 2019. Net investments in property, plant
and equipment amounted to DKK 790 million,
compared with DKK 856 million in 2019.
Free cash ow before acquisitions and
divestments
The free cash ow before acquisitions and
divestments amounted to DKK 3,419 million,
compared with DKK 2,205 million in 2019. The
increase of 55% was mainly due to higher cash
ows from operating activities.
Free cash ow
The free cash ow was DKK 2,831 million in
2020, compared with DKK 2,635 million in
2019. Free cash ow was negatively impacted
by the acquisition of PrecisionBiotics Group.
Financing activities
The cash ow from nancing activities was
negative at DKK 2,314 million, compared with
a negative cash ow of DKK 2,644 million in
2019. The negative cash ow from nancing
activities was mainly due to the 2020 stock
buyback program (DKK 1,500 million) and
dividend payments (DKK 1,483 million).
Cash position
Cash and cash equivalents at December 31,
2020, amounted to DKK 1,181 million, up
from DKK 711 million at December 31, 2019.
Undrawn committed credit facilities were DKK
5,344 million at December 31, 2020.
55Novozymes A/S
Cash ow
Cash ow from operating activities
DKK million
* The comparatives for 2016-2018
have not been restated for IFRS 16
Free cash ow before acquisitions
DKK million
Netinvestments
DKK million %
• Netinvestments
• Netinvestments(%of sales)
Accounts and performanceCash flow
56Novozymes A/S
Consolidated statement of cash ows
DKK million Note 2020 2019
Net prot 2,826 3,155
Reversal of non-cash items 6.6 2,220 1,321
Income tax paid 2.6 (951) (1,116)
Interest received 10 64
Interest paid (62) (88)
Cash ow before change in working capital 4,043 3,336
Change in working capital
(Increase)/decrease in receivables 395 (238)
(Increase)/decrease in inventories 181 218
Increase/(decrease) in payables, deferred income and
contract liabilities (265) (124)
Currency translation adjustments 1 4
Cash ow from operating activities 4,355 3,196
Investments
Purchase of intangible assets 6.6 (146) (135)
Purchase of property, plant and equipment 6.6 (794) (862)
Sale of property, plant and equipment 4 6
Business acquisitions, divestments and purchase of
nancial assets 6.6 (588) 430
Cash ow from investing activities (1,524) (561)
Free cash ow 2,831 2,635
DKK million Note 2020 2019
Financing
Borrowings 999 1,915
Repayment of borrowings (434) (1,028)
Overdra faclilities, net (293) (59)
Repayment of lease liabilities (111) (108)
Shareholders:
Purchase of treasury stock (1,500) (2,000)
Sale of treasury stock 508 75
Dividend paid (1,483) (1,439)
Cash ow from nancing activities (2,314) (2,644)
Net cash ow 517 (9)
Unrealized gain/(loss) on currencies and nancial
assets included in cash and cash equivalents (47) (3)
Net change in cash and cash equivalents 470 (12)
Cash and cash equivalents at January 1 711 723
Cash and cash equivalents at December 31 1,181 711
Accounts and performanceCash flow
Total assets
Total assets increased from DKK 20,437 million
at December 31, 2019, to DKK 20,510 million
at December 31, 2020. The increase was mainly
driven by net investments and the acquisition
of PrecisionBiotics Group, partly oset by
depreciations and amortizations, changes in
currency and a decrease in net working capital.
Invested capital
Invested capital decreased from DKK 15,507
million in 2019 to DKK 15,094 million in 2020.
This was mainly a result of a decrease in net
woking capital.
ROIC
Return on invested capital (ROIC), including
goodwill, was 18.9%, down 2.2 percentage
points from 21.1% in 2019. The decreasewas
mainly driven by lower net prot and higher
average invested capital.
Net working capital
Novozymes’ net working capital decreased
to DKK 2,901 million, down from DKK 3,478
million in 2019, due to lower trade receivables,
lower inventories, partly oset by lower other
payables.
Net interest-bearing debt
Novozymes had net interest-bearing debt of
DKK 3,871 million at December 31, 2020,
compared with DKK 4,049 million at December
31, 2019. Net interest-bearing debt was
impacted by cash outows from dividend
payments of DKK 1,483 million, stock buybacks
of DKK 1,500 million and the acquisition of
PrecisionBiotics Group, which was more than
oset by cash inows from operating activities.
Net interest-bearing debt-to-EBITDA
Net interest-bearing debt-to-EBITDA was 0.8x
at December 31, 2020, on par with December
31, 2019.
57Novozymes A/S
Balance sheet and nancial position
Netinterest-bearing debt(NIBD)andnetinterest- bearing
debt- to- EBITDA
DKK million NIBD/EBITDA
• NIBD
• NIBD/EBITDA
Net working capital
% of sales
• Inventories
• Payables and deferred income
• Receivables
• Networkingcapital
ROICandaverage investedcapital
DKK million %
• Average invested capital
• ROIC (%)
Accounts and performanceBalance sheet and financial position
58Novozymes A/S
Consolidated balance sheet
Assets
DKK million Note Dec. 31, 2020 Dec. 31, 2019
Intangible assets 3.1 2,554 1,926
Land and buildings 3.2 3,853 4,056
Plant and machinery 3.2 4,136 4,501
Other equipment 3.2 941 993
Assets under construction and prepayments 3.2 682 662
Deferred tax assets 2.6 1,339 1,161
Other nancial assets 21 22
Investments in associates 33 37
Other receivables 4.3 40 29
Non-current assets 13,599 13,387
Inventories 4.1 2,361 2,613
Trade receivables 4.2 2,549 2,864
Contract assets 4.2 6 243
Tax receivables 2.6 460 273
Other receivables 4.3 212 269
Other nancial assets 119 15
Cash and cash equivalents 1,181 711
6,888 6,988
Assets held for sale 4.5 23 62
Current assets 6,911 7,050
Assets 20,510 20,437
Liabilities and shareholders’ equity
DKK million Note Dec. 31, 2020 Dec. 31, 2019
Common stock 5.5 570 582
Currency translation adjustments (727) 57
Cash ow hedges 127 19
Retained earnings 11,263 10,810
Equity attributable to shareholders in Novozymes A/S 11,233 11,468
Non-controlling interests 11 12
Shareholders’ equity 11,244 11,480
Deferred tax liabilities 2.6 1,204 879
Provisions 3.4 115 115
Contingent consideration 3.5 146 -
Lease liabilities 386 453
Other nancial liabilities 5.3 3,254 2,775
Non-current liabilities 5,105 4,222
Lease liabilities 136 163
Provisions 3.4 90 128
Other nancial liabilities 5.3 1,309 1,411
Trade payables 1,100 1,117
Contract liabilities 67 74
Tax payables 2.6 336 431
Other liabilities 4.4 1,123 1,411
Current liabilities 4,161 4,735
Liabilities 9,266 8,957
Liabilities and shareholders’ equity
20,510 20,437
Accounts and performanceBalance sheet and financial position
Shareholders’ equity
At December 31, 2020, shareholders’ equity
was DKK 11,244 million, down from DKK
11,480 million at December 31, 2019, as
dividend payments and net stock buybacks
more than oset comprehensive income in
2020.
Equity ratio
Shareholders’ equity accounted for 55% of
the balance sheet total at December 31, 2020,
down from 56% at December 31, 2019.
Return on equity
Return on equity was 24.9%, down 2.6
percentage points from 27.5% in 2019. The
decrease was a result of lower net prot.
Treasury stock
At December 31, 2020, the holding of treasury
stock was 5.7 million B shares, equivalent to
2.0% of the common stock.
Dividend
The Board of Directors proposes that the
Annual Shareholders’ Meeting approve
a dividend of DKK 5.25 per share for the
2020 nancial year, same as in 2019. This
will result in an expected total dividend
payment of approximately DKK 1,466 million,
corresponding to a payout ratio of 51.9%. 
Stock buyback program
In 2020, Novozymes bought back 4.3 million
B shares at an aggregate transaction value of
DKK 1,500 million under the stock buyback
program initiated on February 10, 2020, and
completed on August 24, 2020. The shares
acquired under the program will be used
to reduce the common stock and to meet
obligations arising from employee stock-based
incentive programs.
59Novozymes A/S
Equity and shareholder return
Movementsinequity 2020
DKK million
Payoutratioanddividendgrowth
%
• Payout ratio
• Dividendgrowth
Shareholder return
DKK million
* Dividend for 2020 is the proposed
dividend.
• Dividend
• Stock buyback program
Accounts and performanceEquity and shareholder return
60Novozymes A/S
Attributable to shareholders in Novozymes A/S
DKK million Common stock
Currency
translation
adjustments
Cash ow
hedges
Retained
earnings Total
Non-controlling
interests Total equity
Shareholders’ equity at January 1, 2020 582 57 19 10,810 11,468 12 11,480
Net protfor the year 2,825 2,825 1 2,826
Other comprehensive income for the year (784) 108 (676) (1) (677)
Total comprehensive income for the year (784) 108 2,825 2,149 - 2,149
Purchase of treasury stock (1,500) (1,500) (1,500)
Sale of treasury stock 508 508 508
Write-down of common stock (12) 12 - -
Dividend (1,482) (1,482) (1) (1,483)
Stock-based payment 53 53 53
Tax related to equity items 37 37 37
Changes in shareholders’ equity (12) (784) 108 453 (235) (1) (236)
Shareholders’ equity at December 31, 2020
B/S
570 (727) 127 11,263 11,233 11 11,244
Shareholders’ equity at January 1, 2019 594 (86) (26) 10,943 11,425 13 11,438
Net protfor the year 3,154 3,154 1 3,155
Other comprehensive income for the year 143 45 188 (1) 187
Total comprehensive income for the year 143 45 3,154 3,342 - 3,342
Purchase of treasury stock (2,000) (2,000) (2,000)
Sale of treasury stock 75 75 75
Write-down of common stock (12) 12 - -
Dividend (1,438) (1,438) (1) (1,439)
Stock-based payment 45 45 45
Tax related to equity items 19 19 19
Changes in shareholders’ equity (12) 143 45 (133) 43 (1) 42
Shareholders’ equity at December 31, 2019
B/S
582 57 19 10,810 11,468 12 11,480
The proposed dividend of approximately DKK 1,466 million for 2020 is included in Retained earnings.
Consolidated statement of shareholders’ equity
Accounts and performanceEquity and shareholder return
Operational ecoeciency
Novozymes strives to decouple environmental
impact from business growth, and we dene
targets and metrics that measure and drive our
sustainability performance.
Climate change
Novozymes’ total CO
2
emissions were 268,000
tons in 2020, a decrease from 365,000 tons in
2019.
Energy
In 2020, Novozymes’ energy consumption was
4,475,000 GJ, a decrease of 2% compared with
2019.
Renewable sources accounted for 43% of the
energy consumption in 2020, up from 30%
in 2019. The main contributor is renewable
electricity which has gone up from 49% in
2019 to 69% in 2020, as our production site
in Franklinton, USA have started procuring
renewable electricity in 2020. In addition, all
electricity in Denmark, Brazil and Tianjin, China
come from renewable sources e.g. oshore
windfarms and hydropower.
Energy by source 2020 (2019)
• Electricity – conventional 18% (29%)
• Electricity – renewable 39% (29%)
• Steam 22% (21%)
• Fuels – conventional 15% (15%)
• Heat – conventional 2% (4%)
• Fuel and heat – renewable 4% (2%)
Water
In 2020, Novozymes’ water consumption
increased by 2% from 7,845,000 m
3
in 2019 to
7,998,000 m
3
. The increase is partly driven by
extra cleaning at all sites due to product mix
changes and a higher cleaning requirement
related to food safety.
The total volume of wastewater generated in
2020 increased by 5%.
Waste
In 2020, 97% of our biomass volume was
handled in a circular set-up (recycled), on par
with 2019.
For solid waste, the rate of recycling across
our global production sites decreased to 48%,
compared with 52% in 2019.
Environmental compliance
The number of breaches of regulatory limits
recorded worldwide increased to 20 in 2020
from 17 in 2019. Most of these breaches were
related to wastewater treatment. Novozymes
is addressing these incidents. In addition, we
received ten neighbor complaints in 2020,
compared with seven in 2019, mostly related to
air pollution and waste management.
61Novozymes A/S
Environmental performance
Five -yearoperational emissions(CO
2
-eqv.)
1,000 tons
• Scope 2
• Scope 3
• Scope 1
Accounts and performanceEnvironmental performance
62Novozymes A/S
Note 2020 2019
Climate change
Greenhouse gas emissions 7.1 1,000 tons CO
2
-eqv. 268 365
Energy
Energy consumption 7.2 1,000 GJ 4,475 4,574
Renewable energy 7.2 % 43 30
Water
Water consumption 7.3 1,000 m
3
7,998 7,845
Volume of wastewater 7.3 1,000 m
3
6,471 6,147
Waste
Solid waste 7.4 1,000 tons 15 13
Recycling rate for solid and hazardous waste 7.4 % 48 52
Biomass volume 7.4 1,000 tons 465 513
Biomass handled in circular set-up (recycled) 7.4 % 97 97
Environmental compliance, etc.
Breaches of regulatory limits 7.5 No. 20 17
Neighbor complaints 7.5 No. 10 7
References to notes without data
Bioethics& biodiversity 7.6 n.a. n.a.
Product stewardship 7.7 n.a. n.a.
Consolidated environmental data
Accounts and performanceEnvironmental performance
Labor practices & human rights
At December 31, 2020, the total number of
employees were 6,185, compared with 6,125
in 2019.
Number of employees
In 2020, the employee absence rate was 1.9%
on par with 2019.
Novozymes promotes equal opportunities
and strengthens diversity in the global
workplace. At December 31, 2020, 33% of
senior management (directors and higher) were
women, up from 31% in 2019.
Occupational health & safety
The frequency of occupational injuries
increased to 1.3 per million working hours in
2020, compared with 0.9 per million working
hours in 2019. The three-year rolling average is
within the 2022 target of a frequency of 1.5 per
million working or less.
Frequency of accidents (per million working hours)
Innovation
Novozymes is committed to delivering
bioinnovation and launched 12 new products
in 2020.
In 2020, Novozymes had 963 active patent
families, which comprise the number of
inventions that have active patent applications
or active patents. The number of active patent
families has increased from 951 in 2019.
Business ethics
In 2020, Novozymes reinforced our
commitment to business integrity. During the
year 99% of Novozymes’ employees in scope
completed business integrity training, on par
with 2019.
As in 2019, there were no breaches of
competition law in 2020.
Community engagement
In 2020, Novozymes contributed to local
communities responding to local challenges. In
China, for example, we donated RMB 1 million
to Red Cross to build hospitals and in Latin
America we provided 100 PCs with internet
access to unprivileged students.
Customer engagement
Novozymes conducts an annual customer
satisfaction survey and tracks progress on its
Net Promoter Score (NPS), which is assessed
on a scale from -100 to +100. In 2020, we
received an NPS of +50, which conrms our
solid relationships with our customers. The
COVID-19 pandemic does not seem to have
aected customers perceptions of Novozymes
in 2020 compared to previous years.
63Novozymes A/S
Social and governance performance
Accounts and performanceSocial and governance performance
64Novozymes A/S
Note 2020 2019
Labor practices & human rights
Employees, total 2.3 No. 6,185 6,125
Women 2.3 % 37.8 37.6
Rate of absence 8.1 % 1.9 1.9
Women in senior management 8.1 % 33 31
Occupational health & safety
Fatalities No. - -
Frequency of occupational injuries with absence 8.2 Per million working hours 1.3 0.9
Frequency of occupational diseases 8.2 Per million working hours 0.4 0.1
Three-year rolling average of occupational injuries with absence 8.2 Per million working hours 1.5 1.7
Innovation
New products 2.4 No. 12 9
Active patent families 2.4 No. 963 951
Business ethics
Completion of business integrity training for employees in scope 8.3 % 99 99
Breaches of competition law 8.3 No. - -
Customer engagement
Customer satisfaction, Net Promoter Score (NPS) 8.4 No. 50 54
Reference to notes without data
Community engagement 8.5 n.a. n.a.
Responsible sourcing 8.6 n.a. n.a.
Consolidated social and governance data
Accounts and performanceSocial and governance performance
1
Basis of reporting
1.1 Signicantchangesandevents
1.2 Basisofreporting
2
Net operating prot aer tax
2.1 Segment
2.2 Revenue
2.3 Employees
2.4 Researchanddevelopmentcosts
2.5 Otheroperatingincome,net
2.6 Tax
2.7 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
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 nancing
5.1 Financialriskfactors
andrisk management
5.2 FinancialincomeandFinancialcosts
5.3 Othernancialliabilities
5.4 Derivatives–hedgeaccounting
5.5 Commonstockandtreasurystock
5.6 Financialassetsand
liabilitiesbycategory
6
Other nancial notes
6.1 Managementremuneration
6.2 Stock-basedpayment
6.3 Commitmentsandcontingencies
6.4 Relatedpartytransactions
6.5 Feestostatutoryauditors
6.6 Cashow
6.7 Eventsaerthereportingdate
6.8 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 Occupationalhealth&safety
8.3 Businessethics
8.4 Customerengagement
8.5 Communityengagement
8.6 Responsiblesourcing
Notes
65Novozymes A/S
Accounts and performanceNotes
66Novozymes A/S
Building the Novozymes OneHealth brand
On June 25, 2020, Novozymes acquired
PrecisionBiotics Group Limited to advance
Novozymes’ activities in the area of
biological solutions for oral and gut health.
PrecisionBiotics Group holds a leading position
within probiotics for human gut health and is
well positioned with several clinically-backed
products already on the market.
On January 7, 2021, Novozymes acquired
Microbiome Labs adding a broad range of
proprietary microbiome solutions to its human
health activities and securing an attractive
entry point into the North American probiotics
market.
Both acquisitions are related to human health
and are key steps in building the OneHealth
brand, which also comprises the 2016
acquisition of Organobalance GmbH along with
research and development activities based on
Novozymes’ existing technology.
Reference is made to Note 3.5 for a description
of the two acquisitions and their impact on the
consolidated nancial statements.
New organization
On February 1, 2020, Ester Baiget was
appointed new President and CEO of
Novozymes.
On September 1, 2020, Novozymes announced
a new organizational structure directing the
organization to a more value-chain focused
and customer-centric approach to support and
deliver on our Better business with biology
strategy. This new structure allows for a
stronger dierentiation between sustainable
solutions with clear consumer benets, and
sustainable solutions focusing on maximizing
yields and optimizing processes for our
customers.
As a part of the new organizational structure,
changes were made to the Executive
Leadership Team; see Note 6.1. The sales
reporting has been updated to reect the new
organization; see Note 2.2.
COVID-19 pandemic
Novozymes delivered a resilient 2020
performance despite the COVID-19 pandemic.
See the section on sales and earnings for more
details on COVID-19 impacts on 2020 sales.
Novozymes has only made use of unavoidable
nancial governmental relief packages,
resulting in an negligible impact. All major
postponed tax payments etc. were settled
before the end of the year. The COVID-19
pandemic was not a triggering event for
impairments in 2020.
The COVID-19 pandemic was a challenge for
occupational health and safety in 2020. Task
force teams were in place, focused on keeping
employees safe and labs and production
running; see Note 8.2 for more details.
Throughout the year, Novozymes maintained
close communications with customers on
measures taken within the organization to
prevent impact on production and delivery.
Novozymes also focused on exercising its
responsibility as a corporate citizen to support
authorities in mitigating the eects of the
pandemic. Reference is made to Note 8.4 and
Note 8.5.
1.1 Signicant changes and events
Basis of reporting
Notes
Accounts and performance
Accounts and performanceNotes
67Novozymes A/S
This section provides an overview of
Novozymes’ principal accounting policies, the
critical accounting estimates and judgments
applied, a denition of materiality as well as
the impact of new or amended IFRS standards
and interpretations.
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
environmental data and social and governance
data respectively.
The accounting policies described below
apply to the consolidated nancial statements
as a whole. Accounting policies and critical
accounting estimates 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 nancial statements
comprise the nancial statements of
Novozymes A/S (the Parent Company)
and subsidiaries controlled by Novozymes
A/S, prepared in accordance with Group
accounting policies. The consolidated nancial
statements are prepared by combining
items of a uniform nature and subsequently
eliminating intercompany transactions, internal
stockholdings and balances, and unrealized
intercompany prots and losses.
Consolidation of the environmental, social and
governance data follows the same principles as
the nancial reporting.
Translation of foreign currencies
The consolidated nancial statements are
presented in Danish kroner (DKK).
Exchange rate dierences arising between
the exchange rate at the transaction date and
the reporting date are recognized as Financial
income or Financial costs.
Foreign currency transactions are translated
into the functional currency dened for
each company using the exchange rates
prevailing at the transaction date. Monetary
items denominated in foreign currencies are
translated into the functional currency at the
exchange rates prevailing at the reporting date.
Financial statements of foreign subsidiaries
are translated into DKK at the exchange rates
prevailing at the reporting date for assets and
liabilities, and at average exchange rates for
income statement items.
The following exchange rate dierences,
arisingfrom translation usingthe exchange
rate prevailing 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
Non-IFRS nancial measures
Novozymes uses certain nancial measures
that are not dened in IFRS to describe the
Group’s nancial performance, nancial
position and cash ows. These nancial
measures may therefore be dened and
calculated dierently from similar measures
in other companies, and may thus not be
comparable.
The non-IFRS nancial measures presented in
the annual report are:
• Organic sales growth
• Operating costs
• Economic prot
• ROIC
• Free cash ow before acquisitions
Denitions of non-IFRS nancial measures are
provided in the Glossary.
iXBRL reporting
From 2020, Novozymes is required to le the
annual report in the new European Single
Electronic Format (‘ESEF’) and the Annual
report in 2020 is therefore prepared in the
XHTML format that can be displayed in a
standard browser. The primary statements
in the consolidated nancial 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 nancial statement
line item is not dened 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 subtotals.
The annual report submitted to the Danish
Financial Supervisory Authority consists of
the XHTML document together with certain
technical les, all included in a le named
NOVOZYMES-2020-12-31.zip.
CRITICAL ACCOUNTING ESTIMATES AND
JUDGMENTS
The preparation of the consolidated nancial
statements and the environmental, social
and governance datarequires Management
to make estimates and assumptions that can
have a signicant eect on the application
of policies and reported amounts of assets,
liabilities, income, expenses and related
disclosures. The estimates and underlying
assumptions are based on historical experience
and various other factors. Actual results may
dier from these estimates.
The estimates and underlying assumptions
are reviewed on an ongoing basis. Changes
in estimates 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.
Basis of reporting
1.2 Basis of reporting
Accounts and performanceNotes
68Novozymes A/S
The application of the Group’s accounting
policies may require Management to make
judgments that can have a signicant eect on
the amounts recognized in the consolidated
nancial statements. Management judgment
is required in particular when assessing
the substance of transactions that have a
complicated structure or legal form.
The critical accounting estimates and
judgments could potentially have a signicant
impact on the consolidated nancial
statements.
Basis of reporting
The consolidated nancial statements of
theGroup have been prepared in accordance
with International Financial Reporting
Standards (IFRS) as adopted by the EU and
further requirements in the Danish Financial
Statements Act. The scal year for the Group is
January 1 – December 31.
The consolidated nancial statements have
been prepared on a going concern basis and
under the historical cost convention, with the
exception of derivatives and securities, which
are measured at fair value. The accounting
policies are unchanged from last year.
The consolidated environmental, social and
governance data have been prepared in
accordance with principles that adhere to
internationally recognized voluntaryreporting
standards and principles such as the UN Global
Compact (UNGC). Novozymes is a signatory
to the UNGC, a voluntary policy initiative for
businesses that are committed to aligning their
operations and strategies with ten universally
accepted principles in the areas of human
rights, labor, 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
have also been inspired by the GRI framework.
The principles are unchanged from last year.
Dening materiality
Novozymes’ annual report is based on the
concept of materiality, to ensure that the
content is material 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
provides the specic disclosures required by
IFRS unless the information is considered
immaterial to the economic decision-making of
the readers of the annual report.
The disclosures on environmental, social and
governance (ESG) issues include information
on our management approach, targets,
initiatives and related progress.
Various global movements and the COVID-19
pandemic has led to an increased focus on how
companies manage ESG issues, specically
on social issues for eg. occupational health &
safety and labor practices. As a responsible
corporate citizen, Novozymes considers
these issues to be highly material, and
we continuously strive to strengthen our
governance and management of these issues.
Novozymes’ materiality assessment is
a systematic and rigorous process that
integrates input from external stakeholders,
trend analyses and internal engagement
with relevant departments including Investor
Relations, Risk Management & Controls,
Quality and Sustainability and leadership from
our commercial divisions. This process results
in a materiality matrix of nancial and ESG
issues and reects the importance of those
issues to our key stakeholders versus their
impact on Novozymes. We use our materiality
matrix to guide our strategy and reporting.
During our assessment in 2020, no new issues
were added to or deleted from our matrix. For
more information, refer to www.novozymes.
com/en/about-us/sustainability/materiality.
In the following table, we highlight some
of the material issues, for which, we have
external targets/agship initiatives and make a
contribution to relevant SDG(s).

Basis of reporting
1.2 Basis of reporting (continued)
Accounts and performanceNotes
The table below showscritical accounting estimates and judgments and their level of potential impact on the consolidated nancial statements:
Note Critical accounting estimates and judgments
Estimate/
judgment
Potential impact from
estimates and judgments
2.2 Revenue Prot-sharing in partnerships Estimate
2.6 Tax Group tax charge
Estimate
3.1 Intangible assets and impairment test of goodwill Impairment of intangible assets and goodwill
Estimate
3.1 Intangible assets and impairment test of goodwill
Intangible assets recognized at fair value
Estimate
3.5 Business acquisitions Fair value measurement Estimate
4.1 Inventories Cost of work in progress and nished goods Estimate
4.2 Trade receivables and contract assets Allowances for doubtful trade receivables Estimate
Material issues with
external targets or
agship initiatives External target(s)/agship initiative SDGs
Innovation • HelloScience - open innovation platform
Protable growth • Organic sales growth 5+% per year
• EBIT margin 28% or above by 2022
• ROIC incl. goodwill 23% or above by 2022
Climate change
and energy
• 50% reduction in absolute emissions from
operations by 2030
• 100% renewable electricity by 2030
• 15% reduction in absolute emissions from
purchased goods and services by 2030
Water • 100% of sites* manage water in balance with local
conditions by 2030
Responsible sourcing • 100% of key materials and waste managed in
circular systems by 2030
Community engagement
and social investment
• Pledge 1% of our time to local outreach
activities by 2022
Occupational health
and safety
• Occupational injuries = < 1.5, dened as three-
year rolling average of lost time injuries per million
working hours.
Labor practices
and human rights
• 86 on our diversity index by 2022
• 80 on learning in employee survey in 2022
Waste • Develop programs to reach zero waste
by 2030 at 100% of sites*
* The target does not include sites with activities considered not to have a signicant
environmental impact, e.g sales oces, R&D labs etc.
Limited reporting scope
The environmental data cover those activities
that could have a signicant impact on the
environment. Sites with activities considered
not to have a signicant environmental
impact are not included. Such sites comprise
sales oces, 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 parameter is included
in the reported numbers.
Impact of new accounting standards
Novozymes has adopted the following new or
amended standards and interpretations from
January 1, 2020:
• Amendments to IFRS 3 – Business
Combinations, claries the denition of a
business.
• Amendments to IAS 1 and IAS 8 – Denition
of Material, claries the denition of
material.
• Amendments to IFRS 9, IAS 39, and IFRS
7 – Interest Rate Benchmark Reform (IBOR),
which modify specic hedge accounting
requirements to provide relief from potential
eects of the uncertainty caused by the
IBOR reform, and requires additional
information to be provided about hedging
relationships which are directly aected by
these uncertainties.
The adoption of the new and amended
standards and interpretations has not had a
signicant impact on recognition, measurement
or disclosures in the consolidated nancial
statements for 2020 and is not anticipated to
have a signi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 eective and have consequently
not been implemented in the consolidated
nancial statements for 2020. Novozymes
expects to adopt the accounting standards and
interpretations when they become mandatory.
None of the new or amended standards
or interpretations are expected to have a
signicant impact on the consolidated nancial
statements.
69Novozymes A/S
1.2 Basis of reporting (continued)
Basis of reporting
Accounts and performanceNotes
70Novozymes A/S
Net operating
prot aer tax
2
ROIC
NOPAT
EBIT
Tax
NWC
Invested
capital
excl. NWC
Invested
capital
Net operating profit after tax
DKK million Note 2020 2019
Revenue 2.2 14,012 14,374
Cost of goods sold (6,159) (6,420)
Gross prot 7,853 7,954
Sales and distribution costs (1,581) (1,631)
Research and development costs 2.4 (1,937) (1,966)
Administrative costs (739) (838)
Other operating income, net 2.5 56 520
Operating prot (EBIT) 3,652 4,039
Exchange gains/(losses) (35) (205)
Tax on adjusted operating prot (714) (650)
Share of loss in associates (4) (5)
Adjusted operating prot (NOPAT) 2,899 3,179
Average invested capital (see Invested capital section) 15,301 15,038
ROIC 18.9% 21.1%
Accounts and performanceNotes
26.1%
56.0%
0%
EBIT margin down from 28.1% in
2019 to
Gross margin up from 55.3% in
2019 to
Organic sales growth up from -1%
in 2019 to
71Novozymes A/S
2.1 Segment
Segment reporting
The internal reporting framework used for
reporting on revenue and expenses to the
Executive Leadership Team and the Board of
Directors has been established to reect 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
performance. Thus, there is only one operating
segment.
Worldwide operations
The Group operates in four geographical
regions: Europe, Middle East & Africa (including
Denmark), North America, Asia Pacic and
Latin America. From a revenue perspective,
theUS is the largest single market, contributing
~29% of the Group’s revenue (2019: ~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 specied locations and
the nal destination is unknown. The stated
geographical distribution of revenue may
therefore vary from year to year if the delivery
destination for these customers changes.
Most of the Group’s intangible assets and
property, plant and equipment are located in
Denmark, the US and China at ~48%, ~27%
and ~13% respectively (2019: ~50%, ~30% and
~13%).
Intangibleassetsandproperty,plantand
equipment2020(2019)
DKK million
• Denmark 5,790 (6,007)
• Rest of Europe, Middle East & Africa 833 (51)
• North America 3,498 (3,935)
• Latin America 101 (142)
• AsiaPacic 1,944 (2,003)
Net investments2020(2019)
DKK million
• Denmark 452 (495)
• Rest of Europe, Middle East & Africa 6 (13)
• North America 312 (271)
• Latin America 12 (21)
• Asia Pacic 154 (191)
Revenue 2020 (2019)
DKK million
• Denmark 175 (166)
• Rest of Europe, Middle East & Africa 5,361 (5,174)
• North America 4,441 (4,750)
• Latin America 1,280 (1,407)
• Asia Pacic 2,755 (2,877)
Net operating profit after tax
Accounts and performanceNotes
72Novozymes A/S
The majority ofNovozymes’revenue is
derived from the sale of goods to customers,
where revenue is recognized when goods are
delivered. Less than 1% of Novozymes’ total
revenue arises from royalties.
In 2020, changes were made to the BioAg
setup and the partnerships Novozymes has
entered into within BioAg are no longer based
on prot-split arrangements.
At January 1, 2020, contract liabilities
amounted to DKK 74 million (2019: DKK 374
million), of which DKK 5 million was recognized
as revenue in 2020 (2019: DKK 26 million).
2.2 Revenue
Net operating profit after tax
Salesgrowth2020
DKK million
Salesbycurrency2020 (2019)
DKK million
• DKK ~10% (~10%)
• USD ~35% (~35%)
• Other ~10% (~10%)
• EUR ~35% (~35%)
• CNY ~10% (~10%)
Accounts and performanceNotes
Novozymes has entered into partnerships
where Novozymes manufactures and sells
products to a partner, who undertakes the
sales to end customers, and where the
prot on products sold to end customers is
shared between the partner and Novozymes
based on predetermined prot-sharing
mechanisms. Revenue related to this type
of partnership comprises approximately 9%
of Novozymes’ total annual revenue (2019:
approximately 11%).
A minor part of the revenue, related to the
expected prot-share on products sold to
the partner, requires signicant judgment
and estimates by Management. This involves
estimating future selling prices to end
customers, along with their impact on rebate
schemes, and estimating product returns
from end customers.
CRITICAL ACCOUNTING ESTIMATES
AND JUDGMENTS
DKK million 2020 2019
Consumer Biosolutions
Household Care 4,882 4,758
Food, Beverages & Human Health 2,767 2,745
Agriculture & Industrial Biosolutions
Bioenergy 2,522 2,901
Grain & Tech Processing 2,007 2,089
Agriculture & Animal Health 1,834 1,881
Revenue
I/S
14,012 14,374
Emerging markets 4,711 4,938
Developed markets 9,301 9,436
Revenue
I/S
14,012 14,374
Revenue to the ve largest customers as a percentage of
revenue 27% 27%
The industry split of revenue has been updated to reect the new structure in Novozymes, which was
implemented in 2020. Comparative numbers has been restated.
73Novozymes A/S
2.2 Revenue (continued)
Net operating profit after tax
Accounts and performanceNotes
Novozymes produces a wide range of
industrial enzymes and microorganisms.
Revenue includes the sale of goods and
related services and royalties, and is
recognized at an amount that reects
the consideration to which Novozymes
expects to be entitled. Revenue from the
straightforward sale of goods to customers
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 signicant uncertainty.
The performance obligations in the contracts
are to deliver enzymes and microorganisms
to customers, and each batch delivered
is considered a separate performance
obligation, as each batch is distinct.
Discounts
Enzymes and microorganisms are sometimes
sold at a rebate. A rebate agreement can
be set up in various ways, but common to
all agreements is that revenue is recognized
based on the price specied 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’ partnerships 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 usually scrapped, no
inventory asset is recognized.
Prot split
Novozymes has entered into partnerships
where Novozymes manufactures and sells
products to a partner, who undertakes
the sales to end customers. Theprot on
products sold to end customers is shared
between the partner and Novozymes
based on predetermined prot-sharing
mechanisms.
Revenue from these arrangements consists
of sales of products to the partner and
the shared prot, and isrecognized in
full when the goods are delivered to the
other contracting party. This is done by
calculating the expected prot based
on insights,experience and otherinput
factors. The calculated prot is recognized
as a contract asset or contract liability until
an invoice is issued. The realized prot is
settled periodically.
Commission
Novozymes has entered into commission
agreements where agents undertake sales
to third parties in return for a commission
on realized sales. Revenue from such
agreements is recognized when the
goods are delivered, as the nature of the
performance obligation is to provide the
specied 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 specications
under the standard warranty terms is
recognized as contract liabilities.
A trade receivable is recognized when the
customer 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
payments,deferred revenue and liabilities
for refund goods. The contract liabilities are
recognized as revenue as the performance
obligations under the contracts are fullled.
ACCOUNTING POLICIES
74Novozymes A/S
2.3 Employees
DKK million 2020 2019
Wages and salaries 3,047 3,195
Pensions – dened contribution plans 282 292
Other social security costs 234 284
Other employee costs 114 117
Stock-based payment 54 46
Employee costs 3,731 3,934
Recognized in the income statement under the following items:
Cost of goods sold 1,469 1,447
Sales and distribution costs 792 869
Research and development costs 1,046 1,122
Administrative costs 458 504
3,765 3,942
Change in employee costs recognized in Inventories (34) (8)
Employee costs 3,731 3,934
Employee costs 2020 (2019)
DKK million
• Denmark 2,058 (2,084)
• Rest of Europe, Middle East & Africa 149 (171)
• North America 964 (1,065)
• Asia Pacic 472 (500)
• Latin America 88 (114)
Number of employees end of year 2020 (2019)
No. of employees
• Denmark 2,646 (2,640)
• Rest of Europe, Middle East & Africa 203 (191)
• North America 1,185 (1,195)
• Asia Pacic 1,833 (1,792)
• Latin America 318 (307)
Net operating profit after tax
Accounts and performanceNotes
The employee costs in 2020 included
severance costs of DKK 87 million related
to organizational changes, of which DKK 65
million was related to the changes to the
Executive Leadership Team announced in
2020.
The employee costs in 2019 included
restructuring costs related to organizational
changes of around DKK 200 million. The
one-o impact in 2019 was partly oset
by reduced employee costs during the
remainder of the year. In addition, changes
to the Executive Leadership Team during
2019 resulted in severance costs of DKK 58
million.
75Novozymes A/S
2.3 Employees (continued)
2020 2019
Average number of employees in the Group 6,099 6,341
Average number of employees who work with R&D 1,411 1,522
Number of employees outside Denmark as a percentage of total number of employees 57% 57%
Part-time employees 282 292
Full-time employees 5,903 5,833
Employees at December 31
ESG
6,185 6,125
Senior management 198 189
Management 1,210 1,136
Professional 1,724 1,711
Administrative 605 579
Skilled workers, laboratory technicians and other technicians 1,249 1,294
Process operators 1,199 1,216
Employees by category
ESG
6,185 6,125
Employee gender distribution2020 (2019)
• Women 38% (38%)
• Men 62% (62%)
Senior management gender distribution2020 (2019)
• Women 33% (31%)
• Men 67% (69%)
Net operating profit after tax
Accounts and performanceNotes
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 calculating 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
calculated as the average of the number of
permanent employees at the end of each
month.
Job categories are dened as follows:
Senior management comprises the CEO,
executive vice presidents, vice presidents
and directors. Management comprises
middle managers and specialists.
Professional comprises employees with
academic backgrounds as well as team
leaders.Process operators comprises
operators and unskilled workers.
ACCOUNTING POLICIES
76Novozymes A/S
2.4 Research and development costs
In 2020, Novozymes launched twelve new
products (2019: nine new products). New
products comprise products with new or
improved characteristics.
In 2020, Novozymes had 963 active patent
families (2019: 951). Active patent families
comprise the number of inventions for which
Novozymes has one or more active patent
applications or active patents at December 31.
DKK million Note 2020 2019
Internal and external research and development costs 576 519
Employee costs 2.3 1,046 1,122
Amortization and impairment losses, intangible assets 3.1 154 170
Depreciation and impairment losses, property, plant and equipment 3.2 161 155
Total research and development costs
I/S
1,937 1,966
As a percentage of revenue 13.8% 13.7%
Net operating profit after tax
Accounts and performanceNotes
Research and development costs primarily
comprise employee costs, internal and
external costs related to the development
of new products and to the ongoing
optimization of production processes
for existing products, and amortization,
depreciation and impairment losses related
to intangible assets and property, plant
and equipment used in the research and
development activities.
Research and development costs are
expensed as incurred unless the criteria for
capitalization are deemed to have been met.
Due to signicant uncertainty associated
with the development of new products,
research and development costs are not
capitalized.
Income received from research and
collaboration agreements is recognized in
Other operating income.
ACCOUNTING POLICIES
77Novozymes A/S
2.5 Other operating income, net
In 2020, Other operating income was impacted
by DKK 42 million from the contingent
consideration relating to the divestment
of the pharma-related royalty. Contingent
consideration has been recognized, where
entitlement has been obtained due to
completion of patent registrations.
In 2019, a net gain of DKK 194 million related
to the divestment of the pharma-related royalty
was recognized. The net gain comprised the
selling price less contingent consideration,
transaction costs and the disposed goodwill.
Furthermore, other operating income was
signicantly impacted by the termination of
The BioAg Alliance at a net gain of DKK 300
million. The net gain mainly comprised the
release of the remaining deferred revenue
of DKK 287 million originating from the
formation of the Alliance. Furthermore, the net
gain comprised the income related to assets
recognized at fair value oset by impairment
losses and transaction costs.
DKK million 2020 2019
Income and grants concerning research projects/
collaborations 9 11
Other secondary income, net 5 15
Net gain from divestment of the pharma-related royalty 42 194
Net gain from termination of The BioAg Alliance - 300
Other operating income, net
I/S
56 520
Accounts and performanceNotes
Net operating profit after tax
Other operating income comprises income
that is not product-related.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
Tax risks
Novozymes operates in many markets via sales
companies and distributors, while production
is located in 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 complicated area and
entails a tax risk,because the transactions are
subject to judgment in each country. The tax
controversy risk for Novozymes is signicantly
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 competent authority level to
increase predictability and to mitigate transfer
pricing risks. Most of the intercompany
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
international transactions for future years.
The methodology is applied for a certain period
based on the fullment of certain terms and
conditions (called critical assumptions). An
APA can be unilateral or bilateral. Novozymes
only enters into bilateral APAs, meaning that
they are negotiated 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 agreeing in advance the arm’s
length pricing and pricing methodology to be
applied to the international transactions.
Novozymes has entered into bilateral APAs
with the tax authorities in the countries
where internal transactions are most
signicant. Among APA covered transactions
are group internal transactions between
Denmark and the US, 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 companies are jointly and individually
liable for the joint taxation liability. Any
subsequent adjustments 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.
Tax in the income statement
Transfer of intellectual property from
Switzerland to Denmark had a positive impact
on the eective tax rate of 2.9% in 2020 (2019:
2.9%). This is recognized in Dierence in
foreign tax rates.
In 2019, Novozymes had a positive impact
from uncertain tax positions related to APAs,
recognized in Other adjustments.
78Novozymes A/S
2.6 Tax
Net operating profit after tax
Accounts and performanceNotes
Tax in the income statement
DKK million 2020 2019
Tax payable on net prot (817) (894)
Change in deferred tax 144 262
Prior-year adjustments - current tax 98 21
Prior-year adjustments - deferred tax (120) (33)
Tax in the income statement
I/S
(695) (644)
Calculation of eective tax rate:
Corporate tax rate in Denmark (22.0)% (22.0)%
Non-taxable income less non-deductible expenses 0.2% 0.6%
Dierence in foreign tax rates 2.5% 2.6%
Other adjustments (0.4)% 1.8%
Eective tax rate (19.7)% (17.0)%
79Novozymes A/S
2.6 Tax (continued)
The tax value of the unrecognized share of tax
loss carry-forwards, tax credits, etc. that do
not expire amounted to DKK 25 million (2019:
DKK20 million).
Deferred tax
Deferred tax assets Deferred tax liabilities
DKK million 2020 2019 2020 2019
Intangible assets and property, plant and equipment 1,091 947 (1,479) (1,265)
Inventories 357 427 (179) (197)
Tax loss carry-forwards 41 42 - -
Stock options 82 109 - -
Other 284 274 (62) (55)
1,855 1,799 (1,720) (1,517)
Osetting items (516) (638) 516 638
Deferred tax at December 31
B/S
1,339 1,161 (1,204) (879)
Net operating profit after tax
Accounts and performanceNotes
As the Group operates across many
dierent 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.
Payments in respect of tax liabilities for an
accounting period result from payments on
account and on the nal resolution of open
items. As a result, there may be substantial
dierences between the tax charge in the
consolidated income statement and actual
tax payments.
CRITICAL ACCOUNTING ESTIMATES
AND JUDGMENTS
DKKmillion 2020 2019
Deferred tax at January 1 282 46
Currency translation adjustments (35) 2
Eect of business acquisitions (80) -
Tax related to the income statement 24 229
Tax on shareholders’ equity items (56) 5
Deferred tax at December 31 135 282
Deferred tax assets
B/S
1,339 1,161
Deferred tax liabilities
B/S
(1,204) (879)
Deferred tax at December 31 135 282
80Novozymes A/S
2.6 Tax (continued)
Tax receivables and payables
DKKmillion 2020 2019
Tax payables, net, at January 1 (158) (401)
Currency translation adjustments (14) (2)
Tax related to the income statement (719) (872)
Tax on shareholders’ equity items 64 1
Tax paid for the current year, net 951 1,116
Tax payables, net, at December31 124 (158)
Tax receivables
B/S
460 273
Tax payables
B/S
(336) (431)
Tax payables, net, at December31 124 (158)
Of which due within 12 months 25 (32)
Of which due aer more than 12 months 99 (126)
Tax payables, net, at December31 124 (158)
Corporate income taxes paid are specied as follows:
Income taxes paid in Denmark 593 701
Income taxes paid outside Denmark 358 415
Total income taxes paid 951 1,116
Net operating profit after tax
Accounts and performanceNotes
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 Shareholders’ 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
temporary dierences between the carrying
amount and the tax base of assets and
liabilities. No deferred tax is recognized for
goodwill, 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
current tax rules and at the tax rate
expected to be in force on elimination
of temporary dierences. Changes in
deferred tax due to tax rate changes are
recognized in the income statement, unless
they relate to items recognized either in
Other comprehensive income or directly in
Shareholders’ equity.
ACCOUNTING POLICIES
81Novozymes A/S
2.7 Earnings per share
DKK million 2020 2019
Net prot for the year 2,826 3,155
Less net prot attributable to non-controlling interests (1) (1)
Net prot attributable to the shareholders in Novozymes A/S 2,825 3,154
Average number of shares
Weighted average number of shares in circulation 280,427,908 285,110,290
Average dilutive eect of outstanding stock options and stock awards 1,595,499 1,441,008
Average number of diluted shares 282,023,407 286,551,298
Earnings per share DKK 10.07 DKK 11.06
Earnings per share, diluted DKK 10.02 DKK 11.01
Net operating profit after tax
Accounts and performanceNotes
Earnings per share is calculated as net prot
attributable to shareholders in Novozymes
A/S divided by the average number of
shares in circulation.
Diluted earnings per share is calculated
as net prot attributable to shareholders
in Novozymes A/S divided by the average
number of shares in circulation, including
the dilutive eect of stock options “in the
money”.
ACCOUNTING POLICIES
82Novozymes A/S
Invested
capital
3
ROIC
NOPAT
EBIT
Tax
NWC
Invested
capital
excl. NWC
Invested
capital
Invested capital
DKK million Note 2020 2019
Intangible assets 3.1 2,554 1,926
Property, plant and equipment 3.2 9,612 10,212
Investments in associates 33 37
Net working capital (see Net working capital section) 2,901 3,478
Financial assets, non-interest-bearing 119 15
Provisions 3.4 (205) (243)
Contingent consideration 3.5 (146) -
Derivatives (33) (42)
Tax, net 259 124
Invested capital 15,094 15,507
Average invested capital 15,301 15,038
Accounts and performanceNotes
936
263
18.9%
Net investments excl. acquisitions
down from DKK 991 million in 2019
to DKK million
Increase in average invested
capital of DKK million
ROIC down from 21.1% in 2019 to
Impairment
In 2020, an impairment loss of DKK 32 million
on patents was recognized and included in
Research and development cost. The impaired
asset was part of a project that has been
terminated, and the asset has been fully
written o.
Impairment test of goodwill
Novozymes has one cash-generating unit
(CGU). Since 2016, Management had identied
two CGUs: Novozymes’ main activities and the
Biopharma CGU.With the divestment of
the pharma-related royalty, and thereby the
remaining activity within the Biopharma CGU
in April 2019, only one CGU remained.
As the market value of Novozymes is
signicantly higher than its equity, no further
key assumptions are used to determine
whether impairment of goodwill exists (2019:
no impairment).
83Novozymes A/S
3.1 Intangible assets and impairment test of goodwill
Invested capital
Accounts and performanceNotes
Management assesses the risk of
impairment of the Group’s intangible assets.
This requires judgment in relation to the
identication of cash-generating units
(CGUs) and the underlying assumptions in
the Group’s impairment model.
If there is any indication of impairment,
value in use is estimated and compared
with the carrying amount. The calculation
of value in use is based on the discounted
cash ow method using estimates of future
cash ows from the continuing use. The
key parameters are the expected revenue
streams and the rate used to discount the
cash ows.
As a consequence of the termination of The
BioAg Alliance in 2019, intellectual property
from The BioAg Alliance was recognized at
fair value. Measuring the fair value of these
assets required Management’s assessment
of business plans for the individual assets.
The key parameters were expected cash
ows and the WACC used to discount the
cash ows.
CRITICAL ACCOUNTING ESTIMATES
AND JUDGMENTS
DKK million Goodwill
Acquired patents,
trademarks,
licenses and
know-how, etc.
Completed IT
development
projects
IT development
projects in
progress Total
Cost at January 1, 2020 965 2,648 664 29 4,306
Currency translation adjustments (25) (26) (1) - (52)
Additions from business acquisitions 158 639 - - 797
Additions during the year - 2 30 114 146
Disposals during the year - (28) (7) - (35)
Transfers to/(from) other items - - 59 (59) -
Cost at December 31, 2020 1,098 3,235 745 84 5,162
Amortization and impairment losses at January 1,
2020 (1,905) (475) (2,380)
Currency translation adjustments 20 1 21
Amortization during the year (179) (73) (252)
Impairment losses (32) - (32)
Disposals during the year 28 7 35
Amortization and impairment losses at December 31,
2020 (2,068) (540) (2,608)
Carrying amount at December 31, 2020
B/S
1,098 1,167 205 84 2,554
84Novozymes A/S
3.1 Intangible assets and impairment test of goodwill (continued)
Due to the termination of The BioAg Alliance,
intellectual property from The BioAg Alliance
has been transferred to Novozymes free of
charge. These assets have been recognized at
fair value amounting to DKK 95 million and the
corresponding income is recognized in Other
operating income.
The goodwill disposal is related to the
divestment of the pharma-related royalty.
Impairment
In 2019, impairment losses of DKK 71 million
were recognized on two specic assets. As
theseare related to the termination of
The BioAg Alliance, the impairment losses are
recognized and included in Other operating
income.
The impairment losses were the result of
impairment tests performed on assets where
the termination of The BioAg Alliance has
resulted in reduced sales projections for the
assets in question. The cash ow used to test
one of the assets for impairment was based
on business plans for the period 2019-2025,
and the terminal value used was based on
the expected lifetime and cash ow over that
period. For the other impaired asset, the cash
ow ceased in 2019 with the termination of
The BioAg Alliance.
A pre-tax WACC of 7% was used to calculate
the discounted cash ows.
DKK million Goodwill
Acquired patents,
trademarks,
licenses and
know-how, etc.
Completed IT
development
projects
IT development
projects in
progress Total
Cost at January 1, 2019 1,086 2,942 533 59 4,620
Currency translation adjustments 2 2 - - 4
Additions during the year - 129 47 54 230
Disposals during the year (123) (425) - - (548)
Transfers to/(from) other items - - 84 (84) -
Cost at December 31, 2019 965 2,648 664 29 4,306
Amortization and impairment losses at January 1,
2019 (2,062) (428) (2,490)
Currency translation adjustments (1) - (1)
Amortization during the year (163) (47) (210)
Impairment losses (71) - (71)
Disposals during the year 392 - 392
Amortization and impairment losses at December 31,
2019 (1,905) (475) (2,380)
Carrying amount at December 31, 2019
B/S
965 743 189 29 1,926
Recognition of amortization and impairment losses by
function 2020 (2019)
DKK million
• Cost of goods sold 82 (82)
• Sales and distribution 14 (3)
• Research and development 154 (170)
• Administration 34 (26)
Invested capital
Accounts and performanceNotes
85Novozymes A/S
3.1 Intangible assets and impairment test of goodwill (continued)
Invested capital
Accounts and performanceNotes
Intangible assets other than goodwill
are measured at cost less accumulated
amortization and impairment losses.
Goodwill and IT development projects in
progress are not subject to amortization.
Costs associated with large IT projects for
the development of soware 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
nite-lived assets, as follows:
• Completed IT development projects
are amortized over their useful lives. IT
development assets are amortized over a
period of3-5 years
• Acquired patents, trademarks, licenses
and know-how 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 agreement period. Recognized
patents, trademarks, licenses and know-
how are amortized over a period of 7-15
years
Expected useful lives are reassessed
regularly.
The Group regularly reviews the carrying
amounts of its nite-lived intangible assets
to determine whether there is an indication
of an impairment loss. 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 estimates underlying the
impairment calculation.
Goodwill is tested for impairment annually
or whenever there is an indication that the
asset may be impaired.
ACCOUNTING POLICIES
Capitalized interest and pledges
Interestof DKK 1 million(2019: DKK 2 million)
was capitalized under Additions during the
year and included as Investing activities in the
statement of cash ows. Capitalization rate:
0.53% (2019: 0.9%).
Land and buildings with a carrying amount of
DKK 1,516 million (2019: DKK 1,526 million)
were pledged as securityto credit institutions.
The mortgage loans expire in 2029 and 2039.
Impairment
No impairment losses on property, plant and
equipment were recognized in 2020.
86Novozymes A/S
3.2 Property, plant and equipment
Invested capital
Recognitionofdepreciation and impairment
lossesbyfunction2020 (2019)
DKK million
• Cost of goods sold 712 (713)
• Salesanddistribution 30 (39)
• Researchanddevelopment 161 (155)
• Administration 79 (65)
Accounts and performanceNotes
DKK million
Land and
buildings
Plant and
machinery Other equipment
Assets under
construction and
prepayments Total
Cost at January 1, 2020 7,046 11,176 2,380 662 21,264
Currency translation adjustments (279) (447) (98) (29) (853)
Additions from business acquisitions - - 1 - 1
Additions during the year 146 148 131 427 852
Disposals during the year (32) (55) (128) - (215)
Transfers to/(from) other items 105 195 78 (378) -
Cost at December 31, 2020 6,986 11,017 2,364 682 21,049
Depreciation and impairment losses at January 1,
2020 (2,990) (6,675) (1,387) (11,052)
Currency translation adjustments 113 239 58 410
Depreciation for the year (280) (492) (210) (982)
Disposals during the year 24 46 117 187
Transfers to/(from) other items - 1 (1) -
Depreciation and impairment losses at December 31,
2020 (3,133) (6,881) (1,423) (11,437)
Carrying amount at December 31, 2020
B/S
3,853 4,136 941 682 9,612
87Novozymes A/S
The implementation of IFRS 16 as of January
1, 2019, resulted in an increase in Property,
plant and equipment of DKK 616 million. Refer
to Note 3.3 for additional disclosures relating
to leases.
Depreciation relating to leases in 2019
amounted to DKK 124 million.
Impairment
An ongoing production-related construction
project was abandoned in 2019. This led to
an expense of DKK 33 million, which was
recognized in Cost of goods sold.
Buildings expected to be sold within 12 months
were written down to the expected selling price
less transaction costs before being transferred
to Assets held for sale. Buildings amounting to
DKK 62 million were transferred to Assets held
for sale. An impairment loss ofDKK 15million
wasrecognized in Sales and distribution costs
and Administrative costs at DKK 4 million and
DKK 11 million respectively.
3.2 Property, plant and equipment (continued)
Invested capital
Accounts and performanceNotes
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 in those
assets. If any such indication exists,
the recoverable amount of the asset is
estimated in order to determine the extent
of any impairment loss. If the recoverable
amount of an asset is estimated to be
lower than its carrying 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
DKK million
Land and
buildings
Plant and
machinery
Other
equipment
Assets under
construction and
prepayments Total
Cost at January 1, 2019 5,694 10,645 1,846 1,848 20,033
Lease assets at January 1, 2019 412 12 192 - 616
Currency translation adjustments 59 99 19 8 185
Additions during the year 127 184 215 383 909
Disposals during the year (41) (71) (61) (33) (206)
Transfer to assets held for sale (273) - - - (273)
Transfers to/(from) other items 1,068 307 169 (1,544) -
Cost at December 31, 2019 7,046 11,176 2,380 662 21,264
Depreciation and impairment losses at January 1,
2019 (2,915) (6,193) (1,227) (10,335)
Currency translation adjustments (22) (44) (9) (75)
Depreciation for the year (264) (504) (189) (957)
Impairment losses
(15) - -
(15)
Disposals during year 15 64 40 119
Transfer to assets held for sale 211 - - 211
Transfers to/(from) other items - 2 (2) -
Depreciation and impairment losses at December 31,
2019 (2,990) (6,675) (1,387) (11,052)
Carrying amount at December 31, 2019
B/S
4,056 4,501 993 662 10,212
88Novozymes A/S
3.3 Leases
Invested capital
Accounts and performanceNotes
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 initially measured at the present value
of future lease payments, plus the cost of
obligations to refurbish the asset. Payments
include xed 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.
The 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. The 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
• Equipment and company cars: 1-10 years
Short-term leases and leases of low value
are recognized as expenses in the income
statement on a straight-line basis over the
lease term.
Novozymes’ portfolio of leases covers leases
of land, buildings and other equipment such
as cars and transportation containers.
Lease liabilities
Lease liabilities are initially recognized at
the present value of future lease payments
including 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
borrowing rate in the countries in which
Novozymes operates. Novozymes applies a
single 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 modied, the lease
liability is remeasured. For building leases,
lease terms are estimated taking the size
of the building and its strategic importance
into consideration. Novozymes has entered
into several 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 reassessed at
each reporting date. The estimated lease
terms for such contracts do not exceed 12
years.
ACCOUNTING POLICIES
DKK million 2020 2019
Land and buildings 332 397
Plant and machinery 98 102
Other equipment 114 155
Carrying amount of lease assets 544 654
Additions to the lease assets during 2020 amounted to DKK58 million (2019: DKK 47 million).
DKK million 2020 2019
Lease liabilities
Less than 1 year 142 165
Between 1 and 5 years 299 307
More than 5 years 180 238
Undiscounted lease liabilities at December 31 621 710
DKK million 2020 2019
Amounts recognized in the income statement
Interest on lease liabilities 24 28
Depreciation of lease assets per asset class
Land and buildings 67 68
Plant and machinery 5 5
Other equipment 53 51
Depreciation of lease assets 125 124
Amounts recognized in the statement of cash ows
Total cash outow for leases 135 136
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liabilities 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 of these based on a current
evaluation of the outcomes. The ongoing cases
are expected to be nalized in 2021-2022.
InManagement’s opinion, the outcomes of
these cases are not expected togive rise to
any signicant losses beyond the amounts
provided forat December 31, 2020.
In 2019, Novozymes settled a long-standing
patent dispute, and as a result Novozymes paid
DKK 65 million to the counterpart, of which
DKK 31 million was provided for in previous
years.
Other obligations include other long-term
employee benets and other contractual
obligations.
Other obligations mainly relates to the
divestment of the pharma-related royalty, for
which part of the selling price received must
be repaid if certain patent registrations are not
obtained by 2021. A number of registrations
were obtained in2020.The amount potentially
to be repaid has been reduced by DKK 42
million.
Other long-term employee benets account
for only a minor amount, asthe majorityof
Novozymes’ pension plans are dened
contribution plans, covering approximately
99% ofemployees. These obligations are
mainly expected to be incurred over a relatively
long period of time.
In 2019, DKK 40 million in other obligations
was utilized as a consequence of the
termination of The BioAg Alliance.
89Novozymes A/S
3.4 Provisions
Invested capital
Accounts and performanceNotes
Provisions are recognized where a legal or
constructive obligation has beenincurred
as a result of past events and it is probable
that it will lead to an outow of nancial
resources. Provisions are measured at the
present value of the expected expenditure
required to settle the obligation.
ACCOUNTING POLICIES
2020 2019
DKKmillion
Dismantlingand
restoration
Legal and other
obligations Total
Dismantlingand
restoration
Legal and other
obligations Total
Provisions at January 1 83 160 243 82 147 229
Currency translation adjustments (4) (8) (12) 1 1 2
Additions during the year - 43 43 - 168 168
Reversals during the year (15) (48) (63) - (19) (19)
Utilization during the year - (6) (6) - (137) (137)
Provisions at December 31 64 141 205 83 160 243
Recognized in the balance sheet
as follows:
Non-current
B/S
37 78 115 25 90 115
Current
B/S
27 63 90 58 70 128
Provisions at December 31 64 141 205 83 160 243
The following valuation techniques have
been applied in the fair value assessment of
signicant assets acquired:
• Technology; The Multi-period Excess
Earnings Method (MEEM) has been applied
• Brands; The Relief from Royalty (RfR)
method has been applied
• Customer relationships; An allowed margin
approach has been applied
90Novozymes A/S
3.5 Business acquisitions
Invested capital
Accounts and performanceNotes
On acquisition of companies, the
identiable assets acquired and the
liabilities and contingent 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 contingent
consideration arrangement.
Goodwill may subsequently be adjusted
for changes in the fair value of the
consideration transferred and/or changes
in the fair value of the identiable net
assets acquired until 12 months aer
the acquisition date, to the extent such
changes relate to facts and circumstances
present at the acquisition date. Acquired
companies are consolidated from the date
of acquisition. Acquisition-related costs are
expensed as incurred.
ACCOUNTING POLICIES
On June 25, 2020, Novozymes acquired
all voting shares in PrecisionBiotics Group
Limited.
PrecisionBiotics Group holds a leading
position within probiotics for human gut
health and is well positioned with several
clinically-backed products already on the
market.PrecisionBiotics Group has strong
expertise within clinical development,
upscaling and commercialization and is well
situated in Cork, Ireland, home to a leading
academic society within human gut health.
The acquisition of PrecisionBiotics Group
will advance Novozymes’ activities in the
area of biological solutions for human oral
and gut health - one of the growth pillars in
the strategy; Better business with biology.
Goodwill of DKK 158 million is attributable
to expected synergies with Novozymes’
existing business operations and
technologies within probiotics and enzymes
for human health. The goodwill is not tax
deductible.
The purchase agreement includes a
contingent consideration of up to DKK 298
million. The consideration is contingent
on the achievement of sales and EBITDA
estimates for 2023 and is recognized at the
anticipated fair value of DKK 146 million at
the acquisition date. Fair value is assessed
by using the earn-out from the most
probable sales and EBITDA estimates in
2023 discounted at a 7% discount rate.
Net revenue and prot contributed from
PrecisionBiotics Group to the consolidated
income statement are immaterial for the
reporting period. This would also have
been the case if the acquisition had been
completed on January 1, 2020.
The transaction costs amounted to DKK
20 million and are included in Sales and
distribution costs.
Acquisition in 2020
DKK million PrecisionBiotics Group
The assumed fair value of acquired assets and liabilities is as follows:
Intangible assets excluding goodwill 639
Property, plant and equipment 1
Inventories 5
Trade and other receivables 37
Cash 64
Deferred tax liabilities (80)
Financial and other liabilities (26)
Acquired net assets 640
Purchase price:
Cash 652
Contingent consideration 146
Total purchase price 798
Goodwill 158
Cash ow for acquisition:
Cash payment 652
Less cash and cash equivalents in acquired business (64)
Cash outow for acquisition 588
The fair value and allocation of acquired assets
and liabilities and contingent consideration
are provisional, pending receipt of thenal
valuations.
The following valuation techniques have
been applied in the fair value assessment of
signicant assets acquired:
• Customer relationships; The Multi-period
Excess Earnings Method (MEEM) has been
applied
• Technology; The Relief from Royalty (RfR)
method has been applied
• Brands; The Relief from Royalty (RfR)
method has been applied
91Novozymes A/S
3.5 Business acquisitions (continued)
Invested capital
Accounts and performanceNotes
Fair value measurement of the acquired
assets and liabilities as well as a contingent
consideration requires Management to
make estimates and use assumptions, as
observable market prices are not available.
The determined fair values are associated
with uncertainty and may be subject to
subsequent adjustments.
CRITICAL ACCOUNTING ESTIMATES
AND JUDGMENTS
On January 7, 2021, Novozymes acquired
all voting shares in Microbiome Labs.
Microbiome Labs oers a comprehensive
suite of proprietary probiotic and
microbiome solutions targeting
gastrointestinal, immune, metabolic
and cognitive health. The solutions are
marketed under both the company’sown
supplement brands and in private label
products. The branded products are sold
exclusively through thecompany’s access
to an extensive network of healthcare
practitioners predominately consisting
of medicaldoctors, nutritionists and
naturopaths.
By acquiring Microbiome Labs, Novozymes
adds a broad range of proprietary
microbiome solutions to its human health
activities. The acquisition also creates
an attractive entry point into the North
American probiotics marketaccessed
through the company’s network of
healthcare practitioners. Goodwill of DKK
369 million is attributable to expected
synergies with Novozymes’ existingbusiness
operations and technologies within
probiotics and enzymes for human health.
The goodwill is tax deductible.
The purchase agreement includes a
contingent consideration of up to DKK 825
million. The consideration is contingent on
the achievement ofsales targets for 2022
and is recognized at the anticipated fair
value of DKK 338 million at the acquisition
date. Fair value is assessed by using the
earn-out from the most probable sales
estimates in 2022 discounted at a discount
rate of 8 %.
Revenue and prot contributed from
Microbiome Labs are not included in the
consolidated income statement for 2020.On
a pro forma basis, if the acquisition had
been eective from January 1, 2020
Microbiome Labs would have contributed
DKK ~250 million to revenue and an EBIT
margin slightly lower than Novozymes’ EBIT
margin.
Transaction costs incurred in 2020
amounted to DKK 29 million and are
included in Sales and distribution costs.
Acquisition aer December 31, 2020
DKK million Microbiome Labs
The assumed fair value of acquired assets and liabilities is as follows:
Intangible assets excluding goodwill 718
Property, plant and equipment 8
Inventories 19
Trade and other receivables 14
Cash 13
Financial and other liabilities (46)
Acquired net assets 726
Purchase price:
Cash 757
Contingent consideration 338
Total purchase price 1,095
Goodwill 369
92Novozymes A/S
Net working
capital
4
ROIC
NOPAT
EBIT
Tax
NWC
Invested
capital
excl. NWC
Invested
capital
Net working capital
DKK million Note 2020 2019
Inventories 4.1 2,361 2,613
Trade receivables 4.2 2,549 2,864
Contract assets 4.2 6 243
Other receivables 4.3 252 298
Assets held for sale 4.5 23 62
Trade payables (1,100) (1,117)
Contract liabilities (67) (74)
Other liabilities 4.4 (1,123) (1,411)
Net working capital 2,901 3,478
Average net working capital 3,190 3,123
Accounts and performanceNotes
2,361
20.7%
3,190
Inventories reduced from DKK
2,613 million in 2019 to DKK
million
Net working capital as % of sales
Average net working capital in DKK
million
93Novozymes A/S
4.1 Inventories
Net working capital
Accounts and performanceNotes
Inventories are measured at the lower of
cost determined on a rst-in rst-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
production as well as indirect production
costs such as employee costs, maintenance
and depreciation of plants, etc.
If the expected selling price less any
completion 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
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 when they are
consumed in the customer’s production.
Work in progress and Finished goods
are measured at cost, including indirect
production costs. Indirect production costs
capitalized under inventories amounted
to DKK 811 million at December 31, 2020
(2019: DKK 907 million). 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.
ACCOUNTING POLICIES
CRITICAL ACCOUNTING ESTIMATES
AND JUDGMENTS
DKK million 2020 2019
Raw materials and consumables 353 365
Work in progress 720 821
Finished goods 1,288 1,427
Inventories at December 31
B/S
2,361 2,613
Cost of materials, included under Cost of goods sold 3,248 3,510
Write-downs expensed during the year 109 110
Reversal of write-downs during the year* 48 63
*Part of the reversal of write-downs is attributable to written-down inventory being reused in production.
Trade receivables
Novozymes has collateral of DKK 5 million
(2019: DKK 32 million) held as security for
trade receivables in selected countries.
Contract assets
Contract assets amounted to DKK 6 millionat
December 31, 2020 (2019: DKK 243 million),
and mainly related to theestimated prot split
arising from partnerships that Novozymes has
entered into.
In 2020, changes were made to the BioAg
setup and the partnerships Novozymes has
entered into within BioAg are no longer based
on prot-split agreements. Contract assets
related to BioAg at December 31, 2019 was
DKK 209 million.
The contract assets are initially recognizedas
revenue when goods are delivered to the other
contracting party. When therealized prot split
is invoiced, the contract assets are reclassied
to trade receivables.
No allowance for expected credit losses had
been made for contract assets at December 31,
2020 (2019: no allowance).
94Novozymes A/S
4.2 Trade receivables and contract assets
Net working capital
Accounts and performanceNotes
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 lifetime expected credit losses for
trade receivables isrecognized on initial
recognition.
As the contract assets relate to the
partnerships, the credit risk is based on an
individual assessment.
Trade receivables and contract assets are
written o 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-osfor trade receivables
andcontract assets are recognized in Sales
and distribution costs.
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aecting the
credit risk. The expected loss rates are
updated at each reporting date.
ACCOUNTING POLICIES
CRITICAL ACCOUNTING ESTIMATES
AND JUDGMENTS
DKK million 2020 2019
Trade receivables, gross 2,712 3,022
Allowances (163) (158)
Trade receivables at December 31
B/S
2,549 2,864
Aging of trade receivables, gross:
Up to 30 days 2,516 2,807
Between 30 and 90 days 42 43
More than 90 days 154 172
Trade receivables, gross, at December 31 2,712 3,022
Changes in allowances for trade receivables:
At January 1 158 162
Allowances during the year 19 15
Write-os during the year (3) (4)
Reversed allowances (11) (15)
Allowances at December 31 163 158
95Novozymes A/S
DKK million 2020 2019
Employee costs payable 568 732
Stock-based payment settled in cash 15 16
Deferred income 22 30
Other payables 518 633
Other liabilities at December 31
B/S
1,123 1,411
Recognized in the balance sheet as follows:
Current
B/S
1,123 1,411
Other liabilities at December 31 1,123 1,411
4.3 Other receivables
DKK million 2020 2019
Deposits 29 26
Prepaid expenses 107 102
Other 116 170
Other receivables at December 31 252 298
Recognized in the balance sheet as follows:
Non-current
B/S
40 29
Current
B/S
212 269
Other receivables at December 31 252 298
4.4 Other liabilities
Net working capital
Accounts and performanceNotes
Assets held for sale comprises buildings that
are expected to be sold within the next 12
months. One building was sold in 2020, and an
agreement to sell another building in 2021 was
signed.
96Novozymes A/S
4.5 Assets held for sale
Net working capital
Accounts and performanceNotes
Non-current assets are classied 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
DKK million 2020 2019
Carrying amount of non-current assets held for sale:
Land and buildings 23 62
Total
B/S
23 62
97Novozymes A/S
Capital structure
and nancing
5
Capital structure and financing
Net interest-bearing debt
DKK million Note 2020 2019
Cash and cash equivalents (1,181) (711)
Credit institutions 5.3 4,350 4,086
Transitional holiday accrual 5.3 180 58
Non-current lease liabilities 386 453
Current lease liabilities 136 163
Net interest-bearing debt (NIBD) at December 31 3,871 4,049
Accounts and performanceNotes
0.8x
24.9%
1,500
NIBD/EBITDA unchanged at
Return on equity down from 27.5%
to
Novozymes bought back 4.3
million B shares under the stock
buyback program at an aggregate
transaction value of DKK million
98Novozymes A/S
Due to the international nature of Novozymes’
operations, our earnings andnancial
positionare exposed to a number of nancial
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 nancial
risks and the derivatives used to hedge risk.
The Treasury Policy is adjusted on an ongoing
basis to adapt to the market situation, and
contains rules on which derivatives can be
used for hedging, which counterparties can be
used, and the risk prole that is to be applied.
Currency risk
Currency risk arises due to imbalances
between income and costs in each individual
currency and because Novozymes has more
assets than liabilities in foreign currencies in
connection with global operations.
Hedging of currency risk is carried out in the
currencies in which Novozymes has the largest
exposure. Hedging is managed by entering into
derivatives such as forward contracts, currency
options and swaps. Loans and deposits in
foreign currencies are also utilized for hedging
purposes. Hedge eectiveness 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 ow
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 – 2020
The sensitivity analysis below shows the impact
on net prot and other comprehensive income
of a 5% change in DKK versus the key
currencies to which Novozymes was exposed at
December 31, 2020. For other comprehensive
income, the analysis shows the impact on
currency translation of net investments
anddoes not include the impact of cash ow
hedges, as these relate tofuture commercial
transactions.
The sensitivity analysis reects the transaction
and translation risk, and assumes that the
exchange rates change on December 31, 2020,
while all other variables remain constant.
The table shows the eect of an increase in
exchange rates. A decrease in the exchange
rates would have the opposite eect.
Foreign exchange sensitivity – 2021 estimate
Operating prot (EBIT) is exposed to exchange
rate developments, as the eect of hedges
is included in nancial 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
2021 of around DKK 130-160 million (2020:
DKK 130-160 million). A 5% movement in the
EUR/DKK exchange rate would result in a
change in expected EBIT for 2021 of around
DKK 200 million (2020: DKK 200 million).
Of the expected USD cash ows for 2021,
88% have been hedged by forward contracts
at an average rate of DKK 6.41 at the end of
2020. As a result, the impact on net prot from
changes in the USD/DKK exchange rate has
been reduced signicantly compared with the
impact on EBIT.
Foreign exchange analysis 2020 2019
DKKmillion
Increase in
exchange rates
Change in net
prot
Change in other
comprehensive
income
Change in net
prot
Change in other
comprehensive
income
CHF 5.0% - 49 - 54
CNY 5.0% (3) 113 (4) 112
USD 5.0% (2) 227 (1) 250
Other 5.0% - 68 7 70
Total (5) 457 2 486
Capital structure and financing
5.1 Financial risk factors and risk management
Accounts and performanceNotes
99Novozymes A/S
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 xed interest rates.
Hedging of the interest rate risk is managed by
entering into xed-rate loans and interest rate
swaps.
With the current hedging of interest rate
risk, an increase of one percentage point
in the average interest rate on Novozymes’
net interest-bearing debt would have a
negative eect on net prot of DKK 2 million
(2019: negative eect of DKK 10 million). At
December 31, 2020, 69% (2019: 59%) of the
loan portfolio carried xed interest rates.
No loans, credit facilities or other nancial
instruments held by Novozymes are impacted
by the IBOR reform.
Credit risk
Credit risk arises especially for cash and cash
equivalents, derivatives, trade receivables
and contract assets. The credit risk on trade
receivables and contract assets is countered by
thorough, regular analysis based on customer
type, country and specic conditions. The
credit risk on cash and cash equivalents as
well as on derivatives is mitigated by the
Treasury Policy, which limits exposure solely to
counterparties that have an investment-grade
credit rating. Credit risk is calculated on the
basis of net market values and is governed by
the Treasury Policy. Novozymes has entered
into netting agreements (ISDA or similar) with
all the banks used for trading in nancial
instruments, which means that Novozymes’
credit risk is limited to net assets.
At December 31, 2020, the Group considered
its maximum credit risk to be DKK 4,021 million
(2019: DKK 4,051 million), which is the total
of the Group’s nancial assets. At December
31, 2020, the maximum credit risk related to a
single counterparty was DKK 399 million (2019:
DKK 279 million).
Liquidity risk
In connection with the Group’s ongoing
nancing of operations, including renancing,
eorts are made to ensure adequate and
exible liquidity. This is guaranteed by using
committed credit facilities and placing free
funds in deposits, government bonds or ultra-
liquid mortgage bonds in accordance with the
Treasury Policy.
At December 31, 2020, Novozymes’ nancial
resources amounted to DKK 6,522 million
(2019: DKK 4,174 million), consisting of net
cash and cash equivalents, overdra facilities
and undrawn committed credit facilities of DKK
5,344 million, which expire in 2021-2025.
With the exception of debt to credit
institutions, the maturity dates are primarily
within 12 months.
Capital structure
Novozymes favors a conservative balance
which is reected by a target for net interest-
bearing debt of around 1x EBITDA. At
December 31, 2020, the ratio was 0.8x and
thus the capital structure is in line with the
target. The capital structure is mainly managed
using two instruments: 1) Dividend payments
where Novozymes aims for a payout ratio of
around 50%. For 2020, the payout ratio is
expected to be 51.9% which is in line with
the communicated target. 2) Stock buybacks,
where a program of DKK 1,500 million was
executed in 2020. A new program of up to DKK
1,500 million is planned for 2021.
Capital structure and financing
5.1 Financial risk factors and risk management (continued)
Accounts and performanceNotes
100Novozymes A/S
5.2 Financial income and Financial costs
DKK million 2020 2019
Interest income 10 90
Gains on cash ow hedges
15 -
Gains on fair value hedges
1 22
Financial income
I/S
26 112
Interest costs
(39) (58)
Interest on lease liabilities (24) (28)
Losses on cash ow hedges
- (164)
Other nancial costs
(31) (29)
Other foreign exchange losses, net
(51) (63)
Fair value adjustments of cash-settled stock options (8) (5)
Financial costs
I/S
(153) (347)
Financial income/(costs), net (127) (235)
Capital structure and financing
Accounts and performanceNotes
Financial income and Financial costs
comprise interest income and interest costs,
realized and unrealized foreign exchange
gains and losses, as well as fair value
adjustments of cash-settled stock-based
incentive programs, which are oset against
Other liabilities and fair value adjustments
of Other nancial assets.
Total interest income and costs is measured
at amortized cost for nancial 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 ow
hedges that are transferred from Other
comprehensive income on realization of the
hedged item.
ACCOUNTING POLICIES
101Novozymes A/S
Liabilities arising from nancing activities
2020 2019
DKK million Credit institutions Lease liabilities Total Credit institutions Lease liabilities Total
Liabilities from nancing activities at January 1 4,086 616 4,702 3,258 708 3,966
Financing cash ows 272 (111) 161 828 (108) 720
Foreign exchange adjustments (8) (30) (38) - 9 9
Other changes* - 47 47 - 7 7
Total liabilities from nancing activities at
December 31 4,350 522 4,872 4,086 616 4,702
* Other changes include changes in lease liabilities from new or terminated leases and accrued interest expenses which will be presented as operating
cash ows in the statement of cash ows when paid.
Credit institutions – currency 2020 (2019)
DKK million
• EUR 1,658 (1,719)
• Other 2,692 (2,367)
Creditinstitutions – timetomaturity2020(2019)
DKK million
• Lessthan1year 1,106 (1,380)
• Between1and5years 1,912 (1,477)
• Morethan5years 1,332 (1,229)
Loan portfolio – xed or oating interest rate 2020 (2019)
DKK million
• Fixedinterestrate 2,995 (2,396)
• Floatinginterestrate1,355 (1,690)
5.3 Other nancial liabilities
Capital structure and financing
Accounts and performanceNotes
DKK million 2020 2019
Credit institutions 4,350 4,086
Derivatives 33 42
Transitional holiday accrual 180 58
Other nancial liabilities at December 31 4,563 4,186
Recognized in the balance sheet as follows:
Non-current
B/S
3,254 2,775
Current
B/S
1,309 1,411
Other nancial liabilities at December 31 4,563 4,186
102Novozymes A/S
5.4 Derivatives – hedge accounting
Fair value hedges
The table below shows the derivatives the
Group has contracted in order to hedge
currency exposure on nancial assets and
liabilities that give rise to currency adjustments
in the income statement.
2020 2019
DKK million
Contract amount
based on agreed
rates*
Fairvalue
Dec.31
Contract amount
based on agreed
rates*
Fairvalue
Dec.31
Forward exchange contracts
CAD (57) - (25) -
CHF (1,071) (9) (1,153) 9
USD (649) (13) (333) -
INR 364 4 371 -
Other (3) (2) (21) (2)
Fair value hedges at December 31 (1,416) (20) (1,161) 7
* Positive contract amounts represent a sale of the respective currency, and negative amounts represent a purchase.
Capital structure and financing
Accounts and performanceNotes
The forward exchange contracts fall due in
the period January 2021 to July 2021 (2019:
January 2020 to June 2020).
The fair value hedges were 100% eective, as
thegain on forward exchange contracts was
DKK 1 million (2019: gain of DKK 22 million),
compared with a loss on hedged items of DKK
1 million (2019: loss of DKK 22 million).
Hedge accounting consists of positive and
negative fair values of derivatives, which
are recognizedin the balance sheet under
Other nancial assets and Other nancial
liabilities respectively.
Derivatives used for fair value hedges
are measured at fair value on the
reportingdate, and value adjustments are
recognized as Financial income or Financial
costs.
Derivatives used for cash ow 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 ow
hedges and hedges of net investments in
subsidiaries are transferred from Other
comprehensive income on realization of the
hedged item and are recognized as Financial
income or Financial costs.
Derivatives are recognized at the
transaction date.
ACCOUNTING POLICIES
103Novozymes A/S
5.4 Derivatives – hedge accounting (continued)
Cash ow hedges
The table below shows the derivatives that the
Group has contracted to hedge currency and
interest rate exposure in future cash ows.
2020 2019
DKK million
Contract amount
based on agreed
rates*
Fair value
Dec. 31
Contract amount
based on agreed
rates*
Fair value
Dec. 31
Forward exchange contracts
USD 2,020 114 1,764 (24)
2,020 114 1,764 (24)
Interest rate swaps
DKK/DKK – pays xed rate of (0.1075%) / earns variable rate of (0.22%) (2019:
(0.3933%)) 400 1 400 1
DKK/DKK – pays xed rate of 0.595% / earns variable rate of (0.13%) (2019:
(0.27%)) 382 (9) 451 (11)
782 (8) 851 (10)
Cash ow hedges at December 31 2,802 106 2,615 (34)
* Positive contract amounts represent a sale of the respective currency, and negative amounts represent a purchase.
Capital structure and financing
Accounts and performanceNotes
The forward exchange contracts fall due in
the period January 2021 to December 2021
(2019: January 2020 toDecember 2020), and
the swaps fall due in May 2026 and December
2026 (2019: May 2026 and December 2026).
At the end of 2020, the Group had hedged 88%
of expected future cash ows in USD for 2021
at an average rate of DKK 6.41 (2019: 75% of
expected future cash ows in USD for 2020 at
an average rate of DKK 6.53).
104Novozymes A/S
5.5 Common stock and treasury stock
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 maintains that this is the best way to
safeguard Novozymes’ long-term development
to the benet 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 2020, Novozymes canceled 6 million
treasury shares, reducing the common stock to
285 million shares.
2020 2019
No.
Nominal value
DKK million No.
Nominal value
DKK million
Common stock
A common stock (shares of DKK 2) 53,743,600 107 53,743,600 107
B common stock (shares of DKK 2) 231,256,400 463 237,256,400 475
Common stock at December 31
B/S
285,000,000 570 291,000,000 582
Treasury stock - B stock
Treasury stock at January 1 9,663,317 19 9,405,806 19
Additions during the year 4,278,090 9 6,591,413 13
Disposals during the year (2,266,809) (5) (333,902) (1)
Cancellation of common stock (6,000,000) (12) (6,000,000) (12)
Treasury stock at December 31 5,674,598 11 9,663,317 19
No. 2020 2019
Shares of common stock in circulation
Shares of stock at January 1 281,336,683 287,594,194
Purchase of treasury stock (4,278,090) (6,591,413)
Sale of treasury stock 2,266,809 333,902
Shares of common stock in circulation at December 31 279,325,402 281,336,683
Treasurystock2019
% of common stock
Treasurystock2020
% of common stock
Capital structure and financing
Accounts and performanceNotes
105Novozymes A/S
5.6 Financial assets and liabilities by category
The table below shows the Group’s nancial
assets and nancial liabilities at December 31
by category.
DKK million Note 2020 2019
Trade receivables 4.2 2,549 2,864
Contract assets 4.2 6 243
Other receivables, excl. prepaid expenses 4.3 145 196
Cash and cash equivalents 1,181 711
Financial assets at amortized cost 3,881 4,014
Other nancial assets 21 22
Fair value through prot and loss 21 22
Derivatives 119 15
Fair value through other comprehensive income 119 15
Financial assets 4,021 4,051
Lease liabilities 5.3 (522) (616)
Credit institutions 5.3 (4,350) (4,086)
Trade payables (1,100) (1,117)
Transitional holiday accrual 5.3 (180) (58)
Other payables 4.4 (518) (633)
Financial liabilities at amortized cost (6,670) (6,510)
Contingent consideration 3.5 (146) -
Fair value through prot and loss (146) -
Derivatives 5.3 (33) (42)
Fair value through other comprehensive income (33) (42)
Financial liabilities (6,849) (6,552)
Capital structure and financing
Accounts and performanceNotes
Measurement and fair value hierarchy
All nancial assets and liabilities, except
for derivatives and other nancial assets,
are measured at amortizedcost. The
carrying amounts for these approximate
fair value. Derivatives are measured at fair
value based on observable data (level 2
input) according to the fair valuehierarchy.
The derivatives are nottraded on an
active market based on quoted prices, but
are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 and volatilities.Other nancial
assets and contingent considerations are
measured at fair value based on non-
observable data (level 3 input).There are no
nancial instruments measured at fair value
on the basis of quoted prices (level 1 input).
106Novozymes A/S
Other nancial
notes
This section contains other statutory disclosures
not related to the previous sections.
6
Other financial notes
Accounts and performanceNotes
46
1.0
83
No. of Danish and foreign
subsidiaries in the Group following
the acquisition of PrecisionBiotics
Group
Realized Group audit fee ratio
during 2020
Grant date fair value of options
granted in 2020 in DKK million
107Novozymes A/S
6.1 Management remuneration
General guidelines for the remuneration of
the Board of Directors and the Executive
Leadership Team 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
annual report.
Executive Leadership Team
Remuneration of the Executive Leadership
Team comprises a base salary, pension
contribution, a cash bonus (short-term
incentive program), stock-based incentive
programs (long-term incentive programs)
and other benets (car, telephone, etc.).
The variable components of the total
remuneration (cash bonus and stock-based
incentive programs) are relatively high
compared with the base salary and is subject
to the achievement of individual targets and
Novozymes’ targets for nancial, social and
environmental performance. The annual cash
bonus cannot exceed 9.5 months’ xed base
salary, of which 65% is expected to be payable
at target performance. The stock-based
incentive programs are described in Note 6.2.
Members of the Executive Leadership Team
have contracts ofemployment containing
standard conditions for executive ocers
of Danish listed companies, including the
periods of notice that both parties are required
to give and noncompetition clauses. If an
executive ocer’s contract of employment
is terminated by the company without any
misconduct on the part of the executive ocer,
the executive ocer has a notice period of 12
months. In addition to the notice period, the
executive ocer has a right to termination
compensation of 12 months’ base salary and
pension contributions. However, executive
ocers appointed before 2016 had a right to
compensation of up to two years’ base salary
and pension contributions.
Board of Directors
The remuneration of the Board of Directors
comprises a xed fee and is not based on
incentives.
Changes to the Executive Leadership Team
On February 1, 2020, Ester Baiget joined
Novozymes as new Chief Executive Ocer.
Ester Baiget replaced CEO Peder Holk Nielsen,
who le Novozymes at the end of January
2020. Peder Holk Nielsen’s severance package
was fully expensed in 2019.
In September 2020, Novozymes announced a
change to the organizational structure. As part
of the re-organization, Graziela Chaluppe dos
Santos Malucelli and Claus Crone Fuglsang
joined the Executive Leadership Team,
whileAndrew Fordyce, former Executive Vice
President, Food & Beverages le Novozymes,
and Thomas Videbæk, Executive Vice
President and COO, will leave the company
during 2021. Thomas Videbæk will act as
interim EVP for People & Organization,
Sustainability and Branding, as well as EVP
Strategy & Business Transformation.
The severance packages of Andrew Fordyce
and Thomas Videbæk, totaling DKK 61 million,
were fully expensed in 2020. The severance
packages consist of salary and bonuses during
the notice period (12 months) as well as
termination compensation (18 and 24 months
respectively), and compensation for not being
part of a stock-based incentive program in
2020-21. Furthermore, the remaining value
of awarded stock and stock options (DKK 4
million) has been expensed.
Other financial notes
Accounts and performanceNotes
2020 2019
Executive Leadership Team Executive Leadership Team
DKK million Board of Directors Registered Non-registered Total Board of Directors Registered Non-registered Total
Salaries and other short-term benets 8 21 18 47 7 20 14 41
Dened contribution plans - 2 2 4 - 5 3 8
Cash bonus - 12 7 19 - 2 1 3
Expensed stock-based incentive programs - 6 9 15 - 7 4 11
Total remuneration 8 41 36 85 7 34 22 63
Compensation for lost incentives 5 - 5 - - -
Severance cost 37 28 65 58 - 58
Additional payments 42 28 70 58 - 58
No. of members at December 31 10 3 4 8 3 3
108Novozymes A/S
Novozymes has established stock-based
incentive 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 programs has been,
and remains, dependent on prot, value-
creation and, in some cases, sustainability
targets being achieved. The exercise price and
the share price of a stock option are identical
at the date of grant.
A new incentive program for the Executive
Leadership Team was established in 2020,
covering the performance period 2020-2022.
The program 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 correspond
to 65% of the maximum stock options and
stock, and extra stock options and extra stock
correspond to 35% of the maximum stock
options and stock. Compared to previous
programs the targets reect an increased
weight on organic sales growth (40%), an
explicit and increased weight on sustainability
targets (20%) and a reduced but still prominent
weight on Economic Prot (40%). The targets
are aligned with the updated strategy and the
business measures for the period 2020-2022.
• If Novozymes reaches the mid-term targets
for 2020-2022 for sales growth and economic
prot and on all four measures for the
sustainability targets, then the target stock
options and the target stock will be granted.
Extra stock options and extra stocks will not
be granted.
• If Novozymes manages to outperform
compared to the mid-term targets, some or
all of the extra stock options and extra stock
may be granted.
• If Novozymes does not meet the mid-term
targets for 2020-2022, then none or only
part of the target stock options and 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.
The total target-level fair value of the program
at the date of grant was approximately DKK 40
million. The value of the stock will be expensed
over the three-year qualifying period (2020-
2022) and will be released in 2023. The stock
options have a vesting period of four years,
followed by an exercise period of ve years.
The fair value of the stock options will be
expensed over the four-year vesting period.
Furthermore, a new program was established
in 2020 for vice presidents and directors
covering the performance period 2020-2022
(195 vice presidents and directors). The total
target level fair value at grant date was 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 2023.
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.
For other employees, a new stock option-based
incentive program was established in 2020
covering the performance period 2020-2022.
The employee program follows the same
requirements and targets as the program
for the Executive Leadership Team and the
program for vice presidents and directors.
The Executive Leadership Team and other
senior management, who are already included
in an existing incentive program, are excluded
from this new program. In total, approximately
5,700 employees will be covered by the
program. The awarded stock options have a
vesting period of four years, aer which there
is an exercise period of ve years. The target
level value of the program is approximately
DKK 40 million.
In previous years, stock option programs
were established for all or selected groups of
employees, conferring the right to purchase
one share per stock option. Allocations were
made based on each individual employee’s
base salary and the achievement of a series
of business targets – both nancial and
nonnancial – set by the Board of Directors
for each year. The stock options have a vesting
period of three to four years, followed by
an exercise period of ve years. In order to
exercise the options, the employee must still
be employed at the exercise date. This does
not apply to persons who have retired, taken
voluntary early retirement or been given notice.
Other financial notes
6.2 Stock-based payment
Accounts and performanceNotes
109Novozymes A/S
6.2 Stock-based payment (continued)
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, 2020 1,882,907 3,902,302 1,756,819 7,542,028 267
Change in Management (874,904) 874,904 - -
Granted
1
269,942 553,482 877,336 1,700,760 351 49 83
Exercised
2
(280,434) (1,218,182) (568,307) (2,066,923) 260
Forfeited - (21,400) (1,948) (23,348) 276
Expired - - (9,246) (9,246) 279
OutstandingatDecember31, 2020 997,511 4,091,106 2,054,654 7,143,271 289
OutstandingatJanuary1, 2019 1,934,249 4,165,211 1,871,253 7,970,713 266
Granted (62,626) 62,626 - -
Allocation adjustment 602,535 1,102,730 - 1,705,265 275 40 69
Exercised (591,251) (1,131,136) - (1,722,387) 275
Forfeited - (269,842) (78,703) (348,545) 227
Expired - (27,287) (35,731) (63,018) 277
OutstandingatDecember31, 2019 1,882,907 3,902,302 1,756,819 7,542,028 267
Number of exercisable options at December 31, 2020 2,936,359 266
Number of exercisable options at December 31, 2019 3,215,513
258
1. The allocation of stock options for 2020-2022 will be adjusted in January 2023 based on the cumulative level of target achievement for the period.
2. The weighted average share price for stock options exercised during 2020 was DKK369 (2019: DKK 316).
Other financial notes
Accounts and performanceNotes
2020 2019
Remaining term to
maturity of up to
ve years
Remaining term to
maturity of over
ve years Total
Remaining term to
maturity of up to
ve years
Remaining term to
maturity of over
ve years Total
Stock options outstanding No. 3,727,217 3,416,054 7,143,271 5,015,210 2,526,818 7,542,028
Weighted average term to maturity Years 3 7 5 4 7 5
Range of exercise prices DKK 178-317 275-351 178-351 160-317 249-335 160-335
Average exercise price DKK 263 318 289 264 275 267
110Novozymes A/S
6.2 Stock-based payment (continued)
During 2020, DKK 54 million arising from
stock-based payment was recognized in the
income statement (2019: DKK 46 million), DKK
53 million of which was from equity-settled
programs (2019: DKK 45 million) and DKK 1
million was from cash-settled programs (2019:
DKK 1 million).
Most programs are equity settled, and no
liability 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 liability of DKK
15 million was recognized for this in 2020
(2019: DKK 16 million). The intrinsic value of
exercisable cash-settled programs in 2020 was
DKK 13 million (2019: DKK 14 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 signicant assumptions:
2020 2019
Expected future dividends per share DKK 39.6 37.4
Volatility % 22.1 23.2
Annual risk-free interest rate % (0.6) 0.0
Weighted average share price at grant date DKK 351 275
Other financial notes
Accounts and performanceNotes
Furthermore, the options are assumed to be
exercised two years aer the vesting period,
on average, or at the option’s expiry date if this
is 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.
Stock awards
The stock allocated under the three-year
programs is stock awards. The majority of
the stocks was allocated in 2017. In 2020,
108,242 stock awards with a fair value of DKK
38 million were granted to new employees
enrolled in the programs (2019: DKK 3 million).
The total number of outstanding stock awards
at December 31, 2020 was 108,242 (2019:
307,262). The fair value of these at December
31, 2020 was DKK 38 million (2019: DKK 100
million), which will be expensed over the three-
year period (2020-2022).
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 employees are entitled
or expected to be entitled is recognized.
The value of equity-settled programs is
recognized in Shareholders’ equity. The
value of cash-settled programs, which are
recognized as Other liabilities, is adjusted
to fair value at the end of each reporting
period, and the subsequent adjustment is
recognized in the income statement under
Financial income or Financial costs.
ACCOUNTING POLICIES
111Novozymes A/S
6.3 Commitments and contingencies
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 signicant eect
on the Group’s nancial position. A liability is
recognized under Provisions where the risk of
a loss on a legal case is considered more likely
than not.
Contract conditions
Several of the partnership contracts to which
Novozymes is a party may be terminated by
the other party in the event of signicant
changes in ownership or control of Novozymes.
Furthermore, a few contracts contain
provisions that restrict Novozymes’ licenses
from using specic forms of technology in such
situations.
Novozymes is committed to increasing
production capacity in Latin America if a
specic customer reaches certain milestones.
The amount required to meet this commitment
cannot be estimated reliably at the moment.
DKKmillion 2020 2019
Other commitments
Contractual obligations to third parties relating to property, plant and equipment 272 200
Other guarantees
Other guarantees and commitments to related companies 21 27
Other guarantees and commitments 293 242
Other financial notes
Accounts and performanceNotes
Novozymes A/S is controlled by Novo Holdings
A/S, domiciled in Hellerup, Denmark, which
holds 72.4% of the votes in Novozymes
A/S. The remaining stock is widely held. The
ultimate parent of the Group is the Novo
Nordisk Foundation (incorporated in Denmark).
In 2020, Novozymes purchased from Novo
Holding 1,530,000 of its own B shares with the
approval of the Board of Directors, at a price
Related parties are considered to be
Novo Holdings A/S and the Novo Nordisk
Foundation, and 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
of DKK 537 million (2019: 1,530,000 B shares
at a price of DKK 475 million). The transactions
were based on the market price.
Group, the NNIT Group and the Chr. Hansen
Group, associates of Novozymes A/S, such as
Microbiogen Pty. Ltd., as well as the Board of
Directors and Executive Leadership Team of
Novozymes A/S together with their immediate
families. Related parties also include
companies where the above persons have
control or joint control.
There were no transactions with related parties
other than the transactions described and
normal remuneration of the Board of Directors
and Executive Leadership Team, which is
presented in Note 6.1.
All agreements relating to these transactions
are based on market price (arm’s length). The
majority of the agreements are renegotiated
regularly. The Group had the following
transactions with related parties:
Rental commitments to related parties at
December 31, 2020 amounted to DKK 13
million, compared with DKK 14 million at
December 31, 2019.
112Novozymes A/S
6.4 Related party transactions
Other financial notes
Accounts and performanceNotes
DKK million 2020 2019 DKK million 2020 2019
Novo Holdings A/S Novo Holdings A/S
Sale of services 1 - Receivables - -
The Novo Nordisk Group The Novo Nordisk Group
Sale of goods and materials - 26 Receivables 8 9
Sale of services 72 77 Payables (85) (98)
Purchase of goods and materials (79) (64)
Purchase of services (35) (68)
The NNIT Group The NNIT Group
Purchase of services (43) (27) Payables (14) (7)
The Chr. Hansen Group The Chr. Hansen Group
Sale of goods and materials 69 53 Receivables - 11
Purchase of services (3) (9)
Microbiogen Pty. Ltd. Microbiogen Pty. Ltd.
Purchase of services (30) (15) Payables (7) (4)
113Novozymes A/S
6.5 Fees to statutory auditors
Audit fee policy
It is Novozymes’ policy that the annual fee for
nonaudit servicesprovided by the statutory
auditors should not exceed the annual fee
for statutory audit services measured at
Group level. The Group audit fee ratio may
onlyexceed 1withthe approval of the Audit
Committee.
No such approvals were given in 2020 or 2019.
Implementation of the EU audit reform has
led to restrictions on the nonaudit services
that the auditors elected at the Annual
Shareholders’ Meeting may perform. The fee
for nonaudit services performed for Novozymes
by PricewaterhouseCoopers Statsautoriseret
Revisionspartnerselskab is DKK 3 million
(2019: DKK 2 million) and does not exceed
the 70% CAP. The services comprise audit
of project accounts, tax advisory services
concerning transfer pricing, M&A support
and other general nancial reporting and
tax consultancy. An insignicant service
were performed in relation to local reporting
assistance in a subsidiary.
DKK million 2020 2019
Statutory audit 9 8
Other assurance engagements - -
Tax assurance services 6 4
Other services 3 1
Fees to statutory auditors 18 13
Group audit fee ratio 1.0 0.6
Other financial notes
Accounts and performanceNotes
114Novozymes A/S
6.6 Cash ow
DKK million Note 2020 2019
Non-cash items
Accrued interest income and interest costs 53 (3)
(Gain)/loss on nancial assets, etc., net 9 5
Depreciation, amortization and impairment losses 3.1, 3.2 1,266 1,182
Realized loss and allowances for doubtful trade receivables 20 (1)
Financial (gain)/loss on sale and disposal of assets - 50
Unrealized foreign exchange (gain)/loss 31 10
Tax 2.6 695 644
Stock-based payment 6.2 54 46
Change in provisions 8 (88)
Termination of The BioAg Alliance - (335)
Divestment of the pharma-related royalty (42) (194)
Transitional holiday accrual 122 -
Prot/loss in associates 4 5
Non-cash items 2,220 1,321
Business acquisitions, divestments and purchases of nancial assets
Acquisition of PrecisionBiotics Group 3.5 (588) -
Divestment of the pharma-related royalty - 430
Cash ow from acquisitions, net (588) 430
Additions of intangible assets 3.1 146 230
Intellectual property transferred from The BioAg Alliance 3.1 - (95)
Purchase of intangible assets 146 135
Additions of property, plant and equipment 3.2 852 909
Less additions to lease assets 3.3 (58) (47)
Purchase of property, plant and equipment 794 862
Undrawn committed credit facilities were DKK 5,344 million at December 31, 2020 (2019: DKK 3,758 million), all of which expire in 2021-2025.
Other financial notes
Accounts and performanceNotes
The consolidated statement of cash
ows, which is compiled using the indirect
method, shows cash ows from operating,
investing and nancing activities, and the
Group’s cash and cashequivalents at the
beginning and end of the year.
Cash ow from operating activities
comprises net prot adjustedfor non-
cash items, paid nancial items, corporate
income tax paid and change in working
capital.
Cash ow 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 ow from nancing activities
comprises proceeds fromborrowings,
repayment of principal on interest-bearing
debt, repayment of lease liabilities, payment
of dividends, proceeds 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
115Novozymes A/S
6.8 Group companies
On January 7, 2021, Novozymes acquired all
voting shares in Microbiome Labs. Reference is
made to Note 3.5 for more details.
No other events have occurred aer
the reporting date of importance to the
consolidated nancial statements.
ISO 14001-certied sites. All major companies are also ISO 9001 certied.
Production
Sales and marketing
Research and development
Holding companies, etc.
Activity
Percentage
of shares
owned Activity
Percentage
of shares
owned
Parent Company
Novozymes Deutschland GmbH*, Germany 100
Novozymes A/S, Denmark
Novozymes Hong Kong Ltd., Hong Kong 100
Novozymes South Asia Pvt. Ltd., India 100
Subsidiaries
PrecisionBiotics Group Ltd.*, Ireland 100
Novozymes BioAg S.A., Argentina 100 PrecisionBiotics Ltd., Ireland 100
Novozymes Australia Pty. Ltd.*, Australia 100 Novozymes Italia S.r.l.*, Italy 100
Novozymes Belgium BV*, Belgium 100 Novozymes Japan Ltd.*, Japan 100
Novozymes Latin America Ltda.*, Brazil 100 Novozymes Kenya Ltd.*, Kenya 100
Novozymes BioAg Productos Para Agricultura Ltda., Brazil 100 Novozymes Malaysia Sdn. Bhd.*, Malaysia 100
6.7 Events aer the reporting date
Other financial notes
Accounts and performanceNotes
116Novozymes A/S
Activity
Percentage
of shares
owned Activity
Percentage
of shares
owned
Novozymes BioAg Limited, Canada 100 Novozymes Mexicana, S.A. de C.V.*, Mexico 100
Novozymes Canada Limited, Canada 100 Novozymes Mexico, S.A. de C.V., Mexico 100
Novozymes (China) Biotechnology Co. Ltd., China 100 Novozymes Nederland B.V.*, Netherlands 100
Novozymes (China) Investment Co. Ltd., China 100 Novozymes RUS LLC*, Russia 100
Novozymes (Shenyang) Biologicals Co. Ltd., China 100 Novozymes Singapore Pte. Ltd.*, Singapore 100
Suzhou Hongda Enzyme Co. Ltd., China 96 Novozymes South Africa (Pty) Ltd.*, South Africa 100
Novozymes Bioindustrial A/S*, Denmark 100 Novozymes Korea Limited*, South Korea 100
Novozymes Bioindustrial China A/S*, Denmark 100 Novozymes Spain S.A.*, Spain 100
Novozymes Biopharma DK A/S*, Denmark 100 Novozymes Sweden AB*, Sweden 100
Novozymes BioAg A/S*, Denmark 100 Novozymes Switzerland AG, Switzerland 100
Novozymes France S.A.S.*, France 100 Novozymes Switzerland Holding AG*, Switzerland 100
Novozymes Berlin GmbH, Germany 100 Novozymes (Thailand) Ltd.*, Thailand 100
Novozymes EnzimDis Ticaret Ltd. Sirketi*, Turkey 100
Novozymes UK Ltd.*,**, UK 100 Joint operations/associates
Novozymes BioAg, Inc., USA 100 Grundejerforeningen Smørmosen*, Denmark
Novozymes Biologicals, Inc., USA 100 Grundejerforeningen Hallas Park*, Denmark
Novozymes Blair, Inc., USA 100 Microbiogen PTY Ltd.*, Australia 23.10
Novozymes, Inc., USA 100 Tecnol s.r.l. in liqudiazione (formerly Beta Renewables S.p.A.)*, Italy 9.95
Novozymes North America, Inc., USA 100 MagnaBioAnalytics LLC, USA 19.35
Novozymes US, Inc.*, USA 100
* Owned directly by Novozymes A/S.
** Novozymes A/S has guaranteed the liabilities of Novozymes UK Limited (company number: 1328873)
in order that it qualify for the exemption from preparing individual nancial statements under Section
479A of the Companies Act 2006 in respect of the year ended December 31, 2020.
6.8 Group companies (continued)
Other financial notes
Accounts and performanceNotes
117Novozymes A/S
Environmental
data
We measure our performance in areas where we believe we
have signicant impact on the environment. Monitoring our
environmental data is key to measuring progress against
the ambitious goals we have adopted. We have a high focus
on reducing CO2 emissions from our own operations and
on being more circular in the use of natural resources by
reducing our footprint in other environmental areas like
water, energy, waste and biodiversity.
7
Environmental data
Accounts and performanceNotes
97%
45,000
43%
Percentage of biomass waste
handled in a circular set-up
m
3
of water saved due to water
eciency projects
Renewable energy share of total
energy consumption
118Novozymes A/S
Novozymes’ solutions enable our customers
and end users to reduce their CO
2
emissions
through the application of our products,
and climate action is an integral part of our
business strategy. Climate change also impacts
Novozymes’ supply chain as well as operations,
and it is important we address related risks
through appropriate measures.
Our approach
Novozymes has established an ambitious
climate strategy that drives our approach to
addressing climate-change-related impacts
across our value chain. The Operations,
Supply & Quality function and the Global
Sustainability department are responsible for
driving the climate change action agenda both
within and outside Novozymes.
Climate change poses multiple risks,
transitional as well as physical, to our business
and we have set up an internal process to
manage key climate-related risks.
In addition to our full disclosure to CDP
climate change, we strongly support the
recommendations of the Task Force on Climate
Related Financial Disclosures (TCFD) and are in
the process of its implementation.
Novozymes’ approach to making its operations
less carbon intensive is based on two levers:
implementing various energy eciency
projects and increasing the share of renewable
energy consumption. Our eorts to reduce
operational CO
2
emissions are driven by our
science-based targets. We have committed to
reduce our absolute Scope 1 & 2 CO
2
emissions
by 50% by 2030 (relative to 2018) on our way
to becoming carbon neutral by 2050. We have
also committed to reduce absolute Scope 3
CO
2
emissions from the purchased goods and
services category by 15% by 2030 (relative
to 2018). To drive performance towards
these commitments, we have set mid-term
targets (2020-2022) for reducing absolute CO
2
emissions from operations by 40% by 2022
(relative to 2018). We have also dened annual
internal targets to guide implementation.
Many Novozymes solutions enable our
customers to reduce CO
2
emissions from their
products. Novozymes has committed to help
the world limit global warming increase to 1.5
o
C by saving 60 million tons of CO
2
by enabling
low-carbon fuels in the transport sector in
2022.
Novozymes conducts 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 CO
2
emissions and leverage the positive impact on
climate change made possible by Novozymes’
solutions. To learn more, please nd our
approach to LCA at Novozymes.com.
Also, Novozymes continues to support global
climate action, including through responsible
public advocacy and partnerships. In many
geographies, Novozymes actively supports
policies to promote the use of sustainable, low-
carbon fuels.
See our position paper on climate change at
Novozymes.com
Environmental data
7.1 Climate change
Accounts and performanceNotes
Reported CO
2
emissions comprise scope
1, scope 2 and emissions from outbound
transport of products.
CO
2
from internally generated energy (scope
1) is calculated based on the amount of fuel
consumed, using local emission factors.
CO
2
from externally generated energy (scope
2) is reported in accordance with both
the market-based and the location-based
methods, as dened by the Greenhouse Gas
(GHG) Protocol. The location-based method
assumes zero CO
2
emissions from sourced
renewable energy and uses CO
2
factors
from International Energy Agency (IEA) for
non-renewable energy. The market-based
method uses CO
2
factors from IEA.
Transport-related CO
2
emissions (scope 3)
are calculated based on principles described
in the GHG Protocol. Reported quantities
comprise CO
2
emissions related to transport
from all primary enzyme production sites to
customers where Novozymes pays for the
freight. Transport between production sites
is also included. Transport of raw materials
to a production site is not included. CO
2
emissions generated at external warehouses
are not included. Emissions data are
calculated based on distance and emission
factors from the GHG Protocol.
The environmental impact potentials
for global warming and ozone layer
depletion are calculated on the basis of
data published by the US Environmental
Protection Agency (EPA) and the Montreal
Protocol published by the United Nations
Environment Programme (UNEP).
ACCOUNTING POLICIES
119Novozymes A/S
2020 highlights
In 2020, CO
2
emissions (scope 1 + 2 only)
from our operations decreased by 29% to
234,000 tons from 330,000 tons in 2019.
We also achieved a 46% reduction of our
absolute emissions (scope 1 + 2) compared to
our 2018 baseline, allowing us to achieve our
2022 target well in advance. Apart from the
transition to renewable electricity and green
steam at some of our sites, this reduction was
also inuenced by lower capacity utilization
of our high impact sites in China and North
America, as a result of the COVID-19
pandemic. We have decided not to revise our
2022 target yet as we expect production levels
to normalize.
A breakdown of the operational emissions is
provided in the table.
We began to implement our scope 3 target
to reduce our absolute CO
2
emissions from
purchased goods and services. We are
exploring multiple levers to achieve our target
such as substitution to less CO
2
intensive
materials, and engaging with our suppliers
to drive emission reduction. In 2020, we
developed an accounting methodology for our
scope 3 target, and have also begun to engage
with key suppliers on this.
Novozymes solutions in bioenergy helped the
transport sector save 49 million tons of CO
2
in
2020 by enabling the production of low carbon
fuels.
Going forward, we will continue to explore
renewable energy opportunities for our larger
sites in North America and China. We will
also work on our scope 3 target by driving
supplier engagement and developing emission
reduction plans. Finally, we will continue to
invest in energy eciency and waste-to-energy
opportunities.
Environmental data
Five -yearoperational emissions(CO
2
-eqv.)
1,000 tons
• Scope 2 • Scope 1
7.1 Climate change (continued)
Accounts and performanceNotes
CO
2
-equivalent emissions
1,000 tons 2020 2019
Natural gas 33 35
Gas oil, light fuel oil and diesel oil 4 4
HCFCs 0 1
Scope 1 37 40
District heat 2 11
Electricity 148 203
Steam 47 76
Scope 2 (market-based) 197 290
Scope 1 and 2, Total 234 330
Ship 4 6
Truck 20 17
Air freight 10 12
Scope 3 34 35
Emissions, total
ESG
268 365
Market-based vs. location-based scope 2 emissions
1,000 tons 2020 2019
Scope 2 CO
2
emissions (market-based) 197 290
Scope 2 CO
2
emissions (location-based) 445 415
120Novozymes A/S
Energy is material to Novozymes across
the value chain, as our operations depend
on steam and electricity, while many of our
biosolutions enable downstream users to save
energy in certain applications (e.g. in laundry
and dishwashing detergents and textile
applications) compared with conventional
methods.
Furthermore, our bioenergy solutions enable
the development of low-carbon fuels for
transportation, which represents a signicant
share of the global energy mix.
Our approach
We manage energy in our operations through
a two-pronged approach: reducing energy use
in production by implementing optimization
or energy-saving projects and increasing the
sourcing of renewable energy. Relevant targets
drive our performance in these areas.
Novozymes’ Supply Operations and Sourcing
departments manage and monitor all energy
eciency and renewable energy-sourcing
eorts, and through the RE100 initiative
have committed to source 100% renewable
electricity by 2030.
We also have internal annual targets that guide
our progress towards our 2030 target.
2020 highlights
In 2020, projects driving process optimization
and energy eciency undertaken at our sites
throughout the year resulted in energy savings
of 33,000 GJ. The savings originated from
many projects, including the replacement of
pumps, optimization of ventilation, improved
monitoring enabling optimization of energy
consumption, etc.
On top of the internal energy savings,
Novozymes also has a strategy to produce
energy from waste to local communities.
In 2020, we installed a large heat pump at
our Fuglebakken site in Denmark that will
generate 80,000 GJ annually from excess heat
from our production and to be distributed as
district heating to the city of Copenhagen. This
corresponds to the annual consumption of
more than 2,000 Danish households.
The table provides details of energy consumed
by primary source.
Five-year energy consumption
1,000 GJ
Environmental data
7.2 Energy
Accounts and performanceNotes
Energy consumption by primary source
1,000 GJ 2020 2019
Natural gas 644 656
Biogas 63 70
Gas oil, light fuel oil and diesel oil 39 46
Internally generated energy, total 746 772
Electricity – conventional 806 1,347
Electricity – renewable 1,758 1,315
District heat - conventional 89 187
District heat - renewable 112 -
Steam 964 953
Externally purchased energy, total 3,729 3,802
Energy consumption, total
ESG
4,475 4,574
Energy production from waste 89 86
121Novozymes A/S
This year, we sourced 69% of our electricity
from renewable sources, making progress
towards our 2030 goal. We recognize that in
order to meet our 2050 ambition of becoming
carbon neutral, we will need to also explore
renewable options for energy sources other
than electricity.
In 2020, the share of renewables in our energy
mix increased to 43% from 30% in 2019. This
was possible because we started procuring
renewable electricity at our site in Franklinton
as well as district heat from renewable sources
at our site in Kalundborg.
Going forward, Novozymes will continue to
seek renewable energy opportunities for
all sites in order to reduce its operational
CO
2
footprint and deliver on the 100%
renewable electricity commitment. Novozymes
will also continue to explore energy saving
opportunities at all sites and has allocated
specic budgets for energy eciency and
waste-to-energy initiatives.
Renewable energy sources2020(2019)
• Wind power 51% (70%)
• Solar 26% (0%)
• Hydro 4% (5%)
• Biomass 19% (25%)
Environmental data
7.2 Energy (continued)
Accounts and performanceNotes
Energy consumption includes quantities
consumed both in the production process
and in other areas.
Internally-generated energy is measured
as fuel consumption converted to energy
based on the lower combustion value and
weight by volume, except in the US, where
legal requirements for reporting of CO
2
state
that the higher combustion value is to be
applied. Fuel consumption comprises all
types of fuel used to produce electricity,
heat and steam on site and converted to
energy using factors supplied by utility
providers or local authorities. Fuel for
transportation is not included.
Externally generated energy is the input
to Novozymes of externally generated
electricity, 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
readings, with the exception of steam, which
may be subject to calculation.
The renewable energy percentage is
calculated 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 based on
biomass.
ACCOUNTING POLICIES
122Novozymes A/S
The production of Novozymes’ solutions are
based on the use of freshwater, at dilution
and recovery stages,for example, and
results in wastewater generation. Many of
the raw materials required in our operations
are agriculture-based and need water for
production. At the same time, some of
Novozymes’ existing solutions, specically
in textile and laundry, enable our customers
to reduce water consumption compared
with conventional methods, and improve
wastewater quality by replacing chemicals.
Further, our solutions improve processes in
the wastewater treatment industry. Therefore,
water remains one of our priority focus areas
as it presents both risks and opportunities
across our value chain.
Our approach
Novozymes is committed to ensure water
use that is clean, ecient and respects the
capacity of the planet thereby contributing
to long-term water security for all. Our 2030
ambition on water is to manage water in
balance with local conditions. We have a
short-term target to develop contextual water
management programs for all our key sites by
2022, which will help us focus our eorts in the
regions where it is needed the most and where
we can make the maximum impact. We also
recognize that internal water-related risks are
oen a result of water challenges that exist in
the local water basin and it requires collective
action and eorts beyond our own boundary
to address them eectively. Read more about
our water stewardship approach in our position
paper on water.
In our operations, we focus on improving
water eciency and ensuring compliance with
wastewater discharge regulations at all our
sites to reduce our freshwater consumption
and improve the quality of water that leaves
our boundary.
The wastewater and biomass treatment at our
production sites are given high priority and our
wastewater is treated internally or externally
in biological wastewater treatment systems
before being discharged to a nal destination
point or used in agriculture for irrigation. All
water eciency and wastewater management
eorts are managed by Novozymes’
Operations, Supply and Quality function.
The table provides a breakdown of total water
consumed.
Five-yearwaterconsumption
1,000 m
3
Water by primary source
1,000 m
3
2020 2019
Drinking water 5,473 5,288
Industrial water 2,177 2,214
Steam 348 343
Water, total
ESG
7,998 7,845
Environmental data
7.3 Water
Accounts and performanceNotes
Water 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 consumed 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
discharged by Novozymes or calculated
based on water consumption.
ACCOUNTING POLICIES
123Novozymes A/S
7.3 Water (continued)
2020 highlights
In 2020, we established strong internal and
external engagement to secure successful
results from our long-term water strategy.
We became a proud signatory to the UN
Global Compact’s CEO Water Mandate and
established a partnership with the World Wide
Fund for Nature (WWF). WWF will help us to
develop contextual water programs for our key
sites that will ensure our eorts are focused on
addressing the priority operational and basin
water challenges. This year, we developed
contextual water management programs for
two of our sites in China and have identied
water targets that will help us address water
challenges in and around these sites.
Novozymes has also joined the Science Based
Targets Network’s (SBTN) Freshwater Hub
working group driving the development of
methodology for science-based targets for
water.
The table provides a breakdown of total
wastewater generated in 2020.
Within our operations, we achieved water-
savings of 45,000 m
3
for the year through water
reduction and re-use projects. This year, we
also initiated a large water savings project at
our Tianjin site in China which when completed
will contribute to estimated water savings of
around 150,000 m
3
annually through the re-use
of water for cooling towers and our internal
processes, among other things.
To further expand our water stewardship
eorts in India, Novozymes initiated work
on the ambitious water project ‘NOWO –
Novozymes Water Opulence’ to address
water-scarcity situation in the neighboring
villages near our production site in Patalganga
near Mumbai. The project, which is being
implemented in close collaboration with,
Anarde, a local NGO that aims to raise
the underground water table in the area,
empowers villagers to be self-reliant for
water, and educates them on its ecient and
appropriate use.
Going forward, we will focus on completing the
development of contextual water management
programs for all our key sites and further
expand our water stewardship eorts. At
the same time, we will continue our eorts
to increase water eciency and wastewater
recycling internally to reduce our dependence
on freshwater.
Wastewater by treatment method
1,000 m
3
• Novozymes-treated to external
water recipient
• Novozymes-treated to external
treatment
• Novozymes-treated to irrigation
• Untreated to external treatment
Environmental data
Accounts and performanceNotes
Wastewater treatment
1,000 m
3
2020 2019
Wastewater used for irrigation 662 774
Wastewater discharged 5,809 5,373
Wastewater volume, total
ESG
6,471 6,147
124Novozymes A/S
7.4 Waste
Novozymes supports the transition to a circular
economy through biological solutions which
enable our customers to adopt sustainable
production and consumption practices. At
the same time, we are committed to driving
our own business towards more circularity by
focusing on the reduction, reuse and recycling
of the planet’s limited natural resources.
Circular waste management is a key enabler for
a sustainable future and we are committed to
doing our part.
Our approach
Waste management at Novozymes is managed
through the ‘Production and consumption’
pillar of our strategy, which includes ambitions
and targets on circular waste management.
We aim to have all key materials and waste
managed in circular systems by 2030.
Novozymes has 17 major sites. As waste
management is a complex issue subject to a
diverse set of local regulations and involving
several external service providers, we have
adopted a site-specic management approach.
2020 highlights
Novozymes generated 480,000 tons of total
waste in 2020, of which 465,000 tons was
biomass, compared with 526,000 tons of
total waste in 2019, of which 513,000 tons
was biomass. The majority of the waste was
recovered, and only 5% was sent to landll.
Wasteandby -products2020(2019)
• Recoveredbiomass 93.4% (94.5%)
• Recovered(recycled)non-biomasswaste 1.5% (1.3%)
• Biomasssentforlandll 3.4% (3.0%)
• Non-biomasswastesentforlandll/incineration 1.7% (1.2%)
Biomass
The biomass generated during production
makes up 97% of Novozymes’ total waste. The
biomass is rich in nitrogen and phosphorus,
and the energy can be recovered in biogas
facilities. As part of our strategy, we have a
target of achieving 100% circular management
of our biomass by 2022.
In 2020, 97% of our biomass volume was
handled in a circular set-up with nutrients,
such as nitrogen and phosphorus, being used
in agriculture. The biomass is distributed to
local farmers or used as a raw material for
fertilizer production. A part of the biomass is
also sent through biogas plants to produce
biogas on its organic content prior to being
used in agriculture. In 2020, we secured a new
contract to increase the amount of biomass
to be recovered by local farmers for land
applications.
A breakdown of the total biomass generated is
provided in the table.
Biomass
Biomass wet (actual) Biomass dry matter (excl. water)
1,000 tons 2020 2019 2020 2019
Used in Agriculture 449 497 47 52
Landll 16 16 10 9
Biomass, total
ESG
465 513 57 61
Environmental data
Accounts and performanceNotes
Biomass is measured or calculated based
on volume or weight produced. At each site,
biomass is produced with dierent dry-
matter-to-water ratio. The consolidated dry
matter gure is calculated by measuring of
dry matter content in biomass from each
site multiplied by volume produced at the
same site. Biomass is distributed to local
farmers, biogas plants or supplied as raw
material for fertilizer production by third
parties.
Non-biomass waste is the registered volume
of waste broken down into hazardous
and nonhazardous waste, and by disposal
method. The amount recycled is the
quantity recycled internally or sent to an
external service provider for recycling.
Biomass is not included in the reported
amounts of solid waste.
ACCOUNTING POLICIES
125Novozymes A/S
Non-biomass waste
Our non-biomass waste accounts for 3%
of Novozymes’ total waste and it is further
classied into nonhazardous and hazardous
waste. In 2020, the recycling rate of non-
biomass waste was 48% compared with 52%
in 2019. The remaining 52% of the waste was
sent for landll or incineration.
A breakdown of the total waste generated is
provided in the table.
To pave the way for our long-term circular
ambition, we have a target that, by 2022, all
sites should have programs to reach zero waste
by 2030. To develop local solutions, we are
working actively with local experts and service
providers to explore site-specic opportunities.
In 2020, we developed zero waste programs for
three of our major sites, located in Denmark.
Specically on hazardous waste, in 2020, we
introduced several measures to reduce both
its generation and environmental impact. They
include expansion of our internal recycling
capability, local process improvements and
engagement with local organizations to safely
reuse or recycle specic types of hazardous
waste.
In 2020, we increased our hazardous waste
recycling capacity at two of our major sites.
Due to the planned expansion, we safely
diverted some of the hazardous waste from
incineration in 2019 and we recycled it in 2020
– this explains the increase in the reported
hazardous waste for 2020.
Circular packaging
We are committed to minimizing the impact
of the waste generated by our packaging.
Therefore, by 2022 we will have circular
plans for all our key packaging materials in
key markets. We are working to minimize our
packaging footprint by making our packaging
recyclable, reusable or compostable.
Environmental data
7.4 Waste (continued)
Accounts and performanceNotes
Waste
1,000 tons 2020 2019
Nonhazardous waste
Incineration 2.5 2.3
Landll 4.5 3.1
Recycling (external) 4.2 4.3
Nonhazardous waste, total 11.2 9.7
Hazardous waste
Incineration 0.8 1.0
Landll 0.2 -
Recycling (external) 0.4 0.2
Recycling (internal) 2.7 2.4
Hazardous waste, total 4.1 3.6
Waste, total
ESG
15.3 13.3
126Novozymes A/S
Novozymes’ research and business are based
on bio-innovation. To develop sustainable
solutions and applications for our customers,
we explore nature and take samples of fungi,
bacteria and enzymes among the available
biodiversity. Next, we assess the samples
and optimize applications by means of
biotechnological research.
Our approach
Novozymes’ position paper on industrial
biotechnology describes how industrial
biotechnology and gene technology can
contribute to sustainable development.
Novozymes is committed to sharing its
knowledge about the potential of biology and
industrial biotechnology with the public and
other stakeholders outside of Novozymes.
Novozymes supports a science-based
regulatory framework for products involving
gene editing, operating in compliance with
legislation and following any guidance and
requirements from regulatory authorities
on biotech innovation classication. We are
committed to using scientically-sound tools in
a way that is safe to humans, animals and the
environment.
When we take biological samples in nature, it
is important that we always follow the local
laws of the countries where we operate as
well as complying with globally recognized
principles on the utilization of genetic
resources. We continuously discover new
microbes that are valuable solutions for more
environmentally-friendly industrial processes.
Novozymes’ position paper on biodiversity
articulates how we endorse, acknowledge and
respect the principles of the United Nations
Convention on Biological Diversity and the
complementary Nagoya Protocol on Access
and Benets Sharing. Internal procedures in
our management system ensure that we live up
to our commitments. As an example, we have
established a Nagoya Protocol steering group
which ensures compliance with the protocol
and that internal guidelines are maintained.
We also continuously monitor the global
dialogue and development on biodiversity.
Compliance with environmental norms and
regulations is a high priority for Novozymes
so as to maintain business continuity and the
day-to-day running of operations. Novozymes is
committed to complying with all environmental
regulations at all our sites and maintaining
high standards of environmental management
on various aspects, including pollution
prevention, resource conservation and waste
reduction.
Our approach
Our commitment to environmental compliance
is outlined in Novozymes’ Sustainability
Policy. All activities to ensure environmental
compliance are anchored in the Quality,
Environment & Safety function. Our
Environmental Management System is based
on ISO 14001 certication, and we strive to
minimize instances of non-compliance and
neighbor complaints.
2020 highlights
In 2020, 20 environmental incidents were
registered across our facilities, compared
with 17 in 2019. Most of these were related
to wastewater treatment. Plans for preventive
action for these incidents have been agreed
with the relevant authorities.
Novozymes received ten neighbor complaints
in 2020 compared to seven complaints in 2019.
7.6 Bioethics & biodiversity
Environmental data
7.5 Environmental compliance
Accounts and performanceNotes
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
measurements of spills reported in previous
years are not included, as they are not
indicative of performance during the
reporting year.
Neighbor complaints refers to the number
of registered environmental complaints,
primarily odor and noise related.
ACCOUNTING POLICIES
127Novozymes A/S
Novozymes is committed to ensuring product
safety and stewardship in our operations and
across our value chain. Many of our biological
solutions serve as ingredients in consumer
goods (e.g. in laundry detergents) or are used
for manufacturing consumer products such as
food, textile and paper.
Novozymes’ ambition is tocontinue supplying
safe products and substitute hazardous
substances in its operations using safer
and more sustainable alternatives wherever
possible. Novozymes strives to reduce the risk
of enzyme allergies among employees and
downstream users by promoting adherence to
enzyme safety standards.
Our approach
Product stewardship is an integral part of
Novozymes’ Quality Management System, and
our approach is outlined in the Quality and
Product Safety Policy. Novozymes constantly
strives to reduce the risk of potential harm
to both human health and the environment
during the manufacture, handling and use of
its products. This approach is implemented by
means of many cross-functional teams, and
the primary responsibility rests with Regulatory
Aairs & Product Safety functions. Procedures
ensuring product stewardship are enforced
globally and audited by the independent
external body Bureau Veritas.
Novozymes measures performance in product
stewardship, through internal targets that
guide our progress, particularly in the areas
of product safety and hazardous substance
management. We have also developed a
position on and approach to related topics
such as product information and labeling,
traceability, industrial biotechnology, animal
testing, REACH (Registration, Evaluation,
Authorization and Restriction of Chemicals)
and FIAP (Food Improvement Agents Package).
Our position papers on animal testing and
industrial biotechnology are available at
Novozymes.com.
Novozymes chairs the Enzyme Safety Working
Group, which plays a coordinating role
within The Association of Manufacturers and
Formulators of Enzyme Products (AMFEP) in
the EU. In addition, Novozymes is a co-chair
of the Safety and Sustainability Committee
in Enzyme Trade Association (ETA) in the US.
Through both of these groups, Novozymes
has developed advanced safety standards for
enzyme use.
An annual cross-functional process has
recently been established to explore the
potential phase-out and substitution of
hazardous substances and materials. Every
year, new and existing chemicals are screened
for environmental, health and safety impacts,
followed by risk and feasibility assessments to
determine candidates for potential phase-out.
2020 highlights
Novozymes remains rmly committed to
maintaining high-quality dossiers that
document product safety and transparency
under relevant regulatory schemes such as
REACH and FIAP. With its extensive experience
in responding to increasing global regulatory
requirements, Novozymes worked in 2020 on
developing compliance with new REACH-like
regulations in South Korea, Turkey, UK, India
and other countries. Novozymes also strongly
supports and complies with regulation on the
reduction of chemicals of concern such as
microplastics and 1.4-dioxane.
In 2020, Novozymes established an
internal governance committee to guide
implementation and decisions in the phase-out
of hazardous substances. Within our annual
process cycle, we also identied top candidates
to explore potential phase-outs in 2021.
In 2020, through the AMFEP, Novozymes
published an industry guideline on the ‘Safe
Handling of Enzymes in Pulp and Paper
Manufacturing’ in collaboration with the
Confederation of European Paper Industries.
Furthermore, as a member of the American
Cleaning Institute (ACI), Novozymes took
part in the update of the guideline for ‘Risk
Assessment of Enzyme-Containing Consumer
Products’.
In 2021, we will continue to prioritize product
stewardship practices at Novozymes. One
example is, we will focus on establishing
a systematic follow up on the identied
hazardous substance candidates to explore the
feasibility of phasing them out and developing
appropriate substitution strategies. Another
example of a new initiative in 2021 will be
the development of safety guidelines for the
feed industry in collaboration with the EU
Association of Specialty Feed Ingredients and
their Mixtures (Fefana).
Environmental data
7.7 Product stewardship
Accounts and performanceNotes
128Novozymes A/S
Social and
governance data
We measure our social performance using a number of
indicators in the areas of labor practices & human rights,
occupational health & safety, business ethics, customer
engagement and community engagement. These indicators
enable us to track our progress and respond to risks and
opportunities related to both talent attraction and retention,
and business development.
8
Social and governance data
Accounts and performanceNotes
99%
33%
1.3
Completion of business integrity
training for employees
Women in senior management
Lost-Time Injury frequency (per
million working hours)
129Novozymes A/S
Employees are vital for Novozymes’ growth
and the successful execution of our strategies.
Therefore, it is important for Novozymes to
focus on employee development and diversity
in all operations. Novozymes is responsible
for ensuring that human rights are respected
throughout its value chain.
Our approach
We have adopted a common management
approach and reporting structure for labor
practices and human rights. Our People and
Organization (P&O) function, together with
leaders across Novozymes are responsible for
ensuring equal rights for all employees and
for promoting diversity. We are committed to
ensuring equal opportunities and avoiding
discrimination based on race, religion, gender
or age in our global organization.
In Novozymes, we have a policy for diversity
and equal opportunities, which covers the
entire workforce. Accordingly, the monitoring
and the measures implemented to improve
diversity in Novozymes cover all layers of
management. One of Novozymes’ primary
priorities on the diversity agenda has been
to increase the number of women in senior
management.
Novozymes is committed to providing a work
environment where all individuals can work
together comfortably and productively, free
of any kind of harassment and discrimination.
Novozymes recognizes and respects the right
to form and join associations and to bargain
collectively. Our P&O function works together
with local leadership to facilitate the fulllment
of these fundamental rights in countries with
limited labor legislation.
Novozymes respects human rights as dened
by the UN 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
Women’s Empowerment Principles.
We publish an annual statement under the UK
Modern Slavery Act.
In 2019, we dened targets for 2020-2022
focused on building a culture where our
employees can thrive, grow and perform
to bring out their best. Novozymes aims to
nurture diversity, and to achieve a score of 86
on our diversity index by 2022. The diversity
index is calculated based on gender and
national representation at management and
other job levels. By 2022, we aim to achieve
an 80-point rating on Enable learning in our
employee survey. For the Zymer spirit index,
our target is to achieve a score of 81 by 2022.
2020 highlights
Labor practices
The Enable learning target and excite zymers
target are based on our annual employee
survey. In 2020, in our employee survey, we
achieved a score of 78 points on Enable
learning, and a score of 81 on our Zymer spirit
index. The employee survey is an important
tool that enables us to not only track the
organizational mood but also to make room for
better and more relevant team talks focusing
on how we work together at Novozymes.
These tools are critical to ensuring our success
as a business and for sustaining our reputation
as a great place to work.
We also believe in promoting diversity at work
and this year, for our nurture diversity target,
we achieved 83 on our diversity index, which is
based on gender and nationality.
We are on track to achieving our 2022 targets.
Social and governance data
8.1 Labor practices & human rights
Accounts and performanceNotes
Employee statistics
2020 2019
Rate of employee turnover – retirement % 1.2 1.0
Rate of employee turnover – dismissal % 3.0 5.7
Rate of employee turnover – voluntary % 4.5 6.0
Rate of employee turnover, total % 8.7 12.7
Rate of absence
Senior management, management, professional
and administrative % 1.1 1.2
Skilled workers, laboratory technicians, other
technicians and process operators % 2.8 2.6
All employees
ESG
% 1.9 1.9
Other employee statistics
Average age Years 42.0 42.0
Average seniority Years 10.0 10.1
Number of expatriates No. 19 22
Average training cost spent per employee DKK 3,871 3,351
Costs as percentage of total employee costs % 0.7 0.5
130Novozymes A/S
8.1 Labor practices & human rights (continued)
In 2020, we converted our policy for diversity
and equal opportunities into action by
ensuring that diversity became a design
criterion in our 2020 reorganization. To
increase diversity following our reorganization,
we have initiatives targeting the recruitment
process where we held bias training for
recruiters and developed relevant material
for hiring managers. Further, our local oces
partner with organizations to support diverse
long lists of candidates. Novozymes engages
in forums to learn about and promote
gender equality and this year we focused
on the challenges caused by COVID-19. For
example, we are active in the ‘UN Women’ and
‘Advancing Women in Agriculture Conference’.
Novozymes’ President and CEO Ester Baiget
was invited to ring the bell for Gender Equality
together with UNGC Denmark, Nasdaq
Copenhagen, UN Women and other leaders.
We are continuously tracking the impact of our
initiatives, for example, gender diversity of new
hires and internal transfers, and overall, we
have made progress to ensure gender diversity
in management levels. In 2020, 33% of our
senior management were female.
Novozymes believes that respectful,
professional conduct furthers Novozymes’
mission and is fundamental to a good
workplace. This year, we launched a global
non-discrimination and anti-harassment policy
and company-wide global training for all
employees on these topics.
In 2020, the enrollment of leaders in our
leadership development program ‘‘Lead the
Way’ increased to ~70% from ~57% in 2019.
The program was impacted by COVID-19
as trainings were cancelled, postponed or
changed to virtual sessions, which did not suit
all participants. The rate of employee turnover
decreased to 8.7% from 12.7% in 2019. We
recorded a 1.9% rate of absence, which is in
line with last year. The rate of absence has
been broken down into grouped job categories,
based on whether the work carried out is
primarily oce-based.
Human rights
We conduct regionally focused human rights
impact assessments to identify and assess
human rights risks and impacts in our business
and supplier base. As human rights risks vary
from region to region, this approach enables us
to gain a more comprehensive understanding
of human rights risks, our positioning and the
associated gaps within the respective regions.
In 2020, we conducted the human rights
impact assessment for The Americas. In
the past two years, we have completed
assessments for Europe, Middle East and
Africa (EMEA) region and India. Through these
assessments, we identied the most salient
human rights, and are taking appropriate
measures to mitigate the identied risks and
gaps. Our aim is to complete the assessment
for China in 2021.
Accounts and performanceNotes
Social and governance data
Absence is dened as time lost due toan
employee’s illness, including sick leave, and
occupational injuries and diseases. The rate
of absence is calculated as the number of
registered days of absence as a percentage
of the total number of normal working
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
during thepreceding year (excluding
employees at divested entities transferred to
the acquiring company).
Average age and seniority are calculated as
the sum of employees’ total 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.
Training costs expressthe cost of external
training courses and seminars, translated
into Danish kroner at average exchange
rates. Training costsare also shown as a
percentage of total employee costs.
Women in senior management measures the
percentage of women in director positions
or higher (i.e. director, vice president or
executive vice president).
Nurture Diversity index measures the ratio
of women and international employees at
both Senior management and Management
level. If women and international employees
are represented at the same ratio in all
management layers as in the academic
population in Novozymes as such, the index
would be 100.
The Zymer spirit and Enable learning are
derived from specic questions in the
annual employee survey questionnaire. The
resulting score is a value between 0 and 100.
The ‘Lead the Way’ program indicates the
number of leaders globally who have been
registered for the leadership development
program ‘Lead the Way’. It is shown as a
percentage of total number of leaders in
Novozymes.
ACCOUNTING POLICIES
131Novozymes A/S
8.2 Occupational health & safety
The health and safety of all our employees is
of paramount importance to Novozymes, and
therefore forms a fundamental part of our
business strategy. The aim is to ensure that
robust safety processes, equipment, standards,
tools and training are fully integrated into the
way we work. We take appropriate measures
to ensure focus on occupational health and
safety across the organization, by means of
initiatives owned and driven locally under a
global framework.
Our approach
Novozymes’ Quality, Environment and Safety
function is responsible for supporting the
organization in ensuring a safe and healthy
work environment. To reinforce our safety
culture, we have a global Health and Safety
Policy, along with internal standards and
procedures. We monitor our performance
and ensure continuous improvement through
benchmarking of both internal and external
key performance indicators.
We dene annual targets to ensure we
continue to improve our performance on health
and safety.
In 2019, as part of our strategy update, we
increased our focus on health and wellbeing
and dened new ambitions and programs on
these topics. Our main target is to drive down
the three-year rolling average of lost-time injury
frequency rate to 1.5 per million working hours
by 2022 relative to a 2017-19 baseline of 1.6
per million working hours.
2020 highlights
As for most companies, the COVID-19
pandemic posed a huge challenge to
Novozymes in 2020 and our regional
leadership teams and OHS professionals
were instrumental in handling the situation
and keeping employees safe and production
running. We are successfully addressing the
dierent challenges across the world through
our regional task force teams that are led by
our regional senior leadership.
In 2020, we met our target to drive down the
three-year rolling average of lost-time injury
frequency rate to 1.5.
The performance this year was recorded at 1.3
compared with 0.9 in 2019.
This year, in occupational health and safety, we
followed a risk and data-based strategy when
dening clear category themes such as trac
in outdoor areas, exposure to chemicals, struck
by object (e.g. falling items) and maintenance
hazards.
Social and governance data
Accounts and performanceNotes
Occupational injuries are dened as the
reported number of occurrences arising out
of or in the course of work that result in
fatal or nonfatal injury with at least one day
of absence from work other than the day of
injury.
Occupational diseases are dened as the
number of diseases contracted as a result
of exposure to risk factors arising from
work activity and notied as work related in
accordance with local 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 are stated per million working
hours.
The injury severity rate is calculated by
dividing total days of absence related to
injuries registered in the same year by the
number of occupational injuries.
ACCOUNTING POLICIES
Consequences of occupational injuries
No. 2020 2019
Return to original job 13 10
Return to a dierent job in the same department - -
Out of work or early retirement - -
Case pending 1 -
Occupational injuries with absence, total 14 10
Total days of absence related to injuries registered in the
same year 400 351
Injury severity rate 29 35
132Novozymes A/S
8.2 Occupational health & safety (continued)
Social and governance data
Consequences of occupational diseases
No. 2020 2019
Return to original job 2 1
Return to a dierent job in the same department - -
Out of work or early retirement - -
Case pending
2 -
Occupational diseases, total 4 1
Total days of absence related to diseases registered in the
same year - -
Types of occupational diseases
No. 2020 2019
Skin disease 2 -
Enzyme allergy 2 -
Other
- 1
Occupational diseases, total 4 1
Accounts and performanceNotes
Injury prevention is key to our safety
strategy. Our global incident handling
system CAPTURE has since 2018 enabled
us to implement targeted, data and theme-
based safety initiatives. In 2020, we took
CAPTURE a step further by introducing
a medical application which allows EU
GDPR (General Data Protection Regulation)
compliant management of all medical cases.
Enzyme & biological safety is a top
priority for Novozymes. In January 2020,
we published a scientic study, which
concluded that our preventive program
for enzyme safety works eectively. Our
learnings enable us to further improve
the enzyme safety program ZEAL (Zero
Enzyme Allergy) and gives inspiration for
our biological safety program ZEBRA (Zero
Biological Reactions) for the benet of both
employees and customers. We continuously
promote a culture of product safety across
the Novozymes organization through our
corporate safety culture and awareness
activities that promote safe behavior.
Focus on mental wellbeing is an ongoing
activity that aims to help and inspire our
leaders and employees. One example is our
global initiative called BrainSpace.
Moving forward, we will focus on further
implementing our strategy, aiming to
improve safety in relation to our workplace
and products and assure the continued
wellbeing of all our employees.
133Novozymes A/S
8.3 Business ethics
Novozymes is committed to conducting
business in a responsible, ethical, and
transparent manner, and to meeting
stakeholders’ expectations of high business
integrity standards across our operations.
Our approach
Novozymes’ approach to business integrity is
embedded in our corporate values, policies and
procedures.
Novozymes has adopted seven business
integrity principles that lay the ground rules
for engaging with third parties and apply to
all employees across the world. The business
integrity principles underline Novozymes’
zero tolerance approach to bribery and dene
clear rules for gis and donations. They act
as Novozymes’ code of conduct in business
integrity matters and form the basis of our
eorts to eliminate all forms of corruption.
See our position paper on business integrity at
Novozymes.com.
A dedicated legal compliance function, headed
by the Chief Legal Compliance Ocer, handles
business integrity-related matters and training
of our employees. All employees have access
to relevant guidance on our intranet and
are encouraged to raise any concerns about
business integrity to the designated business
integrity contacts or through other relevant
grievance channels. Novozymes also has a
whistleblower system which allows employees
and others to report their concerns relating to
business integrity and corruption, fraud and
other serious matters.
We oer mandatory business integrity training
annually for our employees in scope. This
training is designed and rolled out by the
Chief Legal Compliance Ocer, based on input
from regional lines of business and questions
raised during the year to ensure relevance
and applicability. This training includes real-
life case studies and reinforces employee
commitment to business integrity principles.
Novozymes’ recurring antitrust training
provides general guidance on competition law
and is completed by relevant employees in
commercial roles across all regions.
Novozymes works proactively to prevent,
detect and respond to fraud, corruption and
other violations of our business integrity
principles, and we continuously promote
internal awareness and develop relevant
programs or initiatives as required. An internal
control system enables identication of
potential violations and addresses concerns
raised, e.g. through our whistleblower system.
All whistleblower reports and all cases on
fraud and corruption are reported to the
Audit Committee on a quarterly basis. All
allegations of fraud, corruption and other
business integrity violations are appropriately
investigated in accordance with internal
policies and procedures. Substantiated
violations will lead to proportionate
disciplinary sanctions for the parties involved.
Accounts and performanceNotes
Social and governance data
Completion of business integrity training
refers to the percentage of employees
in scope who have undergone business
integrity training in the latest training
period. New entities are included within six
months of acquisition. Business integrity
training is conducted for employees who can
potentially inuence third-party interactions
or decisions as part of their job role. This
comprises employees in professional,
managerial or administrative positions.
The reporting criteria for competition
law violations are whether it has been
established by an authority member of the
International Competition Network or by a
competent court anywhere in the world that
a company in the Novozymes Group has
violated applicable anti-trust regulations.
Novozymes denes fraud and corruption
as deliberate misconduct with the intent to
gain a direct or indirect personal advantage
while exposing Novozymes to a nancial or
reputational loss.
ACCOUNTING POLICIES
134Novozymes A/S
General concerns and violations of our
business integrity principles are reported to
Novozymes’ Corporate Business Integrity
Committee, which oversees business integrity
matters across the company and our business
partners.
Novozymes’ responsibility for ensuring ethical
business practices also extends to our business
partners. Our third-party due diligence
processes include monitoring and ensuring
that our commercial partners conduct business
with integrity and share our values regarding
legal compliance.
Novozymes’ whistleblower system allows
employees and others to report their concerns
relating to fraud, corruption and other
violations of Novozymes’ business integrity
principles as well as other serious violations
of law. Concerns reported are handled by
the Chief Legal Compliance Ocer and all
concerns from the system are reported to the
Audit Committee.
2020 highlights
In 2020, the business integrity training was
completed by 99% of our employees in scope
and focused on risks relating to conicts of
interest. The competition law compliance
training this year provided a general reminder
on competition law restrictions.
During the year, we released a new conict of
interest policy that provides better guidance
to employees on identication and proper
management of potential conicts of interests
and related risks with respect to business
integrity.
In 2020, a new dedicated fraud detection
e-learning was rolled out to select functions.
Consistent with previous years, there were
no violations of competition law in 2020. The
number of potential fraud and corruption cases
investigated increased in 2020 due to extended
use of data mining in internal controls and
proactive detection. The nominal number
of substantiated cases increased slightly
compared to 2019. The substantiated cases
had no material business or nancial impact.
The charts below provide further details of the
reporting channels and consequences for fraud
and corruption cases.
Social and governance data
Consequences of substantiated fraud and corruption cases
2020 (2019)
• Dismissal 29% (25%)
• Other disciplinary sanctions 25% (30%)
• Unknown perpetrator 46% (45%)
Reporting channels for potential fraud and corruption 2020
(2019)
• Whistleblower/tip-o 13% (66%)
• Internal controls and proactive detection 87% (34%)
8.3 Business ethics (continued)
Accounts and performanceNotes
135Novozymes A/S
8.4 Customer engagement
As part of our strategy Better business with
biology, we want to give the voice of the
customer a stronger presence at Novozymes
and convert customer needs and demands
into biological solutions. We believe that our
customers’ feedback on our solutions and
services is of great importance to determining
the success and performance of our business.
Therefore, customer engagement and value
of our partnership is measured across our
commercial divisions and across regions.
Our approach
Each year, we conduct a customer satisfaction
survey. This is to monitor customer perceptions
of our solutions and services and learn where
we can improve.
We use the survey as a dialogue tool with our
customers. Overall customer perceptions are
measured via four key performance indicators:
Net Promoter Score (NPS), Loyalty Index, Value
of Partnership, and Customer Satisfaction
Score.
Responsibility for measuring, analyzing
and addressing customer satisfaction and
performance is anchored with our commercial
functions.
2020 highlights
In 2020, Novozymes invited 1,063 customers
across 100 countries to participate in the
survey with a response rate of 58%. We
achieved an NPS of 50.
The results conrm our strong relationships
with our customers both large and small, new
and old and across emerging and developed
markets.
The COVID-19 pandemic does not seem
to have aected customer perceptions of
Novozymes in 2020 compared to previous
years.
Responding customers pointed out that it is
essential that we continue to deliver innovation
to help them become more competitive and
within their detailed responses are a number of
insights that relate to how we can improve our
performance within certain industries and with
certain accounts.
Going forward, we will strive to maintain
close relationships with our customers and
proactively work on the areas where we can
improve.
Social and governance data
Accounts and performanceNotes
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
136Novozymes A/S
We believe that businesses have an obligation
to engage with the communities in which they
operate and to invest strategically in programs
that create value for society. We are passionate
about delivering on our promise of better lives
in a growing world, both inside and outside the
workplace.
Our approach
Novozymes has committed to contribute to
our local communities and inspire people
about the potential of biology. As part of this
commitment, Novozymes has set a target
to “Pledge 1% of our time to local outreach
activities by 2022”.
Our community engagement initiatives are
driven through our Inspire-related initiatives.
The Inspire program is governed by strong
guardrails to guide implementation and
determine eligibility, and is led by a cross-
functional team. The Inspire initiatives are
regionally owned and driven by grassroot
employee-led initiatives. The Executive
Leadership encourages all employees to spend
up to 1% of work time in local outreach and
workplace sustainability initiatives.
2020 highlights
Inspire is about helping our communities
respond to local challenges. In 2020, the
biggest crisis we all faced was the COVID-19
pandemic. Our employees in all regions
stepped up, contributing with their resources,
time, and creativity to help their communities
respond to the pandemic and other pressing
local issues.
In China, we donated RMB 1 million via
the Red Cross to help build hospitals in
Huoshenshan and Leishenshan, procure
supplies, and provide support for frontline
workers.
In Denmark, one of our employees, a trained
nurse, spent a number of working days
to help with COVID-19 testing at Holbæk
Hospital. Another employee, an operator
from Kalundborg, was seconded to his former
employer who started a large production of
hand sanitizer and needed his expertise to
keep up with the high demand.
In India, around 140 Zymers participated in
a virtual tness challenge to raise money for
daily-wage earners, whose lives had come to
a standstill due to COVID-19. Observing local
rules and guidelines, our employees walked
an estimated 2.3 million steps in a day raising
INR 1.7 million. The sum was donated towards
state funds, and organizations involved with
disaster management and eradication of
hunger.
In Kenya, Novozymes was awarded by the
Marketing Society of Kenya (MSK) for driving
Biology amongst the disadvantaged and future
generations for funding the upgrade of the
Starehe Boys Bio-Lab. Starehe Boy’s Centre &
School is a charitable institution that runs a
high school and a technical training institution
for exceptionally talented students with
nancial constraints.
In Latin America, to promote digital inclusion
especially among underprivileged students, we
provided 100 computers with internet access
for students of Marista Escola Social Ecológica.
In North America, our employees helped
educators create meaningful content for
students learning from home due to COVID-19
restrictions. We worked with local schools
to organize virtual chats to discuss career
opportunities in the sciences and hosted virtual
tours of our site for teachers’ professional
development. Our North American sites have
also supported COVID-19 response of local
non-prot organizations. Through in-kind
and nancial charitable donations, we have
helped local food banks, provided protective
equipment and sanitizers to local hospitals,
and given internet access to students in remote
areas so that they can learn online.
Social and governance data
8.5 Community engagement
Accounts and performanceNotes
137Novozymes A/S
Novozymes always strives for responsible
sourcing and we focus on environment, social
and governance (ESG) issues across our value
chain. Agricultural raw materials are a major
component of our production processes and a
secure supply of sustainable raw materials is
crucial to Novozymes’ production.
Our approach
Novozymes’ sourcing department drives our
supplier management and responsible sourcing
program and is anchored within Novozymes
Operations, Supply and Quality function. Our
approach to responsible sourcing is dened
by our Responsible Purchasing Standards
(RPS) and managed through our Supplier
Performance Management (SPM) process
and SEDEX platform. Through the SPM
process, Novozymes screens suppliers and
classies their risk based on spend, country
and category. In case a supplier does not
meet our assessment criteria, either an action
plan is established, or an alternate supplier
is identied. Furthermore, we aim to use
SEDEX to enhance the sustainability aspects
of our SPM evaluation going forward. We have
started onboarding our key suppliers, with
due consideration for risk and spend, to the
platform to increase the level of transparency
in our supply chain.
Novozymes requires all contracted suppliers
to comply with our RPS, as well as, when
requested, to complete questionnaires
and to accept visits and audits relevant for
conrmation of compliance with the standards.
These standards cover various ESG criteria
including respect for human and labor
rights, business ethics, employee health and
safety and environmental stewardship. All
our suppliers of directly sourced agricultural
raw materials are required to adhere to our
deforestation requirements by not contributing
to further deforestation and to have zero
tolerance for land grabbing.
To know more, see our position paper on
Responsible Purchasing, and our annual
statement on Modern Slavery at Novozymes.
com.
We will continue to focus on our long-term
commitment of securing 100% renewable
electricity, reducing Scope 3 CO
2
emissions
from key raw materials and developing plans
to manage 100% key materials and waste in
circular systems.
2020 highlights
Novozymes continued to expand the use of
the SEDEX platform, a sustainability platform,
to enhance the transparency of our supply
chain. Aer onboarding high-risk suppliers in
2019, this year our focus has been to onboard
high-spend suppliers across Novozymes onto
SEDEX, a process which will continue over
time.
As part of Novozymes’ journey towards
becoming carbon neutral, we are taking
various steps to reduce emissions. During
2020, Novozymes initiated additional means
to increase the level of renewable electricity
sourced.
In 2020, the entire electricity consumption at
Novozymes’ Franklinton site was covered by
renewable electricity through the purchase of
Renewable Energy Certicates (REC), deriving
from a nearby solar energy plant.
Novozymes and Novo Nordisk have jointly
engaged in a power purchasing agreement
with Swedish energy provider Vattenfall AB,
to supply the two Danish companies with
renewable electricity for the coming decade.
As part of our climate target we have also set
a science-based Scope 3 target focused on
purchased goods and services. For 2020, the
target internally has been to identify relevant
key suppliers with whom to engage with and to
establish supplier engagement plans. For more
details, read Note 7.1 Climate change.
During 2020, a sustainability hotspot analysis
was conducted for all categories of direct
sourcing of raw materials across dierent
regions. The results of this exercise will be used
to identify key sustainability issues and will
serve as input to future sustainable sourcing
strategies.
As a member of the Roundtable on Sustainable
Palm Oil (RSPO), 100% of the palm oil we
sourced in 2020 was RSPO-certied.
Novozymes has further increased its focus
on sustainability when sourcing products and
services other than raw materials, by including
sustainability criteria in the tender supplier
evaluations and implementing initiatives to
improve sustainability performance within
categories prioritized in risk assessments, e.g.
waste and internal logistics.
Furthermore, we also completed a Human
Rights & Impact assessment of our operations
and supplier base in North America and Latin
America. Read more about these assessments
in Note 8.1 Labor Practices & Human Rights.
Social and governance data
8.6 Responsible sourcing
Accounts and performanceNotes
138Accounts and performane StatementsNovozymes A/S
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 nancial year January 1 – December 31,
2020. 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 prepared in accordance with the Danish
Financial Statements Act. Management’s
Review has been prepared in accordance with
the Danish Financial Statements Act.
In our opinion, the accounting policies used are
appropriate, and the Group’s internal controls
relevant to 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 nancial position at December 31, 2020
of the Group and the Parent Company and
of the results of the Group and the Parent
Company operations and consolidated cash
ows for the nancial year January 1 –
December 31, 2020.
In our opinion, Management’s Review includes
a true and fair account of the development in
the operations and nancial circumstances
of the Group and the Parent Company, of
the results for the year, and of the nancial
position of the Group and the Parent Company
as well as a description of the most signicant
risks and elements of uncertainty 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 materiality, inclusivity, responsiveness and
the accounting policies. In our opinion, they
give a true and fair view of the organisation’s
environmental, social and governance
performance in accordance with these
principles.
In our opinion, the Annual Report of
Novozymes A/S for the nancial year
January 1 - December 31, 2020 identied as
NOVOZYMES-2020-12-31.zip is 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 2, 2021
Executive Management Board of Directors
Ester Baiget
President & CEO
Thomas Videbæk
Lars Green
Jørgen Buhl Rasmussen
Chair
Sharon James
Kim Stratton
Cornelis (Cees) de Jong
Vice Chair
Anders Hentze Knudsen
Mathias Uhlén
Heine Dalsgaard
Kasim Kutay
Lena Bech Holskov
Lars Bo Køppler
Statements
139Accounts and performane StatementsNovozymes A/S
Independent Auditor’s Reports
To the shareholders of Novozymes A/S
Report on the audit of the
Financial Statements
Opinion
In our opinion, the Consolidated Financial
Statements give a true and fair view of the
Group’s nancial position at December
31, 2020 and of the results of the Group’s
operations and cash ows for the nancial
year January 1 to December 31, 2020 in
accordance with International Financial
Reporting 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 nancial position
at December 31, 2020 and of the results of
the Parent Company’s operations for the
nancial year January 1 to December 31,
2020 in accordance with the Danish Financial
Statements Act.
In our opinion, the Consolidated environmental
data and the Consolidated social and
governance data for the nancial year January
1 to December 31, 2020 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 65-116,
for the nancial year January 1 to December
31, 2020 comprise the consolidated income
statement and statement of comprehensive
income, the consolidated balance sheet, the
consolidated statement of shareholders’
equity, the consolidated statement of cash
ows and the notes, including signicant
accounting policies.
The Parent Company Financial Statements of
Novozymes A/S, pages 143-158, for the nancial
year January 1 to December 31, 2020 comprise
the income statement, the balance sheet, the
statement of changes in equity and the notes,
including signicant accounting policies.
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 and 117-137, for
the nancial year January 1 to December 31,
2020 comprise the environmental performance
and consolidated environmental data, the
social and governance performance and
consolidated social and governance data
and the related notes, including signicant
accounting policies.
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
standards 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 sucient 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’ Code of
Ethics for Professional Accountants (IESBA
Code) and the additional requirements
applicable in Denmark. We have also fullled
our other ethical responsibilities in accordance
with the IESBA Code.
To the best of our knowledge and belief,
prohibited non-audit services referred to in
Article 5(1) of Regulation (EU) No 537/2014
were not provided,except for an insignicant
breach that was reported to the Audit
Committee and which did not aect our
independence.
Appointment
We were appointed as auditors of Novozymes
A/S for the rst time aer the initial public
oering on March 21, 2001. We have been
reappointed annually by shareholder resolution
for a total period of uninterrupted engagement
of 20 years, including the nancial year 2020.
140Accounts and performane StatementsNovozymes A/S
Key audit matter How our audit addressed the key audit matter
Collaboration agreements
Novozymes has entered into collaboration agreements.
Some of these collaboration agreements include complex mechanisms for sharing prot and
expenses. Due to the complexity of the agreements, there are uncertainties in relation to the
interpretation of the agreements.
In 2020, the most signicant of these collaboration agreements, the Bioag collaboration
agreement, was amended to a supply agreement. The amendment of the agreement
included uncertainties and assessments of income and accruals.
We focused on this area because the agreements and the related accounting treatment
of prot-sharing and expenses are complex and because the amendment of the Bioag
collaboration agreement required signicant judgment and estimation by Management.
Refer to Note 2.2 and 3.1 to the Consolidated Financial Statements.
We tested relevant controls including applicable information systems and monitoring
controls implemented to ensure that prot-sharing and expenses from the collaboration
agreements are recognized and measured appropriately on an ongoing basis.
We assessed the accounting treatment applied by Management of the amendment of the
Bioag collaboration agreement, including settlement of income and cost associated with the
change to the supply agreement.
We also assessed the accounting treatment applied by Management of the amendment of
the Bioag collaboration agreement in relation to impairment of intangible assets.
We read the amended Bioag collaboration agreement and assessed Management’s
interpretation of the amended agreement and the nancial impact.
We tested Management’s subjective estimation of prot-sharing and related accruals etc.
under the applicable remaining collaboration agreements, as well as reconciled data inputs
and signicant assumptions – to both internal and external sources – and we assessed the
accuracy of the accruals in previous periods.
We assessed whether the disclosures in relation to revenue and intangible assets are
appropriate and meet the requirements of accounting standards.
Key audit matters
Key audit matters are those matters that,
in our professional judgment, were of most
signicance in our audit of the Financial
Statements for 2020. These matters were
addressed in the context of our audit of the
Financial Statements as a whole, and in
Statement on Management’s Review
Management is responsible for Management’s
Review, pages 3-51.
Our opinion on the Financial Statements and
on the Environmental, Social and Governance
Data does not cover Management’s Review,
forming our opinion thereon, and we do not
provide a separate opinion on these matters.
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 considered whether Management’s
Review includes the disclosures required by the
Danish Financial Statements Act.
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. We did
not identify any material misstatement in
Management’s Review.
141Accounts and performane StatementsNovozymes A/S
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
International Financial Reporting 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 nancial statements
that are free from material misstatement,
whether due to fraud or error.
Furthermore, Management is responsible
for preparing the Environmental, Social
and Governance Data in accordance
with the accounting policies stated in 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
misstatement, 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 continue as a going concern, disclosing,
as applicable, 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 operations, 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
assurance about whether the Financial
Statements and the Environmental, Social
and Governance Data as a whole are free
from material misstatement, whether due
to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable
assurance is a high level of assurance, but
is not a guarantee that an audit conducted
in accordance with ISAs and the additional
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 inuence 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
misstatement 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 sucient 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, intentional 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 circumstances, but not for the
purpose of expressing an opinion on the
eectiveness of the Group’s and the Parent
Company’s internal 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
evidence obtained, whether a material
uncertainty exists related to events or
conditions that may cast signicant 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 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
underlying transactions and events in a
manner that achieves fair presentation.
• Obtain sucient appropriate audit
evidence regarding the nancial,
environmental, social and governance
information 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 responsible
for the direction, supervision and
performance of the Group audit. We remain
solely responsible for our audit opinion.
We communicate with those charged with
governance regarding, among other matters,
the planned scope and timing of the audit
and signicant audit ndings, including any
signicant deciencies in internal control that
we identify during our audit.
We also provide those charged with
governance with a statement that we have
complied with relevant ethical requirements
regarding independence, and to communicate
with them all relationships and other matters
that may reasonably be thought to bear on our
independence, and where applicable, related
safeguards.
From the matters communicated with those
charged with governance, we determine
those matters that were of most signicance
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 disclosure about the matter
or when, in extremely rare circumstances,
142Accounts and performane StatementsNovozymes A/S
we determine that a matter should not be
communicated in our report because the
adverse consequences of doing so would
reasonably be expected to outweigh the public
interest benets of such communication.
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 nancial
year January 1 to December 31, 2020 with
the lename NOVOZYMES-2020-12-31.
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.
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 elements in the
taxonomy, for all nancial information
required to be tagged using judgement
where necessary;
• Ensuring consistency between iXBRL
tagged data and the Consolidated Financial
Statements presented in human-readable
format; and
• For such internal control as Management
determines necessary to enable the
preparation of an Annual Report that is
compliant with the ESEF Regulation.
Our responsibility is to obtain reasonable
assurance 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 procedures selected
depend on the auditor’s judgement, 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
prepared 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;
• Evaluating the appropriateness of the
company’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
identied;
• 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 nancial year January
1 to December 31, 2020 with the le name
NOVOZYMES-2020-12-31.zip is prepared, in all
material respects, in compliance with the ESEF
Regulation.
Hellerup, February 2, 2021
PricewaterhouseCoopers
Statsautoriseret Revisionspartnerselskab
CVR no 3377 1231
Lars Baungaard
State Authorized Public Accountant
mne23331
Rasmus Friis Jørgensen
State Authorized Public Accountant
mne28705
Financial statements
for Novozymes A/S
Financial statements
Income statement
Balance sheet
Statement of shareholders' equity
1
Basis of reporting
1
Accounting policies
2
Primary operations
2.1
Revenue
2.2 Employee costs
2.3 Other operating income
3
Other assets and liabilities
3.1
Intangible assets
3.2 Property, plant and equipment
3.3 Leases
3.4 Financial xed assets
3.5 Other receivables
3.6 Deferred tax
3.7 Other provisions
4
Financial activities
4.1
Financial income and costs
4.2 Credit institutions
4.3 Proposed appropriation of
net prot
5
Other notes
5.1
Contingent liabilities and
pending litigation
5.2 Related party transactions
5.3 Fees to statutory auditors
5.4 Common stock and
treasury stock
5.5 Derivatives
5.6 Events aer the reporting date
143Novozymes A/S
Accounts and performanceFinancial statements for Novozymes A/S
144Novozymes A/S
DKK million Note 2020 2019
Revenue 2.1 8,519 8,260
Cost of goods sold (3,847) (3,867)
Gross prot 4,672 4,393
Sales and distribution costs (1,325) (1,285)
Research and development costs (1,512) (1,621)
Administrative costs (543) (598)
Other operating income 2.3 1,214 1,237
Operating prot / EBIT 2,506 2,126
Income from investments in subsidiaries 3.4 772 1,494
Share of result in associates 3.4 (4) (5)
Financial income 157 105
Financial costs (227) (278)
Prot before tax 3,204 3,442
Tax (592) (371)
Net prot 2,612 3,071
Proposed appropriation of net prot
Dividend to shareholders 1,496 1,528
Revaluation reserve according to the equity method 1,307 2,147
Retained earnings (191) (604)
4.3 2,612 3,071
Proposed dividend per share DKK 5.25 DKK 5.25
Income statement, Novozymes A/S
Accounts and performanceFinancial statements for Novozymes A/S
145Novozymes A/S
Balance sheet, Novozymes A/S
Assets
DKK million Note Dec. 31, 2020 Dec. 31, 2019
Intangible assets 3.1 3,547 3,064
Property, plant and equipment 3.2 4,400 4,471
Investments in subsidiaries 3.4 7,157 8,581
Investments in associates 3.4 33 37
Other long-term receivables 3.5 9 2
Receivables from Group enterprises 3.4 295 352
Financial xed assets 7,494 8,972
Fixed assets 15,441 16,507
Raw materials and consumables 146 155
Work in progress 432 476
Finished goods 648 707
Inventories 1,226 1,338
Trade receivables 1,103 924
Receivables from Group enterprises - 158
Tax receivables 186 344
Other receivables 3.5 204 138
Receivables 1,493 1,564
Cash at bank and in hand 475 141
Current assets 3,194 3,043
Assets 18,635 19,550
Liabilities and shareholders’ equity
DKK million Note Dec. 31, 2020 Dec. 31, 2019
Common stock 570 582
Treasury stock (3,314) (4,142)
Revaluation reserve according to the equity method 441 2,116
Reserve for development costs 219 166
Cash ow hedges 127 19
Retained earnings 10,352 10,100
Proposed dividend 1,496 1,477
Shareholders’ equity 9,891 10,318
Provisions for deferred tax 3.6 555 448
Other provisions 3.7 159 10
Provisions 714 458
Lease liabilities 154 176
Credit institutions 3,254 2,716
Transitional holiday accrual - 58
Non-current liabilities 3,408 2,950
Lease liabilities 63 92
Credit institutions
1,126 1,408
Transitional holiday accrual 180 -
Trade payables 494 512
Payables to Group enterprises 2,228 3,083
Other payables 531 729
Current liabilities 4,622 5,824
Liabilities 8,744 9,232
Liabilities and shareholders’ equity 18,635 19,550
Accounts and performanceFinancial statements for Novozymes A/S
146Novozymes A/S
DKK million Common stock Treasury stock
Revaluation
reserve
according to the
equity method
Reserve for
development
costs
Cash ow
hedges
Retained
earnings
Proposed
dividend Total
Shareholders’ equity at January 1, 2020 582 (4,142) 2,116 166 19 10,100 1,477 10,318
Net prot for the year 1,307 1,305 2,612
Capitalized development costs 53 (53) -
Dividend received (2,255) 2,255 -
Dividend paid (1,513) (1,513)
Dividend paid relating to treasury stock 30 30
Proposed dividend (1,496) 1,496 -
Purchase of treasury stock (1,500) (1,500)
Sale of treasury stock 508 508
Write-down of common stock (12) 1,820 (1,808) -
Currency translation adjustments of investments
in subsidiaries, etc. (765) (765)
Fair value adjustments 108 108
Other adjustments 38 49 6 93
Shareholders’ equity at December 31, 2020
B/S
570 (3,314) 441 219 127 10,352 1,496 9,891
Statement of shareholders’ equity,
Novozymes A/S
Accounts and performanceFinancial statements for Novozymes A/S
147Novozymes A/S
The nancial statements of Novozymes A/S
have been prepared in accordance with the
Danish Financial Statements Act (accounting
class D). 
The accounting policies are unchanged from
2019.
The accounting policies are consistent with
those applied for the consolidated nancial
statements except as described below. For a
description of the Group’s accounting policies,
please refer to the consolidated nancial
statements.
No separate statement of cash ows has been
prepared for Novozymes A/S; please refer to
the consolidated statement of cash ows.
Recognition and measurement in general
Income is recognized in the income statement
as earned.
All costs incurred in generating the year’s
revenue are also recognized in the income
statement, including depreciation, amortization
and impairment losses.
Value adjustments of nancial assets and
liabilities 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 benets will ow to the company and
the value of the asset can be measured reliably.
Liabilities are recognized in the balance sheet
when they are considered probable and can be
measured reliably. At initial recognition, assets
and liabilities are measured at cost. Assets
and liabilities are subsequently measured as
described below for each item.
The recognition and measurement principles
take due account of predictable losses and
risks occurring prior to the presentation of
nancial statements that conrm or refute the
conditions prevailing at the reporting date.
Intangible assets
The accounting policies for intangible xed
assets follow those of the Group with the
exception of goodwill, which is amortized over
a period of 10 years using the straight-line
method.
An amount equal to the total capitalized
development costsaer taxis recognized
under Shareholders’ equity in Reserve for
development costs.
Financial assets
Investments in subsidiaries and investments
in associates are recognized initially at cost
and subsequentlymeasured using the equity
method. The company’s share of the equity
of subsidiaries, based on the fair value of
the identiable net assets at the acquisition
date, less or plus unrealized intercompany
prots or losses,with the addition of any
residual value of goodwill, is recognized under
Investments in subsidiaries and Investments
in associates respectively in the balance sheet.
If the shareholders’ equity of subsidiaries or
associates is negative and Novozymes A/S
has a legal or constructive obligation to cover
the company’s negative equity, a provision is
recognized.
Net revaluation of investments in subsidiaries
and associates is recognized under
Shareholders’ equity in the Revaluation reserve
according to the equity method. The reserve
is reduced by payments of dividends to the
parent company and adjusted to reect other
changes in the equity of subsidiaries.
The proportionate share of the net prots
of subsidiaries less goodwill amortization is
recognized under Income from investments in
subsidiaries in the income statement. Goodwill
in subsidiaries is amortized over a period of 10
years using the straight-line method.
Dividend
The dividend proposed for the nancial year is
shown as a separate item under Shareholders’
equity.
NOTES SECTION 1
1 Accounting policies
Accounts and performanceFinancial statements for Novozymes A/S
148Novozymes A/S
DKK million 2020 2019
Geographical distribution:
Denmark 173 166
Rest of Europe, Middle East & Africa 5,542 5,318
North America 1,038 1,032
Asia Pacic 1,331 1,316
Latin America 435 428
Revenue
I/S
8,519 8,260
DKK million 2020 2019
Wages and salaries 1,739 1,767
Pensions - dened contribution plans 180 186
Other social security costs 12 22
Other employee costs 135 88
Employee costs 2,066 2,063
Average number of employees in Novozymes A/S 2,607 2,688
2.3 Other operating income
DKK million 2020 2019
Royalty income relating to subsidiaries 1,205 1,228
Other 9 9
Other operating income
I/S
1,214 1,237
2.1 Revenue
NOTES SECTION 2
2.2 Employee costs
Accounts and performanceFinancial statements for Novozymes A/S
The employee costs in 2020 included
severance costs of DKK 80 million related to
the organizational changes, of which DKK
65 million was related to the changes to the
Executive Leadership Team announced in 2020.
The employee costs in 2019 included
restructuring costs related to organizational
changes of around DKK 100 million. The
one-o impact in 2019 was partly oset by
reduced employee costs during the remainder
of the year. In addition, changes made to
the Executive Leadership Team during 2019
resulted in severance costs of DKK 58 million.
Reference is made to Note 6.1 to the
consolidated nancial statements concerning
remuneration of the Board of Directors and the
Executive Leadership Team.
Reference is made to Note 2.1 to the
consolidated nancial statements segment
information.
149Novozymes A/S
3.1 Intangible assets
2020 2019
DKK million Goodwill
Acquired patents,
licenses and
know-how, etc.
Completed IT
development
projects
IT development
projects in
progress Total Total
Cost at January 1 2,597 1,911 653 25 5,186 4,108
Additions during the year 757 191 27 113 1,088 1,078
Disposals during the year - - (6) - (6) -
Transfers to/(from) other items - - 56 (56) - -
Cost at December 31 3,354 2,102 730 82 6,268 5,186
Amortization and impairment losses at January 1 (602) (1,055) (465) (2,122) (1,662)
Amortization for the year (376) (158) (71) (605) (460)
Disposals during the year - - 6 6 -
Amortization and impairment losses at December 31 (978) (1,213) (530) (2,721) (2,122)
Carrying amount at December 31
B/S
2,376 889 200 82 3,547 3,064
NOTES SECTION 3
Accounts and performanceFinancial statements for Novozymes A/S
150Novozymes A/S
3.2 Property, plant and equipment
Capitalized interest
No interest was capitalized under Additions
during the year (2019: DKK 2 million).
Capitalization rate 2019: 0.9%.
Land and buildings with a carrying amount of
DKK 1,516 million (2019: DKK 1,526 million)
were pledged as security to credit institutions.
The mortgage loans expire in 2029 and 2039.
2020 2019
DKK million
Land and
buildings
Production
equipment and
machinery
Other
equipment
Property,
plant and
equipment under
construction Total Total
Cost at January 1 3,594 5,075 1,234 329 10,232 9,675
Lease assets at January 1 - - - - - 218
Additions during the year 83 82 65 142 372 363
Disposals during the year (91) (27) (95) - (213) (24)
Transfers to/(from) other items 77 111 22 (210) - -
Cost at December 31 3,663 5,241 1,226 261 10,391 10,232
Depreciation and impairment losses at January 1 (1,492) (3,483) (786) (5,761) (5,420)
Depreciation for the year (111) (184) (96) (391) (360)
Impairment losses - - - - (5)
Disposals during the year 43 25 93 161 24
Depreciation and impairment losses at December 31 (1,560) (3,642) (789) (5,991) (5,761)
Carrying amount at December 31
B/S
2,103 1,599 437 261 4,400 4,471
NOTES SECTION 3
Accounts and performanceFinancial statements for Novozymes A/S
151Novozymes A/S
3.3 Leases
NOTES SECTION 3
Accounts and performanceFinancial statements for Novozymes A/S
DKK million 2020 2019
Land and buildings 53 73
Plant and machinery 97 100
Other equipment 65 91
Carrying amount of lease assets 215 264
Additions to the lease assets during 2020 amounted to DKK 9 million (2019: DKK 10 million).
Maturity analysis of the lease liability
DKK million 2020 2019
Lease liability
Less than 1 year 62 92
Between 1 and 5 years 70 79
More than 5 years 89 103
Undiscounted lease liability at December 31 221 274
DKK million 2020 2019
Amounts recognized in prot or loss
Interest on lease liabilities 4 5
Depreciation of lease assets per asset class
Land and buildings 15 19
Plant and machinery 5 5
Other equipment 31 32
Depreciation of lease assets 51 56
Amounts recognized in the statement of cash ows
Total cash outow for leases 54 58
At December 31, 2020, the revaluation reserve
included an amount of DKK 2,820 million
from the elimination of prot on internal asset
transfer.
Reference is made to Note 6.8 to the
consolidated nancial statements concerning
investments in subsidiaries, joint operations
and associates.
152Novozymes A/S
3.4 Financial xed assets
NOTES SECTION 3
Accounts and performanceFinancial statements for Novozymes A/S
DKK million
Investments in
subsidiaries
Investments in
associates
Receivables from
Group companies Total
Cost at January 1, 2020 8,655 128 352 9,135
Additions during the year 798 - 9 807
Disposals during the year (12) - (66) (78)
Cost at December 31, 2020 9,441 128 295 9,864
Revaluation reserve at January 1, 2020 (74) (91) (165)
Share of net prot/(loss) 1,311 (4) 1,307
Elimination of prot on internal asset transfers (539) - (539)
Dividends received (2,255) - (2,255)
Currency translation adjustment (765) - (765)
Other adjustments 38 - 38
Revaluation reserve at December 31, 2020 (2,284) (95) (2,379)
Carrying amount at December 31, 2020
B/S
7,157 33 295 7,485
153Novozymes A/S
3.5 Other receivables
DKK million 2020 2019
Prepaid expenses 50 68
Derivatives 119 15
Other receivables 44 57
Other receivables at December 31 213 140
Recognized in the balance sheet as follows:
Non-current
B/S
9 2
Current
B/S
204 138
Other receivables at December 31 213 140
NOTES SECTION 3
Accounts and performanceFinancial statements for Novozymes A/S
154Novozymes A/S
Reference is made to Note 3.5 to the
consolidated nancial statements concerning
business acquisitions, as the gures and
information applying to Novozymes A/S are
identical to the information provided there.
Deferred tax assets Deferred tax liabilities
DKK million 2020 2019 2020 2019
Intangible assets - - 214 191
Property, plant and equipment - - 383 347
Inventories - 6 1 -
Stock options 61 79 - -
Other - 5 18 -
61 90 616 538
Osetting items (61) (90) (61) (90)
Deferred tax at December 31
B/S
- - 555 448
DKK million 2020 2019
Deferred tax at January 1 448 380
Prior-year adjustments 25 24
Tax related to the income statement 34 51
Tax on shareholders’ equity items 48 (7)
Deferred tax at December 31
B/S
555 448
3.6 Deferred tax
NOTES SECTION 3
3.7 Other provisions
Accounts and performanceFinancial statements for Novozymes A/S
155Novozymes A/S
4.2 Credit institutions
4.3 Proposed appropriation of net prot
DKK million 2020 2019
Long-term debt to credit institutions falling due aer 5 years 1,332 1,229
DKK million 2020 2019
Proposed appropriation of net prot
Dividend to shareholders 1,496 1,528
Revaluation reserve according to the equity method 1,307 2,147
Retained earnings (191) (604)
Net prot 2,612 3,071
4.1 Financial income and costs
NOTES SECTION 4
Accounts and performanceFinancial statements for Novozymes A/S
DKK million 2020 2019
Interest income relating to subsidiaries 27 35
Interest costs relating to subsidiaries (14) (26)
156Novozymes A/S
5.1 Contingent liabilities and pending litigation
DKK million 2020 2019
Other commitments
Contractual obligations to third parties relating to property, plant and equipment 129 92
Other guarantees
Other guarantees and commitments to related companies 315 2,357
Other guarantees and commitments 196 151
NOTE SECTION 5
Accounts and performanceFinancial statements for Novozymes A/S
Pending litigation and arbitration
Reference is made to Note 6.3 to the
consolidated nancial statements concerning
pending litigation and arbitration.
157Novozymes A/S
5.2 Related party transactions
In 2020, Novozymes purchased from Novo
Holding 1,530,000 of its own B shares with the
approval of the Board of Directors, at a price
of DKK 537 million (2019: 1,530,000 B shares
at a price of DKK 475 million). The transactions
were based on the market price.
There were no transactions with related parties
other than the transactions described and
normal remuneration of the Board of Directors
and Executive Leadership Team, which is
presented in Note 6.1 in the consolidated
nancial statements.
Reference is made to Note 6.4 to the
consolidated nancial statements concerning
transactions with related parties.
Novozymes A/S is included in the consolidated
nancial statements of Novo Nordisk
Foundation.
Transactions Outstanding balances
DKK million 2020 2019 DKK million 2020 2019
Novo Holdings A/S Novo Holdings A/S
Sales 1 - Receivables - -
The Novo Nordisk Group The Novo Nordisk Group
Sales 72 103 Receivables 8 9
Purchases (113) (129) Payables (85) (98)
The NNIT Group The NNIT Group
Purchases (43) (27) Payables (14) (7)
The Chr. Hansen Group The Chr. Hansen Group
Sales 60 45 Receivables - 10
Purchases (3) (9)
Microbiogen Pty. Ltd. Microbiogen Pty. Ltd.
Purchase of services (30) (15) Payables (7) (4)
NOTES SECTION 5
Accounts and performanceFinancial statements for Novozymes A/S
158Novozymes A/S
5.3 Fees to statutory auditors
Reference is made to Note 5.5 to the
consolidated nancial statements concerning
common stock and treasury stock.
Reference is made to Note 5.4 to the
consolidated nancial statements concerning
derivatives, as thegures and information
applying to Novozymes A/S are identical to the
information provided there.
Reference is made to Note 6.7 to the
consolidated nancial statements concerning
events aer the reporting date.
DKK million 2020 2019 Reference is made to Note 6.5 to the consolidated
Statutory audit 5 5 nancial statements concerning fees to statutory
Other assurance engagements - - auditors.
Tax advisory services 3 1
Other services 1 -
Fees to statutory auditors 9 6
5.4 Common stock and treasury stock
5.5 Derivatives
5.6 Events aer the reporting date
NOTES SECTION 5
Accounts and performanceFinancial statements for Novozymes A/S
Financial Glossary
Earnings per share (diluted)
Net prot (attributable to shareholders in
Novozymes A/S) divided by the weighted
average number of shares outstanding
(diluted).
EBIT/Operating prot
Prot before interest and tax.
EBIT margin
Prot before interest and tax as a percentage
of revenue.
EBITDA
Prot before interest, tax, depreciation and
amortization.
EBITDA margin
Prot before interest, tax, depreciation and
amortization as a percentage of revenue.
Economic prot
Economic prot is dened as adjusted
operating prot (NOPAT) less (average invested
capital * WACC).
Eective tax rate
Income tax expense as a percentage of prot
before tax.
Equity ratio
Total shareholders’ equity as a percentage of
total assets at year-end.
Glossary
Free cash ow before acquisitions
Cash ow from operating activities less cash
ow from investing activities, changes in
net working capital, business acquisitions,
divestments and purchase of nancial assets.
Invested capital
Total assets excluding interest-bearing assets
and minority investments less interest-bearing
liabilities.
iXBRL tags
iXBRL tags is hidden meta-information
embedded in the source code of an XHTML
document in accordance with the Inline XBRL
specication, which enables the conversion of
XHTML-formatted information into a machine-
readable XBRL data record by appropriate
soware.
Net interest-bearing debt (NIBD)
The market value of interest-bearing liabilities
(nancial liabilities) less the market value of
cash at bank and in hand and other readily
convertible interest-bearing current assets.
Net working capital
Current assets less current liabilities used in,
or necessary for, the company’s operations.
The main components are inventories, trade
receivables and trade payables.
Adjusted operating prot aer tax
Operating prot adjusted for exchange gains/
losses, share of prot in associates less tax on
adjusted operating prot using the eective
tax rate.
Operating costs
Operating costs consist of Sales and
distribution costs, Research and development
costs and Administrative costs.
Organic sales growth
Sales growth from existing business, excluding
divestments, measured in local currency. For
acquisitions pro forma sales for the prior year
is included in the calculation.
Return on invested capital (ROIC)
Adjusted operating prot (NOPAT) aer tax as
a percentage of average invested capital
Taxonomy
Taxonomy is an electronic dictionary of
business reporting elements used to report
business data. A taxonomy element is an
element dened in a taxonomy that is used for
the machine-readable labeling of information
in an XBRL data record.
XHTML
XHTML (eXtensible HyperText Markup
Language) is a text-based markup language used
to structure 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.
CO2
The term “CO2” is used to represent all
greenhouse gasses (CO2, CH4, N2O etc.) on an
equivalency basis in this report.
Zero waste
Zero waste means that >90% of all non-
biomass waste is diverted from landll
or incineration without energy recovery –
excluding when those are to fulll regulatory
requirements.
Other termsFinancial terms
159Novozymes A/S Accounts and performanceGlossary
Novozymes’ reporting ambition is to provide a single integrated report
connecting our business model, strategy, targets and performance
through integrated nancial and nonnancial data
About the report
Editorial team
Editor in chief
Ann Lauritzen Steel, Global
Communications & Brand
alas@novozymes.com | tel. +45 3077 2027
Finance
Jens Breitenstein, Finance
jlb@novozymes.com | tel. +45 3077 1087
Investor Relations
Ulrik Wu Svare, Investor Relations
ulms@novozymes.com | tel. +45 3077 3187
Corporate Sustainability
Santosh Govindaraju, Sustainability
govs@novozymes.com | tel. +45 30772563
Text
The editorial team from Novozymes, headed by
Global Communications & Brand
Photography
Lars Just, Thorbjørn Hansen and Ty Stange
Design & web
BystedFFW A/S
Editing & proofreading
Fokus Translations
Reporting and audits
The website contains The Novozymes Report
2020, which, pursuant to section 149 of
the Danish Financial Statements Act, is an
extract of the company’s annual report. It also
contains the nancial statements of the parent
company Novozymes A/S. Together, these
constitute the company’s annual report as led
with the Danish Business Authority.
PwC has audited the consolidated nancial
statements, the parent company nancial
statements, and the environmental and social
data.
The audit covers nancial, environmental and
social data. These are marked “Audited by
PwC.” See also the statements in the report.
PwC has not audited the sections of the
report under the headings The big picture,
Our business, Governance, and Sustainability.
The Sustainability section includes our
Communication on Progress prepared in
accordance with the UN Global Compact
principles.
The report has been prepared in accordance
with the International Financial Reporting
Standards (IFRS), the Danish Financial
Statements Act and additional requirements of
Nasdaq Copenhagen A/S for the presentation
of nancial statements by listed companies. It
is also inspired by the GRI’s G4 Sustainability
Reporting Guidelines. See Basis of reporting in
the report for more details.
Forward-looking statements
This annual report contains forward-looking
statements, including statements about future
events, future nancial performance, plans,
strategies and expectations. Forward-looking
statements are associated with words such
as, but not limited to, “believe,” “anticipate,”
“expect,” “estimate,” “intend,” “plan,” “project,”
“could,” “may,” “might” and other words with a
similar meaning.
Forward-looking statements are by their very
nature associated with risks and uncertainties
that may cause actual results to dier
materially from expectations, both positively
and negatively. These risks and uncertainties
may include unexpected developments in i) the
ability to develop and market new products; ii)
the demand for Novozymes’ products, market-
driven price decreases, industry consolidation,
and launches of competing products or
disruptive technologies in Novozymes’ core
areas; iii) the ability to protect and enforce
the company’s intellectual property rights; iv)
signicant litigation or breaches of contract;
v) the materialization of the company’s
growth platforms, notably the opportunity for
marketing biomass conversion technologies
or the development of microbial solutions
for broad-acre crops; vi) political conditions,
such as acceptance of enzymes produced by
genetically modied organisms; vii) global
economic and capital market conditions,
including, but not limited to, currency exchange
rates (USD/DKK and EUR/DKK in particular,
but not exclusively), interest rates and ination;
and viii) signicant price decreases for inputs
and materials that compete with Novozymes’
biological solutions. The company undertakes
no duty to update any forward-looking
statements as a result of future developments
or new information.
160Novozymes A/S Accounts and performanceAbout the report
© Novozymes A/S, Krogshoejvej 36
2880 Bagsvaerd, Denmark
Explore interactive
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Novozymes A/S
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The company strives to operate in a sustainable and responsible manner, inter alia in a financial, environmental and social regard.Novo Holdings A/SNovo Nordisk FoundationN/AAnnual reportAuditor's report on audited financial statementsParsePort XBRL Converter2020-01-012020-12-312019-01-012019-12-31529900T6WNZXD2R3JW38Novozymes A/SReporting class D10007127Krogshoejvej362880BagsvaerdDenmarkhttps://investors.novozymes.com/investors/corporate-governance/articles-of-association-and-reports-on-corporate-governance/default.aspxhttps://www.novozymes.com/en/about-us/sustainability/transparency-accountabilityhttps://investors.novozymes.com/investors/corporate-governance/articles-of-association-and-reports-on-corporate-governance/default.aspx6,099634126072688Ester BaigetPresident & CEOThomas VidebækLars GreenJørgen Buhl RasmussenChairCornelis (Cees) de JongVice ChairHeine DalsgaardLena Bech HolskovSharon JamesAnders Hentze KnudsenKasim KutayLars Bo KøpplerKim StrattonMathias Uhlén529900T6WNZXD2R3JW3810007127Novozymes A/SKrogshoejvej 362880 BagsvaerdOpinionBasis for OpinionHellerup2021-02-02Lars BaungaardState Authorized Public Accountantmne2333133771231PricewaterhouseCoopers Statsautoriseret RevisionspartnerselskabStrandvejen442900HellerupRasmus Friis JørgensenState Authorized Public Accountantmne2870533771231PricewaterhouseCoopers Statsautoriseret RevisionspartnerselskabStrandvejen442900Hellerup