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NOTES
Consolidated financial statements • 99
SECTION 3: INVESTED CAPITAL AND WORKING CAPITAL ITEMS, CONTINUED
3.3 INVENTORIES
DKK million
2016
2015
Raw materials and consumables
392
469
Work in progress
168
104
Finished goods
1,950
1,582
Point-of-sale materials
219
202
Total inventories at 31 December
2,729
2,357
Inventory write-downs at 1 January
269
246
Write-downs during the year
289
230
Utilised in the year
-235
-185
Reversal of write-downs in the year
-
-22
Inventory write-downs at 31 December
323
269
Write-downs
Write-downs of inventories are recognised in cost of
sales, DKK 179 million (2015: DKK 135 million), and
distribution expenses DKK 110 million (2015: DKK 73
million). Included in the write-downs are remelt costs. This
is PANDORA’s option to re-melt certain products in order
to reduce some of the costs of disposing of either defective
products or products that are not expected to be sold. The
impact from remelt is mainly influenced by the market
price of silver and gold. Remelting of goods (realised and
unrealised) had a negative impact on gross profit of DKK
138 million (2015: DKK 104 million).
Accounting policies
Inventories are valued at the lower of cost and net realisable
value. Costs are accounted for on a first-in, first-out basis
(FIFO). Besides costs for purchases, costs also include
labour and a proportion of production overheads based on
normal operating capacity, but excluding borrowing costs.
Point-of-sale materials comprise purchase costs regarding
equipment, displays and packaging materials etc. and are
also accounted for on a FIFO basis.
Net realisable value
Net realisable value is based on the estimated selling
price less estimated costs of completion and distribution.
Alternatively, if the inventories are not expected to be
sold, net realisable value is based on remelt value of the
reusable raw materials (primarily silver and gold) measured
at the market prices for silver and gold at the reporting
date.
Capitalised production overheads
Capitalised production overheads are calculated using
a standard cost method, which is reviewed regularly
to ensure relevant assumptions concerning capacity
utilisation, lead times and other relevant factors.