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NOTES
Consolidated financial statements • 101
SECTION 3: INVESTED CAPITAL AND WORKING CAPITAL ITEMS, CONTINUED
PROVISIONS
Sales
return and
warranty
Other
DKK million
provisions
provisions
Total
2016
Provisions at 1 January
902
166
1,068
Made in the year
813
96
909
Utilised in the year
-749
-33
-782
Unused provisions reversed
-60
-38
-98
Exchange rate adjustments
5
3
8
Provisions at 31 December
911
194
1,105
Provisions are recognised in the consolidated balance sheet as follows:
Current
911
93
1,004
Non-current
-
101
101
Total provisions at 31 December
911
194
1,105
2015
Provisions at 1 January
670
69
739
Made in the year
936
108
1,044
Utilised in the year
-702
-6
-708
Unused provisions reversed
-48
-10
-58
Exchange rate adjustments
46
5
51
Provisions at 31 December
902
166
1,068
Provisions are recognised in the consolidated balance sheet as follows:
Current
902
69
971
Non-current
-
97
97
Total provisions at 31 December
902
166
1,068
3.5
Sales return and warranty provisions
Provision for warranty claims is presented together with sales
returns. This is due to the handling of warranty claims, which
lead to replacements instead of repairs.
PANDORA provides sales return and warranty rights
to customers in most countries. Sales return and warranty
provisions mainly relate to the Americas, DKK 576 million
(2015: DKK 583 million).
Other provisions
Other provisions include provisions for defined pension
plans, obligations to restore leased property as well as other
legal and constructive obligations.
Accounting policies
Provisions are recognised when PANDORA has a present
obligation (legal or constructive) as a result of a past event
and it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the
obligation. The expense relating to any provision is recognised
in the income statement net of any reimbursement.
A provision for estimated sales returns is recognised when
there is historical experience or when a reasonably accurate
estimate of expected future returns can otherwise be made.
The provision is recognised at the gross margin of the expected
returns. The part of estimated sales returns that is not expected
to be sold is written down to remelt value.
Significant accounting estimates
In most countries, PANDORA has provided return rights
to customers. The provision is to a large extent based on
historical return patterns, and changes in actual return
patterns will therefore impact gross profit at the time of
the return. Provisions are made on a case-by-case basis
when PANDORA expects to take back specific goods for
commercial reasons.