PANDORA Annual Report 2017

P A N D O R A A N N U A L R E P O R T 2 0 1 7 G R O U P C O N T E N T S 6 2 This section introduces PANDORA’s accounting policies and significant accounting estimates. A more detailed description of accounting policies and significant estimates related to specific reported amounts is presented in the respective notes. The purpose is to provide transparency on the disclosed amounts and to describe the relevant accounting policy, significant estimates and numerical disclosure for each note. PANDORA A/S is a public limited company with its registered office in Denmark. The Annual Report for the period 1 January - 31 December 2017 comprises the consolidated finan- cial statements of PANDORA A/S and its subsidi- aries (the Group) as well as separate financial state- ments for the Parent Company, PANDORA A/S. The Annual Report has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and additional Danish disclosure requirements for the annual reports of listed companies. TheAnnual Report has been prepared on a historical cost basis, except for derivative financial instru- ments, which have been measured at fair value. The Annual Report is presented in Danish kroner and all amounts are rounded to the nearest million (DKK million), unless otherwise stated. The accounting policies as described below and in the respective notes are unchanged from last year. ORDE R OF NOT E S The order of the notes has been changed in the Annual Report for 2017. In 2017, PANDORA re- acquired the distribution in three countries and increased the number of stores acquired due to the strategy to increase the retail share of the busi- ness. As a result, the note relating to business com- binations has been moved from section 5 ‘Other disclosures’ to section 3 ‘Invested capital and working capital items’ as note 3.3 Business com- binations. As a consequence, the order of the oth- er notes in sections 3 and 5 have changed. A LT E RNAT I V E P E R FORMANC E ME A SUR E S PANDORA presents financial measures in the Annual Report that are not defined according to IFRS. PANDORA believes these non-GAAP measures provide valuable information to investors and PANDORA’s management when evaluating performance. Since other companies may calculate these differently from PANDORA, they may not be comparable to the measures used by other companies. These financial measures should therefore not be considered to be a replacement for measures defined under IFRS. For definitions of the performance measures used by PANDORA, refer to note 5.5. NOTE 1.1 P R I NC I PA L ACCOUNT I NG POL I C I E S ACCOUNTING POLICIES The overall accounting policies applied to the Annual Report as a whole are described below. The accounting policies related to specific line items are described in the notes to which they relate. The description of accounting policies in the notes forms part of the overall description of the ac- counting policies of PANDORA: 2.1 Revenue 2.3 Staff costs 2.4 Share-based payments 2.5 Income taxes 2.5 Deferred tax 3.1 Intangible assets 3.2 Property, plant and equipment 3.3 Business combinations 3.4 Inventories 3.5 Trade receivables 3.6 Provisions 4.2 Earnings per share and dividend 4.3 Net interest-bearing debt 4.5 Derivative financial instruments 4.6 Net financials THE CONSOL I DAT ED F I NANC I A L S TAT EMENT S The consolidated financial statements comprise the financial statements of the Parent Company and its subsidiaries. Subsidiaries are fully consoli­ dated from the date of acquisition, being the date on which PANDORA obtains control, until the date that such control ceases. All intercompany balances, income and expenses, unrealised gains and losses and dividends resulting from intercom- pany transactions are eliminated in full. FUNCT I ONA L AND P R E S ENTAT I ON CURR ENCY The consolidated financial statements are present- ed in Danish kroner, DKK, which is also the func- tional currency of the Parent Company. Each sub- sidiary determines its own functional currency, and items recognised in the financial statements of each entity are measured using that functional currency. TRANSACTIONS AND BALANCES Transactions in foreign currencies are initially recognised in the Group entities at their respective functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rate of exchange ruling at the reporting date. All adjustments are recognised in the income statement. Non-monetary items that are measured in terms of historical cost in a foreign currency are trans- lated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.