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Pandora — Interim / Quarterly Report 2016
Nov 1, 2016
3379_rns_2016-11-01_965be8b0-f961-4666-a7f8-e3eb49e4687c.pdf
Interim / Quarterly Report
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PANDORA
PANDORA A/S
Havneholmen 17-19 | DK-1561 Copenhagen V | Denmark
Tel. +45 3672 0044
www.pandoragroup.com
No. 339
COMPANY ANNOUNCEMENT
1 November 2016
INTERIM REPORT FOR Q3 2016
PANDORA GROWS REVENUE BY 18% AND INCREASES EBITDA MARGIN TO 39.9%
- Full year 2016 EBITDA margin guidance is changed to around 39% (from more than 38%). Revenue guidance is unchanged
- Group revenue in Q3 2016 was DKK 4,612 million, an increase of 18% (21% increase in local currency), compared with Q3 2015:
- Americas increased by 6% (6% increase in local currency)
- EMEA increased by 18% (25% increase in local currency)
- Asia Pacific increased by 46% (47% increase in local currency)
- Revenue from concept stores increased by 26% corresponding to 62% of revenue
- Concept store like-for-like sales growth was 4%, driven by positive growth in EMEA and Asia Pacific, and a flat development in Americas (US like-for-like sales growth was 3%)
- The gross margin increased to 75.1% in Q3 2016, compared with 74.0% in Q3 2015
- EBITDA increased by 27% to DKK 1,842 million in Q3 2016, corresponding to an EBITDA margin of 39.9%, compared with 37.2% in Q3 2015
- Net profit for the quarter was DKK 1,405 million, compared with DKK 1,006 million in Q3 2015
- Free cash flow for the quarter increased to DKK 577 million, compared with DKK 263 million in Q3 2015.
- During Q3 2016, PANDORA bought back 1,478,410 own shares at a total value of DKK 1,238 million as part of the ongoing DKK 4.0 billion share buyback programme, corresponding to 1.3% of the total share capital as of end Q3 2016
In connection with the Q3 2016 results Anders Colding Friis, CEO of PANDORA, stated:
"Following a strong first half of 2016, PANDORA continued the positive momentum into Q3, with strong growth in particularly Southern Europe and Asia Pacific. Additionally, the US continued to deliver solid growth supported by positive like-for-like. The increase was driven by double digit growth across all product categories supported by an attractive and relevant product offering. Finally, we improved profitability and increased the EBITDA-margin to 39.9% driven by operational leverage as well as lower realised commodity prices."
PANDORA
CONFERENCE CALL
A conference call for investors and financial analysts will be held today at 11.00 CET and can be joined online at www.pandoragroup.com. The presentation for the call will be available on the website one hour before the call.
The following numbers can be used by investors and analysts:
DK: +45 32 71 16 59
UK (International): +44(0) 203 427 1912
US: +1 212 444 0412
To participate, please quote confirmation code “PANDORA” when dialling into the conference.
FINANCIAL CALENDAR
7 February 2017 Annual Report 2016
15 March 2017 Annual General Meeting
20 March 2017 Payment of annual dividend
9 May 2017 Interim Report for the first quarter of 2017
8 August 2017 Interim Report for the second quarter of 2017
7 November 2017 Interim Report for the third quarter of 2017
ABOUT PANDORA
PANDORA designs, manufactures and markets hand-finished and contemporary jewellery made from high-quality materials at affordable prices. PANDORA jewellery is sold in more than 100 countries on six continents through approximately 9,000 points of sale, including more than 2,000 concept stores.
Founded in 1982 and headquartered in Copenhagen, Denmark, PANDORA employs more than 18,000 people worldwide of whom approximately 12,000 are located in Gemopolis, Thailand, where the Company manufactures its jewellery. PANDORA is publicly listed on the NASDAQ Copenhagen stock exchange in Denmark. In 2015, PANDORA’s total revenue was DKK 16.7 billion (approximately EUR 2.2 billion).
CONTACT
For more information, please contact:
INVESTOR RELATIONS
Magnus Thorstholm Jensen
Vice President, Head of Investor Relations
+45 7219 5739
[email protected]
MEDIA RELATIONS
Kristian Lysgaard
Director, Corporate Communications
+45 7219 5774
[email protected]
Brian Granberg
Investor Relations Officer
+45 7219 5344
[email protected]
1 November 2016 | COMPANY ANNOUNCEMENT No. 339 | page 2 | 29
PANDORA
FINANCIAL HIGHLIGHTS
| DKK million | Q3 2016 | Q3 2015 | 9M 2016 | 9M 2015 | FY 2015 |
|---|---|---|---|---|---|
| Consolidated income statement | |||||
| Revenue | 4,612 | 3,911 | 13,679 | 11,056 | 16,737 |
| Gross profit | 3,464 | 2,893 | 10,260 | 7,988 | 12,193 |
| Earnings before interest, tax, depreciations and amortisations (EBITDA) | 1,842 | 1,454 | 5,211 | 4,070 | 6,214 |
| Operating profit (EBIT) | 1,719 | 1,339 | 4,852 | 3,812 | 5,814 |
| Net financials | 60 | -35 | 126 | -385 | -469 |
| Profit before tax | 1,779 | 1,304 | 4,978 | 3,427 | 5,345 |
| Net profit for the period | 1,405 | 1,006 | 3,932 | 2,299 | 3,674 |
| Consolidated balance sheet | |||||
| Total assets | 15,242 | 12,919 | 15,242 | 12,919 | 13,311 |
| Invested capital | 9,839 | 7,879 | 9,839 | 7,879 | 8,255 |
| Net working capital | 1,952 | 1,124 | 1,952 | 1,124 | 925 |
| Net interest-bearing debt (NIBD) | 4,332 | 2,175 | 4,332 | 2,175 | 1,718 |
| Equity | 5,528 | 5,465 | 5,528 | 5,465 | 6,139 |
| Consolidated cash flow statement | |||||
| Cash flows from operating activities, net | 912 | 594 | 3,369 | 1,665 | 3,384 |
| Cash flows from investing activities, net | -365 | -332 | -1,097 | -973 | -1,296 |
| Free cash flow | 577 | 263 | 2,509 | 985 | 2,449 |
| Cash flows from financing activities, net | -651 | -320 | -2,718 | -1,273 | -2,333 |
| Net increase/decrease in cash | -104 | -58 | -446 | -581 | -245 |
| Growth ratios | |||||
| Revenue growth, % | 18% | 37% | 24% | 39% | 40% |
| Gross profit growth, % | 20% | 45% | 28% | 43% | 45% |
| EBITDA growth, % | 27% | 43% | 28% | 43% | 45% |
| EBIT growth, % | 28% | 39% | 27% | 42% | 43% |
| Net profit growth, % | 40% | 39% | 71% | 10% | 19% |
| Margins | |||||
| Gross margin, % | 75.1% | 74.0% | 75.0% | 72.3% | 72.9% |
| EBITDA margin, % | 39.9% | 37.2% | 38.1% | 36.8% | 37.1% |
| EBIT margin, % | 37.3% | 34.2% | 35.5% | 34.5% | 34.7% |
| Other ratios | |||||
| Effective tax rate, % | 21.0% | 22.9% | 21.0% | 32.9% | 31.3% |
| Equity ratio, % | 36.3% | 42.3% | 36.3% | 42.3% | 46.1% |
| NIBD to EBITDA, x¹ | 0.6 | 0.4 | 0.6 | 0.4 | 0.3 |
| Return on invested capital (ROIC), %¹ | 69.7% | 65.9% | 69.7% | 65.9% | 70.4% |
| Capital expenditure (CAPEX)² | 324 | 384 | 950 | 790 | 1,109 |
| Cash conversion, %³ | 33.6% | 19.6% | 51.7% | 25.8% | 42.1% |
| Share information | |||||
| Dividend per share, DKK | - | - | - | - | 13.00 |
| Total payout ratio (incl. share buyback), %³ | - | - | - | - | 135.8% |
| Earnings per share, basic, DKK | 12.4 | 8.4 | 34.3 | 19.2 | 30.9 |
| Earnings per share, diluted, DKK | 12.3 | 8.4 | 34.1 | 19.1 | 30.7 |
| Share price at end of period, DKK | 801.0 | 779.0 | 801.0 | 779.0 | 872.0 |
| Other key figures | |||||
| Average number of employees | 18,106 | 14,662 | 17,374 | 13,328 | 13,971 |
1) Ratios are based on 12 months rolling EBITDA and EBIT, respectively
2) Capital expenditure includes additions to both tangible and intangible assets
3) The definition was changed in Q4 2015 – please refer to the Annual Report 2015
1 November 2016 | COMPANY ANNOUNCEMENT No. 339 | page 3 | 29
PANDORA
FINANCIAL GUIDANCE
The financial guidance for the full year 2016 for revenue is maintained and PANDORA continues to expect revenue above DKK 20 billion. Assuming current exchange rates, PANDORA expects a full year headwind effect from currencies on revenue of around 4% compared with 2015. This compares to an expected headwind of around 3% anticipated in August 2016 in connection with the announcement of the Q2 2016 report. EBITDA margin guidance is changed to around 39% from previously more than 38%. The revision is primarily based on a better than expected ability to cope with the increasing production complexity, as well as marginally higher than expected operating leverage.
All expectations are based on foreign exchange rates at the day of announcement.
| | FY 2016
New guidance | FY 2016
Previous guidance | FY 2015
Actual |
| --- | --- | --- | --- |
| Revenue, DKK billion | > 20 | > 20 | 16.7 |
| EBITDA margin | approx. 39% | > 38% | 37.1% |
| CAPEX, DKK million | approx. 1,200 | approx. 1,200 | 1,109 |
| Effective tax rate | approx. 21% | approx. 21% | 31.3% |
PANDORA plans to continue to expand the store network and now expects to add more than 325 concept stores in 2016, compared to previously expected more than 300. The concept store openings are expected to be distributed with roughly 50% in EMEA, 25% in Americas and 25% Asia Pacific.
IMPORTANT EVENTS IN Q3 2016
SHARE BUYBACK PROGRAMME FOR 2016
In connection with the Annual Report 2015, PANDORA launched a share buyback programme under which PANDORA expects to buy back own shares to a maximum consideration of DKK 4.0 billion. The programme will end no later than 31 December 2016.
As of 30 September 2016, a total of 3,912,603 shares had been bought back, corresponding to a transaction value of DKK 3,391 million. As of 30 September 2016, PANDORA held a total of 4,401,293 treasury shares, corresponding to 3.8% of the share capital.
EVENTS AFTER THE REPORTING PERIOD
In October 2016, PANDORA opened its new production facility in Lamphun close to Chiang Mai in Northern Thailand. The new facility is now being ramped-up, ready to start commercial production at the start of 2017. Furthermore, as part of the already announced production capacity expansion programme in Thailand, which will run until the end of 2019, PANDORA has started the construction of an additional site in Gemopolis named Triple A.
In addition to potentially double the production capacity in Thailand by the end of 2019 compared to 2015, PANDORA also targets to shorten the general lead-time at the production facilities. PANDORA has of now reduced the lead-time from 3-8 weeks to 3-6 weeks, with an ambition to reduce it to around 4 weeks on average.
1 November 2016 | COMPANY ANNOUNCEMENT No. 339 | page 4 | 29
PANDORA
Furthermore, in recognition of PANDORA's high level of investments in Thailand, the Thailand Board of Investment has granted PANDORA 8 years of tax exemptions in Thailand related to the facilities in Lamphun, as well as 8 years related to the new Triple A facility in Gemopolis. Both agreements (BOI) will be initiated from first sale. The BOIs include exemptions from Thai income tax payable by PANDORA Production Co., Ltd. and on dividends from BOI business paid by PANDORA Production Co., Ltd. to its shareholders as well as exemptions from import duties paid on certain machinery and raw materials imported into Thailand.
FINANCIAL REVIEW
REVENUE
Total revenue for Q3 2016 was DKK 4,612 million, an increase of 18% (21% in local currency) compared with Q3 2015. Growth was mainly driven by an increase in volume. As announced in connection with the Q2 2016 results, prices on earrings, necklaces and Murano charms were aligned across regions during the quarter to improve the Group's pricing structure. On average, prices on individual products towards the end-consumer were largely unchanged.
Revenue increased across all three geographical regions. Growth for the quarter was split evenly between organic growth (including all stores and eSTOREs, which have been open for more than 12 months) and expansion of the network (all new stores and eSTOREs opened in the last 12 months) including acquired stores (the net effect of converting distributor revenue to retail revenue from acquired stores in the last 12 months). The overall growth was driven by a positive reception of the Autumn collection, including the PANDORA Rose collection, launched in stores in all of EMEA during Q3 2016, as well as a continued high demand for earlier launched products. Following the PANDORA Rose collection has been launched in Asia Pacific in October. In Q3 2016, around 50% of revenue was generated by products launched within the last 12 months, which is similar to Q3 2015.
Revenue per sales channel – Group*
| DKK million | Q3 2016 | Q3 2015 | Growth | Share of revenue |
|---|---|---|---|---|
| Concept stores | 2,863 | 2,270 | 26% | 62% |
| - hereof PANDORA owned | 1,322 | 897 | 47% | 29% |
| Shop-in-shops | 623 | 505 | 23% | 14% |
| - hereof PANDORA owned | 138 | 122 | 13% | 3% |
| Branded | 3,486 | 2,775 | 26% | 76% |
| Multibranded | 739 | 809 | -9% | 16% |
| Total direct | 4,225 | 3,584 | 18% | 92% |
| 3^{rd} party distributors | 387 | 327 | 18% | 8% |
| Total revenue | 4,612 | 3,911 | 18% | 100% |
*Regional revenue per sales channel available in note 11
Revenue from concept stores (excluding revenue from 3rd party concept stores) increased 26% compared with Q3 2015, driven by all three regions, and represented 62% of revenue compared with 58% in Q3 2015. The increase was driven by continued growth in existing stores as well as the addition of net 272 new concept stores in the last 12 months, excluding new 3rd party concept stores. Based on data from concept stores (excluding eSTOREs), which have been operating for more than 12 months, like-for-like sales growth for the Group was 4%, driven by growth in EMEA and Asia Pacific. Including the PANDORA eSTOREs, like-for-like sales growth was 5%.
1 November 2016 | COMPANY ANNOUNCEMENT No. 339 | page 5 | 29
PANDORA
Concept stores* like-for-like sales growth
| Q3 2016 vs. Q3 2015 | Q2 2016 vs. Q2 2015 | Q1 2016 vs. Q1 2015 | Q4 2015 vs. Q4 2014 | Q3 2015 vs. Q3 2014 | |
|---|---|---|---|---|---|
| Group | 4% | 7% | 9% | 13% | 13% |
- Concept stores (excluding eSTOREs) that have been operating for more than 12 months
Revenue from PANDORA owned stores, including all PANDORA eSTOREs, increased by 43% to DKK 1,460 million and corresponded to 32% of total revenue compared with 26% in Q3 2015. The growth in retail revenue was driven by a continuous relevant product offering and strong in-store execution with cross selling into all jewellery categories as well as continued success of the PANDORA eSTORE. In Q3 2016, revenue from PANDORA eSTOREs increased to 3.1% of Group revenue (2.5% in Q3 2015)¹. At the end of Q3 2016 PANDORA eSTOREs were available in 15 countries compared with 10 at the end of Q3 2015. Furthermore, PANDORA has added net 120 PANDORA owned stores in the last 12 months, including net 20 concept stores and 5 shop-in-shops, converted from distributor stores, to a total of 563 concept stores and 112 shop-in-shops owned by PANDORA. For Q3 2016, the net effect of converting distributor revenue to retail revenue was approximately DKK 60 million of which approximately DKK 45 million was related to Singapore and Macau. The corresponding effect for Q3 2015 was approximately DKK 150 million.
Revenue from multibranded stores was DKK 739 million and decreased 9% compared with Q3 2015, due to the closure of net 1,330 multibranded stores in the last 12 months.
Revenue from 3rd party distributors was DKK 387 million, corresponding to an increase of 18% compared with Q3 2015. The increase was related to a positive development in a number of 3rd party distribution markets.
At the end of Q3 2016, sales return and warranty provisions corresponded to approximately 6% of 12 months' rolling revenue value, compared with 6% for both Q2 2016 and Q3 2015, respectively.
Store network, number of points of sale – Group*
| Number of PoS Q3 2016 | Number of PoS Q2 2016 | Number of PoS Q3 2015 | Delta Q3 2016 and Q2 2016 | Delta Q3 2016 and Q3 2015 | |
|---|---|---|---|---|---|
| Concept stores | 2,010 | 1,920 | 1,666 | 90 | 344 |
| - hereof PANDORA owned | 563 | 525 | 440 | 38 | 123 |
| - hereof 3rd party distributors | 529 | 511 | 457 | 18 | 72 |
| Shop-in-shops | 1,987 | 1,827 | 1,613 | 160 | 374 |
| - hereof PANDORA owned | 112 | 118 | 115 | -6 | -3 |
| - hereof 3rd party distributors | 433 | 427 | 380 | 6 | 53 |
| Multibranded | 4,924 | 5,172 | 6,254 | -248 | -1,330 |
| - hereof 3rd party distributors | 1,032 | 1,071 | 1,244 | -39 | -212 |
| Total points of sale | 8,921 | 8,919 | 9,533 | 2 | -612 |
*Regional store network development available in note 11
In the last 12 months PANDORA has added net 344 concept stores to the global store network, including a net total of 123 new PANDORA owned concept stores. Please refer to note 10 for a detailed overview of concept stores per country.
1 November 2016 | COMPANY ANNOUNCEMENT No. 339 | page 6 | 29
PANDORA
In Q3 2016, PANDORA opened net 160 new shop-in-shops of which 110 stores were related to a collaboration with Jared in the US, which is in the process of upgrading around 220 multibranded locations to shop-in-shops. At the end of Q3 2016, Jared had upgraded 208 stores in total.
REVENUE BREAKDOWN BY GEOGRAPHY
In Q3 2016, 33% of revenue was generated in Americas (37% in Q3 2015), 48% in EMEA (48% in Q3 2015) and 19% in Asia Pacific (15% in Q3 2015).
Revenue per region
| DKK million | Q3 2016 | Q3 2015 | Growth | Growth in local currency |
|---|---|---|---|---|
| Americas | 1,510 | 1,429 | 6% | 6% |
| EMEA | 2,220 | 1,879 | 18% | 25% |
| Asia Pacific | 882 | 603 | 46% | 47% |
| Total | 4,612 | 3,911 | 18% | 21% |
AMERICAS
Revenue for the third quarter in Americas was DKK 1,510 million, an increase of 6% (6% in local currency) compared with Q3 2015. The increase was driven by a continued positive development in the US, partially offset by a negative development in Latin America, including the Caribbean Islands.
Revenue in the US was DKK 1,141 million, an increase of 8% compared with Q3 2015 (9% in local currency). The growth was driven by the existing store network, including the continued success of the US eSTORE, as well as the addition of 31 new concept stores in the last 12 months. In the same period, PANDORA has closed a net of 404 multibranded points of sale in the US, including the 208 upgraded Jared stores, which have been upgraded to shop-in-shops. Shop-in-shop revenue in Americas increased 36% compared to Q3 2015, primarily due to the Jared upgrades.
Revenue development in Canada, which corresponded to 13% of revenue from Americas, was flat compared with Q3 2015, in both DKK and in local currency. Like-for-like sales growth was high single digit positive in Canada. Additionally, in October 2016, PANDORA launched an eSTORE in the country.
In October 2016, as part of the strategy to focus on the branded sales channel, PANDORA decided to close around 700 multibranded stores in North America (around 80% in the US and 20% in Canada). The expected revenue impact from taking back inventory from the closed multibranded stores is around DKK 150 million. The full impact on revenue and cost of sales will be accounted for as a provision in Q4 2016. Furthermore, these stores will not be generating any revenue for PANDORA in Q4 2016. In Q4 2015, revenue generated in the closed multibranded stores was around 150 million.
Concept stores* like-for-like sales growth
| Q3 2016 vs. Q3 2015 | Q2 2016 vs. Q2 2015 | Q1 2016 vs. Q1 2015 | Q4 2015 vs. Q4 2014 | Q3 2015 vs. Q3 2014 | |
|---|---|---|---|---|---|
| Americas | 0% | -1% | 2% | 7% | 5% |
- Concept stores (excluding eSTOREs) that have been operating for more than 12 months
1 November 2016 | COMPANY ANNOUNCEMENT No. 339 | page 7 | 29
PANDORA
Like-for-like sales growth in concept stores (excluding eSTOREs) in Americas in Q3 2016 was flat. Like-for-like sales growth in the US was 3%, driven by a flat to positive development in all four major regions, whereas like-for-like in Latin America continued to be negative. Including the PANDORA eSTOREs like-for-like sales growth in Americas was 2%.
EMEA
Revenue in EMEA, covering Europe, Middle East and Africa, was DKK 2,220 million in Q3 2016, and increased 18% (or 25% in local currency) compared with Q3 2015.
Revenue in the UK increased 16% in local currency in Q3 2016 (decreased 3% in reported revenue due to the depreciation of the British pound), and contributed around 25% of revenue in EMEA. Growth in local currency was driven by a positive development in existing stores, as well as the expansion of the store network, including net 38 new concept stores opened since Q3 2015, to a total of 217 concept stores.
Italy and France continued to drive the growth in the region with revenue increasing approximately 70% and 35%, respectively, in the quarter. The increase was primarily driven by organic growth. Italy and France represented around 25% and 10%, respectively, of revenue in EMEA in Q3 2016.
Revenue from Germany decreased 13% compared to Q3 2015. As a consequence of the planned optimisation of the network in Germany, revenue in Q3 2016 was negatively impacted by a provision for returned goods of DKK 20 million, while the same quarter last year was positively impacted by a reversed provision, of around DKK 20 million. Excluding provisions, revenue in Germany increased 6% for the quarter, driven by like-for-like sales growth, partially offset by the closing of 255 multibranded stores in the last 12 months. Revenue from Germany represented around 10% of revenue in EMEA.
Concept stores* like-for-like sales growth
| | Q3 2016
vs. Q3 2015 | Q2 2016
vs. Q2 2015 | Q1 2016
vs. Q1 2015 | Q4 2015
vs. Q4 2014 | Q3 2015
vs. Q3 2014 |
| --- | --- | --- | --- | --- | --- |
| EMEA | 5% | 10% | 11% | 13% | 15% |
- Concept stores (excluding eSTOREs) that have been operating for more than 12 months
Like-for-like sales growth in concept stores (excluding eSTOREs) in EMEA in Q3 2016 was 5%. Like-for-like growth was driven by a positive development in all important markets in the region, including single digit growth in UK and continued double digit growth in Germany, Italy and France. Including the PANDORA eSTOREs, like-for-like sales growth was 6%. Like-for-like sales growth in EMEA excluding concept stores in distributor markets (including Russia, which continued to experience double digit negative like-for-like growth) was around 10%.
ASIA PACIFIC
Revenue in Asia Pacific was DKK 882 million in Q3 2016, an increase of 46% (47% in local currency) compared with Q3 2015. Growth was primarily driven by a continued strong development in China and Australia.
Revenue in Australia increased 32% compared with Q3 2015 (27% in local currency), and represented around 30% of revenue from Asia Pacific. The growth was primarily driven by a like-for-like sales growth, as well as net 12 new concept stores opened since Q3 2015, to a total of 109 concept stores in Australia.
1 November 2016 | COMPANY ANNOUNCEMENT No. 339 | page 8 | 29
PANDORA
Revenue in China represented around 30% of revenue from Asia Pacific and increased 120% compared to Q3 2015. Like-for-like sales growth in China continued to be high double digit, and during the last 12 months 43 new concept stores had been added to a total of 81 in China. Furthermore, in October 2016, PANDORA launched on Alibaba Group's business to consumer platform, Tmall.com, and in December, PANDORA expects to launch its own eSTORE in the country.
Revenue in Hong Kong increased 4%, (around 5% in local currency), primarily driven by expansion of the store network and since Q3 2015, 6 new concept stores have been opened to a total of 28 concept stores in Hong Kong. Revenue from Hong Kong represented around 15% of revenue from Asia Pacific.
Concept stores* like-for-like sales growth
| | Q3 2016
vs. Q3 2015 | Q2 2016
vs. Q2 2015 | Q1 2016
vs. Q1 2015 | Q4 2015
vs. Q4 2014 | Q3 2015
vs. Q3 2014 |
| --- | --- | --- | --- | --- | --- |
| Asia Pacific | 7% | 16% | 21% | 26% | 24% |
*Concept stores (excluding eSTOREs) that have been operating for more than 12 months
Like-for-like sales growth in concept stores (excluding eSTOREs) in Asia Pacific in Q3 2016 was 7%, and primarily driven by low double digit growth in Australia and high double digit growth in China. Like-for-like sales growth in Hong Kong continued to be double-digit negative, impacted by the economic environment in the market as well as the increase in retail footprint in the last 12 months, including the launch of the PANDORA eSTORE in Q4 2015. Total sales-out growth in Hong Kong continued to be positive. Like-for-like sales growth in Asia Pacific including the PANDORA eSTOREs was 7%.
REVENUE BREAKDOWN BY PRODUCT CATEGORY
Product category development
| DKK million | Q3 2016 | Q3 2015 | Growth | Share of total revenue |
|---|---|---|---|---|
| Charms | 2,661 | 2,428 | 10% | 58% |
| Bracelets | 777 | 575 | 35% | 17% |
| - hereof Moments and ESSENCE collections | 556 | 422 | 32% | 12% |
| Rings | 686 | 616 | 11% | 15% |
| Other jewellery | 488 | 292 | 67% | 11% |
| Total revenue | 4,612 | 3,911 | 18% | 100% |
Revenue from Charms was DKK 2,661 million in Q3 2016, an increase of 10% compared with Q3 2015. Growth in revenue from Charms in the US was slightly negative, primarily due to lower revenue from the Disney collection, which primarily consists of charms. Revenue from Charms in Asia Pacific increased around 40%, whereas Charms in EMEA increased 10%, negatively impacted by provisions in Germany and the depreciation of the British pound. Revenue from Bracelets increased 35%. The two categories represented 75% of total revenue in Q3 2016 compared with 77% in Q3 2015.
Revenue from Rings was DKK 686 million, an increase of 11% compared with Q3 2015. The category was driven by a strong development in EMEA and Asia Pacific, partially offset by a negative impact on sell-in in Americas, related to the decision not to repeat a rings campaign in North America in October 2016 and instead focus on Earrings. The Rings category represented 15% of total revenue in Q3 2016, compared with 16% in Q3 2015.
1 November 2016 | COMPANY ANNOUNCEMENT No. 339 | page 9 | 29
PANDORA
Revenue from Other jewellery was DKK 488 million, an increase of 67% compared with Q3 2015. From 2016, PANDORA has increased the focus on earrings, and as a result revenue from Earrings increased by around 100% compared with Q3 2015 and contributed with 6% of Group revenue. Revenue from Necklaces and pendants continued to perform well and increased 40%. Other jewellery represented 11% of total revenue in Q3 2016 compared with 7% in Q3 2015.
During the quarter the PANDORA rose collection was launched in all markets in EMEA, whereas the collection was launched during October in Asia Pacific. Revenue from the collection increased significantly compared to the same quarter last year, when it was available only in the UK and North America.
COSTS AND GROSS PROFIT
Total costs in Q3 2016, including depreciation and amortisation, were DKK 2,893 million, an increase of 12% compared with Q3 2015. Total costs corresponded to 62.7% of revenue in Q3 2016 compared with 65.8% in Q3 2015.
Cost development
| DKK million | Q3 2016 | Q3 2015 | Growth | Share of total revenue Q3 2016 | Share of total revenue Q3 2015 |
|---|---|---|---|---|---|
| Cost of sales | -1,148 | -1,018 | 13% | -24.9% | -26.0% |
| Gross profit | 3,464 | 2,893 | 20% | 75.1% | 74.0% |
| Sales and distribution expenses | -934 | -807 | 16% | -20.3% | -20.6% |
| Marketing expenses | -360 | -360 | 0% | -7.8% | -9.2% |
| Administrative expenses | -451 | -387 | 17% | -9.8% | -9.9% |
| Total costs | -2,893 | -2,572 | 12% | -62.7% | -65.8% |
Gross profit in Q3 2016 was DKK 3,464 million corresponding to a gross margin of 75.1% compared with 74.0% in Q3 2015. The increase was mainly driven by tailwind from more favourable raw material prices (approximately 1 percentage point) and an increase in share of revenue from PANDORA owned stores (approximately 1 percentage point). This was partially offset by unfavourable currency rates (approximately 0.5 percentage point) as well as increased production complexity (approximately 0.5 percentage point). Furthermore, the gross margin in Q3 2015 was impacted with approximately minus 1 percentage point due to the takeover of the distribution in China, as initial inventory in the stores was taken over by PANDORA at distributor prices.
COMMODITY HEDGING
It is PANDORA's policy to hedge approximately 100%, 80%, 60% and 40%, respectively, of expected gold and silver consumption in the following four quarters. The hedged prices for the following four quarters for gold are USD 1,176/oz, USD 1,234/oz, USD 1,313/oz USD 1,343/oz and for silver USD 16.54/oz, USD 16.37/oz, USD 18.08/oz USD 19.40/oz. However, current inventory means a delayed impact of the hedged prices on cost of sales.
The average realised purchase price in Q3 2016 was USD 1,145/oz for gold and USD 15.55/oz for silver.
Excluding hedging and the time lag effect from the inventory, the underlying gross margin would have been approximately 73% based on the average gold (USD 1,335/oz) and silver (USD 19.61/oz) market prices in Q3 2016. Under these assumptions, a 10% deviation in quarterly average gold and silver prices would impact PANDORA's gross margin by
1 November 2016 | COMPANY ANNOUNCEMENT No. 339 | page 10 | 29
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approximately +/- 1 percentage point.
OPERATING EXPENSES
Operating expenses in Q3 2016 were DKK 1,745 million compared with DKK 1,554 million in Q3 2015, representing 37.8% of revenue in Q3 2016 compared with 39.7% in Q3 2015.
Sales and distribution expenses were DKK 934 million in Q3 2016, an increase of 16% compared with Q3 2015, and corresponding to 20.3% of revenue compared with 20.6% in Q3 2015. The nominal increase in sales and distribution expenses was mainly driven by higher revenue, as well as an increase in the number of PANDORA owned stores (from 555 in Q3 2015 to 675 in Q3 2016). The sales and distribution costs related to the increasing number of PANDORA owned stores, mainly related to property and employee expenses, had a negative impact of around 2 percentage points on sales and distribution costs as a percentage of revenue compared with Q3 2015. Operational leverage from the existing network more than offset the higher costs particularly driven by Southern Europe and China.
Marketing expenses were DKK 360 million in Q3 2016 compared with DKK 360 million in Q3 2015, corresponding to 7.8% of revenue, compared with 9.2% in Q3 2015.
Administrative expenses in Q3 2016 increased by 17% to DKK 451 million, representing 9.8% of revenue, compared with 9.9% of Q3 2015 revenue. The nominal increase was primarily due to ongoing higher IT expenses as well as an increase in head count, particularly in IT.
EBITDA
EBITDA for Q3 2016 increased by 27% to DKK 1,842 million resulting in an EBITDA margin of 39.9% compared with 37.2% in Q3 2015.
Regional EBITDA
| DKK million | Q3 2016 | Q3 2015 | Growth | EBITDA margin Q3 2016 | EBITDA margin Q3 2015 |
|---|---|---|---|---|---|
| Americas | 539 | 497 | 8% | 35.7% | 34.8% |
| EMEA | 974 | 777 | 25% | 43.9% | 41.4% |
| Asia Pacific | 329 | 180 | 83% | 37.3% | 29.9% |
| Group | 1,842 | 1,454 | 27% | 39.9% | 37.2% |
The EBITDA margin for Americas increased to 35.7% in Q3 2016 compared with 34.8% in Q3 2015. The increase was primarily driven by a higher gross margin due to lower commodity prices.
The EBITDA margin for EMEA increased to 43.9% in Q3 2016 compared with 41.4% in Q3 2015. The increase was primarily driven by a higher gross margin due to lower commodity prices supported by operating leverage in the region due to the higher revenue.
The EBITDA margin for the Asia Pacific region increased to 37.3% compared with 29.9% in Q3 2015. The increase was driven by operational leverage particularly in China, which improved the EBITDA margin with around 2 percentage points. Additionally, the EBITDA margin for Q3 2015 was negatively impacted by roughly 5 percentage points due to the takeover of the distribution in China, where initial inventory in the stores was taken over at distributor prices.
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EBIT
EBIT for Q3 2016 increased to DKK 1,719 million, an increase of 28% compared with Q3 2015, resulting in an EBIT margin of 37.3% for Q3 2016 compared with 34.2% in Q3 2015.
NET FINANCIALS
In Q3 2016, net financials amounted to a gain of DKK 60 million, compared with a net financial loss of DKK 35 million in Q3 2015. The development was primarily related to exchange rate gains including gains on foreign exchange contracts.
INCOME TAX EXPENSES
Income tax expenses were DKK 374 million in Q3 2016. The effective tax rate in Q3 2016 was 21.0% compared with 22.9% for Q3 2015. The effective tax rate for the quarter was in line with the estimated effective tax rate for the full year.
NET PROFIT
Net profit in Q3 2016 increased to DKK 1,405 million from DKK 1,006 million in Q3 2015.
BALANCE SHEET AND CASH FLOW
In Q3 2016, PANDORA generated free cash flow of DKK 577 million compared with DKK 263 million in Q3 2015. The increase was primarily due to the increase in profits.
Operating working capital (defined as inventory and trade receivables less trade payables) at the end of Q3 2016 corresponded to 19.8% of the last twelve months' revenue, compared with 19.6% at the end of Q3 2015 and 15.8% at the end of Q2 2016.
Operating working capital as a percentage of revenue
| Q3 2016 | Q2 2016 | Q1 2016 | Q4 2015 | Q3 2015 | |
|---|---|---|---|---|---|
| Inventory | 16.4% | 15.7% | 13.8% | 14.1% | 17.2% |
| Trade receivables | 10.2% | 6.7% | 7.6% | 8.1% | 9.3% |
| Trade payables | 6.8% | 6.6% | 7.0% | 7.9% | 6.9% |
| Operating working capital | 19.8% | 15.8% | 14.4% | 14.3% | 19.6% |
Inventory relative to preceding 12 months' revenue decreased to 16.4% in Q3 2016, from 17.2% in Q3 2015. Nominally, inventory increased to DKK 3,166 million in Q3 2016 from DKK 2,584 million in Q3 2015. The nominal increase was mainly due to higher activity in the Group and more inventory in PANDORA owned and operated stores, driven by an increase in the number of owned and operated stores. Compared with Q3 2015, gold and silver prices affected inventory value with a decrease of approximately 12%, partially offset by a 3% increase from foreign exchange. The relative and nominal increase compared to Q2 2016 is related to inventory build-up ahead of the launch of the Christmas collection.
Trade receivables increased to DKK 1,976 million at the end of Q3 2016 (10.2% of preceding 12 months' revenue) compared with DKK 1,392 million at the end of Q3 2015 (9.3% of the preceding 12 months' revenue). The increase compared to Q2 2016 is primarily due to revenue in the third quarter being skewed towards the end of the quarter, as well as extended credit terms ahead of Christmas in some markets. The increase compared to Q3 2015, was primarily related to an increasing share of revenue from Italy, which is one of the countries where PANDORA allows extended credit terms ahead of Christmas.
Trade payables at the end of the quarter were DKK 1,309 million compared with DKK 1,036
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million at the end of Q3 2015 and DKK 1,239 million at the end of Q2 2016. The nominal increase in trade payables compared to Q3 2015 was impacted by increased activity in the Group.
CAPEX was DKK 324 million in Q3 2016 compared with DKK 384 million in Q3 2015. The CAPEX investments were primarily related to IT, openings of PANDORA owned stores and the production facilities in Thailand. In Q3 2016, CAPEX represented 7% of revenue.
Total interest-bearing debt was DKK 4,770 million at the end of Q3 2016, compared with DKK 2,723 million at the end of Q3 2015, and cash amounted to DKK 438 million compared with DKK 548 million at the end of Q3 2015. Net interest-bearing debt (NIBD) at the end of Q3 2016 was DKK 4,332 million corresponding to a NIBD to EBITDA ratio of 0.6x of the last twelve months EBITDA, compared with DKK 2,175 million at the end of Q3 2015 corresponding to a NIBD to EBITDA ratio of 0.4x.
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DEVELOPMENT IN FIRST NINE MONTHS OF 2016
REVENUE
Total revenue increased by 24% to DKK 13,679 million in 9M 2016, or 27% in local currency, compared to 9M 2015.
The geographical distribution of revenue in 9M 2016 was 36% for Americas (41% in 9M 2015), 45% for EMEA (43% in 9M 2015) and 19% for Asia Pacific (15% in 9M 2015).
COSTS
Gross profit was DKK 10,260 million in 9M 2016 compared to DKK 7,988 million in 9M 2015, resulting in a gross margin of 75.0% in 9M 2016 compared to 72.3% in 9M 2015.
Sales and distribution expenses increased to DKK 2,826 million in 9M 2016 compared to DKK 2,068 million in 9M 2015, corresponding to 20.7% of revenue in 9M 2016 and 18.7% in 9M 2015. Marketing expenses increased to DKK 1,111 million in 9M 2016 compared to DKK 1,006 million in 9M 2015, corresponding to 8.1% of revenue in 9M 2016 and 9.1% in 9M 2015. Administrative expenses amounted to DKK 1,471 million in 9M 2016 versus DKK 1,102 million in 9M 2015, representing 10.8% and 10.0% of 9M 2016 and 9M 2015 revenue, respectively.
EBITDA
EBITDA for 9M 2016 increased by 28% to DKK 5,211 million resulting in an EBITDA margin of 38.1% in 9M 2016 versus 36.8% in 9M 2015. Regional EBITDA margins for 9M 2016 were 38.2% in Americas (35.8% in 9M 2015), 39.3% in EMEA (37.0% in 9M 2015) and 35.1% in Asia Pacific (39.2% in 9M 2015).
EBIT
EBIT for 9M 2016 was DKK 4,852 million – an increase of 27% compared to 9M 2015, resulting in an EBIT margin of 35.5% in 9M 2016 versus 34.5% in 9M 2015.
NET FINANCIALS
Net financials amounted to a gain of DKK 126 million in 9M 2016 versus a loss of DKK 385 million in 9M 2015, which was primarily related to intercompany loans in US dollars.
INCOME TAX EXPENSES
Income tax expenses were DKK 1,046 million in 9M 2016 compared to DKK 1,128 million in 9M 2015, implying an effective tax rate for the Group of 21.0% for 9M 2016 compared to 32.9% in 9M 2015. Tax expenses for the first nine months of 2015 were impacted by the earlier disclosed settlement with the Danish tax authorities, which had an impact of DKK 364 million in the first quarter of 2015 relating to prior years. Excluding the additional expense, the effective tax rate would have been 22.3% for 9M 2015.
NET PROFIT
Net profit in 9M 2016 was DKK 3,932 million compared to DKK 2,299 million in 9M 2015.
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FINANCIAL STATEMENTS
Consolidated income statement
| DKK million | Notes | Q3 2016 | Q3 2015 | 9M 2016 | 9M 2015 | FY 2015 |
|---|---|---|---|---|---|---|
| Revenue | 3 | 4,612 | 3,911 | 13,679 | 11,056 | 16,737 |
| Cost of sales | -1,148 | -1,018 | -3,419 | -3,068 | -4,544 | |
| Gross profit | 3,464 | 2,893 | 10,260 | 7,988 | 12,193 | |
| Sales, distribution and marketing expenses | -1,294 | -1,167 | -3,937 | -3,074 | -4,722 | |
| Administrative expenses | -451 | -387 | -1,471 | -1,102 | -1,657 | |
| Operating profit | 1,719 | 1,339 | 4,852 | 3,812 | 5,814 | |
| Finance income | 87 | 1 | 182 | 47 | 84 | |
| Finance costs | -27 | -36 | -56 | -432 | -553 | |
| Profit before tax | 1,779 | 1,304 | 4,978 | 3,427 | 5,345 | |
| Income tax expense | -374 | -298 | -1,046 | -1,128 | -1,671 | |
| Net profit for the period | 1,405 | 1,006 | 3,932 | 2,299 | 3,674 | |
| Earnings per share, basic (DKK) | 12.4 | 8.4 | 34.3 | 19.2 | 30.9 | |
| Earnings per share, diluted (DKK) | 12.3 | 8.4 | 34.1 | 19.1 | 30.7 |
Consolidated statement of comprehensive income
| DKK million | Q3 2016 | Q3 2015 | 9M 2016 | 9M 2015 | FY 2015 |
|---|---|---|---|---|---|
| Net profit for the period | 1,405 | 1,006 | 3,932 | 2,299 | 3,674 |
| Items that might be reclassified to profit/loss for the period | |||||
| Exchange rate adjustments of investments in subsidiaries | - | -258 | -46 | 134 | 249 |
| Fair value adjustment of hedging instruments | -67 | -11 | 452 | -13 | 23 |
| Fair value adjustment of obligation to acquire non-controlling interests | -14 | - | -14 | - | - |
| Tax on other comprehensive income, hedging instruments, income/expense | 15 | - | -100 | 10 | 22 |
| Other comprehensive income, net of tax | -66 | -269 | 292 | 131 | 294 |
| Total comprehensive income for the period | 1,339 | 737 | 4,224 | 2,430 | 3,968 |
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Consolidated balance sheet
| DKK million | 2016
30 September | 2015
30 September | 2015
31 December |
| --- | --- | --- | --- |
| ASSETS | | | |
| Goodwill | 2,518 | 2,382 | 2,424 |
| Brand | 1,058 | 1,057 | 1,057 |
| Distribution network | 192 | 223 | 216 |
| Distribution rights | 1,061 | 1,089 | 1,069 |
| Other intangible assets | 829 | 615 | 683 |
| Total intangible assets | 5,658 | 5,366 | 5,449 |
| Property, plant and equipment | 1,708 | 1,072 | 1,237 |
| Deferred tax assets | 872 | 610 | 879 |
| Other financial assets | 240 | 143 | 159 |
| Total non-current assets | 8,478 | 7,191 | 7,724 |
| Inventories | 3,166 | 2,584 | 2,357 |
| Financial instruments | 374 | 110 | 65 |
| Trade receivables | 1,976 | 1,392 | 1,360 |
| Income tax receivable | 27 | 308 | 113 |
| Other receivables | 783 | 786 | 803 |
| Cash | 438 | 548 | 889 |
| Total current assets | 6,764 | 5,728 | 5,587 |
| Total assets | 15,242 | 12,919 | 13,311 |
| EQUITY AND LIABILITIES | | | |
| Share capital | 117 | 122 | 122 |
| Share premium | - | 1,173 | - |
| Treasury shares | -3,724 | -3,209 | -4,152 |
| Reserves | 1,329 | 860 | 1,023 |
| Proposed dividend | - | - | 1,511 |
| Retained earnings | 7,806 | 6,519 | 7,635 |
| Total equity | 5,528 | 5,465 | 6,139 |
| Provisions | 104 | 73 | 97 |
| Loans and borrowings | 4,650 | 2,700 | 2,350 |
| Deferred tax liabilities | 487 | 436 | 394 |
| Other payables | 286 | 57 | 249 |
| Total non-current liabilities | 5,527 | 3,266 | 3,090 |
| Provisions | 939 | 699 | 971 |
| Loans and borrowings | 120 | 23 | 257 |
| Financial instruments | 68 | 292 | 214 |
| Trade payables | 1,309 | 1,036 | 1,329 |
| Income tax payable | 824 | 1,178 | 306 |
| Other payables | 927 | 960 | 1,005 |
| Total current liabilities | 4,187 | 4,188 | 4,082 |
| Total liabilities | 9,714 | 7,454 | 7,172 |
| Total equity and liabilities | 15,242 | 12,919 | 13,311 |
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Consolidated statement of changes in equity
| DKK million | Share capital | Share Premium | Treasury shares | Translation reserve | Hedge reserve | Proposed dividend | Retained earnings | Total equity |
|---|---|---|---|---|---|---|---|---|
| Equity at 1 January 2016 | 122 | - | -4,152 | 1,134 | -111 | 1,511 | 7,635 | 6,139 |
| Net profit for the period | - | - | - | - | - | - | 3,932 | 3,932 |
| Exchange rate adjustments of investments in subsidiaries | - | - | - | -46 | - | - | - | -46 |
| Fair value adjustment of hedging instruments | - | - | - | - | 452 | - | - | 452 |
| Fair value adjustment of obligation to acquire non-controlling interests | - | - | - | - | - | - | -14 | -14 |
| Tax on other comprehensive income | - | - | - | - | -100 | - | - | -100 |
| Other comprehensive income, net of tax | - | - | - | -46 | 352 | - | -14 | 292 |
| Total comprehensive income for the period | - | - | - | -46 | 352 | - | 3,918 | 4,224 |
| Share-based payments | - | - | 231 | - | - | - | -168 | 63 |
| Purchase of treasury shares | - | - | -3,391 | - | - | - | - | -3,391 |
| Reduction of share capital | -5 | - | 3,588 | - | - | - | -3,583 | - |
| Dividend paid | - | - | - | - | - | -1,511 | 4 | -1,507 |
| Equity at 30 September 2016 | 117 | - | -3,724 | 1,088 | 241 | - | 7,806 | 5,528 |
| Equity at 1 January 2015 | 128 | 1,229 | -2,679 | 885 | -156 | 1,088 | 6,537 | 7,032 |
| Net profit for the period | - | - | - | - | - | - | 2,299 | 2,299 |
| Exchange rate adjustments of investments in subsidiaries | - | - | - | 134 | - | - | - | 134 |
| Fair value adjustment of hedging instruments | - | - | - | - | -13 | - | - | -13 |
| Tax on other comprehensive income | - | - | - | - | 10 | - | - | 10 |
| Other comprehensive income, net of tax | - | - | - | 134 | -3 | - | - | 131 |
| Total comprehensive income for the period | - | - | - | 134 | -3 | - | 2,299 | 2,430 |
| Share-based payments | - | - | 266 | - | - | - | -218 | 48 |
| Purchase of treasury shares | - | - | -2,957 | - | - | - | - | -2,957 |
| Reduction of share capital | -6 | -56 | 2,161 | - | - | - | -2,099 | - |
| Dividend paid | - | - | - | - | - | -1,088 | - | -1,088 |
| Equity at 30 September 2015 | 122 | 1,173 | -3,209 | 1,019 | -159 | - | 6,519 | 5,465 |
The "Share premium" is a distributable reserve under the Danish regulations and has therefore been transferred to "Retained earnings" in December 2015.
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Consolidated cash flow statement
| DKK million | Q3 2016 | Q3 2015 | 9M 2016 | 9M 2015 | FY 2015 |
|---|---|---|---|---|---|
| Profit before tax | 1,779 | 1,304 | 4,978 | 3,427 | 5,345 |
| Finance income | -87 | -1 | -182 | -47 | -84 |
| Finance costs | 27 | 36 | 56 | 432 | 553 |
| Depreciation, amortisation and impairment losses | 123 | 115 | 359 | 258 | 400 |
| Share-based payments | 19 | 17 | 56 | 55 | 75 |
| Change in inventories | -238 | -476 | -782 | -765 | -431 |
| Change in receivables | -644 | -466 | -935 | -570 | -560 |
| Change in payables and other liabilities | 39 | 127 | -270 | 329 | 1,139 |
| Other non-cash adjustments | -21 | 11 | 557 | -327 | -432 |
| Interest etc. received | - | 1 | 2 | 2 | 3 |
| Interest etc. paid | -13 | - | -30 | -83 | -104 |
| Income taxes paid | -72 | -74 | -440 | -1,046 | -2,520 |
| Cash flows from operating activities, net | 912 | 594 | 3,369 | 1,665 | 3,384 |
| Acquisitions of subsidiaries and activities, net of cash acquired | -17 | -2 | -209 | -241 | -289 |
| Divestment of businesses | - | - | - | 29 | 29 |
| Purchase of intangible assets | -39 | -165 | -218 | -301 | -402 |
| Purchase of property, plant and equipment | -288 | -174 | -615 | -444 | -620 |
| Change in other non-current assets | -23 | -5 | -69 | -42 | -49 |
| Proceeds from sale of property, plant and equipment | 2 | 14 | 14 | 26 | 35 |
| Cash flows from investing activities, net | -365 | -332 | -1,097 | -973 | -1,296 |
| Capital increase including share premium, net | - | -1 | - | - | - |
| Dividend paid | - | - | -1,507 | -1,088 | -1,088 |
| Purchase of treasury shares | -1,238 | -1,405 | -3,391 | -2,957 | -3,900 |
| Proceeds from loans and borrowings | 751 | 1,359 | 3,168 | 3,163 | 4,658 |
| Repayment of loans and borrowings | -164 | -273 | -988 | -391 | -2,003 |
| Cash flows from financing activities, net | -651 | -320 | -2,718 | -1,273 | -2,333 |
| Net increase/decrease in cash | -104 | -58 | -446 | -581 | -245 |
| Cash at beginning of period | 540 | 611 | 889 | 1,131 | 1,131 |
| Exchange gains/losses on cash | 2 | -5 | -5 | -2 | 3 |
| Net increase/decrease in cash | -104 | -58 | -446 | -581 | -245 |
| Cash at end of period | 438 | 548 | 438 | 548 | 889 |
| Cash flows from operating activities, net | 912 | 594 | 3,369 | 1,665 | 3,384 |
| - Interest etc. received | - | -1 | -2 | -2 | -3 |
| - Interest etc. paid | 13 | - | 30 | 83 | 104 |
| Cash flows from investing activities, net | -365 | -332 | -1,097 | -973 | -1,296 |
| - Acquisition of subsidiaries and activities, net of cash acquired | 17 | 2 | 209 | 241 | 289 |
| - Divestment of businesses | - | - | - | -29 | -29 |
| Free cash flow | 577 | 263 | 2,509 | 985 | 2,449 |
| Unutilised credit facilities | 2,464 | 2,773 | 2,464 | 2,773 | 3,089 |
The above cannot be derived directly from the income statement and the balance sheet.
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NOTES
NOTE 1 – Accounting policies
This unaudited interim financial report has been prepared in accordance with IAS 34 ‘Interim Financial Reporting’ as endorsed by the European Union and accounting policies set out in the Annual Report 2015 of PANDORA.
Furthermore, the interim financial report and Management’s review are prepared in accordance with Danish disclosure requirements for listed companies.
PANDORA has adopted all new or amended standards (IFRS) and interpretations (IFRIC) as adopted by the EU and which are effective for the financial year beginning on 1 January 2016. The implementation of these new or amended standards had no material impact on the financial statements for Q3 2016.
NOTE 2 – Significant accounting estimates and judgements
In preparing the consolidated financial statements, Management makes various accounting estimates and assumptions, which form the basis of presentation, recognition and measurement of PANDORA’s assets and liabilities.
All significant accounting estimates and judgements are consistent with the description in the Annual Report 2015. See descriptions in the individual notes to the consolidated financial statement in the Annual Report 2015.
NOTE 3 – Segment information
PANDORA’s activities are segmented on the basis of geographical areas in accordance with the management reporting structure. In determining reporting segments, a number of segments have been aggregated. All segments derive their revenue from the types of products specified in Company Announcement no. 290.
The Group operates with two performance measures with EBITDA as the primary performance measure and EBIT as the secondary performance measure. Management monitors the segment profit of the operating segments separately for the purpose of making decisions about resource allocation and performance management. Segment results are measured as EBITDA, corresponding to ‘operating profit’ in the consolidated financial statements before depreciation, amortisation and impairment losses in respect of non-current assets. EBIT as a performance measure is only measured at Group level.
For information on revenue from the different products and sale channels reference is made to the Management Review.
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NOTE 3 - Segment information, continued
| DKK million | Americas | EMEA | Asia Pacific | Total Group |
|---|---|---|---|---|
| Q3 2016 | ||||
| External revenue | 1,510 | 2,220 | 882 | 4,612 |
| Segment profit (EBITDA) | 539 | 974 | 329 | 1,842 |
| Amortisation, depreciation and impairment losses | -123 | |||
| Consolidated operating profit (EBIT) | 1,719 | |||
| Q3 2015 | ||||
| External revenue | 1,429 | 1,879 | 603 | 3,911 |
| Segment profit (EBITDA) | 497 | 777 | 180 | 1,454 |
| Amortisation, depreciation and impairment losses | -115 | |||
| Consolidated operating profit (EBIT) | 1,339 | |||
| 9M 2016 | ||||
| External revenue | 4,947 | 6,178 | 2,554 | 13,679 |
| Segment profit (EBITDA) | 1,889 | 2,426 | 896 | 5,211 |
| Amortisation, depreciation and impairment losses | -359 | |||
| Consolidated operating profit (EBIT) | 4,852 | |||
| 9M 2015 | ||||
| External revenue | 4,580 | 4,764 | 1,712 | 11,056 |
| Segment profit (EBITDA) | 1,638 | 1,761 | 671 | 4,070 |
| Amortisation, depreciation and impairment losses | -258 | |||
| Consolidated operating profit (EBIT) | 3,812 | |||
| DKK million | Q3 2016 | Q3 2015 | 9M 2016 | 9M 2015 |
| Revenue per product group | ||||
| Charms | 2,661 | 2,428 | 8,285 | 7,265 |
| Bracelets | 777 | 575 | 2,439 | 1,671 |
| Rings | 686 | 616 | 1,762 | 1,403 |
| Other jewellery | 488 | 292 | 1,193 | 717 |
| Total revenue | 4,612 | 3,911 | 13,679 | 11,056 |
NOTE 4 – Seasonality of operations
Due to the seasonal nature of the jewellery business, higher revenue is historically realised in the second half of the year.
NOTE 5 – Financial risks
PANDORA’s overall risk exposure and financial risks, including risks related to commodity prices, foreign currency, credit, liquidity and interest rate, are unchanged compared with the disclosures in note 4.4 in the consolidated financial statement in the Annual Report 2015.
NOTE 6 – Derivative financial instruments
Derivative financial instruments are measured at fair value and in accordance with level 2 in the fair value hierarchy (IFRS 7), see note 4.5 to the consolidated financial statement in the Annual Report 2015.
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NOTE 7 – Business combinations
Acquisitions in 2016
On 1 January 2016, PANDORA acquired the PANDORA store network in Singapore and Macau from Norbreeze Group (Norbreeze). The distribution agreements with Norbreeze for distributing PANDORA jewellery in Singapore, Macau and the Philippines was expired on 31 December 2015. Distribution in the Philippines continues under a new agreement with the existing distributor, whereas the distribution in Singapore and Macau remain with PANDORA. On 1 January 2016, PANDORA established a local office in Singapore for the Singapore operation, whereas Macau and the Philippines are operated out of PANDORA’s office in Hong Kong.
According to the purchase price allocation, the purchase price of DKK 167 million was primarily related to non-current assets and inventories related to the acquired stores. Goodwill was DKK 102 million mainly related to the opportunity to enter Singapore and Macau directly and to add 15 PANDORA concept stores and 5 shop-in-shops located in these two markets to PANDORA’s retail chain.
Transaction cost of DKK 3 million was recognised in the income statement as administrative expenses. None of the goodwill recognised is deductible for income tax purposes.
On 6 July 2016, PANDORA acquired four concept stores in London, UK, in a business combination. The purchase amount was DKK 21 million. Assets acquired mainly consist of inventories and other assets and liabilities relating to the stores. Of the purchase price DKK 13 million was allocated to goodwill. Transaction cost was DKK 1 million. None of the goodwill recognised is deductible for income tax purposes.
Contribution to Group revenue and net earnings from acquisitions for the period 1 January – 30 September 2016 was insignificant.
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Acquisitions
| DKK million | Q3 2016 | Total 2015 |
|---|---|---|
| Other intangible assets | - | 69 |
| Property, plant and equipment | 6 | 23 |
| Other non-current receivables | 9 | 12 |
| Receivables | 4 | 30 |
| Inventories | 61 | 141 |
| Cash | 1 | 21 |
| Assets acquired | 81 | 296 |
| Non-current liabilities | 2 | 5 |
| Payables | 6 | 40 |
| Other liabilities | - | 7 |
| Liabilities assumed | 8 | 52 |
| Total identifiable net assets acquired | 73 | 244 |
| Goodwill arising from the acquisitions | 115 | 281 |
| Purchase consideration | 188 | 525 |
| Cash movements on acquisition: | ||
| Prepaid, previous year^{1} | -7 | - |
| Consideration transferred regarding previous years^{2} | 29 | - |
| Deferred payment (including earn-out) | - | -222 |
| Cash acquired | -1 | -21 |
| Net cash flow on acquisition for the period | 209 | 282 |
| Prepayments, acquisitions | - | 7 |
| Net cash flow on acquisitions | 209 | 289 |
| Cash flow from divestment of businesses^{3} | - | -29 |
| Net cash flow from business combinations | 209 | 260 |
1) Prepayment in 2015, DKK 7 million, was regarding the acquisitions in Singapore, Macau and the Philippines on 1 January 2016.
2) The consideration transferred in 2016 was the last payment for the transfer of assets regarding the acquisition in China in 2015, DKK 29 million.
3) Sale of businesses in 2015 included mainly inventories (DKK 18 million), assets related to stores and goodwill (DKK 9 million).
Acquisitions in 2015
Strategic alliance in Japan
On 1 January 2015, PANDORA acquired assets related to the distribution in Japan from Bluebell in a business combination. In addition to the reacquired distribution rights (DKK 30 million), assets related to branded stores – one concept store and nine shop-in-shops – and goodwill (DKK 20 million). The acquisition was part of a strategic alliance with Bluebell in Japan with the intent to jointly distribute PANDORA jewellery in Japan.
The agreement initially has a five-year term. On termination of the agreement, PANDORA will take over the full distribution of PANDORA jewellery in Japan. The total amount to be paid to Bluebell will depend on the realised revenue in 2019. The fair value of the earn-out is estimated at DKK 58 million.
Acquisition of PAN ME A/S
On 16 January 2015, PANDORA acquired 100% of the shares in PAN ME A/S, which holds the rights to distribute PANDORA jewellery in the United Arab Emirates (UAE), Bahrain, Qatar and Oman.
The purchase price of DKK 112 million was primarily related to non-current assets and inventories related to 11 concept stores and 3 shop-in-shops in the UAE and intangible assets comprising reacquired distribution rights (with a remaining lifespan of approximately one year) of DKK 5 million and goodwill of DKK 55 million.
UK
On 2 April 2015, PANDORA acquired 100% of the shares in four Evernal companies comprising concept stores in Liverpool, Blackpool, Trafford and Arndale. The purchase price was DKK 70 million. Assets
1 November 2016 | COMPANY ANNOUNCEMENT No. 339 | page 22 | 29
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acquired mainly consist of inventories and other assets and liabilities relating to the stores. Of the purchase price, DKK 74 million was allocated to goodwill.
China
On 1 July 2015, PANDORA acquired assets related to the distribution in China from Oracle Investment (Hong Kong) Limited in a business combination. In addition to the reacquired distribution rights (0.5 year remaining) (DKK 34 million), assets comprised inventories and assets related to 49 branded stores - 30 concept stores and 19 shop-in-shops and goodwill (DKK 94 million). The acquisition was part of a strategic alliance with Oracle in China to jointly distribute PANDORA jewellery in China until 31 December 2018.
The total price will be calculated based on revenue in 2018 and is expected to be DKK 208 million. The remaining payment - the earn-out - will be delayed until the distribution agreement ends in 2018.
Other business combinations in 2015
PANDORA acquired concept stores in the US and Germany in 2015. Assets acquired mainly consist of inventories and other assets relating to the stores. Of the purchase price, DKK 38 million was allocated to goodwill.
The text above regarding acquired businesses in 2015 has been reduced. The full text is available in the Annual Report for 2015.
NOTE 8 - Contingent liabilities
See note 5.2 to the consolidated financial statements in the Annual Report 2015. Leasing commitments increased by DKK 218 million in Q3 2016 to DKK 2,771 million at the end of Q3 2016.
NOTE 9 - Related parties
Related parties with significant interests
BlackRock, Inc. holds more than 5% of the share capital and the voting rights in PANDORA.
Other related parties of PANDORA with significant influence include the Board of Directors and the Executive Board of this company and their close family members. Related parties also include companies in which the aforementioned persons have control or significant interests.
Transactions with related parties
PANDORA did not enter into any significant transactions with members of the Board of Directors or the Executive Board, except for compensation and benefits received as a result of their membership of the Board of Directors, employment with PANDORA or shareholdings in PANDORA.
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NOTE 10 – Concept store development*
| Number of concept stores Q3 2016 | Number of concept stores Q2 2016 | Number of concept stores Q3 2015 | Growth Q3 2016 /Q2 2016 | Growth Q3 2016 /Q3 2015 | Number of O&O Q3 2016 | Growth O&O stores Q3 2016 /Q2 2016 | |
|---|---|---|---|---|---|---|---|
| US | 340 | 335 | 309 | 5 | 31 | 46 | 2 |
| Brazil | 82 | 75 | 57 | 7 | 25 | 46 | 4 |
| Canada | 73 | 73 | 69 | - | 4 | 2 | - |
| Caribbean | 21 | 20 | 17 | 1 | 4 | - | - |
| Mexico | 17 | 16 | 8 | 1 | 9 | - | - |
| Rest of Americas | 26 | 21 | 6 | 5 | 20 | - | - |
| Americas | 559 | 540 | 466 | 19 | 93 | 94 | 6 |
| UK | 217 | 205 | 179 | 12 | 38 | 13 | 4 |
| Russia | 205 | 200 | 187 | 5 | 18 | - | - |
| Germany | 157 | 157 | 154 | - | 3 | 144 | - |
| Italy | 66 | 59 | 47 | 7 | 19 | 22 | 2 |
| France | 60 | 60 | 52 | - | 8 | 23 | - |
| Spain | 50 | 47 | 33 | 3 | 17 | - | - |
| Poland | 41 | 40 | 38 | 1 | 3 | 18 | 1 |
| South Africa | 30 | 31 | 27 | -1 | 3 | - | - |
| Ireland | 27 | 23 | 20 | 4 | 7 | - | - |
| Belgium | 24 | 24 | 24 | - | - | - | - |
| Ukraine | 22 | 21 | 18 | 1 | 4 | - | - |
| Netherlands | 21 | 20 | 19 | 1 | 2 | 21 | 1 |
| Portugal | 20 | 18 | 16 | 2 | 4 | - | - |
| United Arab Emirates | 19 | 15 | 14 | 4 | 5 | 19 | 4 |
| Israel | 14 | 17 | 13 | -3 | 1 | - | - |
| Czech Republic | 14 | 14 | 11 | - | 3 | 10 | - |
| Turkey | 13 | 13 | 11 | - | 2 | 13 | - |
| Greece | 13 | 13 | 9 | - | 4 | - | - |
| Romania | 13 | 10 | 8 | 3 | 5 | 9 | 2 |
| Austria | 12 | 11 | 12 | 1 | - | 5 | 1 |
| Denmark | 11 | 11 | 11 | - | - | 11 | - |
| Rest of EMEA | 87 | 77 | 60 | 10 | 27 | 18 | 2 |
| EMEA | 1,136 | 1,086 | 963 | 50 | 173 | 326 | 17 |
| Australia | 109 | 105 | 97 | 4 | 12 | 17 | - |
| China | 81 | 67 | 38 | 14 | 43 | 81 | 14 |
| Hong Kong | 28 | 26 | 22 | 2 | 6 | 25 | 1 |
| Malaysia | 25 | 25 | 21 | - | 4 | - | - |
| Singapore | 14 | 15 | 15 | -1 | -1 | 11 | -1 |
| New Zealand | 12 | 12 | 10 | - | 2 | - | - |
| Philippines | 11 | 10 | 8 | 1 | 3 | - | - |
| Rest of Asia Pacific | 35 | 34 | 26 | 1 | 9 | 9 | 1 |
| Asia Pacific | 315 | 294 | 237 | 21 | 78 | 143 | 15 |
| All markets | 2,010 | 1,920 | 1,666 | 90 | 344 | 563 | 38 |
*Includes markets with 10 or more concept stores as of end Q3 2016
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NOTE 11 – Regional store development
Revenue per sales channel - Americas
| DKK million | Q3 2016 | Q3 2015 | Growth | Share of revenue |
|---|---|---|---|---|
| Concept stores | 979 | 891 | 10% | 65% |
| - hereof PANDORA owned* | 235 | 173 | 36% | 16% |
| Shop-in-shops | 329 | 242 | 36% | 22% |
| - hereof PANDORA owned | - | - | - | - |
| Branded | 1,308 | 1,133 | 15% | 87% |
| Multibranded | 202 | 296 | -32% | 13% |
| Total direct | 1,510 | 1,429 | 6% | 100% |
| 3rd party distributors | - | - | - | - |
| Total revenue | 1,510 | 1,429 | 6% | 100% |
Revenue per sales channel - EMEA
| DKK million | Q3 2016 | Q3 2015 | Growth | Share of revenue |
|---|---|---|---|---|
| Concept stores | 1,248 | 1,007 | 24% | 56% |
| - hereof PANDORA owned* | 598 | 464 | 29% | 27% |
| Shop-in-shops | 216 | 188 | 15% | 10% |
| - hereof PANDORA owned | 77 | 74 | 4% | 3% |
| Branded | 1,464 | 1,195 | 23% | 66% |
| Multibranded | 475 | 470 | 1% | 21% |
| Total direct | 1,939 | 1,665 | 16% | 87% |
| 3rd party distributors | 281 | 214 | 31% | 13% |
| Total revenue | 2,220 | 1,879 | 18% | 100% |
Revenue per sales channel – Asia Pacific
| DKK million | Q3 2016 | Q3 2015 | Growth | Share of revenue |
|---|---|---|---|---|
| Concept stores | 637 | 371 | 72% | 72% |
| - hereof PANDORA owned* | 488 | 260 | 88% | 55% |
| Shop-in-shops | 79 | 75 | 5% | 9% |
| - hereof PANDORA owned | 61 | 48 | 27% | 7% |
| Branded | 716 | 446 | 61% | 81% |
| Multibranded | 61 | 44 | 39% | 7% |
| Total direct | 777 | 490 | 59% | 88% |
| 3rd party distributors | 105 | 113 | -7% | 12% |
| Total revenue | 882 | 603 | 46% | 100% |
*PANDORA eSTORE revenue is recognised as PANDORA owned concept store revenue
1 November 2016 | COMPANY ANNOUNCEMENT No. 339 | page 25 | 29
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Store network, number of points of sale - Americas
| Number of PoS Q3 2016 | Number of PoS Q2 2016 | Number of PoS Q3 2015 | Delta Q3 2016 and Q2 2016 | Delta Q3 2016 and Q3 2015 | |
|---|---|---|---|---|---|
| Concept stores | 559 | 540 | 466 | 19 | 93 |
| - hereof PANDORA owned | 94 | 88 | 72 | 6 | 22 |
| - hereof 3^{rd} party distributors | - | - | - | - | - |
| Shop-in-shops | 919 | 798 | 670 | 121 | 249 |
| - hereof PANDORA owned | - | - | - | - | - |
| - hereof 3^{rd} party distributors | - | - | - | - | - |
| Multibranded | 1,576 | 1,679 | 1,988 | -103 | -412 |
| - hereof 3^{rd} party distributors | - | - | - | - | - |
| Total points of sale | 3,054 | 3,017 | 3,124 | 37 | -70 |
Store network, number of points of sale - EMEA
| Number of PoS Q3 2016 | Number of PoS Q2 2016 | Number of PoS Q3 2015 | Delta Q3 2016 and Q2 2016 | Delta Q3 2016 and Q3 2015 | |
|---|---|---|---|---|---|
| Concept stores | 1,136 | 1,086 | 963 | 50 | 173 |
| - hereof PANDORA owned | 326 | 309 | 289 | 17 | 37 |
| - hereof 3^{rd} party distributors | 469 | 450 | 390 | 19 | 79 |
| Shop-in-shops | 872 | 829 | 744 | 43 | 128 |
| - hereof PANDORA owned | 80 | 84 | 84 | -4 | -4 |
| - hereof 3^{rd} party distributors | 348 | 340 | 294 | 8 | 54 |
| Multibranded | 3,110 | 3,253 | 4,015 | -143 | -905 |
| - hereof 3^{rd} party distributors | 1,032 | 1,071 | 1,244 | -39 | -212 |
| Total points of sale | 5,118 | 5,168 | 5,722 | -50 | -604 |
Store network, number of points of sale - Asia Pacific
| Number of PoS Q3 2016 | Number of PoS Q2 2016 | Number of PoS Q3 2015 | Delta Q3 2016 and Q2 2016 | Delta Q3 2016 and Q3 2015 | |
|---|---|---|---|---|---|
| Concept stores | 315 | 294 | 237 | 21 | 78 |
| - hereof PANDORA owned | 143 | 128 | 79 | 15 | 64 |
| - hereof 3^{rd} party distributors | 60 | 61 | 67 | -1 | -7 |
| Shop-in-shops | 196 | 200 | 199 | -4 | -3 |
| - hereof PANDORA owned | 32 | 34 | 31 | -2 | 1 |
| - hereof 3^{rd} party distributors | 85 | 87 | 86 | -2 | -1 |
| Multibranded | 238 | 240 | 251 | -2 | -13 |
| - hereof 3^{rd} party distributors | - | - | - | - | - |
| Total points of sale | 749 | 734 | 687 | 15 | 62 |
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Quarterly overview
| DKK million | Q3 2016 | Q2 2016 | Q1 2016 | Q4 2015 | Q3 2015 |
|---|---|---|---|---|---|
| Consolidated income statement | |||||
| Revenue | 4,612 | 4,327 | 4,740 | 5,681 | 3,911 |
| Gross profit | 3,464 | 3,260 | 3,536 | 4,205 | 2,893 |
| Earnings before interest, tax, depreciation and amortisation (EBITDA) | 1,842 | 1,609 | 1,760 | 2,144 | 1,454 |
| Operating profit (EBIT) | 1,719 | 1,488 | 1,645 | 2,002 | 1,339 |
| Net financials | 60 | 57 | 9 | -84 | -35 |
| Profit before tax | 1,779 | 1,545 | 1,654 | 1,918 | 1,304 |
| Net profit for the period | 1,405 | 1,221 | 1,306 | 1,375 | 1,006 |
| Consolidated balance sheet | |||||
| Total assets | 15,242 | 14,242 | 13,502 | 13,311 | 12,919 |
| Invested capital | 9,839 | 8,965 | 7,972 | 8,255 | 7,879 |
| Net working capital | 1,952 | 1,355 | 615 | 925 | 1,124 |
| Net interest-bearing debt (NIBD) | 4,332 | 3,654 | 2,549 | 1,718 | 2,175 |
| Equity | 5,528 | 5,413 | 5,302 | 6,139 | 5,465 |
| Consolidated cash flow statement | |||||
| Cash flows from operating activities, net | 912 | 890 | 1,567 | 1,719 | 594 |
| Cash flows from investing activities, net | -365 | -486 | -246 | -323 | -332 |
| Free cash flow | 577 | 576 | 1,356 | 1,464 | 263 |
| Cash flows from financing activities, net | -651 | -575 | -1,492 | -1,060 | -320 |
| Net increase/decrease in cash | -104 | -171 | -171 | 336 | -58 |
| Growth ratios | |||||
| Revenue growth, % | 18% | 20% | 34% | 43% | 37% |
| Gross profit growth, % | 20% | 27% | 40% | 48% | 45% |
| EBITDA growth, % | 27% | 23% | 35% | 48% | 43% |
| EBIT growth, % | 28% | 20% | 33% | 45% | 39% |
| Net profit growth, % | 40% | 34% | 241% | 37% | 39% |
| Margins | |||||
| Gross margin, % | 75.1% | 75.3% | 74.6% | 74.0% | 74.0% |
| EBITDA margin, % | 39.9% | 37.2% | 37.1% | 37.7% | 37.2% |
| EBIT margin, % | 37.3% | 34.4% | 34.7% | 35.2% | 34.2% |
| Other ratios | |||||
| Effective tax rate, % | 21.0% | 21.0% | 21.0% | 28.3% | 22.9% |
| Equity ratio, % | 36.3% | 38.0% | 39.3% | 46.1% | 42.3% |
| NIBD to EBITDA, x³ | 0.6 | 0.5 | 0.4 | 0.3 | 0.4 |
| Return on invested capital (ROIC), %¹ | 69.7% | 72.2% | 78.0% | 70.4% | 65.9% |
| Capital expenditure (CAPEX), DKK million² | 324 | 352 | 274 | 319 | 384 |
| Cash conversion, %³ | 33.6% | 38.7% | 82.4% | 73.1% | 19.6% |
| Other key figures | |||||
| Average number of employees | 18,106 | 17,276 | 16,740 | 15,898 | 14,662 |
1) Ratios are based on 12 months rolling EBITDA and EBIT, respectively
2) Capital expenditure includes additions to both tangible and intangible assets
3) The definition was changed in Q4 2015 – please refer to the Annual Report 2015
1 November 2016 | COMPANY ANNOUNCEMENT No. 339 | page 27
PANDORA
MANAGEMENT STATEMENT
The Board of Directors and the Executive Board have reviewed and approved the interim report of PANDORA A/S for the period 1 January – 30 September 2016.
The interim report, which has not been audited or reviewed by the Company’s auditor, has been prepared in accordance with IAS 34 ‘Interim Financial Reporting’, as adopted by the EU, and Danish disclosure requirements for listed companies.
In our opinion, the interim report gives a true and fair view of the PANDORA Group’s assets, liabilities and financial position at 30 September 2016, and of the results of the PANDORA Group’s operations and cash flow for the period 1 January – 30 September 2016.
Further, in our opinion the Management’s review p. 1-27 gives a true and fair view of the development in the Group’s operations and financial matters, the result of the PANDORA Group for the period and the financial position as a whole, and describes the significant risks and uncertainties pertaining to the Group.
Copenhagen, 1 November 2016
EXECUTIVE BOARD
Anders Colding Friis
Chief Executive Officer
Peter Vekslund
Chief Financial Officer
BOARD OF DIRECTORS
Peder Tuborgh
Chairman
Allan Leighton
Deputy Chairman
Christian Frigast
Deputy Chairman
Andrea Alvey
Per Bank
Anders Boyer-Søgaard
Bjørn Gulden
Michael Hauge Sørensen
Birgitta Stymne Göransson
Ronica Wang
1 November 2016 | COMPANY ANNOUNCEMENT No. 339 | page 28 | 29
PANDORA
Disclaimer
Certain statements in this company announcement constitute forward-looking statements. Forward-looking statements are statements (other than statements of historical fact) relating to future events and our anticipated or planned financial and operational performance. The words "targets," "believes," "expects," "aims," "intends," "plans," "seeks," "will," "may," "might," "anticipates," "would," "could," "should," "continues," "estimate" or similar expressions or the negatives thereof, identify certain of these forward-looking statements. Other forward-looking statements can be identified in the context in which the statements are made. Forward-looking statements include, among other things, statements addressing matters such as our future results of operations; our financial condition; our working capital, cash flows and capital expenditures; and our business strategy, plans and objectives for future operations and events, including those relating to our on-going operational and strategic reviews, expansion into new markets, future product launches, points of sale and production facilities; and
Although we believe that the expectations reflected in these forward-looking statements are reasonable, such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties and other important factors include, among others: global and local economic conditions; changes in market trends and end-consumer preferences; fluctuations in the prices of raw materials, currency exchange rates, and interest rates; our plans or objectives for future operations or products, including our ability to introduce new jewellery and non-jewellery products; our ability to expand in existing and new markets and risks associated with doing business globally and, in particular, in emerging markets; competition from local, national and international companies in the United States, Australia, Germany, the United Kingdom and other markets in which we operate; the protection and strengthening of our intellectual property, including patents and trademarks; the future adequacy of our current warehousing, logistics and information technology operations; changes in Danish, E.U., Thai or other laws and regulation or any interpretation thereof, applicable to our business; increases to our effective tax rate or other harm to our business as a result of governmental review of our transfer pricing policies, conflicting taxation claims or changes in tax laws; and other factors referenced in this company announcement.
Should one or more of these risks or uncertainties materialize, or should any underlying assumptions prove to be incorrect, our actual financial condition, cash flows or results of operations could differ materially from that described herein as anticipated, believed, estimated or expected.
We do not intend, and do not assume any obligation, to update any forward-looking statements contained herein, except as may be required by law or the rules of NASDAQ Copenhagen. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this company announcement.
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