NOTES
82•Consolidated financial statements
PANDORAANNUAL REPORT2014
SECTION 3: INVESTED CAPITAL ANDWORKING CAPITAL ITEMS, CONTINUED
3.3 INVENTORIES
DKKmillion
2014
2013
Rawmaterials and consumables
412
327
Work in progress
71
78
Finished goods
1,054
948
Point of salematerials
147
137
Total inventories at 31December
1,684
1,490
Inventorywrite-downs at 1 January
300
208
Write-downs during the year
227
265
Utilised in the year
-264
-168
Reversal of write-downs in the year
-17
-5
Inventorywrite-downs at 31December
246
300
Thewrite-downs of inventories are recognised inCost of salesDKK 130million (2013: DKK 209million), andDistribution expensesDKK80million
(2013: DKK 51million).
Inventories at 31December 2014 include inventories at
a nominal value of DKK1,930million (2013: DKK 1,790
million), which have beenwritten down toDKK1,684
million (2013: DKK1,490million).
Silver and gold prices decreased in 2014, leading to losses
on re-melting of goods, with a negative impact on gross
profit of DKK136million (2013: DKK 189million).
Accounting policies
Inventories are valued at the lower of cost andnet realisable
value. Costs incurred in bringing each product to its present
location and condition are accounted for as follows:
• rawmaterials – purchase costs on a first-in, first-out
basis
• finished goods andwork in progress – cost of direct
materials and labour and a proportion of production
overheads based on normal operating capacity, but
excluding borrowing costs.
Significant accounting estimates
Net realisable value
Net realisable value is the re-melt value or the estimated
selling price less estimated costs of completion and
distribution.The re-melt value is based on theweight of
silver and gold in the products and themarket prices for
silver and gold on the reporting date. Future changes in the
market prices of silver or goldwill result in changes in the
re-melt value.
PANDORAdivides inventories into four categories:
introduction, released-for-sale, phasing-out and
discontinued.Group SupplyChainmonitors the sales-out
of all products and, based on sales ratios, some products
may be regarded as slow-moving and thus assigned to
the categories phasing-out or discontinued.The part of
discontinued inventory that is not expected to be sold is
written down to re-melt value. Inventories in the phasing-
out category canbe sold onnormal terms or transferred
to the discontinued category, and the amount expected to
be transferred to discontinued is thereforewrittendown as
described above.
Sales forecasts are used to assesswhichproducts in
the released-for-sale category need to bewritten down.
Inventories exceeding estimateddemand for the next 12
months arewritten down.
Historically, PANDORA has not made any significant
write-downs as a result of damaged goods.
Capitalisedproduction overheads
Capitalisedproduction overheads are calculated using
a standard cost method, which is reviewed regularly
to ensure relevant assumptions concerning capacity
utilisation, lead times andother relevant factors.The
carrying amount of capitalised productionoverheads
wasDKK39million at 31December 2014 (2013: DKK
24million).
