Sales
Sales covers sales of goods and services for the year less provisions for goods returned, and volume and cash discounts. Sales are recognised at the time of risk transfer relating to the goods sold, provided that the revenue can be measured on a reliable basis and is expected to be received.
The Group has entered into few agreements where the other contracting party undertakes sales to third parties and the profit is distributed between the Group and the other contracting party on the basis of a predetermined formula. Sales are recognised using information on the other contracting party’s realised sales, and a liability is recognised for the distribution of the profit, which is calculated and settled with final effect once a year.
The Group has entered into commission agreements where agents undertake sales to third parties in return for commission on realised sales. These sales are recognised when they are realised and the commission is recognised as a liability. Similarly, a liability is recognised where it is permitted for goods to be returned and this is likely.
Research and development costs
Research costs are expensed as incurred.
Development costs pertaining to ongoing optimisation of production processes for existing products, or to development of new products, where lack of approval by the authorities, approval by customers and other factors of uncertainty mean the development costs do not fulfil the criteria for recognition in the balance sheet, are expensed as incurred.
Licence fees and Other operating income, net
Licence fees and Other operating income, net, primarily comprises licence fees, grants from public authorities to research projects, and income, net, of a secondary nature in relation to the main activities in the Group. The item also includes non-recurring income items, net, in respect of outlicensing, etc.
Tax
Corporation tax, comprising the current tax liability, change in deferred tax for the year and any adjustments relating to previous years, is recognised in the income statement at the amount attributable to net profit, and directly in Shareholders’ equity at the amount attributable to items recognised in Shareholders’ equity.
Deferred tax is measured using the liability method, and comprises all temporary differences between the accounting and tax values of assets and liabilities. No deferred tax is recognised for goodwill, unless amortisation of goodwill for tax purposes is allowed. Deferred tax is measured and recognised to cover retaxation of losses in jointly taxed foreign subsidiaries if this is expected to be realised on the sale of shares or when recapture of tax losses becomes applicable.
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 utilised 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 the temporary differences. Changes in deferred tax due to tax rate changes are recognised in the income statement where they can be attributed to net profit, and directly in Shareholders’ equity where they can be attributed to items recognised in Shareholders’ equity.
Novozymes A/S and its Danish subsidiaries are jointly taxed with the Danish companies in the Novo and Novo Nordisk Groups. The tax for the individual companies is allocated in full on the basis of the expected taxable income.
