NOTES
88•Consolidated financial statements
PANDORAANNUAL REPORT2014
SECTION 4: CAPITAL STRUCTURE AND NET FINANCIALS, CONTINUED
4.3
4.4
NET INTEREST-BEARINGDEBT
DKKmillion
2014
2013
Loans and borrowings, current
10
49
Cash
-1,131
-686
Net interest-bearing debt
-1,121
-637
Capital management
Theprincipal objectives of PANDORA’s capitalmanagement
are to ensure shareholders a competitive returnon their
investment and to ensure that PANDORAwill be able to
meet all the commitments set out in the loan agreements
with the banks.The basis of PANDORA’s capital
management is theNIBD/EBITDA ratio. It is the policy of
theGroup that this ratio should be between0 and1on a
12-month rolling basis. At 31December 2014, theNIBD/
EBITDA ratiowas -0.3 (2013: -0.2).
InFebruary2014, PANDORAobtainedanew revolving
credit facility in theamount ofDKK1,000million.Total
committedcredit facilities amount toDKK3,500million
(2013:DKK2,500million) andarecommitteduntil July
2018.
Accounting policies
Subsequent to initial recognition, interest-bearing loans
andborrowings aremeasured at amortised cost using
the effective interest ratemethod.Gains and losses are
recognised in the income statementwhen the liabilities are
derecognised aswell as through the effective interest rate
method.Amortised cost is calculatedby taking into account
anydiscount or premium at inception and fees and costs.
FINANCIAL RISKS
As a consequenceof its operations, investments and
financing, PANDORA is exposed to anumber of financial
risks that aremonitored andmanaged viaPANDORA’s
GroupTreasury.
Tomanagefinancial risks, PANDORAuses anumber
of financial instruments, such as forward contracts, silver
and gold swaps, currency and interest rate swaps, options
and similar instrumentswithin the frameworkof its current
policies. Financial risks aredivided into commodityprice
risk, foreign currency risk, credit risk, liquidity risk and
interest rate risk.
Financial risk related to commodity prices
PANDORA’s rawmaterial risk is the risk of fluctuating
commodity prices resulting in additional costs.Themost
important rawmaterials are silver and gold, which are
priced inUSD by suppliers.
It is the policy of PANDORA to ensure stable,
predictable rawmaterial prices. Based on a rolling
12-month production plan, the policy is for GroupTreasury
tohedge approximately100%, 80%, 60% and40%of the
risk for the following1-3months, 4-6months, 7-9months
and10-12months respectively.Anydeviation from the
policymust be approvedby theGroupCFO and theAudit
Committee. Commodityhedging is updated at the endof
eachmonthor in connectionwith revised12-month rolling
productionplans.Actual production candeviate from the
12months rollingproductions plan. In caseof deviations,
the realised commodityhedging ratio candeviate from the
estimatedhedging ratio. For fair valueof hedging instruments
seenote4.5.
Hedge ratio for the coming 12months:
Months ahead
Commodity Allmajor currencies
1-3
90-100%
100%
4-6
70-90%
80%
7-9
50-70%
60%
10-12
30-50%
40%
