NOTES
64•Consolidated financial statements
PANDORAANNUAL REPORT 2014
SECTION 1: BASIS OF REPORTING, CONTINUED
Groupcompanieswithanother functional currency thanDKK
The assets and liabilities of foreign operations are translated
intoDKK at the rate of exchange prevailing at the reporting
date, and their income statements are translated at
exchange rates prevailing at the dates of the transactions.
Exchange differences arising on translation are recognised
inother comprehensive income. On disposal of a foreign
operation, the component of other comprehensive income
relating to that particular foreign operation is recognised in
the income statement.
The consolidated income statement
The consolidated income statement is presented basedon
costs classified by function. Cost of sales comprises direct
and indirect expenses incurred to generate the revenue
for the year, comprising rawmaterials, consumables,
production staff and depreciationof production equipment.
Sales, distribution andmarketing expenses comprise
expenses related to the distribution of goods sold and sales
campaigns, including packagingmaterials, brochures,
wages and salaries and other expenses related to sales
and distribution staff and depreciation of distribution
equipment.
Administrative expenses comprise expenses incurred in
the year tomanage PANDORA, including expenses related
to administrative staff and amortisation, depreciation and
impairment losses.
The distribution of amortisation and depreciation is
presented in notes 3.1 and 3.2.
Implementation of new or amended standards and
interpretations
PANDORA has adopted all new or amended standards
(IFRS) and interpretations (IFRIC) as adopted by the EU and
which are effective for the financial year 1 January - 31
December 2014.
The implementation of the newor amended standards
has not had anymaterial impact onPANDORA’s
consolidated financial statements.
Standards issued, but not yet effective
The IASBhas issued a number of new IFRS standards,
amended standards, revised standards and IFRIC
interpretations, which are effective for financial years
beginning after 1 January 2014.
PANDORA is currently assessing the effect of implementing
IFRS 9 and IFRS 15 not yet adoptedby the EU, expected
tobe effective on 1 January 2018 and1 January 2017
respectively. All other newor amended standards and
interpretations not yet effective are not expected to have
anymaterial impact on PANDORA’s consolidated financial
statements.
Significant accounting estimates
In preparing the consolidated financial statements,
Management makes various accounting estimates and
assumptionswhich form the basis of the presentation,
recognition andmeasurement of PANDORA’s assets and
liabilities.
Determining the carrying amounts of some assets and
liabilities requires estimates and assumptions concerning
future events. Estimates and assumptions are basedon
historical experience andother factors, whichManagement
assesses tobe reasonable, but whichby their nature involve
uncertainty andunpredictability.These assumptionsmay
have to be revised, andunexpected events or circumstances
may occur.
PANDORA is subject to risks anduncertaintieswhich
may lead to actual results differing from these estimates,
both positively and negatively. Specific risks for PANDORA
are discussed in the relevant sections of theManagement’s
review and in the notes.
Management regards estimates related to return
provisions, valuation of inventories and tax as key
estimates. However, all significant accounting estimates are
described in the following notes:
Taxation
note
2.5
Impairment testing of intangible assets
note
3.1
Valuationof inventories
note
3.3
Provisions
note
3.5
Litigation
note
5.2
