96 / 143
NOTES
94 • Consolidated financial statements
PANDORA ANNUAL REPORT 2016
SECTION 3: INVESTED CAPITAL AND WORKING CAPITAL ITEMS, CONTINUED
3.1 INTANGIBLE ASSETS, CONTINUED
Goodwill
Goodwill was mainly acquired in connection with the
acquisitions of PANDORA Jewelry A/S, PANDORA Jewelry
America ApS (subsequently merged with PANDORA A/S),
PANDORA Production Co. Ltd. and Pilisar ApS on 7 March
2008, AD Astra Holdings Pty Ltd. in July 2009, PANDORA
Jewelry Central Western Europe A/S in 2010, distributors
and concept stores acquired. Additions in 2016 relate to
acquisitions of companies and activities. Note 5.1 includes
an overview of the acquired goodwill.
Brand
The brand ‘PANDORA’ is the only brand of the Group that is
capitalised in the financial statements. It comprises a group of
complementary intangible assets relating to the brand, domain
name, products, image and customer experience related to
products sold under the PANDORA brand. The brand was
acquired as part of the PANDORA core business in 2008.
Distribution network
The distribution network covers PANDORA’s relations with
its distributors. The main part of the distribution network
was acquired with the PANDORA core business in 2008.
Distribution rights
Distribution rights are mainly related to the distribution
rights for PANDORA products in North America. They were
acquired with the American distributor in 2008 and the
carrying amount was DKK 1,034 million at 31 December
2016 (2015: DKK 1,034 million).
Other intangible assets
Other intangible assets mainly comprise software and key
money.
Accounting policies
All intangible assets are tested for impairment if there is any
indications of impairment or at least annually.
Goodwill
Goodwill is initially recognised at the amount by which
the purchase price for a business combination exceeds the
recognised value of the identifiable assets and liabilities
assumed. Goodwill comprises future growth expectations,
buyer-specific synergies, the workforce in place and
know-how. Subsequent to initial recognition, goodwill
is measured at cost less accumulated impairment losses.
Goodwill is not amortised, and impairment losses charged
in previous years are not reversed.
Brand
Brand is measured based on the “Relief from Royalty”
method, which is considered to have an indefinite useful life.
Distribution network
The distribution network is initially recognised at fair value
based on an estimation of the costs the entity avoids by
owning the intangible assets and not needing to rebuild the
network (the cost approach). The distribution network is
amortised over an expected useful life of 15 years.
Distribution rights
The distribution rights for PANDORA products in the North
American market are measured based on a residual model,
since the distribution agreement underlying the distribution
rights is non-terminable. Consequently, the distribution
rights are considered to have an indefinite useful life.
Other acquired distribution rights are measured based
on the “Multi-period Excess Earnings” model and amortised
over their expected useful lives.
Carrying amounts of recognised goodwill:
DKK million
2016
2015
PANDORA core business
1
802
790
PANDORA Jewelry America ApS, the American distributor
300
291
AD Astra Holdings Pty Ltd., the Australian distributor
313
306
PANDORA Jewelry Central Western Europe A/S, the German distributor
605
605
Other distributors
551
432
Total
2,571
2,424
1
PANDORA’s acquisition of all of the voting shares in PANDORA Production Co. Ltd., Populair A/S and Pilisar ApS. The companies comprise the Thai crafting
facilities and the former Danish headquarters.