ANNUAL REPORT 2020
46 Group
91 Management statement
92 Independent auditors’
report
4 At a glance
6 Letter to the shareholders
7 Executive summary
9 Five-year summary
10 2020 highlights
12 2021 nancial guidance
32 Corporate governance
36 Board of Directors
38 Executive Leadership Team
39 Shareholder information
16 Business model
17 Programme NOW
20 Industry trends
23 Sustainability
27 Managing risks
3
15
31
41
45
THE BIG PICTURE
CORPORATE
GOVERNANCE
FINANCIAL
REVIEW
FINANCIAL
STATEMENTS
OUR BUSINESS
CONTENTS
22
01
THE BIG PICTURE
Pandora is the world’s largest jewellery brand. Known by
more consumers and crafting more jewellery than any
other brand in the industry, we provide aordable luxury
to consumers in more than 100 countries.
Made from high-quality materials and with endless
possibilities for personalisation, millions of people
around the world cherish and collect Pandora to express
who they are and what matters to them.
We give a voice to people’s loves.
44
THE BIG PICTURE
MILLION VISITS TO
OUR PHYSICAL AND
ONLINE STORES
2020
DKK BILLION
REVENUE
2020
UNRIVALLED
CRAFTING FACILITIES
in Bangkok and Chiang
Mai, Thailand
GROWTH IN
ONLINE SALES
POINTS OF SALE
IN MORE THAN
100 COUNTRIES
>650
2
>85
19.0
103%
>7,000
PANDORA AT A GLANCE
NO. JEWELLERY BRAND
IN THE WORLD
EMPLOYEES
26,000
MILLION PIECES
OF JEWELLERY SOLD
2020
See more
OF OUR SILVER AND GOLD
IS FROM RECYCLED SOURCES
saving us 20,000 tonnes CO
2
60%
55
THE BIG PICTURE
For Pandora, 2020 was a paradox. On the one hand, the pandemic
forced us to temporarily close most of our stores and revenue
declined dramatically. Many commercial plans had to be cancelled or
postponed, as focus shifted to protecting customers and employees.
On the other hand, 2020 marked a milestone in the company’s
turnaround. We are reigniting the desire for Pandora. The positive
brand development that started towards the end of 2019 continued,
as we cemented our position as a desirable and aordable luxury
brand. The strategic initiatives under Programme NOW showed very
strong results, and our share price increased 135%. Total shareholder
return topped both the Danish C25 and the STOXX 600 Personal &
Household Goods indices.
We were able to leverage new consumer insights across the business
and despite the disruption from COVID-19, our retail operations
proved their resilience. This was particularly evident in our online
stores. As social distancing put limits on physical retail, and brick-
and-mortar stores had to close, we were able to recoup a lot of
revenue thanks to our signicant investments in digital initiatives in
recent years. Pandora’s online revenue doubled in 2020.
We will continue to invest in our digital capabilities, omnichannel
initiatives, and data analytics. These are core elements of the brand’s
future, as we aim to stay relevant to dierent consumer groups while
being very competitive in our go-to-market strategies.
In 2020, we changed the way Pandora operates. We completed a
strategic reorganisation to bring Pandora closer to consumers and
ensure more consistent global execution of our product and market-
ing concepts. The reorganisation has enabled faster decision-making
and better collaboration. Our agility and operational excellence
during the pandemic are solid evidence of the new organisation.
Pandora also made great progress on the sustainability front in 2020.
We committed to becoming carbon neutral in our own operations by
2025, reducing emissions in our full value chain in line with the Paris
Agreement, and switching to using only recycled silver and gold in
our products by 2025. These decisions will greatly benet the envi-
ronment and have set a new standard for responsible production
in the jewellery industry. We also extended our collaboration with
UNICEF after having raised USD 3.4 million for vulnerable children in
the rst year of the partnership. Some of the funds were directed to
COVID-19 relief.
We are now preparing a new chapter for Pandora. Programme NOW
was launched in late 2018 as a two-year transformation programme
with the main objective of halting the decline in revenue. It has
changed the company, and the transformation is nearing its comple-
tion. We look forward to presenting a new strategy and embarking
on the next era for the company – an era of growth – in support of
our aim to give a voice to people’s loves.
We would like to thank all Pandora’s employees for their commit-
ment, innovation and perseverance during a very challenging year.
PETER A. RUZICKA
Chair of the Board
of Directors
ALEXANDER LACIK
President & CEO
TURNAROUND
NEARLY COM
PLETE DESPITE
GLOBAL CRISIS
A review of 2020 can only begin with one topic. A terrible pandemic
swept the world, upending lives and societies everywhere. The im-
pact on individuals, communities, and businesses has been severe,
and we all hope for brighter times in the new year.
LETTER TO THE SHAREHOLDERS
66
THE BIG PICTURE
SOLID PERFORMANCE
AS BRAND STRENGTHENS
EXECUTIVE SUMMARY
Over the past two years, we have worked to
transform our business with the Programme
NOW initiatives and infuse new energy into
the Pandora brand.
Our strong performance during the pandemic and our high
consumer engagement show that Pandora’s brand momentum
continues to strengthen.
The main commercial initiatives of Programme NOW kicked
o with the brand relaunch on 29 August 2019. In Q4 2019, we
saw the rst encouraging results, as like-for-like sales growth
improved compared to the prior quarters of 2019. This trend
continued in early 2020, where Pandora generated positive
like-for-like in January and February (excluding China).
In 2020, Pandora’s nancial results were severely impacted by
COVID-19 and the temporary closures of most of our stores
and reduced footfall in open stores. Despite the impact,
Pandora generated 4% organic growth in Q4.
It is clear that Pandora has taken signicant steps in 2020
towards the key objective of Programme NOW, stabilising
the top-line after years of like-for-like revenue decline.
Read more about Programme NOW on page 17
Since the outbreak of COVID-19, we have taken a number of
steps to navigate through the crisis in a socially responsible
way. We have prioritised a safe environment for employees and
customers, and we have put in place all necessary measures to
comply with local authorities’ guidelines on social distancing
and other safety requirements. When stores were forced to
close, we guaranteed full base pay for our employees.
During the rst lockdowns in spring, Pandora took a number
of steps to secure a very robust liquidity position and protect
our protability as revenue declined. These measures enabled
a strong commercial comeback when stores reopened after
the lockdowns. The commercial plan was based on ensuring
available and motivated store sta, actively managing fresh
Online
sales growth
accelerated
during the
lockdowns
inventory, and continuing a strong media and marketing push.
These decisions produced encouraging results, as consumers
returned to stores and Pandora has taken market share, exclud-
ing China, in a highly fragmented industry.
77
THE BIG PICTURE
Global sell-out growth (equivalent to like-for-like growth
including temporarily closed stores) improved step by step
from the low-point in April 2020. From November 2020, a wave
of COVID-19 lockdowns in key European markets, including
France, the UK and Germany, and restrictive retail guidelines
in most other European markets had a negative impact on our
performance in the important fourth quarter. The negative
impact on performance from COVID-19 store restrictions ap-
pears to have been (partially) oset by a non-recurring positive
impact from reallocation of consumer spending away from
travelling and services towards gifting and discretionary goods.
Sell-out growth was -39% in Q2 2020, -2% in Q3 2020 and 1% in
Q4 2020. The full-year ended at -12%.
E-commerce has been a positive highlight in 2020 and a
signicant driver of our resilient and robust performance. We
relaunched our online business in 2019 and have been deliver-
ing strong results ever since. Online sales growth accelerated
signicantly during the lockdowns, as Pandora successfully
steered customers from oine to online, generating 103%
online sell-out-growth for the year. Digital initiatives will con-
tinue to be prioritised and are considered core for the brand’s
future.
Brand momentum remains strong in a changed retail
environment
In Q4 2020, we took a number of actions to manage the busy
holiday shopping in stores operating under social distancing
requirements. These initiatives centred on three objectives:
• Accommodate peak trac into physical stores through a com-
bination of increasing available store space and decreasing
transaction time in an already fast transaction environment.
• Stretch peak trading periods over longer time through a
combination of tactical promotions and managing media push.
• Transfer trac from oine to online through digital oerings,
media planning, and by providing other incentives for consumers
to access the Pandora brand online.
The initiatives were successful, and from mid-november to 31
December online transactions increased by 87% on last year.
Financial performance
Even though 2020 was an exceptionally challenging and
unpredictable year, Pandora was still highly protable and
cash-generative. The EBIT margin excluding restructuring costs
was 20.4% and cash conversion including lease payments was
183%. This is testimony to the robustness and inherent nancial
attractiveness of the business.
Sell-out growth was -12% and organic growth -11%. Permanent
store closures negatively impacted revenue by around 1% and
adverse foreign exchange developments impacted revenue by
-3%. Total reported revenue ended at DKK 19.0 billion (-11%
growth in local currency compared with 2019).
The two new Global Business Units, Moments and Collabs and
Style and Upstream Innovation, generated sell-out growth of
-13% and -12% respectively. The total share of business for
Charms and Bracelets was 71%, in line with 2019 and continuing
to be the core of Pandora business. Pandora will continue to
invest in new designs and develop the product oering.
Earnings before interest and tax (EBIT) excluding restructuring
costs were DKK 3.9 billion in 2020. Restructuring costs amount-
ed to DKK 1.2 billion.
1
Pandora does not own any of the premises (Land and buildings) where stores are
operated. Pandora exclusively operates stores from leased premises.
TOTAL SELL-OUT GROWTH
%
REVENUE BY CHANNEL
DKKm
NUMBER OF CONCEPT
STORES
0
10
20202019
Q1 Q1Q2 Q2Q3 Q3Q4 Q4
2019 2019
Pandora online stores
Pandora owned
1
Partner owned
11,399
1,397
2,782
1,373
7,687
21,868
2,770
REVENUE IN KEY MARKETS
DKKm
REVENUE IN GLOBAL
BUSINESS UNITS
DKKm
2020 2019
2020 2019
0
0
UK
Italy
Moments and Collabs
France
Germany
US
Australia
China
2,000
6,000
4,000
12,000
6,000
18,000
7,943
5,483
5,583
19,009
2020 2020
1,382
1,308
2,690
Style and Upstream Innovation
88
THE BIG PICTURE
Figures have been restated to reect the adoption of IFRS 15.
Comparative gures have not been restated following the adoption of IFRS 16 Leases.
Like-for-like excluding stores which have been temporarily closed in 2020 due to COVID-19 (2019: excluding Hong Kong SAR in Q3 and Q4 due to the
extraordinary turmoil in the market).
Excluding sale of treasury shares amounting to DKK 1.8 billion in Q2 2020.
Proposed dividend per share for the year.
Paid quarterly dividend per share for the period.
For 2016 and 2017, Invested capital and NIBD have been restated due to immaterial reclassications. Consequently, NIBD to EBITDA and ROIC have been
recalculated.
DKK million 2020 2019 2018 2017
,
2016
,
Key nancial highlights
Organic growth, % 11% 8% 2% 11% NA
Sell-out growth, incl. temporarily closed stores, % 12% 8% 4% 0% 8%
Total like-for-like sales out, % 1% 8% 4% 0% 8%
Gross margin excl. restructuring costs, % 765% 774% 743% 745% 751%
EBIT margin excl. restructuring costs, % 204% 268% 282% 342% 365%
Consolidated income statement (reported)
Revenue 19009 21868 22806 22781 20281
Earnings before interest, tax, depreciation
and amortisation (EBITDA) 4999 6148 7421 8505 7922
Operating prot (EBIT) 2684 3829 6431 7784 7404
Net nancials 190 1 151 117 246
Net prot for the period 1938 2945 5045 5768 6025
Financial ratios
Revenue growth, DKK, % 13% 4% 0% 12% 21%
Revenue growth, local currency, % 11% 6% 3% 15% 24%
Gross margin (reported), % 756% 727% 743% 745% 751%
EBITDA margin (reported), % 263% 281% 325% 373% 391%
EBIT margin (reported), % 141% 175% 282% 342% 365%
Eective tax rate, % 223% 231% 234% 248% 212%
Equity ratio, % 37% 24% 33% 37% 44%
NIBD to EBITDA excl. restructuring costs, x 05 11 08 06 03
Return on invested capital (ROIC), % 25% 27% 53% 68% 80%
Cash conversion incl. lease payments, % 183% 133% 86% 68% 72%
Operating working capital, % of last 12 months' revenue 21% 31% 112% 131% 137%
DKK million 2020 2019 2018 2017
,
2016
,
Stock ratios
Total payout ratio (incl. share buyback), % 65% 147% 104% 99% 91%
Dividend per share, DKK 90 90 90 90
Quarterly dividend per share, DKK 90 90 270
Earnings per share, basic, DKK 200 303 472 520 528
Earnings per share, diluted, DKK 199 301 470 518 525
Consolidated balance sheet
Total assets 19984 21571 19244 17428 15321
Invested capital 10540 14268 12071 11369 9242
Operating working capital 391 684 2555 2988 2782
Net interest-bearing debt (NIBD) 3151 9019 5652 4855 2448
Equity 7389 5249 6419 6514 6794
Consolidated statement of cash ow
Cash ow from operating activities 5975 6775 6624 6606 6531
Capital expenditure – total 491 822 1129 1388 1199
Capital expenditure – property, plant and equipment
369 556 753 946 828
Free cash ow incl. lease payments 4908 5075 5558 5294 5358
FIVEYEAR SUMMARY
99
THE BIG PICTURE
HIGHLIGHTS
Strategic reorganisation to build
a world-class brand
In 2020, we reorganised Pandora to move us closer
to consumers. We brought local markets closer
to our Global Oce by closing our three regional
organisations, and we set up two global business
units with product responsibility across the full
value chain. We established a new retail centre of
excellence to drive best practice across stores
and improve merchandising, store development,
planning and execution. Among other benets, the
reorganisation has enabled faster decision-mak-
ing and better collaboration in the company. This
has improved supply chain management and mer-
chandising and led to higher conversion rates.
All jewellery to be made from
recycled silver and gold
To reduce carbon emissions and other
harmful environmental and social impacts
from mining, we announced that we will
stop using newly mined silver and gold in
our jewellery by 2025 and buy only from
recycled sources. The emissions for
recycled silver are one third compared
to mined silver, while recycling of gold
emits 600 times less carbon than mining
new gold. In 2020, around 60% of our
silver and gold was recycled.
In summer 2020, Pandora funded UNICEF’s
One Love campaign to prevent the pandemic
from becoming a lasting crisis for children. As
part of the campaign, the family of Bob Marley
re-recorded 'One Love' – the iconic song with
a universal message of love and solidarity.
Pandora matched public donations to the
campaign up to USD 1 million. In 2019, we
formed a long-term partnership with UNICEF
to help reach more than 10 million children
and young people worldwide and provide
them with opportunities to learn, express
themselves and nd work in the future. In total,
we raised USD 3.4 million for UNICEF in the
partnership’s rst year.
Silver is the most used material in
Pandora jewellery, accounting for
over half of all purchased product
materials measured by weight.
Pandora donates USD 1 million
to UNICEF's COVID-19 response
1010
THE BIG PICTURE
Launch of the Digital Hub
In July 2020, we inaugurated the Digital Hub,
a new oce space in Copenhagen that houses
a group of almost 100 software engineers, user
experience designers and web and data ana-
lysts. The group is tasked with boosting Pan-
dora’s digital presence, omnichannel expertise
and use of data. Due to COVID-19, our digital
capabilities were immediately in high demand,
and we introduced a number of new solu-
tions to create an exciting and safe shopping
experience. These solutions included a Remote
Shopping Assistant, a virtual try-on simulation,
online queueing and appointment booking.
Read more on page 14
Online sales set records
Lockdowns and social distancing changed global retail
dramatically in 2020. We had to temporarily close
most of our stores during the year, but we were able
to recoup a large part of the lost sales through our
online stores. Online sales increased 103% in 2020
compared to 2019 to make up 29% of revenue. In
Q2, online sales surpassed physical retail for the rst
time ever, making up 52% of revenue in the quarter.
Bringing the Star Wars galaxy
to life through jewellery
We launched a 12-piece capsule collection
of Star Wars
TM
-inspired jewellery in collabo-
ration with Lucaslm. The highly-anticipated
line included a bracelet and charms featuring
beloved Star Wars characters and symbols.
The collection proved popular among consum-
ers and accounted for 4% of total revenue in
its rst month. The Child charm was the most
popular piece, selling more than 100,000
pieces in December alone.
ONLINE SALES
GROWTH IN
2020
103%
1111
THE BIG PICTURE
In the absence of COVID-19 impact, we would guide for slightly
positive organic growth in 2021 versus 2019. However, we
expect 2021 to be impacted by COVID-19 and performance
therefore remains highly uncertain.
Including an assumed -6% COVID-19 impact on organic growth
in 2021, Pandora guides as follows for 2021:
STABILISING THE TOPLINE
In 2021, Pandora expects to reach an impor-
tant milestone: returning to top-line growth
after three years of decline.
Ocial
2021 Guidance
Excluding impact
from COVID-19
Including impact
from COVID-19
Organic revenue
growth
Above 14%
Above 2%
versus 2019
Above 8%
Above 3%
versus 2019
EBIT margin
Above 23% Above 21%
Excluding the assumed COVID-19 impact in 2021, the guidance
represents 2% organic growth compared to 2019 and an EBIT
margin above 23%.
Revenue guidance
The guidance is based on the assumption that approximately
25% of the stores will be temporarily closed during the rst
half of 2021 and that organic growth will be negatively impacted
by around -16% in the rst half (around -6% full year impact).
For the second half of 2021, it is assumed that there are no
signicant store closures and that COVID-19 related store
restrictions will have limited impact.
The guidance is also based on the assumption that the posi-
tive impact seen in late 2020 from reallocation of consumer
spending away from travelling and services towards gifting and
discretionary goods was not larger than the negative impact
from temporary store closures.
Pandora expects China will remain a drag on total revenue
growth in 2021 and that revenue in China in 2021 will be well
below 2019. China remains top priority and a signicant growth
opportunity for Pandora.
FINANCIAL GUIDANCE
FULL-YEAR 2021 ORGANIC GROWTH GUIDANCE BRIDGE
2020
revenue
Network
development
Sell-out growth
in own channels
& sell-in to
partners
2021
expectations
pre COVID-19
impact
2021 incl.
COVID-19
COVID-19
impact
~0%
>14%
~-6%
Above
14%
Above
8%
2021 vs 2019
2019
revenue
Network
development
Sell-out growth
in own channels
& sell-in to
partners
2021
expectations
pre COVID-19
impact
2021 incl.
COVID-19
COVID-19
impact
~ -1%
>3%
~ -5%
Above
2%
Above
-3%
2021 vs 2020
1212
THE BIG PICTURE
Average 2020 3 February 2021
FX ASSUMPTIONS AND
IMPLICATIONS FX Rates FX rates
2021 Y-Y nancial
impact
USD/DKK 65422 61891
THB/DKK
02091 02060
GBP/DKK 83890 84378
CNY/DKK 09476 09582
AUD/DKK 45069 47129
REVENUE (DKKm) 200 to 250
EBIT (DKKm) 100
EBIT margin 05%
Forward integration is expected to add around 1% to revenue
in 2021. Furthermore we expect headwind from foreign ex-
change rates of approximately -1% taking total revenue growth
in DKK to above 8% in 2021.
Protability guidance
The 2021 EBIT margin is expected to be “above 21%” including
negative COVID-19 impact of around 2pp . The building blocks
in the guidance are illustrated by the bridge. It shows there is
signicant positive operating leverage in the business model. In
the EBIT margin guidance for 2021, however, this is not directly
visible due to continued COVID-19 headwind and higher com-
modity prices.
The quarterly phasing of the EBIT-margin obviously depends on
the COVID-19 development. As in prior years and in line with
normal seasonality, Q4 is expected to be by far the most prot-
able quarter of the year.
2021 Guidance – other parameters
CAPEX for the year is expected to be in the range of DKK 1.0-1.2
billion. This includes investments in Pandora’s physical stores,
the crafting facilities in Thailand as well as digitalisation and
technology. No major changes to the overall concept store
network is expected in 2021. The eective tax rate is expected
to be 22-23%, in line with 2020.
Capital structure policy and cash distribution
Entering 2021, Pandora’s leverage is 0.5x EBITDA and thereby in
the very low end of the capital structure policy. Based on the
guidance, Pandora is – everything else equal and in the absence
of cash distribution – likely to end 2021 with a leverage close
to 0. This is a strong position to be in and would under normal
circumstances allow for signicant cash distribution to the
shareholders in 2021.
Due to the unprecedented situation caused by the pandemic
and the elevated uncertainty following this, Pandora will
postpone further cash distribution until the pandemic is under
sucient control. Pandora stresses that the capital structure
policy is unchanged. While we await a more stable and predicta-
ble situation, Pandora will preserve the cash and be ready to
distribute it in an accelerated manner later on. In order to
prepare for a potential re-initiation of cash distribution later in
2021, Pandora will ask the shareholders at the Annual General
Meeting in March 2021 to authorise the Board of Directors to
potentially pass one or more resolutions to distribute extraor-
dinary dividends up to a total amount of DKK 15 per share until
the next annual general meeting.
FULL-YEAR 2021 EBIT MARGIN GUIDANCE BRIDGE
%-point approximations
EBIT
margin
2020
2021
growth
leverage
No gov-
ernment
support
or rent
concessions
Commod-
ities, FX &
other
EBIT margin
expectations
pre COVID-19
Elevated
COVID-19
risk
Cost actions &
government
support
2021 EBIT
margin
guidance
20.4%
~5.5%
Above
23%
~-2.5%
~-0.5%
Above
21%
~-1.5%
~ -1.0%
2021 expectations before COVID-19 impact
1313
THE BIG PICTURE
BUILDING FOR
A DIGITAL FUTURE
From strategy to impactful execution
Pandora has moved fast on its digital transformation. Since
the brand relaunch in 2019, we have completed a compre-
hensive overhaul of our online stores and consolidated the
technologies they run on, making it much easier to implement
new features and update content. In key markets, Pandora
has also launched several new omnichannel features, such as
Click & Collect, and we have introduced personalised market-
ing initiatives that are more relevant for each consumer.
In 2021, Pandora will accelerate the digital journey, in particu-
lar by building more capability in data science and engineer-
ing and by further leveraging data and advanced analytics to
drive growth. Our continued focus on creating great digital
experiences for our customers will move Pandora to a digital
leadership position in the industry.
At Pandora, we have established a specialist
digital unit at our headquarters in Copenhagen
to boost our digital presence, omnichannel
expertise and smart use of data.
20 dierent nationalities
work at our new Digital Hub
in Copenhagen.
In 2020, almost 100 software engineers, user experience
designers, web and data analysts, and other digital profes-
sionals moved into the Digital Hub, a new oce space at our
Copenhagen headquarters. They are tasked with progress-
ing Pandora’s digital customer experience and driving sales
through digital channels.
The group will also strengthen Pandora’s ability to capture,
analyse and apply customer data to enable better personali-
sation of the customer experience.
“Today’s consumer demands more personalised products,
services and interaction. How we derive the benets from
technology and data to create a great customer experience is
key for us as a global brand. By making signicant investments
in our technological capabilities, we will enhance the direct
and meaningful connection with our customers,” says David
Walmsley, Chief Digital & Technology Ocer.
1414
STORY
02
OUR BUSINESS
BRAND ACCESS
Consumers connect with us
through more than 7,000 points
of sale, 16 online stores, social
media and other platforms –
by far the largest distribution
network in the industry.
DESIGN
Building on deep consumer
insights and trend research,
our design team adds creative
inspiration for the launch of
more than 400 new design
variations each year.
KEY RESOURCES
VALUE CREATED
BUSINESS
MODEL
Consumers
In 2020, we had more than 650 million visits
to our physical and online stores. Consum-
ers wear our affordable luxury to express
themselves and share their passions. We
give a voice to people’s loves.
Community
We directly sustain tens of thousands of
jobs at Pandora and our franchise part-
ners, and we spent almost DKK 12 billion
on goods and services in 2020, creating
growth and jobs among our large network
of suppliers. We pay corporate tax in the
countries where we operate and are con-
sistently among the ten largest taxpayers
in Denmark.
Employees
We offer our employees a great and safe
place to work and are focused on creating
rewarding careers with high satisfaction
and motivation.
Investors
In 2020, we paid an ordinary dividend
of DKK 825 million and generated a total
shareholder return of 145%.
Brand
Pandora is known by more consumers than
any other jewellery company.
Employees
Our 26,000 talented employees work across
a fully integrated value chain.
Data & technology
Our digital capabilities enable us to create
an exciting and personal shopping experi-
ence across all channels.
Stakeholder relationships
Our relationships with customers, business
partners, suppliers and franchisees are key
to the business.
Financial resources
Strong margins and high cash generation
constitute a robust financial position.
CRAFTING
Our crafting capacity is the
largest in the industry and
provides flexibility and scal-
ability. It enables us to craft
hand-finished jewellery
from precious metals at
affordable prices.
MARKETING
We use data to reach specific
audiences with customised
messages across multiple
channels. This results in
unmatched brand awareness
and high conversion rates.
1616
OUR BUSINESS
Launch and leverage
In 2018, Pandora conducted a company-wide health and e-
ciency assessment. We had high brand awareness, a global retail
footprint, great creative capabilities, and an unrivalled produc-
tion setup. However, comparable sales (like-for-like) were in
decline, and the brand was in need of rejuvenation.
The ensuing turnaround plan, Programme NOW, was designed
around four transformation objectives to create the needed
stabilisation of the business: brand relevance, brand access, cost
reset, and commercial reset.
Brand relevance
The brand relevance objective has focused on reigniting brand
identity and enhancing the brand’s relevance and ability to
excite consumers. In August 2019, we relaunched the brand
with a clearer denition of the brand purpose and position.
We stripped the Pandora brand back to its core, focusing on
self-expression, collectability and aordability, and we signi-
cantly increased our media and marketing investments.
The brand relaunch showed encouraging results towards the
end of 2019, and the brand momentum drove positive organic
growth in January and February 2020. Then the global pandemic
hit, but we continued to see encouraging results from our
brand initiatives. As stores reopened after the lockdowns in
spring, we used our strong nancial position to create addi-
tional brand awareness by increasing media spend across all
channels ranging from TV campaigns and digital ads to e-mail
marketing. More personalised e-mails have performed particu-
larly well, proving the eectiveness of data-driven marketing
initiatives.
Central to all these eorts has been an ambition to strengthen
the focus on the brand’s core: aordable jewellery that allows
for collectability and self-expression.
Brand access
Another key objective of Programme NOW was to improve
consumers’ experience when they access the brand. Following
the brand relaunch, we upgraded our online stores to our new
PROGRAMME
NOW
We upgraded
the online
stores to
the new visual
improved
navigation
For two years, Programme NOW has set the direction for Pandora's
turnaround, aiming to stabilise the top-line while maintaining our
industry-leading protability. The programme is nearing its conclusion,
and the company is preparing to enter the next phase.
Since Q3 2020, we have been applying a new
”launch and leverage”-approach when launching
products. Instead of short-lived launches, we ex-
tend the lifecycle of new concepts by continuous-
ly building upon them. The objective is to properly
invest in successful product collections and to
build long-term, recognisable platforms.
AUGUST & SEPTEMBER
We launched new collections
with the focus as much on base
products as newness in cam-
paigns and merchandising.
Reaching younger con-
sumers with the Pandora
ME collection in collabo-
ration with actress Millie
Bobby Brown.
JULY
We reactivated Pandora ME and
the Harry Potter collaboration
with new products
1717
OUR BUSINESS
visual identity and signicantly improved website navigation,
imagery, and check-out ow to enable a smoother and faster
shopping experience.
With the establishment of the Digital Hub in 2020, our digital
initiatives have gained signicant momentum, beneting impor-
tant aspects of the business such as faster code roll-out to sites,
personalisation and stronger merchandising. The Digital Hub has
also been instrumental in connection with the roll-out of new om-
nichannel capabilities in the markets, such as Click & Collect and
“BORIS” (Buy-Online-Return-In-Store). In the US, almost 300 stores
now oer Click & Collect, and so do most of Pandora’s UK stores.
To overcome some of the social distancing challenges in Q4, we ac-
celerated the roll-out of “Endless Aisle” (Go-In-Store-Buy-Online)
to cover major European markets and Australia.
During 2019, we ran pilots of a new store design in our physical
stores. Consumers appreciated the pilot, but overall sales perfor-
mance did not match expectations. We have established a new
team to drive our future store design concept. Their focus will be
to optimise and redesign the in-store consumer journey.
Cost reset
The cost reset objective served to fund Programme NOW’s growth
initiatives and support protability, particularly by reducing costs
in production, stores, IT and administration. During 2019 and
2020, we have gradually raised our annual cost savings target from
DKK 1.2 billion at the outset of the programme to DKK 1.6 billion.
Exiting 2020, the target has been reached. The cost reset initiatives
have been integrated into daily operations and will continue after
Programme NOW.
Commercial reset
The Programme NOW analysis showed that excessive promotional
activity up until 2018 had diluted Pandora’s brand equity and led
consumers to wait for the next promotion instead of buying at full
price. Additionally, too many new product introductions coupled
with an immature merchandising process had led to a cluttered
assortment presentation in stores and a build-up of inventory.
The commercial reset initiative addressed these issues by sig-
nicantly reducing non-value adding promotions and lowering
inventory levels at franchise partners. This initiative has delivered
a healthier promotional dependency, appropriate inventory levels
at franchisees, and fewer products, leading to less complexity and
more cost savings. The initiative was completed in 2019.
From turnaround to growth
In late 2018, we launched Programme NOW as a two-year trans-
formation with the main objective of halting the revenue decline.
Now, two years into the programme, Programme NOW has changed
Pandora and delivered very strong results. Pandora has now built
the foundation to embark on a new era of growth.
Despite COVID-19 disruptions, the formal restructuring pro-
gramme was completed in 2020. Consequently, there will be no
further Programme NOW restructuring costs in 2021 and onwards.
In 2021, we will continue to improve brand relevance and drive
retail metrics leveraging the learnings from Programme NOW. We
have initiated preparations for a new strategy, which we expect to
launch during 2021.
In 2021, we
will continue
to improve
-
vance and
drive retail
metrics
leveraging
the learn-
ings from
Programme
NOW.
New omnichannel features provide our customers with a seam-
less shopping experience across physical and online stores.
Programme NOW has reduced annual costs by DKK 1.6 billion.
The savings are used to fund new growth initiatives.
A simplified portfolio of products has reduced design and
production costs while improving sales and inventories.
FAST OMNICHANNEL ROLL-OUT
Number of stores
SIGNIFICANT COST RESET SAVINGS
400
4 0.8
0
0 0
600
6 1.2
800
8 1.6
2018
Q1'19 Q1'20Q2'19 Q2'20Q3'19 Q3'20Q4'19 Q4'20
20202019
Click & Collect Endless Aisle
Realised run rate savings as percentage of 2020 revenue
Cost savings target
1,000
10 1.8
% DKK
200
2 0.4
0
174
414
861
4
PRUNING OF PRODUCT ASSORTMENT
Number of design variations
1,600
1,400
1,800
2018 20202019
2,000
1,821
1,916
1,448
1818
OUR BUSINESS
INVESTING IN OUR PEOPLE
AND ORGANISATION
Building a high-performance organisation
The new operating model led to a signicant strengthening of
the organisation. We hired more than 800 colleagues globally,
bringing new capability and competency to our transforma-
tion. Additionally, we introduced a new global six-layered
career band and title structure to drive transparency and
facilitate career development, talent management and re-
cruitment.
“Our global restructuring has been a key component in deliv-
ering our turnaround and preparing us for long-term growth.
The changes have helped reduce organisational complexity,
strengthen decision-making, and add critical capabilities and
talents. It’s been a well-placed investment in growth and build-
ing a leading organisation for top talent and professional devel-
opment,” says Erik Schmidt, Chief Human Resources Ocer.
Supporting store employees during lockdown
At Pandora, we continued to invest in our employees during
the pandemic. To protect the livelihoods of our store sta,
we maintained normal scheduled base pay during lockdowns.
This reects our commitment to people and also meant
that Pandora was ready to capture demand when markets
reopened.
Building for the future, Pandora made signif-
icant investments in our global organisation
during 2020 with a new consumer-oriented
operating model and a commitment to sup-
port our more than 11,600 store employees by
maintaining salaries when stores were closed
during pandemic lockdowns.
In the midst of the rst lockdowns, we launched our new
operating model to bring Pandora closer to consumers and
ensure faster and more consistent execution. The strategic
reorganisation was a key component of Programme NOW,
and we established two Global Business Units responsible for
product performance all the way from early market research
to nal sales.
In addition, we removed the regional layer and grouped our
more than 100 markets into ten clusters that report to the
newly hired Chief Commercial Ocer, Martino Pessina. At the
same time, we built stronger global functions at our Copenha-
gen headquarters, including Marketing, Digital, Merchandising,
Human Resources and Business Intelligence, and we optimised
our crafting facilities in Thailand to support fast delivery.
of the external hires for
our global headquarters
were digital talents from
tech companies
At our global head-
quarters, we hired
talent from more
than 40 dierent
countries
employees were
promoted as part of the
strategic reorganisation
Pandora has attracted top
leaders from global consum-
er goods companies, fashion
brands and omnichannel
retailers
19%
40
>200
9 OUT OF 10
in employee satisfaction
score on how appropri-
ately Pandora responded
to the pandemic.
1919
STORY
The business landscape is currently undergoing dramatic
changes, some of which have been accelerated by COVID-19.
Four major industry trends are of particular relevance to Pandora.
TREND
Data-driven personalisation
One of the fundamental shifts in consumer behaviour is the
demand for personalised products, services and interactions.
As an example, more than 80% of Americans are willing to
share personal information in exchange for a more personalised
experience. In recent years, the retail industry has implemented
more personalisation at consumer touchpoints across physical
and online channels. Investments in machine learning and data
analytics to increase the relevance of customer interactions are
paying o.
PANDORA’S RESPONSE
By personalising our channels, we oer our customers a better
experience and allow them to be more ecient in their search.
In a UK trial, our personalised banners increased click-rates by
17% and the number of items added to the cart by 4%. Fur-
thermore, Pandora’s machine learning algorithms help predict
customer interests. Initial results from personalised campaign
newsletters are very positive, showing a 60% revenue boost
when compared to standard newsletters.
TREND
Acceleration of e-commerce
COVID-19 has accelerated the ongoing shift to digital with
more consumers choosing to shop from their homes. In 2020,
global online retail sales increased by 30% in major European
markets. Brands responded with digital innovations to bring the
in-store experience online, such as virtual tting rooms aided
by augmented reality and online shopping events.
It is believed the changes will continue beyond the COVID-19
crisis, forcing companies to adjust their operating models to
the new reality: 56% of consumers say they will continue to buy
online and pick up in store after the pandemic.
PANDORA’S RESPONSE
At Pandora, we have invested
signicantly in our digital
capabilities in recent years.
We have established the
Digital Hub and upgraded our
online stores. We have more
than doubled our online
order volume capacity. We
are gradually rolling out new
omnichannel features, such
as Click & Collect, and we
have also introduced a num-
ber of other digital features
such as chat bots and digital
gifting tools.
EMBRACING
CHANGE
INDUSTRY TRENDS
2020
OUR BUSINESS
TREND
Repurposing store space
The high street environment continues to change and has also
had to adapt to new social distancing and safety guidelines in
2020. Customers have become more purposeful when visiting
stores leading to a decrease in shopping frequency and density,
less patience for queues, and higher demand for an ecient
experience. Further, store sta remain critical to the store
experience. In a US consumer survey, 74% of responses tied
a positive experience to a human interaction.
While there has been a notable shift to online shopping due to
COVID-19, physical retail is expected to continue to play a sig-
nicant role in the way consumers shop in the future, and the
pandemic could be a catalyst for change. For example, brands
experiment with creating modular spaces that can be used for
retail as much as for events. The look and feel of retail units is
also seen to adapt to current consumer sentiments, convey-
ing positivity through the use of colour and lights while also
providing consumers with an escape from the everyday through
immersion into utopian and retro worlds.
PANDORA’S RESPONSE
Because of COVID-19, we
introduced a number of
in-store initiatives during the
year to minimise congestion.
To speed up store service and
queues, we implemented a
faster check-out process, and
we used digital services to
engage with queuing custom-
ers. This allowed customers
to browse products, try ring
and bracelet sizes, sign-up for
Pandora Club, and start trans-
actions while queueing.
To handle trac peaks and
reduce congestion outside
our stores, we created tem-
porary pop-up spaces and
introduced virtual queuing
apps. We also enabled
customers to book store
appointments, and we intro-
duced a Remote Shopping
Assistant. These can provide
styling advice over video
calls and add products to
the customer’s online basket
for checkout via pandora.
net. The customer does not
need to come to the store,
but will still receive the same
personal service.
TREND
Running the business, sustainably
Consumers are increasingly loyal to brands with strong social
and environmental proles. In many sectors, sales of more sus-
tainable products are growing faster than sales of less sustaina-
ble alternatives. In the jewellery industry, consumers care about
companies’ environmental impact, supply chain traceability,
working conditions and more. During 2020, the global pandemic
generated even greater interest in social responsibility initia-
tives, notably related to safeguarding the health and safety of
customers, employees and local communities.
PANDORA’S RESPONSE
On many sustainability
issues, Pandora has taken
an industry lead by crafting
jewellery responsibly and
providing safe, healthy and
rewarding working conditions.
By 2025, we will be carbon
neutral and use only recycled
silver and gold in our prod-
ucts. In 2020, we received
the highest ranking in MSCI's
annual sustainability rating
for the fth consecutive year.
We also improved our ranking
from ‘moderate’ to ‘strong’
in Human Rights Watch’s
annual rating of the jewellery
industry.
In 2020, we also continued
our partnership with UNICEF
to support children, espe-
cially girls, around the world
through education.
Read more about our
sustainability ambitions
on page 23
In Q4, we launched a World
Children's Day charm in
support of UNICEF and
children's rights.
2121
OUR BUSINESS
PEAKSEASON TRADING
MARKED BY COVID
We also worked to stretch peak trading periods to avoid large
crowds. In the US, Black Friday deals were accessible every
Friday throughout the month of November.
“We have shown our innovation, resilience and agility during
this crisis. We were able to engage with our customers and
make their shopping experience enjoyable despite the tough
environment,” says Martino Pessina, Chief Commercial Ocer.
The new initiatives proved successful and trading in November
and December was strong. Despite COVID-19 and lockdowns,
organic growth was positive in the fourth quarter.
With a global pandemic and lockdowns in sever-
al countries, Pandora entered the busiest time
of the year with a range of new initiatives.
November and December are key trading months for many
brands – not least a brand like Pandora, where gifting makes
up a large proportion of sales. In a normal year, Pandora
generates almost 30% of annual revenue in those two months.
The holiday season of 2020 was dierent. COVID-19 put new
demands on retailers to handle hygiene and social distancing
among the shopping crowds.
To navigate these challenges in the best possible way, we in-
troduced 11 initiatives in key markets to ensure a good shop-
ping experience while keeping employees and customers safe.
Among these initiatives were a Remote Shopping Assistant,
enabling customers to talk to a sales assistant online. We also
introduced virtual try-on – an augmented reality technology
that enables online shoppers to view jewellery on their own
hands and wrists. And we launched virtual queueing, where
customers scan a QR code and are notied when it is their
turn to enter a store, allowing them to do something else while
waiting in line.
A store assistant uses the Remote
Shopping Assistant feature to
guide a customer.
2222
STORY
SUSTAINABILITY
We are committed to reducing our
climate footprint and helping the
jewellery industry make progress.
Our
strategic
priorities
Inclusive & fair
culture
Circular
innovation
⚘
2323
OUR BUSINESS
2424
We are
committed
silver and
of all waste
at our crafting
facilities was
90%
2525
OUR BUSINESS
ONLY RECYCLED
SILVER AND GOLD
“Silver and gold can be recycled forever without losing their
quality. Metals mined centuries ago are just as good as new. We
want to do our part to build a more circular economy and pre-
vent these ne metals from ending up in landlls,” says Chief
Supply Ocer Jeerasage Puranasamriddhi.
Silver recycling on a global scale
Pandora is one of the largest silver buyers in the jewellery
industry, and silver is the most used metal in our jewellery.
Around 15% of the world’s silver is recycled, and much can be
done to improve this situation. Recycling of consumer electron-
ics is particularly low – in Europe only around 40% of electronic
waste is recycled and in Asia only around 10%.
By using only recycled silver and gold instead of mined metals,
Pandora can save 37,000 tonnes CO
2
. This equates to more than
the annual electricity use of 6,000 homes or driving 145 million
km in a car.
Have you ever wondered what happens to your
old mobile phone after you get rid of it? Parts of
it may end up in Pandora jewellery.
Silver and gold used to be primarily for coins, jewellery and
other household items. Today, these precious metals are also
used in electronics and for industrial purposes, because they
perform well compared to other metals.
As the rst large jewellery brand, Pandora will stop using newly
mined silver and gold and buy only from recycled sources by
2025.
Quality forever
Mining requires a lot of energy, so by using recycled metals we
reduce greenhouse gas emissions. The emissions for recycled
silver are one third compared to mined silver, while recycling
of gold emits approximately 600 times less carbon than mining
new gold.
According to the World Economic Forum,
there is 100 times more gold in a tonne of
mobile phones than in a tonne of gold ore.
2626
STORY
Our approach to risk management
Pandora’s enterprise risk management is focused on identifying
risks early, assessing them candidly, and taking actions to miti-
gate them so they will not prevent the company from achieving
its business objectives. We see a well-functioning risk man-
agement process as key to maintaining and building Pandora’s
position as the world’s largest jewellery brand.
At Pandora, risk management is an enterprise-wide eort, with
management teams across our value chain responsible for the
continuous identication, assessment, mitigation, and report-
ing of current and emerging risks. Pandora also has a dedicated
Risk Management Policy.
Pandora’s Chief Financial Ocer heads the company’s Risk
Management Board, which consists of senior management
representatives from across our value chain. Management
teams are required to report their most signicant risks to the
Global Risk Oce, along with assessments of those risks and
MANAGING
RISKS
Pandora carefully monitors and assesses potential risks to the compa-
ny on an ongoing basis. As a global brand with a fully integrated value
chain, some of the key risks facing Pandora are brand relevance and
supply disruption.
an overview of implemented mitigations and next milestones.
All risk assessments take into account the likelihood of an
event and its potential impact on the business. The impact is
quantied and assessed in terms of potential nancial loss or
reputational damage.
The Risk Management Board is assisted in its work by the Global
Risk Oce, which serves as secretariat to the Board. The Global
Risk Oce’s role is to review risks, support management on risk
information, and consolidate the corporate risk prole contain-
ing the company's key risks. The nal risk prole is reviewed by
Executive Management, the Audit Committee, and the Board of
Directors.
The Board of Directors is ultimately responsible for assess-
ing the nature and extent of risks associated with Pandora’s
strategic direction and for the implementation of eective risk
identication, assessment, and mitigation.
Pandora’s risk
management policy
Pandora proactively manages risk to protect our
people, assets and reputation and to minimise the
risk of disruption to our continued value creation.
This means that we:
• utilise an eective and integrated risk management
system while maintaining business exibility
• identify and assess material risks associated with
our business
• monitor, manage and mitigate risks – and leverage
related opportunities, where possible
All risk
assessments
take into
account the
likelihood of
an event and
its potential
impact on
2727
OUR BUSINESS
Our key risks
The Board of Directors considers the key risks that could
threaten our business model or the future performance,
solvency, or liquidity of Pandora. These key risks make up
Pandora’s consolidated risk prole and do not represent all
the risks associated with our business. Additional risks not
presently identied or those currently deemed to be less
material may also have an adverse eect on our business.
Pandora’s consolidated risk prole and our responses to
them are described in the following.
Brand and product relevance
Description
As a large, global brand the strength and integrity of our
brand is a fundamental asset. It is important that our
product oerings remain relevant to our customers.
Risk
A lack of brand or product relevance constitutes a signif-
icant business risk that could result in lower trac to our
stores and online shopping sites and reduce our revenue.
Mitigation
• Consumer-centric innovation of new products, fuelled by
more powerful customer insights.
• Establishment of two Global Business Units.
• Establishment of the Digital Hub.
• Signicant additional investments in marketing.
• Investments in data and analytical capabilities and
technology.
• Continued monitoring of trademarks and patents and
ghting infringements.
Read more about how we are building for a digital future
on page 14
Brand access
Description
We sell our products globally and depend on a strong
channel network and solid insights to engage with con-
sumers in their preferred marketplace. A personalised and
unique shopping experience is important for developing
customer loyalty.
Risk
Not being able to engage consumers and provide them
with a relevant omnichannel shopping experience can
result in a decline in revenue.
Mitigation
• Investment in improving digital and omnichannel
customer experiences.
• Stronger focus on personalisation of shopping
experiences across channels.
• Launch of new initiatives and services connecting digital
and physical store experiences, such as Click & Collect
and Endless Aisle.
• Mapping of current and potential future store locations
to assess current store viability and potential areas
for growth.
• Development and testing of new store concept.
Read more about our Programme NOW objectives
on page 17
KEY RISKS
2828
OUR BUSINESS
Pandemics, including COVID
Description
Continued COVID-19 outbreaks, or new pandemics, may
have an eect on the economy in general, consumer be-
haviour and demand. It may also require signicant invest-
ments in and changes to Pandora’s operating model etc.
Risk
Pandemics can result in lower revenue and higher costs
through store and crafting facility closures, labour short-
ages, decreases in productivity, supply chain disruptions,
and changes in the macroeconomic environment and
consumer behaviour.
Mitigation
• Expansion of online capacity.
• Introduction of new initiatives, such as curb side pickup,
pop-up stores, and Click & Collect, aimed at making
shopping safer for our customers.
• Review of supply chain, including dependency on
individual suppliers and own production facilities and
distribution centres.
Read more about new initiatives to tackle
COVID-19 on page 22
Supply disruptions
Description
Procurement of raw materials and the ability to produce
and distribute nished products are critical for meeting
customer demand.
Risk
Lockdowns, breakdowns, political unrest, re, natural
catastrophes etc. at Pandora’s or key suppliers’ sites may
result in disruption of our supply chain and have a signi-
cant impact on our nancial performance.
Mitigation
• Dual sourcing where feasible.
• Buers of production components and nished goods.
• Crafting at two separate locations in Thailand.
• Engagement of external manufacturers to provide
exibility.
• Online distribution capacity has been ramped up.
Talent attraction and succession
Description
Pandora needs highly talented and capable people across
all functions and markets to drive growth and sustainable
performance for our future.
Risk
Our employees are our most valuable asset. Failure to at-
tract, develop and retain the right talent poses a signicant
risk to our growth plans. Succession planning for leadership
and critical roles is one of our biggest risks for sustainable
performance and growth.
Mitigation
• Strengthening the global HR organisation.
• Annual employee engagement survey.
• Enhanced focus on employer branding.
• Enhanced focus on key positions and succession
planning.
• Strengthening how we attract digital, operational, and
functional talents to support our business priorities.
Read more about our investments in the organisation
and people on page 19
KEY RISKS
2929
OUR BUSINESS
Facing up to
environmental
risks
Across all of these
trends runs a growing
and widely acknowl-
edged concern for the
global environment,
particularly in relation
to climate change. We
understand the need
to prepare for the risks
and opportunities that
will arise from changing
weather patterns, rising
sea levels, and other
climate impacts. We
have taken initial steps
and will expand on these
in the future.
As recommended by
the Task Force on Cli-
mate-related Financial
Disclosures, we are inte-
grating climate-change
scenarios to identify
short-, medium- and
long-term risks in our
production and supply
chain to ensure a steady
supply of our products.
Market uctuations
Description
Our products are made of precious metals, mainly silver
and gold. As a global business, Pandora has signicant
revenue in USD, USD-related currencies and GBP. Our
crafting facilities are based in Thailand and hence we
have signicant net cost in THB.
Risk
Pandora is exposed to a weakening of the USD, USD-re-
lated currencies and GBP and a strengthening of the THB
and precious metal prices. Currency uctuations and
increases in the price of precious metals can have a sig-
nicant impact on the company’s nancial performance
and cash ow.
Mitigation
• Hedging at least 50% of the combined commodity,
exchange rate and interest rate risk. However, at least
70% of estimated annual commodity purchases must
be hedged.
Responsible business behaviour
Description
Pandora has a reputation for responsible business behav-
iour. This reputation benets the company in several ways,
from attracting new employees to acknowledging consumer
concerns.
Risk
If Pandora violates legislation, disregards principles of good
corporate citizenship, or fails to adhere to social or envi-
ronmental standards, it could damage our brand, reputa-
tion and nancial situation.
Mitigation
• Launch of a new Global Code of Conduct.
• Mandatory ethics and compliance training.
• Upgrading external access to our whistleblower hotline.
• Responsible Supplier Programme, including training and
vendor audits.
• Recurring Responsible Jewellery Council certication.
• Environmental, social, and governance reporting to ensure
transparency.
• Climate targets and other focused sustainability initiatives.
• All taxes and charges are paid according to local laws and
regulations in the countries where Pandora operates.
IT security breaches
Description
Reliable IT systems and infrastructure are critical for the
company’s ability to operate eectively. We also have a duty
to safeguard the data of our customers and partners as well
as our own information.
Risk
Breaches of IT security, caused by malware attacks for
example, could have a severe impact on Pandora’s ability
to maintain operations and, hence, its nancial stability.
The disclosure of condential information could compro-
mise the privacy of customers or other individuals.
Mitigation
• Ongoing security monitoring supported by
incident-response teams.
• Third-party vulnerability and security maturity
assessments.
• Cyber and information security awareness training
and phishing tests to monitor response.
Read more about our sustainability strategy
on page 23
Read more about our nancial risks
in note 4.4
KEY RISKS
3030
OUR BUSINESS
03
CORPORATE
GOVERNANCE
CORPORATE
GOVERNANCE
Governance
structure
A CONNECTED ORGANISATION
Fast execution and collaboration
across clusters and global func-
tions. The ten clusters report to
the Chief Commercial Ocer.
The Board
supervises
Executive
Management’s
work and is
for Pandora’s
general and
strategic
direction
Clusters
Annual General Meeting
Board of Directors
Executive Management
• North America
• Latin America
• Pacic
• China
• Rest of Asia
• Western Europe
• Southern
Europe & MEA
• Eastern Europe
• Northen Europe
• British Isles
Executive Leadership Team
3232
CORPORATE GOVERNANCE
Board
meetings
held in
2020
14
Meeting
attendance
2020
3333
CORPORATE GOVERNANCE
The
Remu neration
Report 2020
our Investor
See the
Remuneration
Report 2020
3434
CORPORATE GOVERNANCE
Pandora’s internal
controls and
risk management
monitored, tested
and documented
CORPORATE GOVERNANCE
Peter A. Ruzicka
Year of birth: 1964
Member since: 2019
Professional position:
Non-executive board member.
Non-executive functions:
Member of the Boards in Aspelin
Ramm Gruppen AS and AKA AS.
Christian Frigast
Year of birth: 1951
Member since: 2010
Professional position:
Executive Chair and Partner of Axcel
Management A/S.
Non-executive functions:
Chair of Aktive Ejere (Active Owners
Denmark), EKF Danmarks Eksportkredit
(Denmark’s Export Credit Agency) and
Danmarks Skibskredit Holding A/S and
Year of birth: 1957
Member since: 2016
Professional position:
Non-executive board member.
Non-executive functions:
Chair of Industrifonden and Cinder
Invest and member of the Boards of
Elekta AB, LEO Pharma A/S and Enea AB.
Competencies:
Experience within areas such as con-
sumer goods, retail execution, IT, digital,
nancial insights and capital markets.
Competencies:
Vast operational experience with
strategy execution and transformation
as well as retail and brand optimisation
on executive level.
member of the Board of its sub-
sidiary; Vice Chair of PostNord and
Axcel Advisory Board; member of the
Boards of Frigast A/S and Nissens
A/S; adjunct professor at Copenha-
gen Business School.
Competencies:
Experience within areas such as
general management, capital markets,
consumer sales and retail execution.
Andrea Dawn Alvey
Year of birth: 1967
Member since: 2010
Professional position:
President of Kitabco Investments, Inc.
Non-executive functions: None.
Competencies:
Experience within areas such as digital
and e-commerce, global supply chain,
IT and nancial insights.
Birgitta Stymne Göransson
BOARD OF DIRECTORS
3636
CORPORATE GOVERNANCE
Catherine Spindler
Year of birth: 1977
Member since: 2020
Professional position:
CMO of Lacoste.
Non-executive functions:
None.
Competencies:
Experience within international brand
strategy, digital transformation, and
lifestyle apparel retail.
Isabelle Parize
Year of birth: 1957
Member since: 2019
Professional position:
CEO of DELSEY Paris.
Non-executive functions:
Member of the Boards of Coty inc.
and Air France-KLM S.A.
Competencies:
Operational experience in international
retail and brand execution via
omnichannel and digitally.
Marianne Kirkegaard
Year of birth: 1968
Member since: 2020
Professional position:
CEO of CSM Bakery Solutions
Non-executive functions:
Member of the Boards of Fertin Pharma
A/S, Salling Group A/S and AKK AB.
Ronica Wang
Year of birth: 1962
Member since: 2012
Professional position:
Co-founder and Global Managing
Partner of The InnoGrowth Group Ltd.
Non-executive functions:
Member of the Boards of GN Store
Nord A/S and Hotelbeds Group.
Competencies:
In-depth international insight into
the consumer market and experience
of the complete value chain within large
corporate multinationals.
Competencies:
Experience within areas such as fashion
and jewellery, digital and e-commerce,
retail strategy, global and cross-platform
branding, sales & marketing.
The Board members’
full CVs are available at
pandoragroup.com
BOARD OF DIRECTORS
3737
CORPORATE GOVERNANCE
EXECUTIVE LEADERSHIP TEAM
Erik Schmidt
SVP, Chief HR Ocer
Anders Boyer
Executive Vice President &
Chief Financial Ocer (CFO)
Year of birth: 1970
Joined: 2018
Other functions:
Member of the Executive Management
Anders Boyer has 20 years’ experience
in nance, business management and
turnarounds. Prior to joining Pandora,
Anders held positions as Chief Financial
Ocer at Hempel and GN Store Nord,
and Finance Director and subsequently
Regional Director of ISS. From 2012 and
until March 2018, he was a member
of the Board of Directors of Pandora.
Anders started his career at A.P. Moller-
Maersk, where he worked for ten years.
He has a Master of Science in Finance
and Accounting from Copenhagen
Business School, Denmark.
Alexander Lacik
President & Chief
Executive Ocer (CEO)
Year of birth: 1965
Joined: 2019
Other functions:
Member of the Executive Management
Alexander Lacik has more than 25 years’
experience from large global consumer
goods companies. In addition, Alexander
is a Board member of Swedish Match.
Before joining Pandora, he was CEO of
Britax Ltd., a British manufacturer of
childcare products. He has also held CEO
and senior management positions at
Kasthall Golv & Mattor, Procter & Gamble
and Reckitt Benckiser, where he held a
number of positions, including head of
Reckitt Benckiser North America.
He has a Bachelor’s degree in Business
Administration from the University of
Växjö, Sweden.
Stephen Fairchild
SVP, Chief Product Ocer
Carla Liuni
SVP, Chief Marketing Ocer
Martino Pessina
SVP, Chief Commercial Ocer
Jeerasage Puranasamriddhi
SVP, Chief Supply Ocer
David Walmsley
SVP, Chief Digital & Technology Ocer
The Executive Leadership Team
members’ full CVs are available at
pandoragroup.com
3838
CORPORATE GOVERNANCE
SHAREHOLDER
INFORMATION
Capital structure and cash allocation
Pandora’s capital structure serves to ensure that the company
has sucient nancial exibility to pursue its strategic goals
and preserve a stable nancial structure based on a strong
balance sheet.
Pandora’s capital structure policy is to maintain NIBD to EBITDA
before restructuring costs between 0.5 and 1.5.
Cash distribution suspended until there is further
certainty on COVID-19
Pandora continues to be highly cash generative and has ample
liquidity to initiate cash distribution to shareholders. Due to
the unprecedented uncertainty caused by COVID-19, Pandora
considers it appropriate and prudent to await further certainty
about the pandemic before re-initiating cash distribution to
the shareholders. At the Annual General Meeting in March 2021,
Pandora will ask the shareholders to authorise the Board of
Directors to potentially pass one or more resolutions to distribute
extraordinary dividends of up to a total amount of DKK 15 per
share until the next Annual General Meeting.
In addition to being listed in Copenhagen, Pandora has a spon-
sored level 1 American Depository Receipt (ADR) programme.
The ADRs are traded in the US over-the-counter under the symbol
PANDY. Further information regarding the ADR programme can be
found on the Pandora Group website.
In 2020, the lowest closing price for the Pandora share was DKK
195.2 on 16 March. The highest closing price was DKK 681 on 30
December 2020 (last trading day of 2020), corresponding to an
increase of 135% compared to the end of 2019 (DKK 289.8). By
the end of the year, the total shareholder return was 145%.
Around 173 million Pandora shares were traded in 2020. The
trading volume averaged around 699,000 shares per day.
SHARE PRICE DEVELOPMENT 2020
DKK
Pandora shares have been listed on the
Nasdaq OMX Copenhagen stock exchange since
2010. Pandora is included in the blue-chip OMX
C25 index and has around 40,000 registered
shareholders.
ANNUAL COMMITMENT
DKK billion
FY 2021
Proposed
FY 2020
Actual
FY 2019
Actual
FY 2018
Actual
FY 2017
Actual
Dividend (ordinary + interim) 08 18 19 40
Nominal dividend per share, DKK 90 180 180 360
Share buyback programme 22 40 18
Total cash return 08 40 59 58
share price increase
in 2020
135%
300
100
400
500
Jan Feb Mar May Jun Jul Aug Sep Oct Nov DecApr
700
800
600
200
3939
CORPORATE GOVERNANCE
SHARE INFORMATION
Exchange Nasdaq
Copenhagen
Trading
symbols
PANDORA
Identication
number/ ISIN
DK0060252690
Number of
shares
100,000,000 of DKK
1, each with one
vote
Share classes 1
GICS 25203010
Sector Apparel,
Accessories &
Luxury Goods
Segment: Large
ADR INFORMATION
ADR trading
symbol
PANDY
Programme
type
Sponsored level 1
programme
(J.P. Morgan)
Ratio (ADR:ORD) 4 ADRs : 1 ordinary
share (4:1)
ADR ISIN US 698 341 2031
Review of 2020 share buyback and dividends
In 2020, Pandora paid out an ordinary dividend of DKK 9 per
share. The total amount paid was around DKK 0.8 billion.
The Board of Directors proposed a share buyback programme in
2020, under which Pandora would buy back own shares to a maxi-
mum consideration of up to DKK 2.1 billion. As COVID-19 escalated
throughout Q1 2020, leading to the closure of many of Pandora’s
physical stores, the programme was suspended to strengthen the
balance sheet during these uncertain and unprecedented times.
Shareholders
As of 31 December 2020, Pandora had three major sharehold-
ers. BlackRock has disclosed holdings of voting rights amounting
to 7.4% of the total outstanding voting rights while Parvus has
disclosed holdings amounting to 5.1%. Additionally, Société
Générale has disclosed holdings of voting rights through shares
and nancial instruments amounting to 5.3%.
As of 31 December 2020, the geographical split of institutional
investors was:
• Investors in Denmark held 9% of the share capital.
• The largest share of international investors resided in the
United Kingdoms (23% of share capital) and in the United
States (22% of share capital).
As of 31 December 2020, Pandora’s Board of Directors and Execu-
tive Management held a total of 86,074 and 264,099 Pandora shares
respectively, corresponding to 0.4% of the total share capital.
Investor Relations
The Executive Management is responsible for the existence of an
Investor Relations (IR) function, which is responsible for ensuring
compliance with Pandora’s Investor Relations Policy. IR reports
directly to the Chief Financial Ocer.
The purpose of Pandora’s IR activities is to ensure that relevant,
accurate and timely information is made available to the capital
markets to serve as a basis for regular trading and a fair pricing of
the share. Prior to the announcement of interim and annual re-
ports, a four-week silent period is in place. In addition, members
of the Board of Directors and Executive Management are only al-
lowed to trade shares in a four-week trading window following the
announcement of interim and annual reports. Pandora will ensure
that the company is perceived as visible, accessible, reliable and
professional by the capital markets and that Pandora is regarded
among the best relative to peers. This will be achieved by comply-
ing with the rules and legislation for listed companies on Nasdaq
OMX as well as Pandora’s internal policies.
Company website
The Pandora Group website (pandoragroup.com )
provides
comprehensive information about the company, its activities,
share performance and shareholders. Additionally, all company
announcements, including interim and annual reports, as well as
investor presentations, webcasts and conference call transcripts
are made available on the website in due time. Furthermore, the
website contains a constantly updated nancial and event calen-
dar showing events and actions related to investors.
A comprehensive list of the 21 analysts covering the Pandora share
is maintained, including names, institutions and contact details.
In 2020,
Pandora
paid out
dividend of
DKK 9 per
share for
a total of
around DKK
11 Mar Annual General
Meeting
04 May Interim Report
Q1 2021
17 Aug Interim Report
Q2/H1 2021
03 Nov Interim Report
Q3/9M 2021
Financial
calendar
2021
4040
CORPORATE GOVERNANCE
04
FINANCIAL REVIEW
GROUP PERFORMANCE
REVENUE BY SALES CHANNEL
DKK million 2020 2019
Sell-out growth
incl. closed stores
Like-for-like
sales-out
Organic
growth
Growth in
local currency
Share of
revenue
FY 2020
Share of
revenue
FY 2019
Pandora owned retail 13426 14181 3% 10% 3% 2% 71% 65%
- of which concept stores 7321 10619 30% 29% 39% 49%
- of which online stores 5483 2782 103% 103% 29% 13%
- of which other points of sale 622 780 22% 18% 3% 4%
Wholesale 4949 6725 27% 13% 24% 25% 26% 31%
- of which concept stores 2714 3843 26% 28% 14% 18%
- of which other points of sale 2235 2882 21% 21% 12% 13%
Third-party distribution 634 962 27% 13% 33% 33% 3% 4%
Total revenue 19009 21868 12% 1% 11% 11% 100% 100%
STORE NETWORK
Number of points of sale 2020 2019 Growth
Concept stores 2690 2770 80
- of which Pandora owned 1382 1397 15
- of which franchise owned 797 856 59
- of which third-party distribution 511 517 6
Other points of sale 4402 4657 255
2020 marked a milestone in Pandora’s turna-
round with several strong signs that the ini-
tiatives under Programme NOW are working.
Pandora has experienced increased brand
momentum, increased desire for the brand
and has seen several digital and commercial
initiatives paying o.
Despite being a tough and uncertain year, Pandora came
through 2020 in good shape. Pandora started the year with
positive organic growth in January and February before a global
pandemic swept the world forcing Pandora to temporarily
close stores. Focus then shifted away from commercial plans
and into protecting customers and employees. As Pandora was
forced to temporarily close stores, demand shifted towards
online sales where Pandora was able to successfully recoup
signicant revenue thanks to the large investments in digital in-
itiatives made in recent years. Pandora saw the initiatives drive
an increased level of trac online, which together with a much
stronger conversion rate saw online sales grow more than 100%
compared with 2019. On the other hand, Pandora experienced
a double digit revenue decline in the physical network. Trac
into physical stores was down all year by high double digits,
following the temporarily closed stores and social restrictions
guidelines in most countries putting pressure on retail opera-
tions. 2020 ended at -11% organic growth, as the online sales
were not able to fully mitigate the lost revenue in the physical
network, yet Pandora saw a sequential improvement during the
year ending Q4 with 4% positive organic growth.
Revenue by key market
Pandora delivered a strong underlying performance in many of
its key markets. Especially in the UK the large and mature online
store secured a strong performance throughout the year despite
lockdowns. Performance in the US was particularly strong in the
second half of the year, when the commercial comeback and
large share of voice delivered signicant results. Italy started
the year well, but performance was impacted by store closures
and lockdowns as Italian consumers have a clear preference for
accessing the brand in physical stores. China continues to be
structurally challenged.
Revenue by product
The two new Global Business Units, Moments and Collabs and
Style and Upstream Innovation, generated sell-out growth of
-13% and -12% respectively. The total share of business for
Charms and Bracelets was 70%, in line with 2019 and continues
to be the core of Pandora business.
Store network development
In 2020, Pandora closed net 80 of the concept stores due to a
general pruning of the store network. The closed stores were
performing unsatisfactorily, even before the lockdowns. Some
store openings were delayed or put on hold due to COVID-19,
particularly in Latin America and China.
4242
FINANCIAL REVIEW
GROUP
PROFITABILITY
COST OF SALES AND GROSS PROFIT
DKK million 2020 2019 Growth
Share of
revenue 2020
Share of
revenue 2019
Revenue 19009 21868 13% 1000% 1000%
Cost of sales 4475 4950 10% 235% 226%
Gross prot excl. restructuring costs 14534 16919 14% 765% 774%
Restructuring costs 159 1016 84% 08% 46%
Total gross prot incl. restructuring costs 14375 15903 10% 756% 727%
OPERATING EXPENSES
DKK million 2020 2019 Growth
Share of
revenue
2020
Share of
revenue
2019
Sales and distribution expenses 6234 6259 0% 328% 286%
Marketing expenses 2717 2696 1% 143% 123%
Administrative expenses 1702 2110 19% 90% 96%
Total operating expenses excl. restructuring costs 10652 11065 4% 560% 506%
Restructuring costs 1038 1009 3% 55% 46%
Total operating expenses incl. restructuring costs 11691 12074 3% 615% 552%
Protability
Gross margin was slightly down compared with 2019 (-0.9%)
mainly following negative impacts from higher silver prices, for-
eign exchange rates and a higher share of online revenue, which
was partially oset by continued cost reductions.
OPEX excluding restructuring costs decreased by 4% compared
with 2019 driven by cost measures during the lockdown peri-
ods following an overall decision to protect cash and foreign
exchange development favourably impacting OPEX by DKK 0.2
billion. In 2020, Pandora received DKK 225 million in govern-
ment COVID-19 relief. We have deliberately continued to invest
heavily in marketing to ensure continued strong brand momen-
tum and share of voice, leveraging Pandora’s favourable cash
position. The EBIT margin excluding restructuring costs ended
at 20.4%, a very protable and healthy level despite signicant
disruption from COVID-19.
4343
FINANCIAL REVIEW
CASH FLOW AND
INVESTMENTS
DEVELOPMENT IN
OPERATING WORKING CAPITAL
DKK million 2020 2019 Growth
Share of
revenue
2020
Share of
revenue
2019
Inventories 1949 2137 9% 103% 98%
Trade receivables 870 1643 47% 46% 75%
Trade payables 3211 3095 4% 169% 142%
Total 391 684 157% 21% 31%
Working capital
The operating working capital ended historically low at -2% of
revenue. As a result of successful negotiations with suppliers,
trade payables developed favourably this year. Pandora does
not consider the current level of working capital sustainable.
In 2021, Pandora plans for a higher inventory level and expects
lower trade payables resulting from the cessation of Programme
NOW restructuring costs.
SEGMENT
PERFORMANCE
REVENUE BY OPERATING SEGMENT
DKK million 2020 2019
Sell-out
growth
Share of
revenue
2020
Share of
revenue
2019
Moments and Collabs 13059 15095 13% 69% 69%
Style and Upstream Innovation 5950 6774 12% 31% 31%
Total 19009 21868 13% 100% 100%
The two new Global Business Units, Moments and Collabs
and Style and Upstream Innovation, generated sell-out growth
of -13% and -12% respectively. The share of business for
Moments and Collabs was 69% in total, the same level as 2019.
Despite a decline in all product categories due to the outbreak
of COVID-19, the performance within each product category
is satisfactory. We will continue to invest in new designs and
develop the product oering.
4444
FINANCIAL REVIEW
05
FINANCIAL
STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER
CONSOLIDATED INCOME STATEMENT
DKK million Notes 2020 2019
Revenue 21 19,009 21,868
Cost of sales 24 31 32 -4,634 -5,966
Gross prot 14,375 15,903
Sales, distribution and marketing expenses 22 24 31 32 -9,155 -9,305
Administrative expenses 22 24 31 32 -2,536 -2,770
Operating prot 21 2,684 3,829
Finance income 46 316 351
Finance costs 46 -507 -351
Prot before tax 2,494 3,829
Income tax expense 26 -556 -884
Net prot for the year 1,938 2,945
Earnings per share, basic (DKK) 42 20.0 30.3
Earnings per share, diluted (DKK) 42 19.9 30.1
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
DKK million Notes 2020 2019
Net prot for the year 1,938 2,945
Other comprehensive income:
Items that may be reclassied to prot/loss for the year
Exchange rate adjustments of investments in subsidiaries -609 226
Commodity hedging instruments:
- Realised in net cost of sales 11 6
- Realised in net nancials -31 -16
- Realised in inventories -234 -55
- Fair value adjustments 490 83
Foreign exchange hedging instruments:
- Realised in net nancials -49 -41
- Fair value adjustments 21 24
Tax on other comprehensive income, income/expense 26 -13 -27
Items that may be reclassied to prot/loss for the year, net of tax -416 200
Items not to be reclassied to prot/loss for the year
Actuarial gain/loss on dened benet plans, net of tax 24 6 -
Items not to be reclassied to prot/loss for the year, net of tax 6 -
Other comprehensive income, net of tax -410 200
Total comprehensive income for the year 1,528 3,145
4646
FINANCIAL STATEMENTS
ASSETS
DKK million Notes 2020 2019
Goodwill 4,247 4,416
Brand 1,057 1,057
Distribution 1,110 1,140
Other intangible assets 529 831
Total intangible assets 31 6,943 7,445
Property, plant and equipment 32 2,054 2,585
Right-of-use assets 33 3,007 4,010
Deferred tax assets 26 764 675
Other nancial assets 244 290
Total non-current assets 13,012 15,006
Inventories 35 1,949 2,137
Trade receivables 36 870 1,643
Right-of-return assets 38 62 73
Derivative nancial instruments 44 45 351 187
Income tax receivable 83 467
Other receivables 745 1,004
Cash 2,912 1,054
Total current assets 6,972 6,565
Total assets 19,984 21,571
EQUITY AND LIABILITIES
DKK million Notes 2020 2019
Share capital 41 100 100
Treasury shares 41 -93 -1,964
Reserves 750 1,167
Dividend proposed 42 - 836
Retained earnings 6,632 5,110
Total equity 7,389 5,249
Provisions 37 370 278
Loans and borrowings 43 44 2,066 7,962
Deferred tax liabilities 26 368 235
Total non-current liabilities 2,804 8,476
Provisions 37 29 53
Refund liabilities 38 654 753
Contract liabilities 38 82 71
Loans and borrowings 43 44 3,996 2,069
Derivative nancial instruments 44 45 119 115
Trade payables 44 3,211 3,095
Income tax payable 382 438
Other payables 44 1,317 1,251
Total current liabilities 9,790 7,846
Total liabilities 12,595 16,322
Total equity and liabilities 19,984 21,571
CONSOLIDATED BALANCE SHEET
AT DECEMBER
4747
FINANCIAL STATEMENTS
DKK million
Notes
Share
capital
Treasury
shares
Translation
reserve
Hedging
reserve
Dividend
proposed
Retained
earnings
Total
equity
2020
Equity at 1 January 100 -1,964 1,112 54 836 5,110 5,249
Net prot for the year - - - - - 1,938 1,938
Other comprehensive income, net of tax - - -577 161 - 6 -410
Total comprehensive income for the year - - -577 161 - 1,944 1,528
Share-based payments 24 25 - 14 - - - 76 90
Purchase of treasury shares 41 - -431 - - - - -431
Sale of treasury shares
1
41 - 2,288 - - - -509 1,779
Dividend paid 42 - - - - -836 11 -825
Dividend proposed 42 - - - - - - -
Equity at 31 December 100 -93 535 215 - 6,632 7,389
Dividend paid in 2020
relating to the 2019 results
was DKK 9 per share, corre-
sponding to DKK 825 million
(2019: DKK 896 million).
Furthermore, in 2019, DKK
860 million was paid as part
of the commitment to pay
bi-annual dividend in 2019
relating to the 2019 results.
Due to the uncertainty from
COVID-19 Pandora does not
propose any dividend relat-
ing to the 2020 results.
For additional shareholder
information about dividend,
read more on page 39
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED DECEMBER
2019
Equity at 1 January 110 -3,469 913 54 920 7,891 6,419
Net prot for the year - - - - - 2,945 2,945
Other comprehensive income, net of tax - - 199 1 - - 200
Total comprehensive income for the year - - 199 1 - 2,945 3,145
Fair value adjustments of obligation to acquire non-controlling interests - - - - - 19 19
Share-based payments 24 25 - 13 - - - -8 5
Purchase of treasury shares 41 - -2,583 - - - - -2,583
Reduction of share capital 41 -10 4,075 - - - -4,065 -
Dividend paid 42 - - - - -1,794 38 -1,756
Dividend proposed 42 - - - - 1,710 -1,710 -
Equity at 31 December 100 -1,964 1,112 54 836 5,110 5,249
On 5 May 2020, Pandora initiated an
accelerated book-building for the sale
of 8 million treasury shares, which was
carried out on the same day, generat-
ing approximately DKK 1.8 billion in net
proceeds.
4848
FINANCIAL STATEMENTS
DKK million Notes 2020 2019
Operating prot 2,684 3,829
Depreciation and amortisation 2,315 2,319
Share-based payments 25 70 20
Change in inventories -96 1,284
Change in receivables 869 -65
Change in payables and other liabilities 724 808
Other non-cash adjustments 47 -155 -20
Interest etc. received 3 13
Interest etc. paid -247 -178
Income tax paid 26 -192 -1,233
Cash ows from operating activities, net 5,975 6,775
Acquisition of subsidiaries and activities, net of cash acquired 34 -12 -148
Purchase of intangible assets -130 -272
Purchase of property, plant and equipment -374 -540
Change in other non-current assets 19 66
Proceeds from sale of property, plant and equipment 13 18
Cash ows from investing activities, net -484 -877
Acquisition of non-controlling interests -42 -311
Dividend paid 42 -825 -1,756
Purchase of treasury shares 41 -431 -2,583
Sale of treasury shares 41 1,778 -
Proceeds from loans and borrowings 43 5,861 5,626
Repayment of loans and borrowings 43 -9,073 -6,088
Repayment of lease commitments 43 -839 -1,138
Cash ows from nancing activities, net -3,571 -6,250
Net increase/decrease in cash 1,920 -352
DKK million Notes 2020 2019
Cash at 1 January
1
Exchange gains/losses on cash -62 19
Net increase/decrease in cash 1,920 -352
Cash at 31 December
1
Cash ows from operating activities, net 5975 6775
- Interest etc. received 3 13
- Interest etc. paid 247 178
Cash ows from investing activities, net 484 877
- Acquisition of subsidiaries and activities, net of cash acquired 12 148
Free cash ow incl. IFRS 16 (excluding lease payments) 5747 6213
Free cash ow excl. IFRS 16 (including lease payments) 4908 5075
Unutilized committed credit facilities 44 6998 2345
The above cannot be derived directly from the income statement and the balance sheet.
1
Cash comprises cash at bank and in hand.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER
ACCOUNTING POLICIES
Cash flows from operating activities are presented using the
indirect method.
Cash flows in currencies other than the functional currency
are translated at the average exchange rates for the month
in question, unless these differ significantly from the rates at
the transaction dates.
4949
FINANCIAL STATEMENTS
Notes
The notes are grouped into ve sections related to key gures.
The notes contain the relevant nancial information as well as
a description of accounting policies applied for the topics of
the individual notes.
Section 1
BASIS OF PREPARATION 51
1.1 Principal accounting policies 52
1.2 New accounting policies and disclosures 53
1.3 Management’s judgements and
estimates under IFRS 54
Section 2
RESULTS FOR THE YEAR 55
2.1 Segment and revenue information 56
2.2 Programme NOW restructuring costs 59
2.3 Government grants 59
2.4 Sta costs 60
2.5 Share-based payments 61
2.6 Taxation 63
Section 3
INVESTED CAPITAL AND WORKING
CAPITAL ITEMS 66
3.1 Intangible assets 67
3.2 Property, plant and equipment 71
3.3 Leases 72
3.4 Business combinations 74
3.5 Inventories 75
3.6 Trade receivables 75
3.7 Provisions 76
3.8 Contract assets and liabilities 77
Section 4
CAPITAL STRUCTURE AND NET FINANCIALS 78
4.1 Share capital 79
4.2 Earnings per share and dividend 80
4.3 Net interest-bearing debt 81
4.4 Financial risks 82
4.5 Derivative nancial instruments 85
4.6 Net nancials 86
4.7 Other non-cash adjustments 86
Section 5
OTHER DISCLOSURES 87
5.1 Contingent liabilities 88
5.2 Related parties 88
5.3 Fees to independent auditor 88
5.4 Events occurring after
the reporting period 88
5.5 Companies in the Pandora Group 89
5.6 Financial denitions 89
CONTENTS
5050
FINANCIAL STATEMENTS
BASIS OF
PREPARATION
SECTION 1
This section introduces Pandora’s accounting policies
and signicant accounting estimates.
A more detailed description of accounting policies and
signicant estimates related to specic 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, signicant
estimates and numerical disclosure for each note.
Pandora’s
accounting
policies and
accounting
estimates
5151
FINANCIAL STATEMENTS
Pandora A/S is a public limited company with its registered
oce in Denmark.
The Annual Report for the period 1 January – 31 December
2020 comprises the consolidated nancial statements of
Pandora A/S and its subsidiaries (the Group) as well as separate
nancial statements 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 requirements of the Danish Financial
Statements Act.
The Annual Report has been prepared on a historical cost basis,
except for derivative nancial instruments, which have been
measured at fair value.
The Annual Report is presented in Danish kroner and all
amounts are in million (DKK million), unless otherwise stated.
Due to rounding, numbers presented throughout this report
may not add up precisely to the totals and percentages may
not precisely reect the absolute gures.
After the reorganisation announced on 4 March 2020, the
reportable segments have been reorganised as of Q2 2020
in two Global Business Units: Moments and Collabs and Style
and Upstream Innovation. For information on segments, see
note 2.1.
As part of Pandora’s reorganisation, the cost of certain func-
tions in the markets previously recognised under Administra-
NOTE .
PRINCIPAL ACCOUNTING POLICIES
tive expenses is reclassied to Sales & Distribution expenses.
This change has been applied prospectively from 1 January
2020 and the comparative gures have not been restated. The
impact of the change in 2019 would have been an increase in
Sales & Distribution expenses of approximately DKK 350 million
and a corresponding decrease in Administrative expenses.
Due to COVID-19, Pandora was entitled to government grants
in 2020. These are recognised where there is reasonable assur-
ance that the grant will be received and all attached conditions
will be complied with. When the grant relates to an expense
item, it is recognised as a deduction in reporting the related
costs, for which it is intended to compensate, and over the
time these costs are expensed.
Apart from changes listed above and changes due to the imple-
mentation of new or amended standards and interpretations
as described in note 1.2 , accounting policies are unchanged
from last year.
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 Pandora’s accounting policies.
2.1 Segment and reve-
nue information
2.2 Programme NOW
restructuring costs
2.3 Government
grants
2.4 Staff costs
2.5 Share-based
payments
2.6 Taxation
3.1 Intangible assets
3.2 Property, plant and
equipment
3.3 Leases
3.4 Business
combinations
3.5 Inventories
3.6 Trade receivables
3.7 Provisions
3.8 Contract assets
and liabilities
4.2 Earnings per share
and dividend
4.3 Net interest-
bearing debt
4.5 Derivative financial
instruments
4.6 Net financials
Alternative performance measures
Pandora presents nancial measures in the Annual Report that
are not dened 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 dierently from Pandora,
they may not be comparable to the measures used by other
companies. These nancial measures should therefore not be
considered to be a replacement for measures dened under
IFRS. For denitions of the performance measures used by
Pandora, see note 5.6.
Consolidated nancial statements
The consolidated nancial statements comprise the nancial
statements of the Parent Company and its subsidiaries. Subsid-
iaries 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 intercompany transactions are eliminated in full.
Functional and presentation currency
The consolidated nancial statements are presented in Danish
kroner, DKK, which is also the functional currency of the Parent
Company. Each subsidiary determines its own functional cur-
rency, and items recognised in the nancial 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
NOTES
5252
FINANCIAL STATEMENTS
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 translated 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.
Group companies with another functional currency than DKK
The assets and liabilities of foreign subsidiaries are translated
into DKK at the rate of exchange prevailing at the reporting
date, and their income statements are translated at the ex-
change rates prevailing at the dates of the transactions.
Exchange rate adjustments arising on translation are recognised in
other comprehensive income. On disposal of a foreign subsidiary,
the component of other comprehensive income relating to that
particular foreign operation is recognised in the income statement.
Consolidated income statement
The consolidated income statement is presented based on costs
classied by function. Cost of sales comprises direct and indirect
expenses incurred to generate revenue for the year, compris-
ing raw materials, consumables, production sta, depreciation,
amortisation and impairment losses in respect of production
equipment.
NOTE .
PRINCIPAL ACCOUNTING
POLICIES CONTINUED
NOTE .
NEW ACCOUNTING POLICIES
AND DISCLOSURES
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 ef-
fective for the nancial year 1 January – 31 December 2020. The
implementation of these new or amended standards and inter-
pretations had no material impact on the nancial statements
for the year apart from the amendment in IFRS 16.
Amendment to IFRS 16 Leases
On 28 May 2020, the IASB issued COVID-19-Related Rent
Concessions – amendment to IFRS 16 Leases. The IASB amend-
ed the standard to provide relief to lessees from applying IFRS
16 guidance on lease modication accounting for rent conces-
sions arising as a direct consequence of the COVID-19 pandemic.
As a practical expedient, a lessee may elect not to assess
whether a COVID-19 pandemic-related rent concession from a
lessor is a lease modication. A lessee that makes this election
accounts for any change in lease payments resulting from the
COVID-19 pandemic-related rent concession the same way it
would account for the change under IFRS 16 if the change was
not a lease modication. The practical expedient applies only
to rent concessions occurring as a direct consequence of the
COVID-19 pandemic and only if all of the following conditions
are met:
• The change in lease payments results in revised consideration
for the lease that is substantially the same as, or less than, the
consideration for the lease immediately preceding the change
Sales, distribution and marketing expenses comprise expenses
related to the distribution of goods sold and sales campaigns,
including packaging materials, brochures, wages and salaries
and other expenses related to sales and distribution sta as
well as depreciation, amortisation and impairment losses in
respect of distribution equipment.
Administrative expenses comprise expenses incurred in the
year to manage Pandora, including expenses related to admin-
istrative sta and depreciation, amortisation and impairment
losses in respect of assets used in the administration.
The allocation of amortisation and impairment losses from
intangible assets is presented in note 3.1 and allocation of
depreciation and impairment losses from property, plant and
equipment in note 3.2.
5353
FINANCIAL STATEMENTS
NOTE .
MANAGEMENT’S JUDGEMENTS
AND ESTIMATES UNDER IFRS
SIGNIFICANT ACCOUNTING ESTIMATES
In preparing the consolidated financial state-
ments, Management makes various accounting
estimates and assumptions that form the basis
of the presentation, recognition and measure-
ment 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 based on
historical experience and other factors, which
Management assesses to be reasonable, but
which by their nature involve uncertainty and
unpredictability. These assumptions may
have to be revised, and unexpected events or
circumstances may occur.
Pandora is subject to risks and uncertainties
that may lead to actual results differing from
these estimates, both positively and negatively.
COVID-19
Due to the COVID-19 outbreak, Pandora has
assessed the value of intangible assets and
property, plant and equipment. Due to the
change of operating segments, an impairment
test was carried out in Q2 2020. No impair-
ment was identified and the impairment test is
still considered to include sufficient head-
room. As there is limited visibility on the future
COVID-19 development, Pandora will continue
assessing the value of the assets including the
terms of the leasing contracts and any gov-
ernment grants. Pandora has also considered
the recoverability of accounts receivable and
the inventory value and has not identified any
impairment write down.
Specific risks for Pandora are discussed in the
relevant sections of the Management’s review
and in the notes.
The areas that involve a high degree of judge-
ment and estimation and are material to the
financial statements are described in more
detail in the related notes.
2.1 Segment and reve-
nue information
2.2 Programme NOW
restructuring costs
2.6 Taxation
3.3 Leases
3.5 Inventories
3.8 Contract assets
and liabilities
4.4 Financial risks
5.1 Contingent
liabilities
NOTE .
NEW ACCOUNTING POLICIES
AND DISCLOSURES CONTINUED
• Any reduction in lease payments aects only payments
originally due on or before 30 June 2021 (for example, a rent
concession would meet this condition if it results in reduced
lease payments before 30 June 2021 and increased lease
payments that extend beyond 30 June 2021)
• There is no substantive change to other terms and conditions
of the lease.
Pandora decided to apply the practical expedient issued by
IASB for all contracts with rent concessions occurring as a direct
consequence of COVID-19 and where it meets all conditions of
the practical expedient. The eect of the amendment and its
impact on nancial statements are presented in note 3.3.
5454
FINANCIAL STATEMENTS
RESULTS FOR
THE YEAR
SECTION 2
22.3%
1,938
REVENUE
DKK million
2019: 21,868
19,009
NET PROFIT
DKK million
2019: 2,945
EBIT MARGIN
excl. restructuring costs
2019: 26.8%
20.4%
EFFECTIVE TAX RATE
2019: 23.1%
This section comprises notes related to the results for the
year, including reporting segment disclosures, and provides
additional information related to two of Pandora’s perfor-
mance measures: revenue and EBIT.
A detailed description of the results for the year is given in
the Financial review section of the Management’s review.
5555
FINANCIAL STATEMENTS
NOTE .
SEGMENT AND REVENUE INFORMATION
As part of Pandora’s reorganisation, the reportable segments
have been reorganised as of Q2 2020 in two Global Business
Units, each responsible for the end-to-end performance of
products. One Global Business Unit will have the responsibility
mainly for core collections, including Moments and Collabs,
while the other Global Business Unit will drive the newer collec-
tions and innovations. The comparative gures for 2019 have
been restated to reect the new segments.
The two operating segments include all channels relating to the
distribution and sale of Pandora products.
Both segments derive their revenue from the types of products
shown in the product information.
Management monitors the protability of the operating seg-
ments separately for the purpose of making decisions about
resource allocation and performance management. Segment
results are measured as gross prot.
As Programme NOW restructuring costs cannot be meaningfully
allocated to segments, segment performance is measured and
reported excluding restructuring costs. Segment information is
recognised and measured in accordance with IFRS.
INCOME STATEMENT BY GLOBAL BUSINESS UNIT
DKK million
Moments
and Collabs
Style and
Upstream Innovation Group
2020
Revenue 13059 5950 19009
Cost of sales 3253 1381 4634
Gross prot 9806 4569 14375
Operating expenses 11691
Consolidated operating prot (EBIT) 2684
Prot margin (EBIT margin) 141%
Restructuring costs 1197
Prot margin (EBIT margin) excl. restructuring costs 204%
2019
Revenue 15095 6774 21868
Cost of sales 4150 1816 5966
Gross prot 10945 4958 15903
Operating expenses 12074
Consolidated operating prot (EBIT) 3829
Prot margin (EBIT margin) 175%
Restructuring costs 2025
Prot margin (EBIT margin) excl. restructuring costs 268%
Two
Business
Units
5656
FINANCIAL STATEMENTS
GEOGRAPHIC INFORMATION, REVENUE
DKK million 2020 2019
UK 2960 2861
Italy 2021 2272
France 1154 1169
Germany 1014 963
Denmark 30 53
US 4505 4677
Australia 1120 1118
China 1261 1970
Other 4943 6786
Total revenue 19009 21868
GEOGRAPHIC INFORMATION, ASSETS
DKK million 2020 2019
Germany 645 633
Denmark 1952 2155
US 1701 1816
Australia 443 449
Thailand 535 641
Other 1669 1751
Total intangible assets
1
6,943 7,445
Property, plant and equipment
2
2054 2585
Right-of-use assets
3
3007 4010
Deferred tax assets 764 675
Other non-current nancial assets 244 290
Current assets 6972 6565
Total consolidated assets 19984 21571
1
Allocation of intangible assets in the table above reects the country in which the assets were acquired in order to capture the values, including goodwill,
in the functional currency in which it is denominated. This is dierent from the presentation in note 3.1 where goodwill is allocated in accordance with
Management reporting and monitoring.
2
The crafting facilities in Thailand accounted for DKK 1,130 million (2019: DKK 1,331 million), corresponding to 55.0% of property, plant and equipment
(2019: 51.5%).
3
Right-of-use assets mainly relate to stores and oces.
REVENUE BY PRODUCT CATEGORY
DKK million 2020 2019
Charms 9646 11395
Bracelets 3751 4216
Rings 2774 3113
Earrings 1319 1487
Necklaces & Pendants 1519 1658
Total revenue
1
19009 21868
Goods transferred at a point in time 18939 21799
Services transferred over time 70 70
Total revenue 19009 21868
1
Figures include franchise fees etc. of DKK 129 million (2019: DKK 87 million), which have been allocated to the product categories.
REVENUE BY SALES CHANNEL
DKK million 2020 2019
Pandora physical stores 7943 11399
Pandora online stores 5483 2782
Wholesale and third-party distribution 5583 7687
Total revenue 19009 21868
NOTE .
SEGMENT AND REVENUE INFORMATION CONTINUED
Revenue by product category of Pandora products does not
dier materially between segments. Product oerings are also
similar between segments and grouped into the collections.
The use of sales channels for the distribution of Pandora jewel-
lery depends on the underlying market maturity and varies with-
in markets but is consistent when viewed between segments.
5757
FINANCIAL STATEMENTS
NOTE .
SEGMENT AND REVENUE INFORMATION CONTINUED
SIGNIFICANT ACCOUNTING ESTIMATES
Recognition and measurement of revenue is based on
estimates and judgements relating to expected sales returns
allowed to customers in most countries. These judgements
can have a material impact on the timing and measurement
of recognised revenue as well as the level of the refund
liability. Reductions in revenue from expected sales returns is
calculated based on historical return patterns and on a case-
by-case basis for commercial reasons.
ACCOUNTING POLICIES
Retail sales – products
Revenue from the sale of products through Pandora owned and
operated stores is recognised when a store sells a product to the
customer. Payment is usually due when the customer picks up
the product in the store or the product is delivered from an on-
line store. However, in some instances collection is delayed and a
receivable recognised, see note 3.6 Trade receivables.
A refund liability and a right-of-return asset are recognised for
products expected to be returned, see note 3.8 Contract assets
and liabilities. The estimate for returned products is based on
historical experience and expectations. Based on knowledge of
the nature of returns, it is considered highly probable that a sig-
nificant reversal of cumulative revenue recognised will not occur.
Provisions for rebates and discounts granted to customers are
recognised as a reduction in revenue.
The Group’s obligation to repair or replace faulty products is part
of the standard terms and is therefore recognised as a contract
liability, see note 3.8 Contract assets and liabilities. Revenue is
further measured excluding sales taxes and duties when these
are passed on to customers. Sales taxes and duties incurred on
sales that are not recoverable from the local taxation authorities
are reported gross as part of revenue and cost of sales.
Wholesale and third-party distributors – products
Pandora manufactures and sells jewellery to wholesalers and
third-party distributors. Revenue is recognised when control of
the products has been transferred to the wholesaler or third-par-
ty distributor. Change of control of the products occurs when the
products have been delivered to the wholesaler or distributor
and no further obligation exists that can affect the transfer of
control. Delivery has taken place when the products have been
shipped to the location of the wholesaler or distributor and
control of the goods has been transferred to the buyer. Revenue
from the sale is recognised based on the price specified in the
contract. Revenue is only recognised to the extent it is highly
probable that a significant reversal will not occur. A refund liability
and a right-of-return asset are recognised for products expected
to be returned, see note 3.8 Contract assets and liabilities. The
estimate for returned products is based on historical experience
and expectations. Based on knowledge of the nature of returns
in the wholesale and distributor channels, it is considered highly
probable that a significant reversal of cumulative revenue recog-
nised will not occur. Provisions for rebates and discounts granted
to wholesalers and franchisees are recognised as a reduction in
revenue.
The Group’s obligation to repair or replace faulty products is
recognised on a gross basis in the income statement as both a
reduction in revenue and a decrease in cost of goods sold. This is
due to the handling of warranty claims, which leads to replace-
ments instead of repairs. Revenue is further measured excluding
sales taxes and duties when these are passed on to customers.
Sales taxes and duties incurred on sales that are not recoverable
from the local taxation authorities are reported gross as part of
revenue and cost of sales.
When control has been transferred, a receivable is recognised as
the consideration to be paid is conditional only on the passage
of time. The price specified in the contract is not adjusted for any
financing element as payment terms never exceed 12 months.
5858
FINANCIAL STATEMENTS
NOTE .
PROGRAMME NOW RESTRUCTURING COSTS
Programme NOW
Programme NOW costs are reported in the income statement
within the cost types it relates to.
Restructuring costs amounted to DKK 1.2 billion (DKK 2.0 billion
in 2019). Restructuring costs impacted the income statement
as follows:
• Cost of sales, DKK 0.2 billion primarily related to optimisa-
tion in production (2019: DKK 1.0 billion, primarily related to
inventory buyback of DKK 0.6 billion and product portfolio
optimisation of DKK 0.3 billion).
• Operating expenses, DKK 1.0 billion, primarily related to or-
ganizational restructuring (DKK 0.3 billion), IT transformation
(DKK 0.2 billion) and consultancy expenses (DKK 0.4 billion)
(2019: DKK 1.0 billion, primarily related to brand restructuring
activities (DKK 0.2 billion), IT transformation (DKK 0.1 billion),
accelerated amortisations (DKK 0.2 billion) and consultancy
costs (DKK 0.4 billion)).
Restructuring costs impacted marketing expenses by DKK 0.1
billion (2019: DKK 0.2 billion), sales and distribution expenses
by DKK 0.1 billion (2019: DKK 0.2 billion) and administrative
expenses by DKK 0.8 billion (2019: DKK 0.6 billion).
SIGNIFICANT ACCOUNTING ESTIMATES
Estimates mainly relate to judgement applied by Executive
Management in distinguishing between restructuring and
normal operation.
ACCOUNTING POLICIES
In 2019 and 2020, Pandora is restructuring the business
under the programme name “Programme NOW” to restore
long-term sustainable growth and protect profitability.
The restructuring costs are significant non-recurring items
assessed by Executive Management, making a distinction
between normal operation and restructuring.
As Programme NOW restructuring costs cannot be meaning-
fully allocated to reportable segments, segment performance
is measured and reported excluding restructuring costs.
Pandora has received government subsidies of DKK 225 million
as a result of the COVID-19 pandemic for operations mainly in
Europe and Australia. The majority of the subsidies were relat-
ed to employee retention and facility cost and included among
others the government programmes “Job Retention Scheme”
and “Business Rates Relief Scheme” in the United Kingdom,
“JobKeeper Program” in Australia and “ERTE” in Spain. There
are no unfullled conditions or other contingencies attached
to the received subsidies. During the pandemic Pandora has
retained all sta onboard, including store sta while stores
were closed. The government subsidies partially fund the cost
hereof.
NOTE .
GOVERNMENT GRANTS
ACCOUNTING POLICIES
Government grants are recognised where there is reasona-
ble assurance that the grant will be received and all attached
conditions will be complied with.
Income from government subsidies as a result of COVID-19
pandemic were recognised as a deduction in the expense
item to which they are intended to compensate.
5959
FINANCIAL STATEMENTS
The Group’s pension plans are primarily dened contribution
plans. Pandora has dened benet plans relating to employees
in Thailand. The dened benet plans are recognised at the
present value of the actuarially measured obligations. In 2020,
these obligations amounted to DKK 74 million (2019: DKK 75
million).
In 2020, the actuarial gain was DKK 6 million (2019: gain of DKK 0
million) recognised in other comprehensive income.
DKK million 2020 2019
Total remuneration to
Board of Directors
78 74
Certain Board members received a xed travel fee as compensation
when attending Board meetings abroad in 2020. Total travel fee for
2020 amounted to DKK 1.0 million (2019: DKK 0.9 million).
For further details, see the Remuneration Report available on the
Pandora website.
NOTE .
STAFF COSTS
DKK million 2020 2019
Wages and salaries 3581 3811
Pensions 178 166
Share-based payments 70 20
Social security costs 177 263
Other sta costs 472 553
Total sta costs 4478 4814
Sta costs have been recognised in the consolidated income statement:
Cost of sales 913 1122
Sales, distribution and marketing expenses 2572 2816
Administrative expenses 993 876
Total sta costs 4478 4814
Average number of full-time employees during the year 22336 23736
DKK million Base pay Bonus Shares Benets Other Total
Total remuneration to Executive Management 140 157 131 17 445
The above compensation includes DKK 1.2 million cost for bonus and DKK 1.0 million cost for shares related to the former executive management.
Total remuneration to Executive Management 164 80 34 06 253 537
’Other’ includes a sign-on bonus to Alexander Lacik of DKK 18.0 million, an amount of DKK 2.7 million (4 out of 9 months) related to a replacement reward to Anders
Boyer, and DKK 4.7 million as part of a DKK 7.0 million cash bonus to Jeremy Schwartz, which was payable upon ending his service. For further details, see the Remu-
neration Report available on the Pandora website.
ACCOUNTING POLICIES
Wages and salaries, social security contributions, leave and
sick leave, bonuses and non-monetary benefits are recog-
nised in the financial year in which services are rendered by
employees of Pandora. Whenever Pandora provides long-
term employee benefits, the costs are accrued to match the
rendering of the services by the employees.
Termination benefits are recognised at the time an agree-
ment between Pandora and the employee is made and no
future service is rendered by the employee in exchange for
the benefits.
6060
FINANCIAL STATEMENTS
Decisions to grant share-based incentive programmes are
made by the Board of Directors in accordance with general
guidelines on incentive pay for Pandora.
The total cost related to share-based payments was DKK 70
million (2019: net cost of DKK 20 million). The programme for
2020 was recorded at target level as the target is expected
to be met. The cost of share-based payments are included in
sta costs. In the remaining vesting periods, an amount of DKK
95 million (2019: DKK 52 million) is expected to be recognised
in respect of the current programmes. The weighted average
remaining contractual life of performance shares at the end of
the period was 2.9 years (2019: 2.1 years).
For shares exercised in 2020, the average share price at the
time of exercise was DKK 306.
Long-term incentive programmes
Each year, two incentive programmes are launched targeting ei-
ther Executive Management or other employees. The calculated
value of each programme is recognised over the vesting period
(three years) based on the likelihood that programme targets
will be met. For Executive Management, a further two-year
holding period applies.
NOTE .
SHAREBASED PAYMENTS
SHARES OUTSTANDING
Executive
Management
Other
employees
Total
Average exercise price
per performance share, DKK
Shares outstanding at 1 January 188413 502386 690799 42
Shares granted during the year 115491 446854 562345
Shares exercised during the year 32061 19079 51140 41
Shares lapsed during the year 42825 222548 265373 62
Shares outstanding at 31 December 229018 707613 936631 11
Shares outstanding at 1 January 101203 171768 272971 68
Shares granted during the year 118524 366868 485392 26
Shares exercised during the year 31314 31314 30
Shares lapsed during the year 36250 36250 51
Shares outstanding at 31 December 188413 502386 690799 42
6161
FINANCIAL STATEMENTS
NOTE .
SHAREBASED PAYMENTS CONTINUED
NUMBER OF PERFORMANCE SHARES IN PANDORA A/S
Expiry
date
Exercise
price, DKK
Shares
31 December
2020
Expected
volatility
Risk-free
interest rate
Maximum market
value at launch
(DKK million)
Accumulated cost
recognised
(DKK million)
Remaining value
to be expensed
(DKK million)
Programme start date
November 2018
1
2023 265 7865 43% 01% 2 2
March 2019
1
2022 265 260759 43% 06% 93 44 16
March 2019
1
2024 265 105662 43% 05% 27 12 4
July 2020 2023 000 446854 42% 06% 152 31 61
July 2020 2025 000 115491 42% 06% 36 9 15
Total number of performance shares outstanding 936631 310 99 95
1
Although technically structured as options for legacy Danish tax treatment reasons, the awards have the characteristics of Performance Share Units because the option exercise price is 1% of the share price.
Assumptions
The volatility of the shares is based on the historical volatility of
the price of Pandora A/S’ shares. The risk-free interest rate
is based on a Danish government bond with similar maturity.
The dividend yield applied is equal to 4.5% for the 2020 pro-
gramme and 5.9% for the 2019 programme and is based on the
assumed future dividend over the vesting period and the share
price on the date of the grant. Actual paid dividends may dier
from the assumptions applied in the valuation of the market
value. Given that the exercise price for one performance share
equals up to 1% of the market price of one share at grant date,
the fair value almost equals the market value of one share at
grant date. The assumptions in the table therefore have very
limited impact on the estimated fair value of performance
shares granted.
ACCOUNTING POLICIES
Selected Pandora employees receive remuneration in the form
of share-based payment transactions, whereby programme par-
ticipants render services as consideration for equity instruments
(“equity-settled transactions”).
Equity-settled transactions
The cost of equity-settled transactions with employees is meas-
ured by reference to the fair value at the grant date. The calculat-
ed fair values are based on either the Black-Scholes model or the
Monte Carlo model according to the performance conditions of
each programme. The cost of equity-settled transactions is recog
nised as staff costs together with a corresponding increase in
equity over the period in which the performance and/or service
conditions are fulfilled.
The cumulative expense recognised for equity-settled transac-
tions at each reporting date until the vesting date reflects the
extent to which the vesting period has expired and Management’s
best estimate of the number of equity instruments that will
ultimately vest. The income statement expense or income for a
period represents the movement in cumulative expenses recog-
nised at the beginning and end of that period.
6262
FINANCIAL STATEMENTS
INCOME TAX EXPENSE
DKK million 2020 2019
Current income tax charge for the year 604 751
Change in deferred tax for the year 66 114
Impact of change in tax rates 2 1
Adjustment to current tax for prior years 52 29
Adjustment to deferred tax for prior years 68 47
Total income tax expense 556 884
Deferred tax on other comprehensive income 45
Corporate tax on other comprehensive income 32 27
Total tax on other comprehensive income 13 27
Income taxes
Income tax expense
Income tax expense was DKK 556 million in 2020, correspond-
ing to an eective tax rate of 22.3% (2019: DKK 884 million,
23.1%) for the Group. The tax rate of 22.3% was negatively im-
pacted by adjustments to previous years and paid withholding
tax. The eective tax rate was reduced by non-taxable income
in Thailand due to the Board of Investment agreements (BOIs).
The corporate income tax rate in most of Pandora’s key markets is
higher than the Danish tax rate of 22%, except for UK and Thailand.
The eective tax rate (based on IFRS) per key market is illustrated
in the table in the end of this note.
RECONCILIATION OF EFFECTIVE
TAX RATE AND TAX
2020 2019
% (DKK million) % (DKK million)
Prot before tax 2494 3829
Corporate tax rate in Denmark, 22% 220% 549 220% 842
Deviation in foreign subsidiaries’ tax rates
compared with the Danish rate 02% 5 10% 37
Deferred tax impact of change in tax rates 01% 2 00% 1
Non-taxable income and non-deductible expenses 13% 31 08% 31
Adjustment to tax for prior years 07% 16 05% 18
Non-capitalised tax assets, net 01% 2 01% 4
Withholding taxes 07% 17 03% 13
Eective income tax rate/income tax expense
223% 556
231% 884
NOTE .
TAXATION
SIGNIFICANT ACCOUNTING ESTIMATES
Pandora is subject to income tax in the countries in which
the Group operates, comprising various tax rates worldwide.
Significant judgements are required in determining the ac-
crual for income taxes, deferred tax assets and liabilities, and
provision for uncertain tax positions. Provision for uncertain
tax positions is measured according to IFRIC 23.
As part of Pandora conducting business globally, tax and
transfer pricing disputes with tax authorities may occur. Any
unresolved disputes with local tax authorities are recognised
as income tax payable/receivable based on the expected val-
ue method or the most likely amount. Management believes
that the provision made for uncertain tax positions is ade-
quate. However, the actual obligation may deviate from this
and is dependent on the result of litigations and settlements
with the relevant tax authorities.
ACCOUNTING POLICIES
Income tax expense for the year comprises current tax and
changes in deferred tax, including changes in tax rate, adjust-
ment to prior years and changes in provision for uncertain tax
positions. Tax is recognised in the income statement, except
to the extent that it is related to items recognised in equity or
othercomprehensive income. The tax rates and tax laws used
to compute the amounts are those enacted or substantively
enacted, by the reporting date, in the countries in which
Pandora operates and generates taxable income.
6363
FINANCIAL STATEMENTS
Deferred tax
At the end of 2020, deferred tax assets amounted to DKK
764 million (2019: DKK 675 million) and deferred tax liabilities
amounted to DKK 368 million (2019: DKK 235 million). Net de-
ferred tax assets amounted to DKK 396 million (2019: DKK 440
million).
Of the total deferred tax assets recognised, DKK 14 million
(2019: DKK 3 million) related to tax loss carryforwards, the
utilisation of which depends on future positive taxable income
exceeding realised deferred tax liabilities. It is Management’s
opinion that these tax loss carryforwards can be utilised.
Tax assets not recognised, DKK 28 million (2019: DKK 30 million),
relate to tax loss carryforwards that are not expected to be
utilised in the foreseeable future. Tax losses that can expire
amounted to DKK 14 million (2019: DKK 7 million).
No deferred tax has been recognised in respect of entities’
earnings that are intended for distribution in the short term,
as no tax will be payable on distribution.
Only insignicant latent tax liabilities remained at 31 December
2020. These liabilities are not recognised as the Group is able
to control this liability and it is considered probable that the
liability will not crystallise in the foreseeable future.
DEFERRED TAX
DKK million 2020 2019
Deferred tax at 1 January 440 589
Exchange rate adjustments 15 4
Recognised in the income statement 2 161
Recognised in other comprehensive income 45
Recognised in equity, share-based payments 20 9
Impact of change in tax rates 2 1
Deferred tax at 31 December 396 440
Deferred tax assets 764 675
Deferred tax liabilities 368 235
Deferred tax, net 396 440
BREAKDOWN OF DEFERRED TAX
DKK million 2020 2019
Intangible assets 612 616
Property, plant and equipment 6 5
Right-of-use assets 11 9
Current assets 792 840
Non-current assets and liabilities 197 199
Tax loss carryforwards 14 3
Deferred tax, net 396 440
NOTE .
TAXATION CONTINUED
ACCOUNTING POLICIES
Deferred tax on all temporary differences between the car-
rying amounts for financial reporting purposes and the tax
base of assets and liabilities is measured using the balance
sheet liability method. No deferred tax is recognised on
temporary differences that arise from the initial recognition
of goodwill or of an asset or liability in a transaction that is
not a business combination and, at the time of the transac-
tion, affects neither accounting profit nor taxable profit or
loss.
The recognition of deferred tax assets includes the expected
tax value of tax loss carryforwards to the extent that these
tax assets can be offset against positive taxable income in
the foreseeable future. The same applies to deferred tax
assets related to investments in subsidiaries. Management
has considered future taxable income and applied judge-
ments to determine whether deferred tax assets should be
recognised.
Deferred tax assets and liabilities are measured according to
current tax rules and at the tax rates expected to be effec-
tive on elimination of the temporary differences. Deferred
tax assets and liabilities are offset if the Group has a legally
enforceable right to offset current tax assets against current
tax liabilities and the deferred tax relates to the same taxa-
ble entity and the same tax authority.
6464
FINANCIAL STATEMENTS
NOTE .
TAXATION CONTINUED
Tax policy
Pandora is a large taxpayer and it is of great importance for
Pandora to be a responsible taxpayer as well. This means that
we focus on paying the correct amount of taxes at the right
time in all countries where we do business. Pandora is commit-
ted to ensuring compliance with the letter and spirit of tax laws
in the markets in which we operate, while striving to maximise
shareholder value in a responsible way. Pandora will not engage
in aggressive tax planning and will only optimise the Group’s
tax position in connection with the evolution of its operational,
commercial and economic activities. Tax will be an outcome of
the business strategy and will not drive business strategy.
Pandora aims to minimise the level of tax risks at all times and
actively seeks to identify, quantify, manage and monitor the tax
position to ensure it will remain in line with the Group’s tax pol-
icy. Pandora will refrain from unnecessarily complex tax set-ups,
keeping a simple, business-aligned model that is well under-
stood and based on in-depth analysis of tax and reputational
impacts.
Pandora will consider government-sponsored tax incentives
where appropriate and in line with our code of conduct to
support economic development, transfer of knowledge, job
creation and maintaining good corporate citizenship.
The Group tax policy, which has been approved by the Audit
Commitee of Pandora, is available on www.pandoragroup.com.
Paid income tax
In 2020, Pandora paid DKK 192 million in income tax. Most of
the tax payments are attributable to Pandora’s key markets
shown in the table below. The signicant decrease in tax paid
compared with previous years (2019: DKK 1,233 million) is
caused by lower prot in general compared with 2019 as a
result of COVID-19. The signicant decrease is further caused
by a refund in Denmark (related to 2019) which exceed 2020
paid taxes of DKK 309 million resulting in a net refund of DKK
97 million (2019: 876 million which also included tax payments
related to previous years).
Tax paid,
DKK million
Eective
tax rate, %
2020 2019 2020
Australia 47 74 37%
China 18 2 16%
Denmark 97 876 15%
France 22 9 34%
Germany 16 30 42%
Italy 67 48 58%
UK 33 21 27%
USA 12 40 26%
Thailand 27 18 4%
Rest of the world 71 115 NA
Total Group
192 1233 223%
6565
FINANCIAL STATEMENTS
INVESTED
CAPITAL AND
WORKING
CAPITAL ITEMS
SECTION 3
491
10,540
OPERATING
WORKING CAPITAL/
REVENUE
2019: 3.1%
-2.1%
INVESTED
CAPITAL
DKK million
2019: 14,268
CAPEX
DKK million
2019: 822
The notes in this section describe the assets that form the
basis for the activities of Pandora and the related liabilities.
Operating working capital at the end of 2020 was -2.1% of
revenue, compared to 3.1% at the end of 2019.
Financial risks are described in note 4.4.
WORKING CAPITAL
DKK million Notes 2020 2019
Inventories 35 1949 2137
Trade receivables 36 870 1643
Trade payables 3211 3095
Operating working capital 391 684
Other receivables 807 1077
Current provisions 37 38 683 806
Net commodity derivatives 221 32
Other payables 1399 1281
Net working capital 1447 293
INVESTED CAPITAL
DKK million Notes 2020 2019
Intangible assets 31 6943 7445
Property, plant and equipment 32 2054 2585
Right-of-use assets 33 3007 4010
Other non-current nancial assets 244 290
Non-current provisions 37 370 278
Net working capital 1447 293
Deferred tax, net 26 396 440
Currency derivatives 12 40
Income tax receivables/payable, net 299 29
Invested capital 10540 14268
In 2020 Pandora has updated the denition of Net working capital to include Commodi-
ty derivatives and exclude Net tax payable. The 2019 gures has been restated to reect
the change.
6666
FINANCIAL STATEMENTS
DKK million
Goodwill
Brand
Distri-
bution
Other
intangible
assets
Total
Cost at 1 January 4416 1057 1881 1705 9060
Acquisition of subsidiaries and activities 2 2
Additions 122 122
Disposals 274 17 291
Exchange rate adjustments 170 6 64 240
Cost at 31 December 4247 1057 1601 1747 8652
Amortisation and impairment losses at 1 January 741 874 1615
Amortisation for the year 30 296 326
Impairment loss for the year 82 82
Disposals 274 5 281
Exchange rate adjustments 6 28 33
Amortisation and impairment losses at 31 December 491 1218 1708
Carrying amount at 31 December 4247 1057 1110 529 6943
The impairment loss of DKK 82 million relates to scrapped software applications and design rights whose value in use has been estimated to be lower than the
net book value. The loss is mainly included in cost of sales in the income statement.
NOTE .
INTANGIBLE ASSETS
DKK million
Goodwill
Brand
Distri-
bution
Other
intangible
assets
Total
Cost at 1 January 4278 1057 1879 2177 9391
Reclassication to right-of-use assets 454 454
Acquisition of subsidiaries and activities 59 1 59
Additions 266 266
Disposals 318 319
Exchange rate adjustments 80 2 34 116
Cost at 31 December 4416 1057 1881 1705 9060
Amortisation and impairment losses at 1 January 708 905 1613
Reclassication to right-of-use assets 209 209
Amortisation for the year 30 466 496
Disposals 304 304
Exchange rate adjustments 2 17 19
Amortisation and impairment losses at 31 December 741 874 1615
Carrying amount at 31 December 4416 1057 1140 831 7445
The majority of the intangible assets have been acquired through business combinations.
Key money reclassied to right-of-use assets on 1 January 2019, see note 1.2.
DKK million 2020 2019
Amortisation and impairment losses have been recognised in the income statement
as follows:
Cost of sales 105 52
Sales, distribution and marketing expenses 104 198
Administrative expenses 199 246
Total 408 496
6767
FINANCIAL STATEMENTS
Goodwill
Additions in 2020 relate to acquisitions of activities.
Note 3.4 includes an overview of acquired goodwill for
the year.
Brand
The ‘Pandora’ brand is the only brand of the Group that is
capitalised in the nancial statements. It comprises a group of
complementary intangible assets relating to the brand, domain
name, products, image and customer experience related to
products sold under the Pandora brand. The brand was ac-
quired as part of the Pandora core business in 2008.
Distribution
Distribution includes distribution network and distribution
rights. These are presented aggregated in 2020.
The distribution network covers Pandora’s relations with its
distributors. The main part of the distribution network was
acquired with the Pandora core business in 2008.
Distribution rights mainly relate to the distribution rights for
Pandora products in North America. These were acquired with
the American distributor in 2008 and the carrying amount at
31 December 2020 was DKK 1,034 million (2019: DKK 1,034
million).
Other intangible assets
Other intangible assets mainly comprise software.
NOTE .
INTANGIBLE ASSETS CONTINUED
ACCOUNTING POLICIES
All intangible assets are tested for impairment if there
is any indication of impairment or at least annually.
In addition, impairment testing of goodwill was per-
formed in Q2 2020 after the change in the operating
segments in Pandora. All the assumptions used are
described on the following page.
Goodwill
Goodwill is initially recognised at the amount by
which the purchase price for a business combina-
tion exceeds the recognised value of the identifiable
assets and liabilities acquired. Goodwill comprises
future growth expectations, buyer-specific synergies,
the workforce in place and know-how. Subsequent to
initial recognition, goodwill is measured at cost less
accumulated impairment losses. Goodwill is not amor-
tised, and impairment losses charged in previous years
cannot be reversed.
Brand
Brand is initially recognised at cost based on the
“Relief from Royalty” method, which is considered to
have an indefinite useful life and is impairment tested
annually.
Distribution
The distribution network is initially recognised at fair
value based on an estimation of the costs the entity
avoids by owning the intangible assets and not need-
ing to rebuild the network (the cost approach).
The distribution network is amortised over an expect-
ed useful life of 15 years.
The distribution rights for Pandora products in the
North American market are measured based on a
residual model, since the distribution agreement
underlying the distribution rights is non- terminable.
Consequently, the distribution rights are considered
to have an indefinite usefullife.
Other acquired distribution rights are initially recognised
at cost based on the “Multi-period Excess Earnings”
model and amortised over their expected useful lives.
Other intangible assets
Software is initially recognised at cost and amortised
over 2-5 years.
Amortisation is allocated to segments on a pro-rata
basis based on the standard cost per segment.
Impairment
At each reporting date, Pandora assesses whether
there is any indication that an asset may be impaired.
If any such indication exists, or when annual impair-
ment testing of an asset is required, Pandora estimates
the recoverable amount of the asset.
The recoverable amount of an asset is the higher of
the fair value of the asset or cash-generating unit
(CGU) less costs to sell and its value in use. The recov-
erable amount is determined for the smallest group
of assets that is independent from other assets or
groups of assets. Where the carrying amount of an as-
set or CGU exceeds its recoverable amount, the asset
is written down to its recoverable amount.
In assessing the value in use, the estimated future
cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks
specific to the asset. In determining fair value less
costs to sell, an appropriate valuation model is used.
The most significant factors when assessing the po-
tential need for impairment are:
— decreasing revenue
— decreasing brand value
— changes to the product mix.
The indicators above should be viewed in the context
of Pandora’s relatively high margins and low asset base.
The brand is applied and supported globally in all
of the Group’s entities. The brand is maintained and
preserved through common strategy and product
development at Group level and marketing in the indi-
vidual sales entities. The brand is consequently tested
for impairment at Group level.
Like the brand described above, goodwill is reported
and managed internally at Group level. Due to the
constraint in IAS 36 Impairment, goodwill is allocated to
the grouped CGUs in the two operating segments for
impairment testing purposes. It is Management’s opin-
ion that this best reflects Pandora’s value creation.
6868
FINANCIAL STATEMENTS
Method for impairment testing
In the impairment test, the recoverable amount was compared
with the carrying amount. The recoverable amount is based
on a calculation of the value in use using cash ow estimates
based on the budget for 2021 and expectations for the next
three years. The long-term growth rate in the terminal period
has been set so that it equals the expected long-term rate of
ination.
NOTE .
INTANGIBLE ASSETS CONTINUED
DISCOUNT RATES AND GROWTH RATES IN TERMINAL PERIOD
Discount rate
before tax
Growth rate in
terminal period
Moments and Collabs 112% 2%
Style and Upstream Innovation 113% 2%
Group 113% 2%
EMEA 102% 2%
Americas 114% 2%
Asia Pacic 129% 2%
Group 109% 2%
ALLOCATION OF INTANGIBLE ASSETS TO CGUS
DKK million
Goodwill
Brand
Distribution
Moments and Collabs 2981 742 779
Style and Upstream Innovation 1265 315 331
Total 4247 1057 1110
EMEA 2545
Americas 972 1034
Asia Pacic 898 13
Group 1057 94
Total 4416 1057 1141
6969
FINANCIAL STATEMENTS
Assumptions
The calculations of the recoverable amounts of CGUs or groups
of CGUs are based on the following key assumptions:
Discount rates reect the current market assessment of the
risks specic to each CGU or group of CGUs. The Group dis-
count rates have been estimated based on a weighted average
cost of capital for the industry. The rates have also been adjust-
ed to reect the market assessment of any risk specic to each
group of CGUs.
The EBIT gures used in the impairment test are based on the
budget for next year, prepared and approved by Management,
and a forecast for the two subsequent years.
The 2% growth rate applied is an estimate of the expected
average ination in the terminal period. As such no real growth
is applied to the terminal period when calculating the recover-
able amounts.
The EBIT margin in the budget of each group of CGUs is based
on historical experience and expectations concerning:
• revenue development taking into account development in
network (stores, retail/wholesale share), product mix and
market share as well as the COVID-19 impact on temporarily
closed stores and online revenue growth
• cost of sales based on raw materials consumption aected by
mix of materials (stones, gold, silver and salaries) and average
lagged hedge commodity prices at the time the budget is
NOTE .
INTANGIBLE ASSETS CONTINUED
prepared. This includes also the potential impact of COV-
ID-19 in the metal prices that has surged since Q2 2020 and
the impact after the cost and commercial mitigating actions
was considered
• development in operating expenses
• currency rates are based on actual rates at the time the
budget is prepared.
Net working capital in the budget for next year, relative to the
revenue of each group of CGUs, is based on historical experi-
ence and is maintained for the remainder of the expected lives.
Net working capital thus increases on a linear basis as the level
of activity increases.
The impairment test of the Brand at Group level is based on the
"Relief from Royalty" method.
Due to the change of operating segments, an impairment test
was carried out in Q2 2020. The impairment tests did not
identify any need for impairment losses to be recognised. As
there is limited visibility on the future COVID-19 develop-
ment, Pandora will continue assessing the value of the assets.
Based on sensitivity analyses, it is Management’s opinion that
no probable change in any key assumptions would cause the
carrying amounts of grouped CGUs or at Group level to exceed
the recoverable amount.
Even with a signicant reduction in growth rate and a decrease
in discount rate, Management has not identied any impair-
ment indicator.
7070
FINANCIAL STATEMENTS
DKK million 2020 2019
Depreciation has been recognised in the income statement as follows:
Cost of sales 241 165
Sales, distribution and marketing expenses 416 432
Administrative expenses 42 101
Total 699 698
NOTE .
PROPERTY, PLANT AND EQUIPMENT
DKK million
Land and
buildings
Plant and
equipment
Assets under
construction
Total
Cost at 1 January 1287 3591 33 4912
Additions 4 111 247 362
Disposals 34 146 180
Transfers 102 130 232
Exchange rate adjustments 121 225 5 351
Cost at 31 December 1238 3461 44 4742
Depreciation and impairment losses at 1 January 246 2081 2326
Depreciation for the year 136 563 699
Disposals 34 136 170
Exchange rate adjustments 25 142 167
Depreciation and impairment losses at 31 December 323 2366 2689
Carrying amount at 31 December 915 1095 44 2054
Cost at 1 January 1008 3148 122 4278
Acquisition of subsidiaries and activities 13 13
Additions 15 214 278 507
Disposals 7 120 128
Transfers 150 224 374
Exchange rate adjustments 122 112 7 241
Cost at 31 December 1287 3591 33 4912
Depreciation and impairment losses at 1 January 166 1478 1644
Depreciation for the year 62 636 698
Disposals 2 98 100
Exchange rate adjustments 20 64 84
Depreciation and impairment losses at 31 December 246 2081 2326
Carrying amount at 31 December 1041 1511 33 2585
ACCOUNTING POLICIES
Property, plant and equipment is stated at cost, net of accu-
mulated depreciation and accumulated impairment losses.
Depreciation is calculated on a straight-line basis over the
estimated useful life according to the table below.
Asset Useful life
Land Indenite
Buildings 20-50 years
Leasehold improvements Lease term
Plant and equipment 3-5 years
Other xtures and ttings 3-5 years
7171
FINANCIAL STATEMENTS
NOTE .
LEASES
RIGHTOFUSE ASSETS
DKK million 2020 2019
Property 2975 3972
IT 5 2
Cars 18 21
Other 10 16
Total right-of-use assets 3007 4010
Assets and liabilities related to leases. Amounts recognised in the balance sheet:
Leases
Pandora leases stores, various oces, oce equipment and cars.
RECOGNISED DEPRECIATION AND IMPAIRMENT
LOSSES ON RIGHTOFUSE ASSETS CHARGED
TO THE INCOME STATEMENT FOR THE PERIOD
JANUARY DECEMBER:
DKK million 2020 2019
Property
1
1190 1105
IT 1 1
Cars 11 12
Other 5 7
Total depreciation and impairment losses on
right-of-use assets for the period
1208 1125
LEASE LIABILITIES
DKK million 2020 2019
Non-current 2066 2804
Current 993 1012
Total lease liabilities 3059 3816
Additions of right-of-use assets were DKK 817 million in 2020 (2019: DKK 522 million).
Amounts recognised in the income statement:
Lease liabilities are recognised in loans and borrowings.
Costs recognised in the period for short-term and low-value
leases were DKK 33 million (2019: DKK 30 million). Expenses are
recognised on a straight-line basis.
OTHER ITEMS RELATING TO LEASES
DKK million 2020 2019
Interest income from sub-leases 1 1
Interest expense 97 106
Total interest for the period 96 104
COVID-19-related rent concessions of DKK 112 million have
been recognised within sales and distribution expenses in the
income statement in 2020.
Rent of DKK 52 million has been deferred, meaning that rent
payments have been postponed under agreements with land-
lords. Overall nancing cash ow was positively impacted by
DKK 164 million due to rent relief and rent deferrals.
Total cash outow relating to leases was DKK 1,164 million
(2019: DKK 1,643 million) for the period. This comprises of xed
lease payments in scope of IFRS 16 of DKK 839 million (2019:
DKK 1,138 million), variable lease payments of DKK 196 million
(2019: DKK 371 million), interest paid of DKK 96 million (2019:
DKK 104 million), and short-term and low-value leases of DKK
33 million (2019: DKK 30 million). Many of the Group’s property
leases contain variable payment terms that are linked to the
volume of sales made from leased stores according to normal
market practice. In 2020, around 17% (2019: 23%) of the lease
payments recognised in the income statement were variable
rent. Pandora has estimated that a 1% increase in annual phys-
ical store revenue would consequently result in a 0.7% (2019:
0.5%) increase in lease payments. The average usual store
leases are ve years with a three to ve year option to extend
in approximately 23% (2019: 23%) of current leases. Approxi-
mately 20% of current leases are up for renegotiations in 2021.
The estimated value of lease extensions that Pandora is not
reasonably certain to exercise is around DKK 0.6 billion (2019:
DKK 0.4 billion).
1
Including impairment losses of DKK 128 million due to revaluation of right-of-use
assets in connection with COVID-19.
7272
FINANCIAL STATEMENTS
NOTE .
LEASES CONTINUED
ACCOUNTING POLICIES
Pandora applies a single recognition and measure-
ment approach to all leases, except for short-term
leases and low-value leases.
Pandora recognises right-of-use assets at the com-
mencement date of the lease when the asset is avail-
able for use. Right-of-use assets are measured at cost,
less any accumulated depreciation and impairment
losses, and adjusted for any remeasurement of lease
liabilities. The cost of right-of-use assets includes the
amount of lease liabilities recognised, initial direct
costs incurred, lease payments made at or before the
commencement date, key money, less any lease in-
centives received. Key money is measured at cost and
amortised over the term of the contract. Right-of-use
assets are depreciated over the shorter of the asset’s
useful life and the lease term on a straight-line basis.
At each reporting date Pandora assesses whether
there is any indication that a right-of-use asset may
be impaired. If any such indication exists, Pandora
carries out impairment testing for the relevant CGU.
Pandora recognises lease liabilities at the commence-
ment date of the lease, measured at the present value
of lease payments to be made over the lease term.
Lease payments include fixed payments less any lease
incentives receivable. Some leases are exposed to
potential future increases in variable lease payments
based on an index or rate, which are not included
in the lease liability until they take effect. Payments
relating to services are not included in lease liabilities.
Some property leases contain variable payment
terms that are linked to sales generated from a store.
Variable lease payments that depend on sales are
recognised in profit or loss in the period in which the
condition that triggers those payments occurs and
are not included in the lease liability.
In calculating the present value of lease payments,
Pandora uses its incremental borrowing rate at the
lease commencement date because the interest
rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made.
In addition, the carrying amount of lease liabilities is
remeasured if there is a modification, a change in the
lease term or a change in the lease payments.
Pandora applies the short-term lease recognition
exemption to its short-term leases.
Payments related to short-term leases and leases
of low-value assets continue to be recognised on
a straight-line basis as an expense in the income
statement. Short-term leases are leases with a lease
term of 12 months or less. Low-value assets comprise
some IT equipment and other office equipment.
On 28 May 2020, the IASB issued COVID-19- Related
Rent Concessions - amendment to IFRS 16 Leases. As
a practical expedient, a lessee may elect not to assess
whether a COVID-19 pandemic-related rent conces-
sion from a lessor is a lease modification. Pandora de-
cided to apply the practical expedient for all contracts
with rent concessions occurring as direct consequence
of COVID-19 and where all conditions of the practical
expedient are met.
SIGNIFICANT ACCOUNTING ESTIMATES
When assessing the life of leases, Pandora considers the
non-cancellable lease term and options to extend the lease
where Pandora is reasonably certain to extend. Leases in
Pandora mainly comprise stores, office buildings, cars, IT and
other office equipment. Usual lease contracts for stores
average five years with a three to five year option to extend
in approximately 23% of current leases. The lease term for
stores is assessed to be up to 10 years, depending on an
internal store rating based on location, revenue and earnings.
For office buildings, the lease term is usually five to 15 years.
For other assets, the life is equal to the non-cancellable lease
term, and extensions are not considered for these.
The COVID-19 outbreak is deemed a significant change in the
circumstances, which has led Pandora to re-negotiate store
leases where possible. Pandora is renegotiating most of the
lease contracts and does not intend to extend the existing
contracts within existing terms. Pandora has also decided to
execute termination options and communicated the decision
to the landlords by sending termination letters. Both gave rise
to the reassessment/reduction in the right-of-use assets by
around DKK 0.4 billion.
7373
FINANCIAL STATEMENTS
NOTE .
BUSINESS COMBINATIONS
Acquisitions in 2020
No acquisitions, to an extent of signicance to Pandora, were completed during 2020.
Acquisitions after the reporting period
No acquisitions took place after the reporting period.
ACCOUNTING POLICIES
Business combinations are accounted for using the acquisi-
tion method. The cost of an acquisition is measured as the
aggregate of the consideration transferred, measured at
acquisition date fair value, and the amount of any non-con-
trolling interests in the acquiree.
For each business combination, the acquirer measures the
non-controlling interests in the acquiree either at fair value
or at the proportionate share of the acquiree’s identifiable
net assets. Acquisition costs incurred are expensed. Subse-
quent to initial recognition, goodwill is measured at cost less
any accumulated impairment losses.
As goodwill is reported and managed internally at Group lev-
el, goodwill acquired should also be allocated to the Group.
However, goodwill acquired is allocated to the grouped
CGUs in the two operating segments for impairment testing
purposes due to the constraint in IAS 36 Impairment.
If any part of the cost of an acquisition is contingent on
future events or performance, the cost is recognised at fair
value at the time of acquisition. Changes to the fair value of
the contingent payment is recognised in net financials in the
income statement.
Any changes to the fair value of obligations to acquire
non-controlling interests (put options) are recognised
directly in equity.
ACQUISITIONS
DKK million 2020 2019
Other intangible assets 1
Property, plant and equipment 4 13
Inventories 4 70
Assets acquired 8 84
Non-current liabilities 2
Other current liabilities 1 2
Liabilities assumed 3 2
Total identiable net assets acquired 5 82
Goodwill arising on acquisitions 2 59
Purchase consideration 7 140
Cash movements on acquisitions:
Consideration transferred regarding previous years
1 , 2
5 12
Deferred payment (including earn-out)
5
Net cash ows on acquisitions 12 148
1
In 2019, consideration paid related to acquisitions was nal payment for acquired stores in the UK in the amount of DKK 10 million and
in the US in the amount of DKK 2 million.
2
The deferred payment of DKK 5 million related to the store acquisitions in Mexico in 2019 is paid in 2020.
7474
FINANCIAL STATEMENTS
DKK million 2020 2019
Raw materials and consumables 358 481
Work in progress 119 158
Finished goods 1392 1398
Point-of-sale materials 80 99
Total inventories at 31 December 1949 2137
Inventory write-downs at 1 January 837 539
Write-downs during the year 361 881
Utilised in the year 458 583
Inventory write-downs at 31 December 740 837
Write-downs
Write-downs of inventories are recognised in cost of sales, DKK
312 million (2019: DKK 818 million), and operating expenses,
DKK 49 million (2019: DKK 63 million). Write-downs include
remelt costs.
Remelting of goods (realised and unrealised) negatively
impacted gross prot by DKK 110 million (2019: DKK 942 mil-
lion, including costs related to product portfolio optimisation
and inventory buyback from wholesale partners as part of the
Commercial Reset under Programme NOW).
Production overheads
Production overheads are calculated using a standard cost
method, which is reviewed regularly to ensure relevant
NOTE .
INVENTORIES
ACCOUNTING POLICIES
Inventories are valued at the lower of cost and net realisable
value. Costs are accounted for on a first-in, first-out basis
(FIFO). Besides raw materials, costs also include labour and
a proportion of production overheads based on normal
operating capacity, but excluding borrowing costs.
Point-of-sale materials comprise purchase costs regarding
equipment, displays and packaging materials etc. and are
also accounted for on a FIFO basis.
SIGNIFICANT ACCOUNTING ESTIMATES
Estimates relating to write-downs are impacted by forecasting
accurancy in the number of obsolete products whichs will need
to be remelted. The impact from remelt is also influenced by
development in the market prices of silver and gold.
assumptions concerning capacity utilisation, lead times and
other relevant factors.
Net realisable value
Net realisable value is based on the estimated selling price less
estimated costs of completion and distribution. Alternatively,
for inventories that are not expected to be sold, net realisable
value is based on the remelt value of the reusable raw materials
(primarily silver and gold).
DKK million 2020 2019
Receivables related to third-party distribution and wholesale 600 1086
Receivables related to retail revenue sales 270 557
Total trade receivables at 31 December 870 1643
Ageing of trade receivables at 31 December
Not past due 746 1419
Up to 30 days 124 184
Between 30 and 60 days 34
Between 60 and 90 days 4
Over 90 days 1
Total past due, not impaired 124 223
Total trade receivables at 31 December 870 1643
Development in impairment losses on trade receivables
Impairment at 1 January 129 103
Additions 53 78
Utilised 11 10
Unused amounts reversed 44 43
Exchange rate adjustments 5 2
Impairment at 31 December 121 129
NOTE .
TRADE RECEIVABLES
7575
FINANCIAL STATEMENTS
Trade receivables are amounts due from the sale of goods sold
in the ordinary course of business to wholesalers and distrib-
utors or to landlords, malls or e-commerce providers respon-
sible for the collection of cash on behalf of Pandora related to
retail sales.
While realised losses are immaterial and remain low, Pandora
has applied an increased risk factor in light of COVID-19. The
impairment on receivables has slightly decreased for the year.
Realised losses remain within the expected range.
Pandora applies the simplied approach to measure expected
credit losses, using a lifetime expected loss allowance. In view
of the low historical loss rates on receivables, adjusting these
ACCOUNTING POLICIES
Trade receivables are initially recognised at the amount
of consideration that is unconditional unless they contain
significant financing components, and consequently recog-
nised at fair value. The Group holds trade receivables with
the objective of collecting the contractual cash flows and
therefore measures them subsequently at amortised cost
using the effective interest method.
rates to reect current and forward-looking information on
macroeconomic factors such as GDP and the unemployment
rate that aect the ability of customers to settle receivables
will not increase the risk of losses signicantly. The low risk is
further supported by the compilation of receivables as these
consist of a large population of immaterial amounts.
Management continues to assess credit risks in order to ensure
credit risk never exceeds the recognised write-down on trade
receivables. For a further description of credit risk, see note 4.4
Financial risks. Changes in impairment are presented in the
table on the previous page.
NOTE .
PROVISIONS
DKK million 2020 2019
Provisions at 1 January 332 307
Additions in the year 142 180
Utilised in the year 26 102
Unused provisions reversed 33 64
Exchange rate adjustments 16 10
Provisions at 31 December 399 332
Provisions are recognised in the consolidated balance sheet as follows:
Current 29 53
Non-current 370 278
Provisions at 31 December 399 332
Provisions
Provisions include provisions for dened benet pension plans,
obligations to restore leased property as well as other legal and
constructive obligations. See note 5.1 for estimates relating
to litigation.
ACCOUNTING POLICIES
Provisions are recognised when Pandora has a present
obligation (legal or constructive) as a result of a past event
and it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the
obligation. The expense relating to any provision is recog-
nised in the income statement net of any reimbursement.
NOTE .
TRADE RECEIVABLES CONTINUED
7676
FINANCIAL STATEMENTS
NOTE .
CONTRACT ASSETS AND LIABILITIES
DKK million 2020 2019
Contract assets
Receivables from sale of products,
see note 3.6 870 1643
Right-of-return assets 62 73
Total contract assets 932 1716
Contract liabilities
Prepayments from customers 10 7
Coupons, gift cards etc. 72 64
Refund liabilities 654 753
Total contract liabilities 736 824
ACCOUNTING POLICIES
Pandora recognises a refund and warranty liability related
to return rights provided to customers in most countries.
A corresponding right-of-return asset is also included as
part of contract assets. The value of the right-of-return asset
is determined by how many of the returned products are
expected to be sold. Remaining products are written down
to remelt value together with returns covered by warranties.
The refund liability for estimated sales returns is recognised
when there is historical experience or when a reasonably
accurate estimate of expected future returns can otherwise
be made. The income effect recognised is the gross margin
of the expected returns and the potential effect of writing
down parts of the returned goods to remelt value. Changes
to the right-of-return asset and refund liability are recog-
nised gross in the income statement, i.e. as both revenue
and cost of sales.
Refund liability to cover warranty claims is based on expect-
ed replacements provided for products still covered by
warranty at the end of the period. The liability is recognised
gross in the income statement, as both a reduction in rev-
enue and in cost of goods sold. This is due to the handling
of warranty claims, which lead to replacements instead of
repairs.
No costs to obtain contracts with customers have been cap-
italised as part of contracts with customers either in 2020 or
previous years. This is common practice in Pandora.
SIGNIFICANT ACCOUNTING ESTIMATES
In most countries, Pandora has provided return and warranty
rights to customers. The handling of warranty claims leads to
replacements instead of repairs. The recognised refund liabil-
ity relating to return and warranty rights is assessed to a large
extent on the basis of historical return patterns.
DKK million Refund Warranty Total
Liability at 1 January 428 325 753
Performance obligations to which consideration has been received 936 281 1217
Revenue recognised, included in the contract liability at 1 January 845 238 1084
Transfer between contract assets and liabilities 109 85 194
Exchange rate adjustments 27 10 38
Refund and warranty liability at 31 December 382 273 654
Liability at 1 January 553 316 869
Performance obligations to which consideration has been received 1214 399 1613
Revenue recognised, included in the contract liability at 1 January 1228 369 1596
Transfer between contract assets and liabilities 126 25 152
Exchange rate adjustments 15 3 18
Refund and warranty liability at 31 December 428 325 753
7777
FINANCIAL STATEMENTS
MATURITY OF LOAN
FACILITIES
Undrawn revolving credit facilities
20222021
0
2
4
6
8
CAPITAL
STRUCTURE
AND NET
FINANCIALS
SECTION 4
This section includes notes related to Pandora’s capital structure
and net nancials, including nancial risks (see note 4.4 ). As a
consequence of its operations, investments and nancing, Pandora
is exposed to a number of nancial risks that are monitored and
managed by Pandora’s Group Treasury. Pandora uses a number of
derivative nancial instruments to hedge its exposures to uctu-
ations in commodity prices and similar. Derivative nancial instru-
ments are described in note 4.5.
Pandora’s capital structure policy is to maintain a leverage ratio
(NIBD to EBITDA ratio) between 0.5 and 1.5 (excluding restructuring
costs and including committed leases in accordance with IFRS 16).
At 31 December 2020, the ratio excl. restructuring costs was 0.5x
compared with 1.1x at 31 December 2019. The cash conversion was
183% in 2020 including committed leases payments compared
with 133% in 2019.
0.5 — 1.5
NIBD to
EBITDA
ratio
Pandora’s capital
structure policy
NET INTERESTBEARING DEBT
DKK million 2020 2019
Loans and borrowings, non-current 5157
Lease liabilities, non-current 2066 2804
Loans and borrowings, current 3003 1057
Lease liabilities, current 993 1012
Other liabilities, current 41
Cash 2912 1054
Net interest-bearing debt 3151 9019
The undrawn committed
facilities of DKK 7 billion
underpins Pandora’s strong
liquidity position
7878
FINANCIAL STATEMENTS
At 31 December 2020, the share capital comprised 100,000,000
shares with a par value of DKK 1. No shares have special rights.
In 2020, Pandora launched a share buyback programme under
which Pandora expected to buy back own shares to a value of
DKK 2.1 billion. The 2020 programme was suspended on 16
March due to the unprecedented COVID-19 circumstances. In
2020 Pandora bought 1,303,455 treasury shares, corresponding
to a total purchase price of DKK 431 million. Of these 1,215,595
treasury shares corresponding to a total purchase price of DKK
412 million related to the 2019 share buyback programme,
and 87,860 treasury shares corresponding to a total purchase
price of DKK 19 million related to the 2020 share buyback
programme.
On 5 May 2020, Pandora sold 8,000,000 treasury shares through
an accelerated book-building sale, generating approximately
DKK 1.8 billion in net proceeds.
Treasury shares
All treasury shares are owned by Pandora A/S. Treasury shares
include hedges for share-based incentive plans and restricted
shares granted to the Executive Management and other
employees.
NOTE .
SHARE CAPITAL
SHARE CAPITAL
Number
of shares
Nominal
value (DKK)
Balance at 1 January 100000000 100000000
Balance at 31 December 100000000 100000000
Balance at 1 January 110029003 110029003
Reduction of share capital 10029003 10029003
Balance at 31 December 100000000 100000000
TREASURY SHARES
Number
of shares
Nominal
value (DKK) Purchase price
% of shares
Balance at 1 January 7070524 7070524 1964356664 71%
Used to settle performance shares 51140 51140 14363322 01%
Purchase of treasury shares 1303455 1303455 430511739 13%
Sale of treasury shares 8000000 8000000 2287762725 80%
Balance at 31 December 322839 322839 92742356 03%
Balance at 1 January 7825553 7825553 3469404257 71%
Used to settle performance shares 31314 31314 12823609 00%
Reduction of share capital 10029003 10029003 4075498431 91%
Purchase of treasury shares 9305288 9305288 2583274447 93%
Balance at 31 December 7070524 7070524 1964356664 71%
7979
FINANCIAL STATEMENTS
NOTE .
EARNINGS PER SHARE AND DIVIDEND
DKK million 2020 2019
Prot attributable to equity holders 1938 2945
Weighted average number of ordinary shares 97048768 97250084
Eect of performance shares 374286 690799
Weighted average number of ordinary shares adjusted for the eect of dilution 97423054 97940883
Basic earnings per share, DKK 200 303
Diluted earnings per share, DKK 199 301
There have been no transactions between the reporting date and the date of completion of the Annual Report involving shares that would have signicantly changed the number of
shares or potential shares in Pandora A/S.
Dividend
Due to the uncertainty from COVID-19 Pandora does not
propose any dividend relating to the 2020 results. Declared
dividend of DKK 9 per share, corresponding to DKK 825 million
in 2019, was paid to the shareholders in 2020. No dividend was
paid on treasury shares.
Furthermore, in 2019 DKK 860 million was paid as part of the
commitment to pay bi-annual dividend in 2019 relating to the
2019 results.
Dividend paid has had no eect on the Group’s tax expense for
the year.
For additional shareholder information about dividend, read
more on page 39
ACCOUNTING POLICIES
Dividend proposed is recognised as a liability at the date of
the adoption at the Annual General Meeting (declaration
date). Bi-annual dividend is recognised as a liability at the
declaration date.
Distributable reserves
Distributable reserves are based on the reserves of the parent
company. When calculating the amount available for distribu-
tion of dividend, treasury shares are deducted from distribut-
able reserves.
8080
FINANCIAL STATEMENTS
TOTAL LIABILITIES FROM
FINANCING ACTIVITIES
DKK million
Financial liabilities
1 January
Cash ows,
net New leases Other
Foreign
exchange
adjustments
Financial
liabilities
31 December
Non-current borrowings 5157 2182 2976
Non-current lease liabilities 2804 588 1225 101 2066
Current borrowings 1057 1028 2976 1 3003
Current lease liabilities 1012 839 261 608 49 993
Total liabilities from nancing activities 10031 4050 849 617 150 6063
Non-current borrowings 6421 1263 5157
Non-current lease liabilities 3322 373 958 66 2804
Current borrowings 248 801 8 1057
Current lease liabilities 1082 1138 129 909 30 1012
Total liabilities from nancing activities 11073 1600 502 49 105 10031
includes the eect of the reclassication of the non-current portion of interest-bearing loans and borrowings, including lease liabilities, to current due to the passage of time, the eect of accrued but not yet paid interest on
interest-bearing loans and borrowings, including lease liabilities, the upfront prepayment of lease liabilities and the eect of the lease modication & reassessment. The Group classies interest paid as cash ows from operating
activities.
NOTE .
NET INTERESTBEARING DEBT
ACCOUNTING POLICIES
On initial recognition, interest-bearing debt and borrowings
are measured at fair value less transaction costs. Subsequent
to initial recognition, interest-bearing loans and borrowings
are measured at amortised cost using the effective interest
rate method. Gains and losses are recognised in the income
statement when the liabilities are derecognised and through
the effective interest rate method. Amortised cost is cal-
culated by taking into account any discount or premium at
inception, and fees and other costs.
Pandora has historically entered into put options with
non-controlling interests of certain Group entities. The put
option gives the non-controlling shareholder the right to
sell its non-controlling interest to Pandora at a predefined
exercise price, which is based on revenue.
Financial liabilities relating to the acquisition of non-con-
trolling interests are measured at fair value as if the put op-
tions have already been exercised. The value is determined
using the estimated present value of the expected cash out-
flows required to settle the put options. The value is based
on projected revenue and assuming that the put options will
be exercised by the non-controlling interests at year end in
the current financial year. Changes in the value of these lia-
bilities as well as differences on settlement between actual
cash outflows and expected cash outflows are accounted
for as transactions directly in equity. All financial liabilities
relating to the acquisition of non-controlling interests had
been settled at the end of 2020.
Subsidiaries whose non-controlling shareholdings are
subject to put options are fully consolidated, i.e. with no
recognition of a non-controlling interest.
8181
FINANCIAL STATEMENTS
It is Pandora’s policy to hedge at least 50% of the combined
commodity, exchange rate and interest rate risk. However, at
least 70% of estimated commodity purchases must be hedged.
The table below illustrates the sensitivity on 2020 revenue, EBIT
and EBIT margin from exchange rates and commodity price
movements. In addition, the sensitivity of assets and liabilities
as of 31 December from currency movements is illustrated on
the next page.
Commodity price risk
Raw material risk is the risk of uctuating commodity prices
resulting in additional production costs. The most important
raw materials are silver and gold, which are priced in USD.
It is the policy of Pandora to ensure stable, predictable raw
material prices. Based on a rolling 12-month production plan,
the general policy is for Group Treasury to hedge at least 70%
of the Group’s expected purchases.
Purchases are hedged from 1 to 12 months forward with a
hedge ratio target that decreases with time to maturity as
illustrated in the table. Any deviation from the policy must
be approved by the Audit Committee.
Commodity hedging is updated at the end of each month or in
connection with revised 12-months rolling production plans.
Actual production may deviate from the 12-months rolling
production plan. In case of deviations, the realised commodity
hedge ratio may deviate from the estimated hedge ratio. The
prot (loss) from commodity hedging goes to cost of sales as
the hedges matures. For the fair value of hedging instruments,
see note 4.5.
Foreign currency risk
Pandora’s presentation currency is DKK, but the majority of
Pandora’s activities and investments are denominated in other
currencies. Consequently, exchange rate uctuations may have
a substantial impact on Pandora’s cash ows, prot (loss) and/
or nancial position in DKK.
The majority of Pandora’s revenue is denominated in USD, CAD,
AUD, GBP, CNY and EUR. The functional currency of subsidiaries
is generally the local currency, and a substantial portion of
Pandora’s costs relates to raw materials purchased in USD.
As a consequence of its operations, investments and nancing,
Pandora is exposed to a number of nancial risks that are moni-
tored and managed by Pandora’s Group Treasury.
To manage nancial risks, Pandora may use a number of nan-
cial instruments, such as forward contracts, silver and gold
swaps, currency and interest rate swaps, options and similar
instruments within the framework of its current policies. Finan-
cial risks are divided into commodity price risk, foreign currency
risk, credit risk, liquidity risk and interest rate risk.
NOTE .
FINANCIAL RISKS
2020 2019
SENSITIVITY ANALYSIS ON
EXCHANGE RATES AND
COMMODITY PRICES
1
DKK million
Change in
exchange rate
and commo-
dity prices Revenue EBIT
EBIT margin
impact Revenue EBIT
EBIT margin
impact
USD 10% 480 138 03% 577 112 00%
CAD 10% 57 36 01% 67 42 01%
AUD 10% 123 83 03% 112 68 02%
GBP 10% 299 209 09% 286 186 06%
EUR 1% 53 30 01% 65 28 01%
CNY 10% 125 30 01% 197 78 02%
THB 10% 227 12% 265 12%
GOLD and SILVER 10% 124 07% 150 07%
1
Revenue and EBIT would have been impacted by the above amounts if exchange rates and commodity prices in 2020 had been higher than the realised exchange rates and
commodity prices. The impact would have been the opposite if exchange rates and commodity prices had been decreasing with similar percentages. The analysis is based on
the transaction currency. The analysis excludes the eects of hedging and time lag of inventory.
8282
FINANCIAL STATEMENTS
Min Max
COMMODITY HEDGE
RATIO TARGET
4 – 6 MONTHS AHEAD
7 – 9 MONTHS AHEAD
10 – 12 MONTHS AHEAD
1 – 3 MONTHS AHEAD
It is Pandora’s policy to hedge foreign currency risks related to
the risk of declining net cash ows resulting from exchange rate
uctuations. Pandora does not hedge balance sheet items or
ownership interests in foreign subsidiaries. For 2021, 70% of the
cash ows from the main currencies have been hedged based
on a rolling 12-months liquidity forecast. Cash ows are hedged
from 1 to 12 months forward with a hedge ratio that decreases
with time to maturity. Foreign currency hedging is updated at
the end of each month or in connection with revised 12-months
rolling cash forecasts. The realised prot (loss) from exchange
rate hedging goes to nancial items.
The table below illustrates the currency revaluation impact in
DKK million on net prot and changes in equity resulting from
a change in the Group’s primary foreign currencies after the
eect of hedge accounting.
Credit risk
Credit risk is primarily related to trade receivables, cash and
unrealised gains on nancial contracts. The maximum credit risk
related to nancial assets corresponds to the carrying amounts
recognised in the consolidated balance sheet.
It is Pandora’s policy for subsidiaries to be responsible for
credit evaluation and credit risk on their trade receivables. In
case of deviation from standard agreements, Group Treasury
and/or the CFO must approve any signicant deviations from
standard terms.
Note 3.6 includes an overview of the credit risk related to trade
receivables. Rating of trade receivables does not dier materi-
ally either by type of customer or geographic location. The risk
of further impairment is considered to be limited.
Credit risks related to Pandora’s other nancial assets mainly in-
clude cash and unrealised gains on nancial contracts. The cred-
it risk is related to default of the counterparty with a maximum
exposure corresponding to the carrying amount of the assets.
Group Treasury is responsible for managing these credit risks.
Liquidity risk
Pandora’s cash conversion is high and Pandora maintains an
adequate level of cash, debt and unutilised credit facilities to
meet nancial obligations when due. Pandora’s liquidity risk is
considered to be low.
NOTE .
FINANCIAL RISKS CONTINUED
CURRENCY EXPOSURE FROM
ASSETS AND LIABILITIES
DKK million
31 December 2020 31 December 2019
Change in
exchange rate
Prot (loss)
before tax
Equity
Prot (loss)
before tax
Equity
USD 10% 118 36 149 203
CAD 10% 14 4 4 42
AUD 10% 2 35 16 34
GBP 10% 43 54 54 98
EUR 1% 2 31 18 15
THB 10% 52 121 28 330
CNY 10% 60 36 50 13
The movements in the income statement arise from monetary items (cash, borrowings, receivables and payables) where the functional currency of the entity diers
from the currency that the monetary items are denominated in. The movements in equity arise from monetary items and hedging instruments where the functional
currency of the entity diers from the currency that the hedging instruments or monetary items are denominated in. The impact would have been the opposite if ex-
change rates had been decreasing by similar percentages. The analysis is based on the transaction currency.
In addition, Pandora incurs costs denominated in THB. Changes
in the exchange rate of these currencies versus DKK will result in
changes to the translated value of future EBIT and cash ows.
Pandora nances the majority of its subsidiaries’ cash require-
ments via intercompany loans denominated in the local currency of
the individual subsidiary. A devaluation of these currencies against
DKK will result in a foreign exchange loss in the Parent Company.
Exchange rate uctuations may lead to a decrease in revenue
and an increase in costs and thus declining margins. In addition,
exchange rate uctuations aect the translated value of the prots
or losses of foreign subsidiaries and the translation of foreign
currency assets and liabilities.
8383
FINANCIAL STATEMENTS
REVENUE BREAKDOWN
BY CURRENCY
Other
USD
GBP
EUR
CAD
CNY
AUD
2019
5%
9%
3%
30%
13%
26%
14%
2020
6%
7%
3%
28%
16%
25%
15%
LIABILITIES FALL DUE AS FOLLOWS
DKK million
Falling due
within
1 year
Falling due
between
1 and 5 years
Falling due
after more
than 5 years
Total
Non-derivatives
Loans and borrowings 3033 3033
Lease liabilities 1079 1863 356 3298
Trade payables 3211 3211
Other payables 1317 1317
Contract liabilities 82 82
Derivatives
Derivative nancial instruments 119 119
Total at 31 December 8841 1863 356 11060
Non-derivatives
Loans and borrowings 1057 5157 6215
Lease liabilities 1094 2336 650 4080
Trade payables 3095 3095
Other payables 1210 1210
Contract liabilities 71 71
Derivatives
Derivative nancial instruments 115 115
Fair value of obligation to acquire
non-controlling interests (put-options) 41 1 41
Total at 31 December 6685 7494 650 14828
NOTE .
FINANCIAL RISKS CONTINUED
Pandora has revolving credit facilities of DKK 6,998 million com-
mitted until May 2022
1
. Also, Pandora has a committed term
loan of DKK 2,976 million maturing end-2021. Furthermore,
Pandora has uncommitted credit facilities to ensure ecient
and exible local liquidity management. The credit facilities are
managed by Group Treasury.
Pandora’s loan and credit agreements contain one nancial
covenant that was amended during the renancing exercise
in April 2020 to cater for potential COVID-19 impacts. The
covenant was amended to 4.25x NIBD/EBITDA leaving material
headroom before getting close to the covenant.
Interest rate risk
Interest rate risk is the risk of interest rate uctuations result-
ing in changed interest rate payments and market value of the
loan portfolio. At the reporting date, all interest-bearing loans
and borrowings were based on oating interest rates.
All else being equal, it is estimated that a general increase in
interest rates by one percentage point would have no impact
on prot before tax and equity, excluding tax eect (2019: DKK
75 million decrease).
Contractual maturities of nancial liabilities
The table to the right breaks the Group’s nancial liabilities
down into relevant maturity groupings based on contractual
maturities for:
• all non-derivative nancial liabilities, and
• net and gross settled derivative nancial instruments for
which the contractual maturities are essential for an under-
standing of the timing of the cash ows.
The amounts disclosed in the table are the contractual undis-
counted cash ows. Balances due within 12 months equal their
carrying amounts as the impact of discounting is insignicant.
The obligation of DKK 42 million to acquire non-controlling
interests in Japan was settled in 2020.
The following table includes the earn-out payment relating
to Pandora Jewelry Central Western Europe A/S recognised at
DKK 0 (2019: DKK 0).
Based on the Group’s expectations for the future operation
and the Group’s current cash resources, no other signicant
liquidity risks have been identied.
1
Provided that Pandora extend or renance the term loan.
8484
FINANCIAL STATEMENTS
Pandora uses a number of derivative nancial instruments to hedge its exposure to
uctuations in commodity prices and exchange rates.
Derivative nancial instruments include forward commodity contracts and forward
exchange contracts.
DKK million
Assets
Liabilities
Carrying
amount
Hedge reserve,
net of tax
2020
Commodities 231 10 220 206
Foreign exchange 120 108 12 9
Total derivative nancial instruments 351 119 232 215
2019
Commodities 55 23 32 23
Foreign exchange 132 92 40 31
Total derivative nancial instruments 187 115 72 54
Classication according to the fair value hierarchy
The fair value at 31 December 2020 and 2019 of Pandora’s
derivative nancial instruments was measured in accordance
with level 2 in the fair value hierarchy (IFRS 13). Level 2 is based
on non-quoted prices, observable either directly (i.e. as prices)
or indirectly (i.e. derived from prices). Pandora uses input from
third-party valuation specialists to quote prices for unrealised
derivative nancial instruments. The value of unrealised silver
and gold instruments is tested against the prices observable at
London Bullion Market Association (LBMA). The value of unreal-
ised foreign exchange instruments is tested against observable
foreign exchange forward rates.
The value of nancial instruments recognised in other com-
prehensive income is recycled from equity at the time the
instrument is settled, i.e. within 12 months.
Derivative nancial instruments that qualify for cash
ow hedge accounting
The hedges are expected to be highly eective due to the nature
of the economic relation between the exposure and the hedge.
The eective portion of the unrealised gain or loss on all hedg-
ing instruments is recognised directly as other comprehensive
income in the equity hedging reserve. The ineective portion
is recognised in net nancials.
The eective portion of the realised gain or loss on a commod-
ity hedging transaction is recognised in Group inventories and
subsequently to cost of sales whereas the ineective portion is
realised in net nancials.
NOTE .
DERIVATIVE FINANCIAL INSTRUMENTS
ACCOUNTING POLICIES
Derivative financial instruments are initially recognised at
fair value at the date on which a contract is entered into
and are subsequently measured at fair value. For derivative
financial instruments not traded in an active market, the fair
value is determined using appropriate valuation methods.
Such methods may include comparison with recent arm’s
length market transactions, reference to the current fair
value of another instrument that is substantially the same, or
discounted cash flow analysis.
Pandora has designated certain derivative financial instru-
ments as cash flow hedges as defined under IFRS 9. Hedge
accounting is classified as a cash flow hedge when the hedg-
es of a particular risk is associated with the cash flows of
recognised assets and liabilities and highly probable forecast
transactions.
Pandora designates and documents all hedging relationships
between commodity contracts and purchase transactions.
The realised gain or loss on all forward exchange contracts is
recognised in net nancials.
The ineectiveness impact in net nancials is a gain of DKK 31
million (2019: gain of DKK 16 million).
For information about risk management strategy, see note 4.4
Financial risks.
8585
FINANCIAL STATEMENTS
OTHER NONCASH ADJUSTMENTS
DKK million 2020 2019
Eects from exchange rate adjustments 52 48
Eects from derivative nancial instruments 91 61
Eects from IFRS16 rent relief 112
Other, including gains/losses from the sale of
property, plant and equipment 4 7
Total other non-cash adjustments 155 20
NOTE .
NET FINANCIALS CONTINUED
NOTE .
OTHER NONCASH ADJUSTMENTS
FINANCE INCOME
DKK million 2020 2019
Finance income from nancial assets and liabilities measured at fair value
through the income statement:
Fair value adjustments, derivative nancial instruments 149 121
Total nance income from derivative nancial instruments 149 121
Finance income from loans and receivables measured at amortised cost:
Foreign exchange gains 160 214
Interest income, bank 6 7
Interest income, loans and receivables 1 9
Total nance income from loans and receivables 167 230
Total nance income 316 351
FINANCE COSTS
DKK million 2020 2019
Finance costs from nancial assets and liabilities measured at fair value
through the income statement:
Fair value adjustments, derivative nancial instruments 68 63
Total nance costs from derivative nancial instruments 68 63
Finance costs from nancial liabilities measured at amortised cost:
Foreign exchange losses 186 102
Interest on loans and borrowings 61 25
Interest on lease liabilities 97 106
Other nance costs 95 55
Total nance costs from loans and borrowings 439 288
Total nance costs 507 351
NOTE .
NET FINANCIALS
ACCOUNTING POLICIES
Finance income and costs comprise interest income and
expenses, realised and unrealised gains and losses on pay-
ables/receivables and transactions in foreign currencies.
For all financial instruments measured at amortised cost,
interest income or expense is recognised using the effective
interest rate, which is the rate that discounts the estimated
future cash payments or receipts over the expected life of
the financial instrument or a shorter period, where appro-
priate, to the net carrying amount of the financial asset or
liability.
8686
FINANCIAL STATEMENTS
NOTE .
CONTINGENT LIABILITIES
Litigation
Pandora is a party to various legal proceedings with current
business partners, authorities and other third parties, related
to copyrights, marketing conduct and pricing. None of these
proceedings is expected to have a material eect on Pandora’s
nancial position or future earnings.
Contractual obligations
Pandora has entered into a number of long-term purchase,
sales and supply contracts in the course of the Group’s ordinary
business. Contractual obligations amounted to DKK 462 million
(2019: DKK 436 million).
Apart from the liabilities already recognised in the balance
sheet, no signicant nancial losses are expected to be in-
curred as a result of these contracts.
Related parties with signicant interests
At 31 December 2020, treasury shares accounted for 0.3% of
the share capital (2019: 7.1%), see note 4.1.
Other related parties of Pandora with signicant inuence in-
clude the Board, Executive Management and their close family
members. Related parties also include companies in which the
aforementioned persons have control or signicant interests.
Transactions with related parties
As part of the share buyback carried out in 2020, Pandora pur-
chased own shares from major shareholders. The shares were
purchased at the volume-weighted average purchase price for
the shares purchased under the share buyback programme in
the market on the relevant day of trading.
Pandora did not enter into any signicant transactions with
members of the Board or the Executive Management, except
for compensation and benets received as a result of their
membership of the Board, employment with Pandora or share-
holdings in Pandora. See notes 2.4 and 2.5.
NOTE .
RELATED PARTIES
SIGNIFICANT ACCOUNTING ESTIMATES
The factors taken into account when estimating a potential
liability in connection with litigation include the nature of the
litigation or claim. Other factors taken into account are the
development of the case, the judgements and recommenda-
tions of legal or other advisers, experience from similar cases,
and Management’s decision on how the Group will react to
the litigation or claim.
DKK million 2020 2019
Fee for statutory audit 11 11
Other assurance engagements 1 1
Total audit related services 12 12
Tax consultancy
Other services 1 0
Total non-audit services 1 0
Total fees to independent auditor 13 12
The costs are recognised in the consolidated income statement as administrative expenses.
Pandora has implemented a policy regarding non-audit services provided
by the auditor appointed at the Annual General Meeting. The policy states
which services are allowed or prohibited.
Other non-audit services include fees for advisory services including
Programme NOW. All non-audit services have been approved according
to the policy for non-audit services.
NOTE .
FEES TO INDEPENDENT AUDITOR
NOTE .
EVENTS OCCURRING AFTER
THE REPORTING PERIOD
No subsequent events have occurred after the balance sheet date that re-
quired adjustment to or disclosure in the consolidated nancial statements.
8888
FINANCIAL STATEMENTS
The table below shows information about the Group entities at 31 December 2020
Company Ownership Registered oce Date of consolidation
OWNED BY PANDORA A/S
Pandora Jewelry Argentina SRL 100% Argentina 27 September 2017
Pandora Jewellery Belgium NV 100% Belgium 13 April 2017
Pandora do Brasil Participações Ltda. 100% Brazil 24 October 2013
Pandora Jewelry Ltd. 100% Canada 7 March 2008
Pandora Jewelry Chile SpA 100% Chile 7 May 2017
Pandora Jewelry Colombia S.A.S 100% Colombia 17 January 2019
Pandora Int. ApS 100% Denmark 1 October 2009
Pandora Jewelry Central Western Europe A/S 100% Denmark 5 January 2010
Pan Me A/S 100% Denmark 16 January 2015
Pandora Taiwan A/S 100% Denmark 18 May 2018
Pandora Jewellery DMCC 100% Dubai 8 October 2014
Pandora Jewellery UK Limited 100% England 1 December 2008
Pandora Jewelry Finland Oy 100% Finland 1 January 2012
Pandora France SAS 100% France 25 February 2011
Pandora EMEA Distribution Center GmbH 100% Germany 5 December 2011
Pandora Jewelry Asia-Pacic Limited 100% Hong Kong 1 November 2009
Pandora Jewelry Limited 100% Ireland 10 January 2018
Pandora Jewelry Mexico Import, S.A. de C.V. 100% Mexico 4 April 2018
Pandora Jewelry Mexico, S.A. de C.V. 100% Mexico 8 March 2017
Pandora Jewelry Mexico Servicios, S.A. de C.V. 100% Mexico 8 March 2017
Pandora Jewelry Panama S.A. 100% Panama 5 July 2016
Pandora Jewelry Peru S.A.C 100% Peru 10July 2018
Pandora Jewelry Shared Services Sp. z.o.o. 100% Poland 7 February 2012
Pandora Jewelry CEE Sp. z.o.o. 100% Poland 1 March 2009
Pandora Jewelry Slovakia s.r.o. 100% Slovakia 6 September 2016
Pandora Jewellery South Africa Pty Ltd. 100% South Africa 31 January 2017
Pandora Jewellery Spain S.L 100% Spain 28 September 2017
Pandora Sweden AB 100% Sweden 4 November 2013
Pandora Production Co. Ltd.
100%
Thailand 7 March 2008
Pandora Services Co. Ltd.
100%
Thailand 15 October 2010
Pandora Jewelry Mücevherat Anonim Şirketi 100% Turkey 4 November 2013
Pandora Jewelry Inc. 100% USA 1 July 2008
Company Ownership Registered oce Date of consolidation
OWNED BY OTHER COMPANIES IN THE PANDORA GROUP
Pandora Österreich GmbH 100% Austria 23 May 2012
Pandora do Brasil Comércio e Importação Ltda. 100% Brazil 24 October 2013
Pandora Franchise Canada Ltd. 100% Canada 19 January 2011
Pandora Retail Canada Ltd. 100% Canada 4 February 2014
Pandora Jewelry CR s.r.o. 100% Czech Republic 2 December 2009
Panmeas Jewellery LLC 100% Dubai 16 January 2015
Pandora Jewelry GmbH 100% Germany 5 January 2010
Pandora Jewelry Hungary Ltd. 100% Hungary 2 June 2010
Pandora Italia SRL 100% Italy 23 May 2012
Pandora Jewelry B.V. 100% Netherlands 20 September 2010
Pandora Norge AS 100% Norway 17 August 2010
Pandora Jewelry Romania SRL 100% Romania 18 August 2011
Pandora Schweiz AG 100% Switzerland 6 December 2011
Pandora ECOMM LLC 100% USA 21 August 2014
Pandora Jewelry LLC 100% USA 7 March 2008
Pandora Franchising LLC 100% USA 1 November 2009
Pandora Ventures LLC 100% USA 10 May 2012
AD Astra Holdings Pty Ltd. 100% Australia 1 July 2009
Pandora Retail Pty Ltd. 100% Australia 1 July 2009
Pandora Jewelry Pty Ltd. 100% Australia 1 July 2009
Pandora Jewelry (Shanghai) Company Ltd. 100% China 4 February 2015
Pandora Jewelry Design (Beijing) Company Ltd. 100% China 1 March 2016
Pandora Jewelry Hong Kong Company Ltd. 100% Hong Kong 4 February 2015
Pandora Jewelry Japan Ltd. 100% Japan 29 October 2014
Pandora Jewelry Macau Company Ltd. 100% Macau 1 January 2016
Pandora Jewelry Singapore Pte. Ltd.. 100% Singapore 1 January 2016
Pandora Group has ve dormant companies, which have been omitted from the table.
Pandora A/S has no dormant companies.
NOTE .
COMPANIES IN THE PANDORA GROUP
8989
FINANCIAL STATEMENTS
Forward-looking statements
The Annual Report contains forward-looking statements, which include estimates of nancial
performance and targets. These statements are not guarantees of future performance and
involve certain risks and uncertainties. Therefore, actual future results and trends may dier
materially from what is forecasted in this report due to a variety of factors.
Key figures and financial ratios stated in the consolidated financial statements have been
calculated in accordance with the Danish Finance Society’s guidelines.
Pandora presents the following alternative performance measures not defined according to IFRS
(non-GAAP measures) in the Annual Report:
Furthermore, a breakdown of ‘Operating working capital’, ‘Net working capital’ and ‘Invested capital’ is given on the section 3 front page.
NOTE .
FINANCIAL DEFINITIONS
Revenue growth, % (The current year’s revenue - last year’s revenue)
Last year’s revenue
Revenue growth,
local currency, %
(The current year’s revenue at last year’s exchange rates - last year’s revenue)
Last year’s revenue
Gross margin, % Gross prot / revenue
Eective tax rate, % Income tax expense / prot before tax
Equity ratio, % Equity / total assets
Payout ratio, % Dividends paid for the year / net prot
Total payout ratio, % Dividends paid for the year plus value of share buyback / net prot
EPS basic Net prot / average number of shares outstanding
EPS diluted Net prot / average number of shares outstanding, including the dilutive
eect of share options ‘in the money’
Retail like-for-like
sales-out growth, %
Sell-out revenue from Pandora owned
concept stores and eSTOREs that have
been owned and operated for more
than 12 months relative to the same
period last year
Total like-for-like
sales-out growth, %
Sell-out revenue from concept stores
and eSTOREs across all channels that
have been operated for more than 12
months relative to the same period last
year
Sell-out growth, % Like-for-like not adjusted for tempo-
rarily closed stores
Organic growth, % Growth in revenue in local currency
relative to the same period last year
adjusted for the acquisition/divest-
ment of distributors and franchisee
stores (the eect of converting
wholesale to retail revenue and vice
versa)
Restructuring costs Costs related to Programme NOW
includes inventory buyback, optimisa-
tion of product portfolio and product
quality, brand restructurung, external
consultants, IT transformation, etc.
EBIT excluding
restructuring costs
Earnings before interest and tax
(operating prot) excluding restructur-
ing costs
EBIT margin excluding
restructuring costs, %
EBIT excluding restructuring costs /
revenue
EBIT margin, % EBIT / revenue
EBITDA Earnings before interest, tax, deprecia-
tion and amortisation
EBITDA margin, % EBITDA / revenue
Capital expenditure
(CAPEX)
Purchase of intangible assets and prop-
erty, plant and equipment for the year,
excluding acquisitions of subsidiaries
Days sales
outstanding (DSO)
Last three months of wholesale and
third-party distribution revenue
relative to trade receivables not adjust-
ed for VAT receivables
Return on invested
capital (ROIC), %
EBIT / invested capital including
goodwill
NIBD Loans, borrowings, capitalised leases
and other liabilities relating to
obligations to acquire non-controlling
interests (current and non-current) less
cash
NIBD to EBITDA excl.
restructuring cost
NIBD / EBITDA excl. restructuring cost
(rolling 12 months)
Cash conversion incl.
lease payments, %
Free cash ow before acquisitions /
EBIT
9090
FINANCIAL STATEMENTS
Copenhagen,
4 February 2021
Executive Management
Board of Directors
Alexander Lacik
Chief Executive Ocer
Peter A. Ruzicka
Chair
Christian Frigast
Deputy Chair
Andrea Alvey
Marianne Kirkegaard
Birgitta Stymne Göransson
Ronica Wang
Isabelle Parize
Anders Boyer
Chief Financial Ocer
STATEMENT BY THE EXECUTIVE MANAGEMENT
AND THE BOARD OF DIRECTORS
Catherine Spindler
9191
FINANCIAL STATEMENTS
Our opinion
Basis for opinion
Key audit matters
INDEPENDENT AUDITORS' REPORT
9292
FINANCIAL STATEMENTS
Statement on the Management’s review
Management’s responsibilities for the
nancial statements
DESCRIPTION OF MATTERCONSIDERATION OF THE MATTER IN THE AUDIT
9393
FINANCIAL STATEMENTS
Auditor’s responsibilities for the audit of the nancial
statements
Report on compliance with the ESEF Regulation
9494
FINANCIAL STATEMENTS
Copenhagen, 4 February 2021
EY
Godkendt Revisionspartnerselskab
CVR no. 30 70 02 28
Henrik Kronborg Iversen
State Authorised
Public Accountant
MNE no.: mne24687
Mikkel Sthyr
State Authorised
Public Accountant
MNE no.: mne26693
9595
FINANCIAL STATEMENTS
9797
FINANCIAL STATEMENTS
2020
PARENT
COMPANY
INCOME STATEMENT
DKK million Notes 2020 2019
Revenue 21 9626 9533
Cost of sales 4932 5994
Gross prot 4693 3539
Sales, distribution and marketing expenses 22 23 31 1160 934
Administrative expenses 22 23 31 2138 2261
Operating prot 1396 343
Dividends from subsidiaries 33 652 1321
Impairment of investments in subsidiaries 33 107
Finance income 45 379 678
Finance costs 45 511 234
Prot before tax 1915 2001
Income tax expense 25 291 212
Net prot for the year 1624 1789
STATEMENT OF COMPREHENSIVE INCOME
DKK million Notes 2020 2019
Net prot for the year 1624 1789
Other comprehensive income:
Items that may be reclassied to prot/loss for the year
Commodity hedging instruments:
- Realised in net cost of sales 11 6
- Realised in net nancials 1 1
- Fair value adjustments 2 13
Foreign exchange hedging instruments:
- Realised in net nancials 49 41
- Fair value adjustments 21 24
Tax on other comprehensive income, hedging instruments,
income/expense 25 5 5
Other comprehensive income, net of tax 16 20
Total comprehensive income for the year 1608 1769
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER
9898
PARENT COMPANY
ASSETS
DKK million Notes 2020 2019
Intangible assets 31 2963 3091
Property, plant and equipment 51 50
Right-of-use assets 32 128 136
Investments in subsidiaries 33 6350 6304
Loans to subsidiaries 52 1010 1783
Other nancial assets 12 9
Total non-current assets 10514 11373
Inventories 34 420 714
Trade receivables 4 12
Receivables from subsidiaries 52 3700 3227
Right-of-return assets 35 204 235
Derivative nancial instruments 43 44 351 187
Income tax receivable 90 319
Other receivables 308 422
Cash 2211 347
Total current assets 7288 5463
Total assets
17802 16835
EQUITY AND LIABILITIES
DKK million Notes 2020 2019
Share capital 41 100 100
Treasury shares 93 1964
Reserves 207 291
Dividend proposed 836
Retained earnings 6830 5568
Total equity 7044 4832
Provisions 34
Loans and borrowings 42 44 105 5277
Deferred tax liabilities 25 318 154
Total non-current liabilities 457 5430
Provisions 4 4
Refund liabilities 35 1438 1615
Loans and borrowings 42 44 3003 954
Derivative nancial instruments 43 44 119 115
Payables to subsidiaries 44 52 4361 2632
Trade payables 44 1135 1115
Other payables 44 242 138
Total current liabilities 10301 6573
Total liabilities 10758 12004
Total equity and liabilities
17802 16835
BALANCE SHEET
AT DECEMBER
9999
PARENT COMPANY
DKK million Notes
Share
capital
Treasury
shares
Hedging
reserve
Other
reserves
1
Dividend
proposed
Retained
earnings
Total
equity
2020
Equity at 1 January 100 1964 25 266 836 5568 4832
Net prot for the year 1624 1624
Other comprehensive income, net of tax 16 16
Total comprehensive income for the year 16 1624 1608
Transfers 68 68
Share-based payments 24 14 68 82
Purchase of treasury shares 41 431 431
Sale of treasury shares
2
41 2288 509 1779
Dividend paid 836 11 825
Dividend proposed
Equity at 31 December 100 93 9 198 6830 7044
Dividend paid in 2020
relating to the 2019 results
was DKK 9 per share, corre-
sponding to DKK 825 million
(2019: DKK 896 million).
Furthermore, in 2019 DKK
860 million was paid as part
of the commitment to pay
bi-annual dividend in 2019
relating to the 2019 results.
Due to the uncertainty from
COVID-19 Pandora does not
propose any dividend relat-
ing to the 2020 results.
For additional shareholder
information about dividend,
read more on page 39.
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED DECEMBER
2019
Equity at 1 January 110 3469 45 486 920 9306 7398
Net prot for the year 1789 1789
Other comprehensive income, net of tax 20 20
Total comprehensive income for the year 20 1789 1769
Transfers 220 220
Share-based payments 24 13 9 4
Purchase of treasury shares 41 2583 2583
Reduction of share capital 41 10 4075 4065
Dividend paid 1794 38 1756
Dividend proposed 1710 1710
Equity at 31 December 100 1964 25 266 836 5568 4832
¹ Other reserves include non-distributable reserves under Danish legislation relating to the capitalisation of projects developed in-house.
² On 5 May, Pandora initiated an accelerated book-building for the sale of 8 million treasury shares, which was carried out on the same day, generating approximately DKK 1.8 billion in net proceeds.
100100
PARENT COMPANY
DKK million Notes 2020 2019
Operating prot 1396 343
Depreciation and amortisation 277 415
Share-based payments 24 43 10
Change in inventories 295 460
Change in intercompany receivables/payables 1588 710
Change in receivables 118 248
Change in payables and other liabilities 235 992
Other non-cash adjustments 46 478 300
Interest etc. received 65 171
Interest etc. paid 120 48
Income tax paid 124 728
Cash ows from operating activities, net 365 2377
Acquisitions of subsidiaries and activities, net of cash acquired
1
33 24 351
Purchase of intangible assets 113 64
Purchase of property, plant and equipment 13 24
Change in other nancial non-current assets 3
Dividends received
2
44
Cash ows from investing activities, net 152 394
DKK million Notes 2020 2019
Dividend paid 825 1756
Purchase of treasury shares 41 431 2583
Sale of treasury shares 41 1778
Proceeds from loans and borrowings 42 5921 5614
Repayment of loans and borrowings 42 4769 2890
Repayment of lease commitments 42 22 20
Cash ows from nancing activities, net 1651 1636
Net increase/decrease in cash 1864 347
Cash at 1 January
3
347
Net increase/decrease in cash 1864 347
Cash at 31 December
3
2211 347
Cash ows from operating activities, net 365 2377
- Interest etc. received 65 171
- Interest etc. paid 120 48
Cash ows from investing activities, net 152 394
- Acquisition of subsidiaries and activities, net of cash acquired 24 351
Free cash ow
292 2210
Unutilized committed credit facilities
4
6998 2345
The above cannot be derived directly from the income statement and the balance sheet.
1
Non-cash capital increases amounted to DKK 0 million (2019: DKK 1,339 million).
2
Non-cash dividends received amounted to DKK 652 million (2019: DKK 1,277 million).
3
Cash comprises cash at bank and in hand.
4
See note 4.4 to the consolidated nancial statements.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER
101101
PARENT COMPANY
Notes for the Parent Company
The notes are grouped into ve sections related to key gures.
The notes contain the relevant nancial information as well as a
description of accounting policies applied for the topics of the
individual notes. For some notes, reference is made to notes in
the consolidated nancial statements.
Section 1
BASIS OF PREPARATION 103
1.1 Principal accounting policies 103
1.2 New accounting policies and disclosures 103
1.3 Management’s judgements
and estimates under IFRS 103
Section 2
RESULTS FOR THE YEAR 104
2.1 Revenue from contracts with customers 104
2.2 Programme NOW restructuring costs 104
2.3 Sta costs 105
2.4 Share-based payments 105
2.5 Taxation 106
Section 3
INVESTED CAPITAL AND WORKING
CAPITAL ITEMS 107
3.1 Intangible assets 107
3.2 Leases 107
3.3 Investments in subsidiaries
and business combinations 108
3.4 Inventories 108
3.5 Contract assets and liabilities 109
Section 4
CAPITAL STRUCTURE AND NET FINANCIALS 109
4.1 Share capital 109
4.2 Liabilities from nancing activities 109
4.3 Derivative nancial instruments 109
4.4 Financial risks 110
4.5 Net nancials 111
4.6 Other non-cash adjustments 111
Section 5
OTHER DISCLOSURES 111
5.1 Contingent liabilities 111
5.2 Related parties 112
5.3 Fees to independent auditor 112
CONTENTS
102102
PARENT COMPANY
Under section 149 of the Danish Financial Statements Act, the
consolidated nancial statements of Pandora (also referred to as
the ‘Group’) represent an extract of Pandora’s complete annual
report. This annual report of the parent company is an integrated
part of the full annual report. This contains the statement from
the Board of Directors and the Executive Directors as well as the
independent auditor’s report.
The nancial statements for the parent company show the
nancial position, the result and the cash ow of Pandora A/S
on a non-consolidated basis for the nancial year 1 January – 31
December 2020.
Parent Company nancial statements
The accounting policies of the Parent Company are unchanged
from last year and identical to the accounting policies in Pan-
dora’s consolidated nancial statements, with the following
exceptions:
Foreign currency translation
Foreign exchange adjustments of balances accounted for as
part of the total net investment in entities that have a func-
tional currency other than DKK are recognised in prot for
the year as net nancials in the Parent Company nancial
statements.
NOTE .
PRINCIPAL ACCOUNTING
POLICIES
NOTE .
NEW ACCOUNTING POLICIES
AND DISCLOSURES
New standards and interpretations
The description in note 1.2 to the consolidated nancial
statements regarding new standards issued eective for the
Annual Report for 2020 fully covers the Parent Company as well
except for the amendment to IFRS 16, which has not materially
aected the results of the parent as leasing arrangements are
limited to the Head Quarter in Copenhagen and contracts for
cars and oce equipment.
Derivative nancial instruments
The eective portion of realised and unrealised gains and
losses on all commodity hedging instruments is recognised as
cost of goods sold, while the ineective portion of realised and
unrealised gains and losses is recognised in net nancials. De-
rivative nancial instruments are treated as economic hedging
if the hedge accounting requirements in IFRS 9 are not met.
Dividends from subsidiaries
Dividends from investments in subsidiaries are recognised in
the nancial year in which they are declared.
Investments in subsidiaries
Investments in subsidiaries are measured at cost in the Parent
Company nancial statements. Impairment testing is carried
out if there is any indication of impairment, as described in
Pandora's consolidated nancial statements. The carrying
amount is written down to the recoverable amount whenever
the carrying amount exceeds the recoverable amount. If the
Parent Company has a legal or constructive obligation to cover
a decit in subsidiaries, a provision for this is recognised.
NOTE .
MANAGEMENT’S JUDGEMENTS
AND ESTIMATES UNDER IFRS
SIGNIFICANT ACCOUNTING ESTIMATES
In the process of preparing the Parent Company financial
statements, a number of accounting estimates and judge-
ments have been made 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, see note
1.3 to the consolidated financial statements.
103103
PARENT COMPANY
REVENUE BY SALES CHANNEL
DKK million 2020 2019
Third-party distribution 9626 9533
Total revenue 9626 9533
REVENUE BY PRODUCT CATEGORY
DKK million 2020 2019
Charms 4711 4775
Bracelets 2171 2143
Rings 1359 1261
Earrings 609 619
Necklaces & Pendants 776 735
Total revenue¹ 9626 9533
Goods transferred at a point in time 9626 9533
Total revenue 9626 9533
1
Figures include franchise fees of DKK 3 million (2019: DKK 5 million), which have been
allocated to the product categories.
NOTE .
REVENUE FROM CONTRACTS
WITH CUSTOMERS
Revenue by category of Pandora products does not dier
materially between clusters.
Revenue mainly comprises sales of jewellery to subsidiaries
carrying out the distribution. All sales are thus intra-group
sales. Contracts are generally 5-year distribution contracts.
ACCOUNTING POLICIES
Revenue is recognised when control of the products has
been transferred to the subsidiaries. Change of control of the
products occurs when the products have been delivered to
the subsidiary and no further obligation exists that can affect
the transfer of control. The Parent Company provides return
rights to subsidiaries, which cover products received in sub-
sidiaries for both returns and warranty, based on historical
return rates and current return liabilities in subsidiaries.
NOTE .
PROGRAMME NOW
RESTRUCTURING COSTS
Programme NOW restructuring costs
Programme NOW costs are reported in the income statement
for Pandora A/S within the cost type it relates to.
Restructuring costs amounted to DKK 0.9 billion in 2020 (DKK
2.2 billion in 2019). Restructuring costs impacted the income
statement as follows:
• Gross prot, DKK 0.0 billion (2019: DKK 1.3 billion related to
sales return liability from subsidiaries regarding the product
portfolio optimization, hereof DKK 0.7 billion in revenue and
DKK 0.6 billion in cost of sales primarily related to inventory
buyback).
• Operating expenses, DKK 0.9 billion, primarily related to or-
ganizational restructuring (DKK 0.2 billion), IT transformation
(DKK 0.2 billion) and consultancy expenses (DKK 0.4 billion)
(2019: DKK 0.9 billion primarily related to brand restructuring
activities (DKK 0.1 billion), IT transformation (DKK 0.1 billion),
accelerated amortisations (DKK 0.2 billion) and consultancy
costs related to the launch and execution of Programme NOW
(DKK 0.4 billion)).
Restructuring costs impacted marketing expenses DKK 0.1 bil-
lion (2019: DKK 0.1 billion), sales and distribution expenses DKK
0.1 billion (2019: DKK 0.2 billion) and administrative expenses
DKK 0.7 billion (2019: DKK 0.6 billion).
104104
PARENT COMPANY
SIGNIFICANT ACCOUNTING ESTIMATES
Estimates mainly relate to the consultancy bonus accru-
al which depends on the actual savings of the initiatives .
Furthermore, Executive Management applies judgement in
distinguishing between restructuring and normal operation.
ACCOUNTING POLICIES
In 2019 and 2020, Pandora is restructuring the business
under the programme name “Programme NOW” to restore
long-term sustainable growth and protect profitability.
Restructuring costs are significant non-recurring items
assessed by Executive Management, making a distinction
between normal operation and restructuring.
DKK million 2020 2019
Wages and salaries 570 391
Pensions 40 27
Share-based payments 43 10
Social security costs 3 8
Other sta costs 118 84
Total sta costs 774 521
Sta costs have been recognised in the income statement:
Sales, distribution and marketing expenses 330 196
Administrative expenses 444 324
Total sta costs 774 521
Average number of full-time employees during the year 614 478
Key management personnel at Pandora A/S represent the same persons as key management personnel of the Pandora Group. For
information regarding compensation of key management personnel of Pandora A/S, see note 2.4 to the consolidated nancial statements.
The performance shares programmes described in note 2.5
to the consolidated nancial statements is issued by Pandora
A/S. The value of shares granted to employees in the Parent
Company’s subsidiaries is recognised in investments in subsid-
iaries. As described in note 2.5
to the consolidated nancial
statements, the costs related to share-based payments were
DKK 70 million (2019: DKK 20 million), of which DKK 23 million
related to subsidiaries (2019: DKK 16 million).
NOTE .
STAFF COSTS
NOTE .
SHAREBASED PAYMENTS
NOTE .
PROGRAMME NOW
RESTRUCTURING COSTS
CONTINUED
105105
PARENT COMPANY
INCOME TAX EXPENSE
DKK million 2020 2019
Current income tax charge for the year 160 427
Change in deferred tax for the year 124 217
Adjustment to current tax for prior years 54 4
Adjustment to deferred tax for prior years 61 2
Total income tax expense 291 212
Deferred tax on other comprehensive income 5 5
Tax on other comprehensive income 5 5
2020 2019
RECONCILIATION OF EFFECTIVE TAX RATE AND TAX % DKK million % DKK million
Prot before tax 1915 2001
Corporate tax rate in Denmark, 22% 220% 421 220% 440
Non-taxable dividend income 75% 143 145% 291
Non-deductIble impairment expenses 12% 24
Other adjustments including adjustment to tax for prior years 04% 8 15% 30
Withholding taxes 03% 5 04% 9
Eective income tax rate/income tax expense 152% 291 106% 212
NOTE .
TAXATION
ACCOUNTING POLICIES
Income tax
Pandora A/S is taxed jointly with its Danish subsidiaries. These
subsidiaries are included in the joint taxation from the date
they are recognised in the consolidated financial statements
and up to the date on which they are no longer consolidat-
ed. The jointly taxed Danish companies are taxed under the
on-account tax scheme.
Further information is provided in note 2.6 to the consolidat-
ed financial statements.
DEFERRED TAX
DKK million 2020 2019
Deferred tax at 1 January 154 386
Recognised in the income statement 185 219
Recognised in other comprehensive income 5 5
Recognised in equity, share-based payments 16 8
Deferred tax at 31 December 318 154
Deferred tax liabilities 318 154
Deferred tax, net 318 154
BREAKDOWN OF DEFERRED TAX
DKK million 2020 2019
Intangible assets 542 565
Property, plant and equipment 9 9
Inventory 39 102
Provisions 277 304
Other assets and liabilities 23 4
Deferred tax, net 318 154
106106
PARENT COMPANY
DKK million Goodwill Brand Distribution
Other intangible
assets Total
Cost at 1 January 549 1044 1541 904 4038
Additions 114 114
Disposals 7 7
Cost at 31 December 549 1044 1541 1011 4144
Amortisation and impairment losses at 1 January 397 551 947
Amortisation for the year 30 175 205
Impairment loss for the year 32 32
Disposals 3 3
Amortisation and impairment losses at 31 December 427 755 1182
Carrying amount at 31 December 549 1044 1114 256 2963
Cost at 1 January 549 1044 1541 1110 4243
Additions 186 186
Disposals 390 390
Cost at 31 December 549 1044 1541 904 4038
Amortisation and impairment losses at 1 January 366 471 838
Amortisation for the year 30 346 376
Disposals 266 266
Amortisation and impairment losses at 31 December 397 551 947
Carrying amount at 31 December 549 1044 1144 354 3091
The impairment loss of DKK 32 million relates to scrapped software applications. The loss is included in administrative expenses.
DKK million 2020 2019
Amortisation and impairment losses have been recognised in the income
statement as follows:
Sales, distribution and marketing expenses 88 182
Administrative expenses 149 195
Total 237 376
NOTE .
INTANGIBLE ASSETS
LEASE LIABILITIES
DKK million 2020 2019
Non-current 105 119
Current 27 20
Total lease liabilities 132 140
Additions of right-of-use assets were DKK 14 million in 2020 (2019: DKK 5 million).
Lease liabilities are recognised in loans and borrowings.
The depreciation on right-of-use assets charged to the income statement for the period was DKK
23 million (2019: DKK 20 million).
The interest expense for the period was DKK 1 million (2019: 1 million).
Total cash outow relating to leases was DKK 23 million in 2020 (2019: DKK 21 million).
NOTE .
LEASES
RIGHTOFUSE ASSETS
DKK million 2020 2019
Property 120 132
Cars 8 5
Total right-of-use-assets 128 136
Assets and liabilities related to leases. Amounts recognised in the balance sheet:
107107
PARENT COMPANY
NOTE .
INVESTMENTS IN SUBSIDIARIES
AND BUSINESS COMBINATIONS
Result of annual impairment test
As at 31 December 2020, the cost price of the investments
in subsidiaries was tested for impairment. The impairment
test identied impairment charges for 2020 amounting to
DKK 0 million (2019: DKK 107 million).
Key assumptions
The impairment test has been based on the internal 2021
forecast and a forecast for the two subsequent years, and an
applied discount rate in the range of 10%-24%.
The growth rate applied is an estimate of the expected growth
for each market in the terminal period, including the expected
average ination.
Dividend received
In 2020, Pandora A/S received a total of DKK 0.7 billion in divi-
dend from subsidiaries in Thailand.
In 2019, Pandora A/S received a total of DKK 1.3 billion in divi-
dend from subsidiaries in Thailand (DKK 0.8 billion), the UK (DKK
0.4 billion), and Denmark (DKK 0.1 billion).
INVESTMENTS IN SUBSIDIARIES
DKK million 2020 2019
Cost at 1 January 6411 4738
Additions
1
24 1690
Disposals 2
Additions relating to share-based payments 23 16
Cost at 31 December 6457 6411
Impairment at 1 January 107
Impairment for the year 107
Impairment at 31 December 107 107
Carrying amount at 31 December 6350 6304
1
in 2019, DKK 1.3 billion relates to the capital injection in US entity Pandora Jewelry Inc.
DKK million 2020 2019
Finished goods 340 643
Point-of-sale materials 80 71
Total inventories at 31 December 420 714
Inventory write-downs at 1 January 336 181
Write-downs during the year 328 793
Utilised in the year 405 638
Inventory write-downs at 31 December 259 336
Write-downs of inventories are recognised in cost of sales, DKK 289 million (2019: DKK
761 million), and operating expenses, DKK 39 million (2019: DKK 32 million).
NOTE .
INVENTORIES
The Programme NOW initiatives had a major impact on realised
and unrealised remelt losses in 2019, especially assortment
portfolio optimisation and the inventory buyback programme.
For further details, see note 2.2 Programme NOW.
108108
PARENT COMPANY
NOTE .
LIABILITIES FROM FINANCING
ACTIVITIES
TOTAL LIABILITIES FROM
FINANCING ACTIVITIES
DKK million
Financial
liabilities
1 January
Cash
ows,
net
1
New
leases Other
2
Foreign
exchange
adjust-
ments
Financial
liabilities
31
December
Non-current borrowings 5157 2182 2976
Non-current lease liabilities 119 10 25 105
Current borrowings 933 933 2976 2976
Current lease liabilities 20 22 7 22 27
Total liabilities from nancing
activities
6230 3137 17 3 3107
Non-current borrowings 6421 1263 5157
Non-current lease liabilities 134 5 20 119
Current borrowings 125 800 8 933
Current lease liabilities 20 20 1 19 20
Total liabilities from nancing
activities
6700 483 6 1 8 6230
1
Cash ows from loans and borrowings in the statement of cash ows include internal loan movements. The eect was an inow of DKK
4,267 million in 2020 (2019: inow of DKK 3,187 million).
2
The ‘Other’ column includes the eect of the reclassication of the non-current portion of interest-bearing loans and borrowings, in-
cluding lease liabilities, to current due to the passage of time, the eect of accrued but not yet paid interest on interest-bearing loans
and borrowings, including lease liabilities, and the upfront prepayment of lease liabilities. The Group classies interest paid as cash
ows from operating activities.
NOTE .
DERIVATIVE FINANCIAL
INSTRUMENTS
All hedging is carried out by Parent Company’s Treasury de-
partment. As all instruments are also recorded in the Parent
Company, all eects from nancial instruments are shown in
note 4.5 to the consolidated nancial statements.
DKK million 2020 2019
Contract assets
Receivables from sale of products 2403 1668
Right-of-return assets 204 235
Total contract assets 2607 1903
Contract liabilities
Refund liabilities 1438 1615
Total contract liabilities 1438 1615
Refund liabilities
The Parent Company recognises a refund liability related to
return rights provided to subsidiaries. A corresponding right-
of-return asset is also included as part of contract assets. The
value of the right-of-return asset is determined by how many
of the returned products are expected to be sold. Remaining
products are written down to remelt value.
NOTE .
CONTRACT ASSETS AND
LIABILITIES
See note 4.1 to the consolidated nancial statements.
NOTE .
SHARE CAPITAL
109109
PARENT COMPANY
As a consequence of its operations, investments and nancing,
Pandora A/S is exposed to a number of nancial risks that are
monitored and managed by Pandora's Group Treasury.
The company’s nancial risks and the management of these
are in all material respects identical to the disclosures made
in note 4.4
to the con solidated nancial statements, unless
otherwise stated below.
Credit risk
The company’s credit risk also includes the risk related to
receivables from subsidiaries.
Contractual maturities of nancial liabilities
The table below provides a breakdown of Pandora A/S’s
nancial liabilities similar to note 4.4 to the consolidated
nancial statements.
LIABILITIES FALL DUE AS FOLLOWS
DKK million
Falling due
less than
1 year
Falling due
between
1 and 5 years
Falling due
after more
than 5 years
Total
2020
Non-derivatives
Loans and borrowings 3006 3006
Lease liabilities 28 94 12 135
Payables to subsidiaries 4361 4361
Trade payables 1135 1135
Other payables 242 242
Derivatives
Derivative nancial instruments 119 119
Total at 31 December 8890 94 12 8997
2019
Non-derivatives
Loans and borrowings 933 5157 6091
Lease liabilities 21 104 18 143
Payables to subsidiaries 2632 2632
Trade payables 1115 1115
Other payables 138 138
Derivatives
Derivative nancial instruments 115 115
Total at 31 December 4955 5262 18 10235
NOTE .
FINANCIAL RISKS
110110
PARENT COMPANY
NOTE .
OTHER NONCASH
ADJUSTMENTS
OTHER NONCASH ADJUSTMENTS
DKK million 2020 2019
Eects from exchange rate adjustments 161 263
Eects from derivative nancial instruments 318 33
Other, including gains/losses from sale of
property, plant and equipment 1 4
Total other non-cash adjustments 478 300
Litigation
Pandora is a party to various legal proceedings with current
business partners, authorities and other third parties, related
to copyrights, marketing conduct and pricing. None of these
proceedings is expected to have a material eect on Pandora
A/S’s nancial position or future earnings.
Contractual obligations
Pandora A/S has entered into a number of long-term purchase,
sales and supply contracts in the course of the company’s
ordinary business. Contractual obligations amounted to DKK
461 million (2019: DKK 359 million). Apart from the liabilities
already recognised in the balance sheet, the company does
not expect to incur any signicant nancial losses as a result of
these contracts.
Other contingent liabilities
Pandora A/S has issued letters of support in favour of certain
subsidiaries. Furthermore, the company has issued guarantees
totalling DKK 580 million at 31 December 2020 in favour of cer-
tain subsidiaries related to securing local credit lines and rental
agreements (2019: DKK 684 million).
The company is jointly taxed with Danish subsidiaries. The com-
pany is jointly and severally liable with other jointly taxed Dan-
ish companies within the Group for income tax and withholding
taxes due on or after 1 July 2012 in the joint taxation.
NOTE .
CONTINGENT
LIABILITIES
FINANCE INCOME
DKK million 2020 2019
Finance income from nancial assets and liabilities
at fair value through the income statement:
Fair value adjustments, derivative nancial instruments 149 121
Total nance income from derivative nancial instruments 149 121
Finance income from loans and receivables measured at amortised cost:
Interest income from subsidiaries 64 171
Foreign exchange gains 165 386
Total nance income from loans and receivables 230 557
Total nance income 379 678
FINANCE COSTS
DKK million 2020 2019
Finance costs from nancial assets and liabilities measured at fair value
through the income statement:
Fair value adjustments, derivative nancial instruments 68 63
Total nance costs from derivative nancial instruments 68 63
Finance costs from nancial liabilities measured at amortised cost:
Interest costs to subsidiaries 5 3
Foreign exchange losses 326 123
Interest on loans and borrowings 61 24
Interest on lease liabilities 1 1
Other nance costs 50 21
Total nance costs from loans and borrowings 443 171
Total nance costs 511 234
NOTE .
NET FINANCIALS
111111
PARENT COMPANY
DKK million
Subsidiaries
2020 2019
Income statement:
Sales to subsidiaries 9621 9525
Purchases from subsidiaries 4726 4876
Dividend 652 1321
Finance income 64 171
Finance costs 5 3
Total 5606 6138
Balance sheet:
Loans to subsidiaries, non-current 1010 1783
Trade receivables from subsidiaries 2399 1657
Loans to subsidiaries, current 1301 1570
Right-of-return assets, related parties 204 235
Payables to subsidiaries 4361 2632
Refund liabilities, related parties 1438 1615
Total 885 997
Development in impairment losses on trade receivables
Impairment at 1 January 25 40
Additions
Unused amounts reversed 1 15
Impairment at 31 December 24 25
NOTE .
FEES TO INDEPENDENT AUDITOR
NOTE .
RELATED PARTIES
In addition to the related parties disclosed in note 5.2 to the
consolidated nancial statements, related parties of Pandora
A/S include the subsidiaries listed in the Group structure in
note 5.5 to the consolidated nancial statements.
The table to the left shows transactions entered into with
related parties.
DKK million 2020 2019
Fee for statutory audit 3 3
Other assurance engagements 1
Total audit related services 4 3
Other services 0 0
Total non-audit services 0 0
Total fees to independent auditor 4 3
The costs are recognised in the consolidated income statement as administrative
expenses.
112112
PARENT COMPANY
