Frequently Asked Questions

Basic earnings per share (EPS) is calculated by dividing net income attributable to shareholders of Novartis AG by the weighted average number of shares outstanding in a reporting period. This calculation excludes the average number of issued shares purchased by the Group and held as treasury shares.

For diluted EPS, the weighted average number of shares outstanding is adjusted to assume the vesting of all restricted shares, restricted share units, and the conversion of all potentially dilutive shares arising from options on Novartis shares that have been issued.

No options were excluded from the calculation of diluted EPS in 2017, 2016, or 2015, as all options were dilutive in all years.

Per-share information

Learn more about share ownership

The company’s Articles of Incorporation state that no person or entity shall be registered with the right to vote for more than 2% of the share capital as set forth in the Commercial Register. In particular cases, the Board of Directors may allow exemptions from the limitation for registration in the share register.

According to the share register, shareholders owning 2% or more of the Company’s capital at December 31 and being entitled to voting rights on all of their shares, excluding treasury shares held by Novartis AG and its subsidiaries are as follows:

We transact our business in many currencies other than the US dollar, our reporting currency.

The following provides an overview of net sales and operating expenses for our operations based on IFRS values for 2017 and 2016 for currencies most important to the Group:

Operating expenses in the above table include Cost of goods sold, Marketing & Sales, Research & Development, General & Administration, Other income and Other expense.

We prepare our consolidated financial statements in US dollars. As a result, fluctuations in the exchange rates between the US dollar and other currencies can have a significant effect on both the Group’s results of operations as well as on the reported value of our assets, liabilities and cash flows. This in turn may significantly affect reported earnings (both positively and negatively) and the comparability of period-to-period results of operations.

For purposes of our consolidated balance sheets, we translate assets and liabilities denominated in other currencies into US dollars at the prevailing market exchange rates as of the relevant balance sheet date. For purposes of the Group’s consolidated income and cash flow statements, revenue, expense and cash flow items in local currencies are translated into US dollars at average exchange rates prevailing during the relevant period. As a result, even if the amounts or values of these items remain unchanged in the respective local currency, changes in exchange rates have an impact on the amounts or values of these items in our consolidated financial statements.

Because our expenditures in Swiss francs are significantly higher than our revenues in Swiss francs, volatility in the value of the Swiss franc can have a significant impact on the reported value of our earnings, assets and liabilities, and the timing and extent of such volatility

You will find detailed information about the 2017 Annual Report in our Annual Report section.

Yes, however, since ADR holders will receive their dividend in US dollars, the amount received will be impacted by currency exchange rates, as well as by a handling fee (historically, $0.01 per share) associated with the ADR dividend. An estimate of the amount of the US dollar dividend for the ADR will be calculated on the day of the dividend announcement based on that day’s exchange rates. The actual exchange rate will be determined once all funds are received and exchanged by JP Morgan, the depository bank.

A withholding tax of 35% is applied on the gross dividend amount paid by Novartis AG. This withholding tax is paid by Novartis AG to the Swiss Tax Authorities (STA) within 30 days after the Swiss payment date. The STA then requires investors to follow a procedure to reclaim the withholding taxes, if they are eligible to do so. JP Morgan carries out this procedure on behalf of the ADR holders. Under this procedure, investors certify and elect their tax status and their entitlement to reclaim the withholding tax by providing the necessary disclosure documentation. This procedure is required by the tax treaty between the U.S. and Switzerland.

JP Morgan carries out this process on behalf of the ADR holders. The process permits banks and brokers within the Depository Trust Company to elect their clients’ correct tax status electronically and to provide documentation on behalf of their clients to the STA. Please contact JP Morgan / Global Tax at 1-800-929-5484 with further questions.

You need to check with your tax advisor or local tax authority, as this rate varies depending on your tax status.

The final conversion rate and ADR payment date will be determined once the withheld funds are received from the STA by JP Morgan and converted into US dollars. This will be formally announced by JP Morgan.