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NOTES
98 • Consolidated financial statements
PANDORA ANNUAL REPORT 2016
SECTION 3: INVESTED CAPITAL AND WORKING CAPITAL ITEMS, CONTINUED
3.2 PROPERTY, PLANT AND EQUIPMENT, CONTINUED
Operating leases
Land and
Plant and
DKK million
buildings
equipment
Total
Future minimum lease payments on existing contracts at 31 December
2016
Within 1 year
661
28
689
Between 1- 5 years
1,543
20
1,563
After 5 years
641
-
641
Total
2,845
48
2,893
2015
Within 1 year
513
27
540
Between 1- 5 years
1,258
19
1,277
After 5 years
617
-
617
Total
2,388
46
2,434
PANDORA has a large number of individually insignificant
leases. The leases are mainly for stores, offices, office
equipment etc. The increase in commitments in 2016 is
mainly related to new owned and operated concept stores,
and the lease for a new office in Germany.
Lease expense recognised in the year was DKK 934
million (2015: DKK 576 million). Of this amount DKK 292
million was variable lease payments based on store sales
(2015: DKK 150 million).
Accounting policies
Property, plant and equipment is stated at cost, net of
accumulated depreciation and accumulated impairment
losses. Depreciation is calculated on a straight-line basis
over the estimated useful life of the asset.
Leases
Lease agreements in which a substantial portion of
the risks and benefits of ownership are transferred to
PANDORA are classified as finance leases. All other lease
agreements are classified as operating leases.
Assets held under finance leases are reported as non-
current assets and future minimum payments are reported
as liabilities in the balance sheet. PANDORA had no
finance leases at the reporting date.
Minimum lease payments under operating leases are
charged to the income statement on a straight-line basis
over the term of the lease. Contingent (sales-based) rents are
recognised in the same period as the corresponding sales.