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PANDORA ANNUAL REPORT 2009 | FINANCIAL REPORT, GROUP
NOTES
NOTE 1. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS, CONTINUED
The distribution rights are measured based on the Multi Period Excess Earnings Method under which the value is calculated based on the cash fl ows from the distribution
right, tax effect and an appropriate discount rate. The useful lives of the distribution rights are the remaining contract periods. With regard to the acquisition
of the US distributor, the distribution agreement is non-terminable, and the distribution right is considered to have an indefi nite useful life.
As of 31 December 2009, the carrying amount of the distribution rights is DKK 884,206 thousand (2008 DKK 900,357 thousand).
Impairment testing
Due to the growth in and profi tability of the Group’s operations, the impairment tests prepared show that none of the assets tested are at risk of being impaired.
Please refer to Note 14 for further information on impairment testing.
Useful lives of intangible assets
The expected useful lives are determined based on expectations of the future use of the assets, and as far as distribution rights are concerned, the remaining duration
of the contracts. When the useful life is based on future use, it is reassessed at least once a year or if any major event occurs which could impact the useful life
of an asset. The amortisation periods used are described in the summary of signifi cant accounting policies in Note 26 and in Note 3 concerning business combinations.
Judgements in applying the accounting policies
In applying the Group’s accounting policies, management makes judgements which may signifi cantly infl uence the amounts recognised in the consolidated fi nancial
statements.
In the process of applying the Group’s accounting policies, management has made the following judgements, which have the most signifi cant effect on the amounts
recognised in the consolidated fi nancial statements.
Tax
Executive Management applies certain judgements based on historical practice in setting up the Group’s transfer pricing policy. The judgement affects the calculated
tax and the recognized assets and liabilities related to this. Due to signifi cant differences in tax rates between the Group entities, a change in the distribution of the
Group’s profi t could have signifi cant impact on the Group’s consolidated tax payments.
Business combinations
Management has elected to early adopt IFRS 3 revised, Business Combinations which introduces signifi cant changes in accounting for business combinations
compared to the former IFRS 3 (from 2004). The adoption of IFRS 3 revised affects the valuation of non-controlling interest, accounting for transaction costs and the
initial recognition and subsequent measurement of contingent considerations. The implementation of the standard has impacted the amount of goodwill recognised,
the reported results in the period and will impact future reported results.
In the purchase of the Australian distributor in 2009 management has decided to measure the non-controlling interests at fair value including goodwill. This has
impacted the size of goodwill as well as the non-controlling interest.
NOTE 2. OPERATING SEGMENT INFORMATION
The Group’s activities are segmented on the basis of geographical areas in accordance with the management reporting structure. In determining the reporting
segments, a number of operating segments have been aggregated. All segments derive their revenues from the types of products shown in the product information
provided below.
Management monitors the segment profi t of the operating segments separately for the purpose of making decisions about resource allocation and performance
management. Segment profi t is measured consistently with the operating profi t in the consolidated fi nancial statements before non-current assets are amortised/
depreciated.
31 December 2009
Unallocated Total
DKK ‘000 Americas Europe Asia Pacifi c cost group
Income statement
External revenue 1,558,067 1,206,725 696,290 - 3,461,082
Segment profi t (EBITDA) 792,052 642,087 403,787 -263,976 1,573,950
Adjustments
Amortisation/depreciation -148,183
Loss from sale of non-current assets -1,798
Consolidated operating profi t according to IFRS 1,423,969