PARENTCOMPANY FINANCIAL STATEMENTS •107
NOTES FOR THE
PARENT COMPANY
SUPPLEMENTTOMANAGEMENT´S REVIEW FORTHEGROUP
InventoryCWE
Thefinancial statements of PANDORAA/S are affected
by a transactionwith the subsidiaryPANDORA Jewelry
CentralWestern EuropeA/S (CWE). Since2012,wholesale
inventory for all European countries has been centralised and
ownedbyPANDORAA/S. Part of the inventorywas soldby
PANDORAA/S toCWE inDecember 2014 at normal sales
prices at a total valueofDKK177million.At 31December
2014, CWE consequentlyowned thewholesale inventory
related toCWEmarkets.The transactionwas completed as
a result of the earn-out agreementwithPANDORA’s former
distributor inCentralWestern Europe inorder toneutralise
the saleof thewholesale inventory in2012.
Gross profit
TheParent Company takes back inventory from subsidiaries
for thepurposeof re-melting excess inventory.Gross profit
is significantly impactedby realised losses from re-melting
activities andunrealised losses from inventorywrite-downs.
Fluctuations inmarket prices of silver and goldhave amajor
impact on gross profit.
Hedging transactions
TheParent Company realised anet loss ofDKK7million
(2013:DKK0million) on commodityhedge contracts.Anet
loss ofDKK12million relates to the eliminationof over-
hedgedpositions.Anet gainofDKK5million (2013:DKK0
million) relates to efficient hedgingof re-melt ofmetal.
Earn-out
Changes in the valueof the earn-out provision are recognised
in the income statement as finance incomeor finance costs.
In2014, therewereno adjustments (2013:DKK0million).
1.1
1.2 BASISOF REPORTING
Parent Company financial statements
The accounting policies for the Parent Company are
unchanged from last year and identical to the accounting
policies inPANDORA’s consolidated financial statements,
with the following exceptions:
Foreign currency translation
Foreign exchange adjustments of balances accounted for
as part of the total net investment in enterprises that have
a functional currency other thanDKK are recognised in
profit for the year as net financials in the Parent Company
financial statements.
Dividends from investments in subsidiaries are recog-
nised in the financial year inwhich they are received.
Investments in subsidiaries
Investments in subsidiaries aremeasured at cost in the
Parent Company financial statements. Impairment testing
is carried out if there is any indication of impairment, as
described in PANDORA’s consolidatedfinancial statements.
The carrying amount iswritten down to the recoverable
amount whenever the carrying amount exceeds the
recoverable amount.The impairment loss is recognised as
a finance cost in profit for the year. If the Parent Company
has a legal or constructive obligation to cover a deficit in
subsidiaries, a provision for this is recognised.
Significant accounting estimates
In the process of preparing the Parent Company financial
statements, a number of accounting estimates and
judgements have beenmade that affect assets and
liabilities at the reporting date and income and expenses
for the reporting period.Management regularly reassesses
these estimates and judgements, partly on the basis of
historical experience and a number of other factors in
the given circumstances.Management is of the opinion
that no accounting estimates or judgements aremade in
connectionwith the presentation of the Parent Company
financial statements applying the Parent Company
accounting policies that arematerial to the financial
reporting, other than those disclosed in note 3.1 to the
consolidated financial statements concerning impairment
testing.
New standards and interpretations
Reference ismade to the description innote 1.1 to the
consolidated financial statements.
