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NOTES
106 • Consolidated financial statements
PANDORA ANNUAL REPORT 2016
SECTION 4: CAPITAL STRUCTURE AND NET FINANCIALS, CONTINUED
Analysis of assets and liabilities
31 December 2016
31 December 2015
Change in
Profit (loss)
Profit (loss)
DKK million
exchange rate
before tax
Equity
before tax
Equity
USD
-10%
-0
68
38
103
USD
+10%
0
-68
-38
-103
CAD
-10%
-13
33
2
49
CAD
+10%
13
-33
-2
-49
AUD
-10%
18
94
4
64
AUD
+10%
-18
-94
-4
-64
GBP
-10%
53
223
15
150
GBP
+10%
-53
-223
-15 -150
EUR
-1%
0
-3
-9
-10
EUR
+1%
-0
3
9
10
THB
-10%
12
-266
-11
-197
THB
+10%
-12
266
11
197
The movements in the income statement arise from monetary items (cash, borrowings, receivables and payables) where the functional currency of the entity differs
from the currency that the monetary items are denominated in. The movements in equity arise from monetary items and hedging instruments where the functional
currency of the entity differs from the currency that the hedging instruments or monetary items are denominated in.
Below is an illustration of the impact in DKK million on the
net profit and changes in equity resulting from a change in
the Group’s primary foreign currencies after the effect of
hedge accounting.
FINANCIAL RISKS, CONTINUED
4.4
Credit risk
Credit risk is primarily related to trade receivables, cash and
unrealised gains on financial contracts. The maximum credit
risk related to financial assets corresponds to the carrying
amounts recognised in the consolidated balance sheet.
It is PANDORA’s policy for subsidiaries to be responsible
for credit evaluation and credit risk on their trade receivables.
In case of deviation from standard agreements, Group Treasury
and/or the CFO must approve any significant transactions
related to direct distributors and local key customers.
Note 3.4 includes an overview of the credit risk related to
trade receivables. Rating of trade receivables is not materially
different either by type of customer or geographic placement.
The risk of further impairment is considered limited.
Credit risks related to PANDORA’s other financial
assets mainly include cash and unrealised gains on
financial contracts. The credit risk is related to default of the
counterparty with a maximum exposure corresponding to
the carrying amount of the assets. It is PANDORA’s policy for
Group Treasury to monitor and manage these credit risks.
Liquidity risk
Liquidity risk is the risk that PANDORA will have insufficient
funds to meet its liabilities when due.
The aim of liquidity management is to maintain optimal
cash resources to fund PANDORA’s commitments at
all times, to minimise interest and bank costs and to
avoid financial distress. Group Treasury is responsible
for monitoring and managing PANDORA’s total liquidity
position. PANDORA currently does use cash pools, and
in addition intercompany loans exist between PANDORA
A/S and its subsidiaries. Whenever possible, liquidity is
accumulated in PANDORA A/S.
PANDORA’s cash resources comprise cash and
unutilised committed and uncommitted credit facilities. It is
Management’s opinion that the cash resources of the Group
and the Parent Company are adequate. It is PANDORA’s
policy to ensure adequate cash resources in case of
unforeseen cash fluctuations.
PANDORA has committed revolving credit facilities of
7,500 million. DKK 1,000 million are committed until June
2019 and DKK 6,500 million are committed until June 2021.
Furthermore, PANDORA has minor local uncommitted
credit facilities to ensure efficient and flexible local liquidity
management. These credits are facilitated by Group Treasury.