Q4 2O21
INTERIM FINANCIAL REPORT
9 February 2022 | Company Announcement No. 690
2
HIGHLIGHTS
02 Executive Summary
03 Financial Highlights
4
BUSINESS UPDATE
04 Business Update
07 Revenue Review
13 Profitability
16 Cash Flow & Balance Sheet
17 Financial Guidance
22 Sustainability
23 Other Events
25 Contact
26
FINANCIAL STATEMENTS
26 Financial Statements
30 Accounting Notes
40 Disclaimer
Our equity story
Pandora is a cross-generational brand with unmatched recognition that gives a voice to
people’s loves. Our jewellery is crafted and hand-finished to the highest ethical and
environmental standards at our state-of-the-art crafting facilities in Thailand and made to
inspire women to collect, create and combine genuine jewellery at affordable prices.
Pandora’s strategy focuses on delivering sustainable and profitable revenue growth
building on the vast untapped opportunities within our existing core business. A strong
cash generation and attractive cash return will remain.
CONTENTS
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
9 FEBRUARY 2022 | INTERIM FINANCIAL REPORT Q4 2021 | COMPANY ANNOUNCEMENT No. 690 | page
2 | 41
EXECUTIVE SUMMARY
Record revenue and sell-out in the fourth quarter
- Sustainable and profitable growth to continue
Highlights
• Strong and broad-based growth in Q4 with 12% sell-out growth vs 2019
• Full year organic growth of 23% vs 2020 and EBIT margin of 25.0% both exceeded the guidance
• US remained strong with sell-out growth of 39% vs Q4 2019
• Performance in China was unsatisfactory and negatively impacted by COVID-19. Sell-out growth ended at -
39% vs Q4 2019. Pandoras continue to see significant opportunities to grow in China
• The Moments platform continue to deliver strong results, including a successful Christmas collection
• Online sustained the strong performance with 91% organic growth vs Q4 2019
• Pandora ME relaunch was well received, delivering 57% growth compared to the initial launch in 2019
• Solid Q4 EBIT margin of 29.7% driven by operating leverage. The Q4 results include a write-down of IT
assets and a larger bonus pool, in total non-recurring cost of around DKK 100 million
• Pandora generated a strong cash flow in 2021, and leverage ended at only 0.4x NIBD to EBITDA
• Pandora continues distributions to shareholders with proposed dividend of DKK 16 per share and a new
share buyback programme of DKK 3.3 billion
Pandora expects the sustainable and profitable growth to continue. Pandora guide for an “organic growth of 3-6%”
in 2022. The EBIT margin is expected to be “25.0-25.5%”. Pandora also reconfirms the 2021-2023 organic growth
CAGR of 5-7% communicated at the Capital Markets Day, thereby raising the absolute revenue target for 2023 by
DKK 1.9-2.2 billion to DKK 27.0-28.1 billion.
Current trading remain solid and confirm that Pandora is back on the growth track. Organic growth was 23% in January
2022. It should be noted that January 2021 was impacted by COVID-19 lock-downs, making it an easier comparison.
Alexander Lacik, President and CEO of Pandora, says:
“We end 2021 on a high note with record-breaking revenue and sell-out in Q4, and I am pleased that we are able to
increase our 2023 revenue target by around DKK 2 billion. I am particularly pleased that our strong growth was broad-
based across key markets. Our investments in digital are clearly paying off, Moments is showing solid growth, and we
are encouraged by the new product platforms Pandora ME and Brilliance. With this – and with network expansion
accelerating in 2022 – I am confident that we have all the ingredients to deliver sustainable and profitable revenue
growth in the years to come.”
Financial overview (excl. Programme NOW restructuring costs in 2020)
Q4 2021
Q4 2020
FY 2021
FY 2020
Organic growth, %
10%
4%
23%
-11%
Sell-out growth incl. temporarily closed stores, %
11%
1%
20%
-12%
Organic growth, % vs 2019
15%
n/a
9%
n/a
Sell-out growth incl. temporarily closed stores, % vs 2019
12%
n/a
7%
n/a
Revenue, DKK million
9,011
7,891
23,394
19,009
Gross margin, %
75.7%
75.7%
76.1%
76.5%
EBIT margin, %
29.7%
31.8%
25.0%
20.4%
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
9 FEBRUARY 2022 | INTERIM FINANCIAL REPORT Q4 2021 | COMPANY ANNOUNCEMENT No. 690| page
3 | 41
FINANCIAL HIGHLIGHTS
DKK million
Q4 2021
Q4 2020
FY 2021
FY 2020
FY 2022 guidance
Key financial highlights
Organic growth, %
10%
4%
23%
-11%
”3-6%”
Organic growth, % vs 2019
1
15%
n/a
9%
n/a
Sell-out growth incl. temporarily closed stores, %
11%
4
1%
20%
-12%
Sell-out growth incl. temporarily closed stores, %, vs 2019
1
12%
n/a
7%
n/a
Gross margin
2
, %
75.7%
75.7%
76.1%
76.5%
EBIT margin
2
, %
29.7%
31.8%
25.0%
20.4%
”25.0-25.5%”
Revenue
9,011
7,891
23,394
19,009
Earnings before interest, tax, depreciation and amortisation
(EBITDA)
3,267
2,896
7,838
4,999
Operating profit (EBIT)
2,678
2,212
5,839
2,684
Net financials
-211
96
-461
-190
Net profit for the period
1,904
1,794
4,160
1,938
Financial ratios
Revenue growth DKK, %
14%
-1%
23%
-13%
Revenue growth, local currency, %
11%
4%
24%
-11%
Gross margin, %
75.7%
75.4%
76.1%
75.6%
EBITDA margin, %
36.3%
36.7%
33.5%
26.3%
EBIT margin, %
29.7%
28.0%
25.0%
14.1%
Effective tax rate, %
22.8%
22.3%
22.6%
22.3%
Equity ratio, %
38%
37%
38%
37%
NIBD to EBITDA excl. restructuring costs, x
0.4
0.5
0.4
0.5
Return on invested capital (ROIC), %
59%
25%
59%
25%
Cash conversion incl. lease payments, %
147%
171%
88%
183%
Net working capital, % of last 12 months revenue
-5.0%
-7.6%
-5.0%
-7.6%
Stock ratios
Total pay-out ratio (incl. share buyback)
3
, %
143%
-
115%
65%
Dividend per share, proposed, DKK
-
-
16
-
Dividend per share, paid, DKK
5
-
15
-
Earnings per share, basic, DKK
19.4
18.5
42.1
20.0
Earnings per share, diluted, DKK
19.1
18.4
41.7
19.9
Consolidated balance sheet
Total assets
18,542
19,984
18,542
19,984
Invested capital
9,884
10,540
9,884
10,540
Net working capital
-1,181
-1,447
-1,181
-1,447
Net interest-bearing debt (NIBD)
2,882
3,151
2,882
3,151
Equity
7,001
7,389
7,001
7,389
Consolidated statement of cash flow
Cash flow from operating activities
4,073
4,062
6,228
5,975
Capital expenditure – total
215
124
641
491
Capital expenditure - property, plant and equipment
146
78
341
369
Free cash flow incl. lease payments
3,941
3,780
5,137
4,908
1
Revenue performance compared with 2020 was heavily distorted by COVID-19, as both years are impacted by store closures. Pandora has therefore added two
supplementary growth KPIs vs 2019 to provide a cleaner view on the performance: Organic growth vs 2019 and Sell-out growth vs 2019. These two KPI's will be
removed from 2022 onwards.
2
2020 figures exclude Programme NOW restructuring costs.
3
Excluding sale of Treasury shares amounting to DKK 1.8 billion in Q2 2020.
4
Sell-out growth vs Q4 2020 changed from ~10% in the preliminary and unaudited numbers released in the pre-release dated January 10, 2022 to 11%.
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
9 FEBRUARY 2022 | INTERIM FINANCIAL REPORT Q4 2021 | COMPANY ANNOUNCEMENT No. 690| page
4 | 41
BUSINESS UPDATE
Broad based revenue growth in Q4 2021 secures recording-breaking sell-out - execution of Phoenix continues
Pandora delivered a solid revenue performance in Q4 2021, with organic growth of 15% vs 2019. The strong growth
was driven by a solid online performance, which ended Q4 at 91% above Q4 2019. This is a testimony to the digital
investments made during the last couple of years, and Pandora has increased both traffic and conversion rate online.
The strong growth was supported by Pandora’s biggest platform, Moments, which delivered sell-out growth of 12%
vs Q4 2019. Growing the Moments platform is a key pillar in Pandora’s Phoenix strategy. The performance was
boosted by a very strong Christmas collection where meaningful symbols such as Family, Friends and Love resonate
with the consumer. The performance was furthermore supported by a successful Product with Purchase campaign
(PWP). As another element in innovating the Moments platform, Pandora is currently testing engraving capabilities
and have done an online pilot in Italy with promising results.
Style and Upstream Innovation also delivered a strong 12% growth in the quarter vs Q4 2019. This is not least driven
by the relaunch of Pandora ME, which grew 57% vs. the initial launch in Q4 2019. The platform was well received
across key markets and ended at 4% share of revenue in the quarter, double the share in Q4 2020. The relaunch of
Pandora ME created new hype around the brand and attracted less active and lapsed consumers. Around 65% of
transactions were lapsed consumers who have not bought a Pandora product in 200 days. This help build brand
momentum as lapsed consumers are reengaged with the brand. Around 35% of transactions were from new
consumers. The most successful products have been the Carriers, Mini Dangles and Medallions representing 81% of
total sales in the quarter.
Pandora Brilliance delivered DKK 20 million incremental revenue in Q4 2021, which was the first key consumption
period after the test launch. In December, a pick-up in sales was recognised, as marketing activities around Brilliance
was shifted towards being a gifting proposition. Online share of business was 40% and in line with the overall UK
market, demonstrating consumer willingness to purchase higher price points online. Pandora stores with full
assortment continue to perform well, delivering around 3% share of business, while Rings continue to be the best
performing item representing 50% share of sales. Average sales price during 2021 has been around GBP 500 which is
10 times the UK average. Learnings and continued tests during Q4 2021 underpin the decision to embark on a
sequential global rollout starting in 2022.
REVENUE BY GLOBAL BUSINESS UNITS
DKK million
Q4 2021
Q4 2020
Sell-out growth
vs 2020
Sell-out growth
vs 2019
Local currency
Growth vs 2020
Share of
Revenue
Moments and Collabs
6,311
5,602
10%
12%
9%
70%
- Moments
5,510
4,654
14%
12%
15%
61%
- Collabs
801
948
-14%
15%
-18%
9%
Style and Upstream Innovation
2,700
2,288
13%
12%
14%
30%
- Timeless
1,656
1,492
7%
0%
7%
18%
- Signature
695
674
1%
27%
0%
8%
- Me
328
122
147%
57%
163%
4%
- Brilliance
20
-
n/a
n/a
n/a
-
Total revenue
9,011
7,891
11%
12%
11%
100%
1
The ‘Garden’ collection has been re-allocated from Style and Upstream Innovation to Moments and Collabs in Q2 2021. Comparative figures for 2020 were restated
accordingly.
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
9 FEBRUARY 2022 | INTERIM FINANCIAL REPORT Q4 2021 | COMPANY ANNOUNCEMENT No. 690| page
5 | 41
DKK million
YTD 2021
YTD 2020
1
Sell-out growth
vs 2020
Sell-out growth
vs 2019
Local currency
Growth vs 2020
Share of
revenue
Moments and Collabs
16,610
13,562
20%
8%
23%
71%
- Moments
14,699
11,660
22%
6%
27%
63%
- Collabs
1,911
1,902
3%
28%
0%
8%
Style and Upstream Innovation
6,784
5,447
19%
2%
25%
29%
- Timeless
4,091
3,318
19%
-12%
24%
17%
- Signature
1,990
1,739
12%
21%
14%
9%
- Me
656
390
42%
140%
67%
3%
- Brilliance
48
-
n/a
n/a
n/a
-
Total revenue
23,394
19,009
20%
7%
24%
100%
1
The ‘Garden’ collection has been re-allocated from Style and Upstream Innovation to Moments and Collabs in Q2 2021. Comparative figures for 2020 were restated
accordingly.
The strong performance in Q4 2021 was broad based, as all key markets (except China) delivered positive growth vs
2019. The solid performance continue to be supported by Pandora’s biggest market, US, representing 28% of
revenue in Q4 2021 vs 25% in Q4 2020. The performance remained strong in US and sell-out growth vs Q4 2019
ended at 39% - below the growth level seen during the first 9 months of 2021 as expected. US represents a strategic
priority for Pandora, and the strong performance is encouraging. The long-term aim is to double the US business vs
2019.
The performance in China continue to be unsatisfactory and negatively impacted by COVID-19. Pandora’s Chinese
stores were formally open in Q4, but traffic into stores was down -40% vs 2020 as most stores are located in cities
impacted by the pandemic and China’s “zero-COVID policy”. Performance in China in Q4 therefore continued to be
weak with sell-out growth at -39% vs Q4 2019, slightly up vs -45% in Q3 2021. Pandora saw a few positive signs in
Q4, such as being ranked the largest brand in fashion jewellery on Tmall for the first time since entering China. This
provide comfort for the journey ahead. The first significant steps in the repositioning of the brand was planned for
2021. Following the negative traffic development seen in Q3 and Q4 due to COVID-19, Pandora has decided to
postpone the majority of the media investment into 2022. The purpose of the investment is among others to drive
traffic to the stores, which makes little sense when street traffic is impacted by COVID-19. Pandoras long term
ambition is to triple the China business vs 2019.
Key European markets continue to perform strongly. Despite an escalation of COVID-19 during Q4, performance
remained strong. In Q4 2021, UK, Italy, France and Germany delivered a combined sell-out growth of 10% vs Q4 2019
following an equally strong Q3 at 11% growth, cementing that Pandora is back on a growth track.
Online continued the phenomenal performance in Q4 2021 with organic growth of 91% vs Q4 2019 (-7% vs Q4 2020
when more stores were temporarily closed) driven by among others strong performance in Click and Collect. The
online share of revenue in Q4 2021 was 27% (32% in Q4 2020 and 16% in Q4 2019). Pandoras online business
furthermore accounted for 95% of revenue growth vs Q4 2019, a testimony to the step-changes made in Pandora’s
online presence during the past couple of years.
Pandora’s production sites in Thailand were running throughout Q4 2021 and saw limited disruptions to its supply
chain. Product availability was high across all key markets, following Pandoras decision to keep investing in
precautionary measures to manage the pandemic and avoid disruptions and minimise risk of stock outs.
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
9 FEBRUARY 2022 | INTERIM FINANCIAL REPORT Q4 2021 | COMPANY ANNOUNCEMENT No. 690| page
6 | 41
Personalising the consumer journey continues
Pandora is built on the concept of personalisation. Personalisation is also one of the growth pillars in the Phoenix
strategy, aiming to drive a more seamless and personalised customer experience. Pandora opened three new concept
stores in Q4 2021 testing a new store format. The stores opened in London UK, Milan Italy and Guangzhou China, and
show initial promising results. The stores aims to make shopping more intuitive and will improve speed of service,
enabling customers to easily explore, find and try on products. Pandora plan to roll out further 10 stores in Q2 2022
in China, US, Germany and France to test the concept further.
Part of the design in the store concept is to successfully cater for omni-channel capabilities such as Click and Collect
(C&C) which Pandora now offer in the majority of concept stores in its key markets. In Q4 2021, and especially
December, C&C performance was strong and reached 21% and 26% share of online business in US and Australia,
respectively - the highest among the key markets. Additionally, Pandora continue to see encouraging results from
personalised marketing activities online, such as email marketing which grew approx. 80% vs 2019 and reached DKK
255 million in the quarter. This cements the opportunity in the new loyalty programme as Pandora will be able to
target the consumers directly with content of their interest. Today the new loyalty programme is only operational in
China, but in Q2 2022 Pandora will also launch the programme in France with more markets to come later in the year.
Pandora continued to successfully reduce promotions in Q4 vs both Q4 2020 and Q4 2019, and is now approaching
the right level of promotions for the brand. The lower promotions were especially noticeable around Black Friday,
which did not include any extended promotions in Q4 of this year as it did last year. In US, where Black Friday is biggest,
Pandora also took the Black Friday discount offer down from 35% in 2020 and 2019 to 30% in 2021. Despite lower
promotions, Black Friday was larger than last year. In key markets, the number of promotional days in physical stores
was furthermore lowered to 31 days in Q4 2021 compared with 37 days in Q4 2019. Online, there were 38
promotional days across key markets in Q4 2021, in line with Q4 2019.
Pandora’s strong brand position was maintained in Q4 2021. Pandora has kept marketing spend high throughout 2021
as a clear ambition to stay top of mind with consumers. This is paying off as one third of all Google searches for
branded jewellery in Q4 2021 and throughout 2021 was for Pandora. Unaided brand awareness was strong in Q4
2021, and still differs from market to market depending on maturity. The relative gap to competitors was unchanged
in Q4 2021.
Throughout 2021, Pandora has provided additional growth KPI’s vs 2019 to make it easier to interpret performance
during the pandemic. Going into 2022, and as the impact of the pandemic is expected to ease, Pandora will simplify
the performance KPI’s and shift focus back towards year-over-year organic growth. This is aligned to the Phoenix
target and guidance. Pandora will continue to supplement with sell-out growth performance. Acknowledging that
comparison with 2021 is impacted by the pandemic as well as the unusual US growth in 2021 Pandora will – for
selected dimensions - report the organic growth vs 2019 as an additional datapoint to understand underlying
performance. For this reason, Pandora will no longer provide sell-out growth vs 2019. The new set of KPI’s will be
introduced in Q1 2022.
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
9 FEBRUARY 2022
| INTERIM FINANCIAL REPORT Q4 2021 | COMPANY ANNOUNCEMENT No. 690| page
7 | 41
REVENUE REVIEW
Broad based growth results in historical high revenue
The revenue growth development can be illustrated as follows (supplementary comments follows below):
Q4 2021 growth composition vs Q4 2019
Q4 2021 growth composition vs Q4 2020
COVID-19 continues to impact performance KPI’s vs 2020, as Q4 2020 was impacted by temporary store closures.
On average around 3% of the stores were temporarily closed in Q4 2021 vs approximately 10% in Q4 2020 and down
from an average of 5% in Q3 2021, 15% in Q2 2021 and 30% in Q1 2021. In addition, while stores in China were
formally open in Q4, traffic into the majority of the network was heavily impacted by COVID-19. Pandora still
recommends to use performance vs 2019 as the best indicator for performance (although performance vs 2019 is,
of course, also impacted by COVID-19), and cautions that performance vs 2020 need to be interpreted with care.
Q4 2021 growth composition vs Q4 2019
Organic growth vs 2019 was up 15% in Q4 2021, mainly driven by strong sell-out growth of 12% across most markets.
Since Q4 2019 the network composition has changed slightly. Revenue was negatively impacted by approximately 1%
from the closure of net 151 concept stores and 503 other points of sale compared with Q4 2019. This was partially
offset by takeover of franchise partners, mainly in UK, where Pandora is not paying any goodwill, affecting revenue
*Sell-out growth incl. temporarily closed stores, %
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
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Financial
statements
Accounting
notes
9 FEBRUARY 2022
| INTERIM FINANCIAL REPORT Q4 2021 | COMPANY ANNOUNCEMENT No. 690| page
8 | 41
positively by approximately 1%. Additionally, organic growth was positively impacted by a favourable channel mix
among others related to the significant growth in online revenue.
Q4 2021 growth composition vs Q4 2020
Pandora generated sell-out growth of 11% vs Q4 2020, while organic growth ended 1pp below at 10%. The gap
between sell-out growth and organic growth is mainly driven by a phasing of sell-in between quarters. Franchise
partners build-up inventory already in Q3 2021 ahead of the Q4 peak season. In 2020, due to high uncertainty around
COVID-19, sell-in for peak season was pushed into Q4 and consequently, Q4 2021 sell-out growth is higher than sell-
in growth, which impacts organic growth negatively by 3%.
Revenue is furthermore positively impacted by approximately 1% from takeovers, same as mentioned above, and
approximately 1% from strong performance in Pandora-owned other points of sales.
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
9 FEBRUARY 2022
| INTERIM FINANCIAL REPORT Q4 2021 | COMPANY ANNOUNCEMENT No. 690| page
9 | 41
REVIEW OF REVENUE BY CHANNEL
Online deliver staggering results
Pandora saw strong performance across all channels in Q4. Online continued the strong growth and almost doubled
vs Q4 2019. Organic growth was down -7% vs Q4 2020, a reflection of temporary store closures in Q4 2020 driving
more demand online. Pandora-owned concept stores saw a sequential improvement in Q4 2021 and delivered
organic growth of -1% vs Q4 2019 up from -7% in Q3, -16% in Q2 and -41% in Q1 2021. Pandora-owned Other
points of sales delivered strong positive organic growth vs both 2020 and 2019, following an expansion and
strengthening of the network.
Organic growth in Pandora’s wholesale business was up 8% vs Q4 2020. As expected, sell-out growth was higher than
organic growth vs Q4 2020 as partners build inventories ahead of the Q4 peak season already in Q3 2021. Exiting
2021, the inventory levels at partners are healthy. Performance at third-party distributors ended Q4 2021 at 0%
organic growth vs 2019, a significant improvement vs -23% in Q3 2021, due to the reopening of markets in Asia,
where Pandora has a high share of third party distribution.
QUARTERLY REVENUE DEVELOPMENT BY CHANNEL
DKK million
Q4 2021
Q4 2020
Sell-out growth
vs 2020
Sell-out growth
vs 2019
Organic
growth vs 2020
Organic
growth vs 2019
Share of
Revenue
Pandora owned
1
retail
6,471
5,525
9%
18%
11%
24%
72%
- of which concept stores
3,668
2,725
26%
-1%
41%
- of which online stores
2,465
2,533
-7%
91%
27%
- of which other points of sale
338
266
26%
31%
4%
Wholesale
2,291
2,143
15%
1%
8%
-2%
25%
- of which concept stores
1,278
1,182
11%
-3%
14%
- of which other points of sale
1,013
961
3%
-1%
11%
Third-party distribution
249
223
15%
1%
12%
0%
3%
Total revenue
9,011
7,891
11%
12%
10%
15%
100%
1
Pandora does not own any of the premises (Land and buildings) where stores are operated. Pandora exclusively operates stores from leased premises.
YEAR-TO-DATE REVENUE DEVELOPMENT BY CHANNEL
DKK million
YTD 2021
YTD 2020
Sell-out growth
vs 2020
Sell-out growth
vs 2019
Organic
growth vs 2020
Organic
growth vs 2019
Share of
Revenue
Pandora owned
1
retail
15,922
13,426
15%
13%
16%
13%
68%
- of which concept stores
9,133
7,321
20%
-15%
39%
- of which online stores
5,977
5,483
8%
119%
26%
- of which other points of sale
812
622
30%
3%
3%
Wholesale
6,705
4,949
32%
-3%
41%
6%
29%
- of which concept stores
3,737
2,714
47%
7%
16%
- of which other points of sale
2,968
2,235
35%
6%
13%
Third-party distribution
767
634
32%
-3%
24%
-16%
3%
Total revenue
23,394
19,009
20%
7%
23%
9%
100%
1
Pandora does not own any of the premises (Land and buildings) where stores are operated. Pandora exclusively operates stores from leased premises.
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
9 FEBRUARY 2022
| INTERIM FINANCIAL REPORT Q4 2021 | COMPANY ANNOUNCEMENT No. 690| page
10 | 41
REVIEW OF NETWORK DEVELOPMENT
Pruning of the network in 2021 makes Pandora ready for expansion in 2022
Pandora opened net 3 concept stores in Q4 2021, but has closed a total of -71 net concept stores in the year. As
communicated at the Capital Markets Day on 14 September 2021, Pandora sees significant opportunities to expand
the store network and expects to have more concept stores in 2023 than today. The first steps in increasing the store
network will happen in 2022, as Pandora expects to open net 50-100 concept stores. Furthermore, Pandora has
signed a letter of intent to assume ownership of 37 franchise stores in the US and Canada from Ben Bridge Jeweler.
Ben Bridge is Pandora's largest franchise partner in North America and the acquisition will support Pandoras growth
strategy in the US.
Finally, Pandora has closed net -248 Other points of sale, mainly in Spain and US. The closures are predominantly
related to smaller sales points, which did not drive substantial incremental revenue. In fact, Pandora sees opportunity
in this channel as well and during 2021 Pandora has engaged with a number of new partners, such as CHRIST in
Germany. Despite substantial closures in terms of the number of points of sale, the quality of the network is up and
organic growth for the year was 35% vs 2020.
Number of points of sale
Q4 2021
Q3 2021
Q4 2020
Growth
Q4 2021
/Q3 2021
Growth
Q4 2021
/Q4 2020
Concept stores
2,619
2,616
2,690
3
-71
- of which Pandora owned
1
1,423
1,403
1,382
20
41
- of which franchise owned
700
710
797
-10
-97
- of which third-party distribution
496
503
511
-7
-15
Other points of sale
4,154
4,105
4,402
49
-248
Total points of sale
6,773
6,721
7,092
52
-319
1
Pandora does not own any of the premises (Land and buildings) where stores are operated. Pandora exclusively operates stores from leased premises.
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REVIEW OF REVENUE BY KEY MARKET
Positive growth in all key market except China
The US continued the very strong performance in the quarter. This is the sixth consecutive quarter, where Pandora
delivers sell-out growth above or around +20%, with Q4 2021 ending at 39% vs 2019. Pandora ended 2021 with an
extraordinary 51% sell-out growth vs 2019. The performance in US vs 2019 is temporarily supported by the stimulus
packages and a potential reallocation of consumer spend away from travel and entertainment into discretionary
goods. It is Pandoras assessment that the underlying performance in the US is strong, and a result of the commercial
and operational initiatives put in place during the last couple of years. Pandora sees ample opportunity to continue
to grow in US in the long term, but obviously 2022 is subject to uncertainty given the unusually strong performance
in 2021. Pandora has a solid pipeline of initiatives lined up for 2022 and expect to continue to meaningfully
outperform the market.
Performance in China in Q4 2021 continue to be unsatisfactory and impacted by COVID-19. Sell-out growth vs 2019
ended at -39% in Q4 2021. Although Pandora’s physical stores in China were open during Q4, most of the stores saw
a significant decline in traffic due to COVID-19 restrictions. The negative impact was not recouped online and China
accounted for just 2% of Group revenue in Q4 2021. Pandora saw a number of positive signs cementing the
opportunity ahead, especially from a very successful Tmall performance during 2021. For further details on China,
please refer to the section Business update.
All Pandoras key markets in Europe delivered positive growth vs both Q4 2020 and Q4 2019. Combined, the key
European markets delivered 10% sell-out growth vs Q4 2019 and continued the strong performance from Q3 2021
following the reopening of stores. For the second consecutive quarter, Germany saw 30% sell-out growth vs 2019,
while Italy delivered 6% sell-out growth vs Q4 2019. Both markets saw a flat performance in the physical network,
but delivered growth rates of more than 100% online. In Italy, the strong online performance was supported by
engraving capabilities, which contributed with 7% of online sales in December based on only 4 DV’s. France returned
to positive sell-out growth of 2% in Q4 2021 vs Q4 2019, an improvement from -6% in Q3 2021. UK ended Q4 2021
with 9% sell-out growth vs both Q4 2020 and Q4 2019, but the growth composition was different as Q4 2020 was
impacted by temporary store closures due to COVID-19. Online growth in UK was around 80% vs Q4 2019.
The Australian market improved gradually during the quarter, as October was impacted by approx. 30% temporary
store closures. Despite store closures, Australia ended Q4 with positive sell-out growth of 9% vs Q4 2019 and
returned to positive growth in November following reopening of the network. Australia had a very successful C&C
performance in December, contributing with 26% of online sales; the highest share in all of Pandoras key markets.
Finally, Pandora saw a strong recovery outside the seven key markets in Q4 2021. These markets ended the year with
organic growth in Q4 2021 vs Q4 2019 of +8% compared to -14% in the first nine months of 2021, mainly coming
from Asian markets outside China and Latin America.
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QUARTERLY REVENUE DEVELOPMENT BY KEY MARKET
DKK million
Q4 2021
Q4 2020
Sell-out growth
vs 2020
Sell-out growth
vs 2019
Organic growth
vs 2020
Organic growth
vs 2019
Share of
revenue
US
2,523
1,983
15%
39%
18%
42%
28%
China
222
322
-24%
-39%
-36%
-51%
2%
UK
1,521
1,345
9%
9%
6%
17%
17%
Italy
961
825
23%
6%
17%
13%
11%
Australia
491
537
-10%
9%
-12%
9%
5%
France
498
494
1%
2%
1%
1%
6%
Germany
478
418
23%
30%
14%
23%
5%
Total top-7 markets
6,694
5,923
10%
17%
8%
18%
74%
Rest of Pandora
2,316
1,967
15%
-1%
16%
8%
26%
Total revenue
9,011
7,891
11%
12%
10%
15%
100%
YEAR-TO-DATE REVENUE DEVELOPMENT BY KEY MARKET
DKK million
YTD 2021
YTD 2020
Sell-out growth
vs 2020
Sell-out growth
vs 2019
Organic growth
vs 2020
Organic growth
vs 2019
Share of
revenue
US
7,026
4,506
48%
51%
58%
56%
30%
China
1,126
1,261
-7%
-37%
-13%
-43%
5%
UK
3,314
2,960
5%
4%
7%
14%
14%
Italy
2,443
2,021
21%
0%
21%
8%
10%
Australia
1,131
1,120
-1%
-1%
-4%
-1%
5%
France
1,122
1,154
-4%
-7%
-3%
-4%
5%
Germany
1,191
1,014
8%
13%
17%
24%
5%
Total top-7 markets
17,353
14,038
21%
15%
23%
17%
74%
Rest of Pandora
6,041
4,971
18%
-13%
23%
-7%
26%
Total revenue
23,394
19,009
20%
7%
23%
9%
100%
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PROFITABILITY
Strong profitability continues
As illustrated above, the underlying EBIT margin in Q4 2021 was slightly lower than Q4 last year, among others due to
increased brand investments and some cost phasing from Q3 into Q4. The increased brand investments include
investments into the Pandora ME re-launch. In Q4 2021, Pandora has deliberately increased its marketing spend
across most key markets to stay top of mind with the consumers in a competitive fourth quarter. Marketing expenses
constitute 16.4% of revenue in Q4 and are thereby above the range in which Pandora generally expect to operate
(13-15%). It is part of Pandoras strategy to continue to invest in driving the topline, which include investments in the
brand.
In Q4 last year, the EBIT margin was impacted by two non-recurring factors. A DKK 82 million write down of intangible
assets, which was partly offset by government support and rent concessions of DKK 60 million. In Q4 2021 the EBIT
margin is also negatively impacted by two non-recurring factors. As in Q3 2021, Pandora had increased production
cost in Thailand driven by precautionary measures taken due to COVID-19. In Q4 2021, these cost amount to approx.
DKK 25 million. Pandora continued these significant measures to protect employees and production in Thailand from
COVID-19. This included setting up temporary on-site lodging to mitigate the risk of infections. Pandora anticipates
to continue taking certain pre-cautionary measures during the first part of 2022. Additionally, the Q4 results include
around DKK 100 million incremental cost related to among others a write-down of certain IT assets and a larger bonus
pool to employees reflecting the strong 2021 performance.
The EBIT margin was negatively impacted by rising commodity prices (mainly silver) leading to a headwind of around
-2.1pp. This is fully offset by favourable foreign exchange rate developments (mainly USD and Thai baht) of around
+2.1pp.
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In absolute terms and excluding restructuring costs in 2020, EBIT increased by 21% vs Q4 2020. Year-to-date 2021,
Pandora has more than doubled absolute EBIT ending the year at DKK 5,839 million, up from DKK 2,684 million in
2020.
GROSS MARGIN
In Q4 2021, the gross margin remained strong and is unchanged at 75.7% vs Q4 2020.
In Q4, Pandora continued its significant measures to protect employees and production in Thailand from COVID-19
impacting gross margin negatively by 0.3pp, please also refer to the EBIT margin section above. As also mentioned, in
Q4 2020, a non-recurring write off of DKK 80 million was recognised, suppressing the margin in Q4 2020 by -1pp.
Increasing commodity prices had a negative impact on the gross margin of -2.1pp, partly offset by a favourable FX
development, mainly from the Thai baht and strong USD, of +1.4pp vs Q4 2020. Finally, the gross margin was positively
impacted by lower promotional activity (more full-price sell-through). This was partly offset by higher freight costs
of -0.3pp and a temporary additional drag of around -0.2pp due to take-over of inventory at wholesale value from
acquired franchise partners.
COST OF SALES AND GROSS PROFIT
DKK million
Q4 2021
Q4 2020
Growth
Share of
revenue
Q4 2021
Share of
revenue
Q4 2020
YTD 2021
YTD 2020
Growth
Share of
revenue
YTD 2021
Share of
revenue
YTD2020
Revenue
9,011
7,891
14%
100.0%
100.0%
23,394
19,009
23%
100.0%
100.0%
Cost of sales
-2,188
-1,920
14%
-24.3%
-24.3%
-5,590
-4,475
25%
-23.9%
-23.5%
Gross profit
excl. restructuring costs
6,822
5,971
14%
75.7%
75.7%
17,803
14,534
22%
76.1%
76.5%
Restructuring costs
0
-21
-100%
0%
-0.3%
0
-159
-100%
0.0%
-0.8%
Gross profit
incl. restructuring costs
6,822
5,950
15%
75.7%
75.4%
17,803
14,375
24%
76.1%
75.6%
OPERATING EXPENSES
Total operating expenses was DKK 4,144 million in Q4 2021, up 18% in constant foreign exchange rates compared to
Q4 2020. The OPEX ratio increased to 46.0% in Q4 2021 from 43.9% in Q4 2020 mainly driven by higher marketing
cost but also around DKK 100 million in non-recurring costs in Q4 2021.
Marketing expenses increases around 40% vs Q4 2020. During Q4, Pandora re-launched Pandora ME, following the
“launch and leverage” principle. Pandora also experienced more competition in Q4 2021 for the best marketing slots
and as a result prices for marketing also went up. Marketing expenses in Q4 2021 constituted 16.4% of revenue, while
year-to-date was 15.3% and slightly above Pandora’s expectations of a 13-15% marketing spend ratio.
Sales and distribution expenses was up 4% in constant foreign exchange rates vs Q4 2020. Adjusting for government
support and rent concessions received in Q4 2020 of DKK 60 million the year over year development is roughly flat.
Pandora has received DKK 15 million in government support and rent concessions in Q4 2021. Pandora see a higher
cost level in the stores post-COVID-19 due to elevated salary increases as well as the need to operate with a slightly
higher staffing level to mitigate the risk of having to temporarily close stores due to COVID-19 quarantines.
Administrative expenses increased by 37% in constant foreign exchange rates compared with Q4 2021, mainly due
to the write down of IT assets and employees bonuses mentioned above.
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OPERATING EXPENSES
DKK million
Q4 2021
Q4 2020
Growth
Share of
revenue
Q4 2021
Share of
revenue
Q4 2020
YTD 2021
YTD 2020
Growth
Share of
revenue
YTD 2021
Share of
revenue
YTD 2020
Sales and distribution
expenses
-2,061
-1,966
5%
22.9%
24.9%
-6,352
-6,234
2%
27.2%
32.8%
Marketing expenses
-1,473
-1,052
40%
16.4%
13.3%
-3,587
-2,717
32%
15.3%
14.3%
Administrative expenses
-610
-444
37%
6.8%
5.6%
-2,026
-1,702
19%
8.7%
9.0%
Total operating expenses
excl. restructuring costs
-4,144
-3,462
20%
46.0%
43.9%
-11,965
-10,652
12%
51.1%
56.0%
Restructuring costs
0
-276
-100%
0.0%
3.5%
0
-1,038
-100%
0.0%
5.5%
Total operating expenses
incl. restructuring costs
-4,144
-3,738
11%
46.0%
47.4%
-11,965
-11,691
2%
51.1%
61.5%
FINANCIAL EXPENSES AND TAX
Net financials in Q4 2021 ended at a cost of DKK 211 million, in large driven by realised losses on FX hedging
contracts relating to Sterling, Thai Baht and U.S. Dollar.
The effective tax rate ended at 22.8% for Q4 2021 and 22.6% for the full year, in line with guidance and slightly
above 2020.
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CASH FLOW & BALANCE SHEET
Free cash flow remained strong despite significant inventory build-up during 2021
The net working capital continues to be strong and ended at -5.0% of the last 12 months revenue in Q4 2021
compared with 0.2% in Q3 2021, and -7.6% in Q4 2020. This is despite significant inventory build-up during 2021
amounting to around DKK 1.0 billion vs Q4 2020. The increase in inventory was as expected, and is a result of a
deliberate action to mitigate risk of stock outs and disruptions in the supply chain.
Trade receivables in absolute amounts are up vs Q4 2020 reflecting an increase in wholesale revenue. Wholesale Days
Sales Outstanding (DSO) ended at 24 days in line with last year, but 9 days lower than Q3 2021 reflecting the healthy
and balanced sell-in to partners. Total DSO, including retail receivables, ended at 10 days by the end of December; 5
days lower than Q3 2021.
Free cash flow incl. lease payments ended at DKK 3,941 million corresponding to a cash conversion of 147% in Q4
2021. CAPEX in the quarter remained low at 2% of revenue (3% year to date), mainly as a result of postponements of
certain projects caused by COVID-19. CAPEX will increase in 2022, as Pandora expect to invest 6% of revenue, in line
with the communication at the Capital Markets Day in September.
The improved underlying performance, combined with the lapse of Programme NOW one-off restructuring costs as
well as lower invested capital are all positively impacting ROIC. ROIC ended the year at 59% - the highest level since
Q1 2018 – and up from 25% in Q4 2020.
NET WORKING CAPITAL AS A SHARE OF THE LAST 12 MONTHS’ REVENUE
Share of preceding 12 months' revenue
Q4 2021
Q3 2021
Q2 2021
Q1 2021
Q4 2020
Inventories
12.8%
14.4%
11.8%
12.3%
10.3%
Trade receivables
4.3%
3.6%
3.2%
3.1%
4.6%
Trade payables
-14.0%
-11.0%
-10.3%
-11.8%
-16.9%
Other net working capital elements
-8.2%
-6.7%
-4.9%
-4.0%
-5.6%
Total
-5.0%
0.2%
-0.3%
-0.4%
-7.6%
The financial leverage, NIBD to EBITDA excl. restructuring costs, was 0.4x by the end of December. This is below the
capital structure policy range of NIBD to EBITDA between 0.5 and 1.5x. Pandora has since Q2 2021until 4 February
2022 paid out DKK 5.5 billion to its shareholder through a combination of extraordinary dividends and share
buybacks. Pandora paid out DKK 1.5 billion in extraordinary dividends in 2021 and bought back 3.9 million shares at a
total value of 3.3 billion in 2021, out of the DKK 4.0 billion share buyback programme which ended 4 February 2022.
For cash distribution in 2022 please see section around capital structure policy and cash distribution below.
2021 ended the year with a significant lift in EPS of more than 100% vs 2020. This is driven by the both the lapse of
restructuring costs and the record breaking revenue growth driving operating leverage.
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FINANCIAL GUIDANCE
Sustainable and profitable growth to continue
The Phoenix strategy aims to deliver sustainable and profitable growth. And in 2021 Pandora delivered on that
purpose. In 2022, Pandora expects to continue the journey and deliver solid organic revenue growth – confirming
that Pandora is back on the growth track.
Pandora targets an organic growth of 3-6% and an EBIT margin of 25.0-25.5% in 2022. This includes expected
headwinds following the unusually high growth in the US in 2021 and expected negative impact from COVID-19,
especially in Q1 2022.
Given that the US constituted 30% of revenue in 2021 and given the unusually high growth in 2021, the guidance is
based on certain assumptions about the growth in the overall US jewellery market. The guidance is also based on
certain assumptions about the COVID-19 impact in 2022. The key assumptions behind the organic growth guidance
can be illustrated as below (further details follows in the section below):
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REVENUE GUIDANCE
The organic growth guidance can be illustrated as follows:
Pandora’s guidance for 2022 is best understood by looking at the US and the Rest of world separately. In 2022
Pandora assumes that the general US jewellery market will decline 10-20% following the very strong growth in 2021.
Pandora expects to continue outperforming the general US market – as has been the case for the last several quarters
– and thereby deliver an organic growth in 2022 between high single-digit negative and slightly positive.
It should be noted that if the Pandora US revenue decline by a high single-digit percentage in 2022, it still equals an
organic growth CAGR in the low teens compared to 2019.
Additionally, the low end of the guidance for 2022 assumes that COVID-19 will continue to impact performance
negatively, and mainly in Q1 2022 (high single-digit percentage negative impact in Q1 2022, corresponding to a low
single-digit percentage negative impact for the full year.) This is obviously associated with uncertainty.
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PROFITABILITY GUIDANCE
Pandora aims to continue to expand its EBIT margin and targets an EBIT margin of 25.0-25.5% in 2022. The building
blocks in the EBIT margin guidance are illustrated in the bridge below.
In 2021, a number of non-recurring factors positively impacting the EBIT margin by 0.5%. Pandora received DKK 152
million in government support and DKK 56 million in rent concessions, positively impacting the EBIT margin by 0.9%.
This was partly offset by non-recurring cost of around DKK 100 million related to write-down of IT assets and a larger
bonus pool in Q4 2021 dragging down the EBIT margin by 0.4%. Adjusting for these non-recurring impacts, the
underlying EBIT margin in 2021 was 24.5%.
The margin expansion in 2022 is driven by operating leverage. Where Pandora will land within the 25.0-25.5% range,
will depend primarily on the revenue performance. As in prior years and in line with normal seasonality, Q4 is expected
to be the most profitable quarter of the year by far.
Current foreign exchange rates, if unchanged, are estimated to have a favourable impact on the EBIT margin in 2022
of approximately 0.5%, compared to 2021. This is offset by a negative impact from commodities, mainly silver prices,
of approximately -1.0%.
With the guidance for 2022, Pandora is already within its guided range for 2023 of 25-27% EBIT margin as
communicated at the Capital Market Day, see also section “2023 Target”.
2022 GUIDANCE - OTHER PARAMETERS
CAPEX for 2022 is expected to be around 6% of revenue (2021 actual: 3% of revenue). The increase is among others
due to opening of new stores and expansion of manufacturing capacity. The guidance for the store network
development is net 50-100 concept store openings (2021 actual: 71 net closures) while other points of sales is
expected to increase by net 50-75. The effective tax rate is expected to be 23-24%, up from 22-23% in prior years.
The increase is related to among others increased withholding taxes on dividends upstreamed to the parent company
and non-deductible expenses related to China and Panama.
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As a global brand, Pandoras financial performance is subject to changes in the macroeconomic environment,
consumer behaviour as well as geopolitical unrest. Pandora sees greater uncertainty than usual around these factors
in 2022. In addition, the guidance for 2022 do not take into account if further material COVID-19 outbreaks occur
later in 2022 or if COVID-19 causes major disruptions in the supply chain. The guidance contains forward-looking
statements, which include estimates of financial performance and targets. These statements are not guarantees of
future performance and involve certain risks and uncertainties. Therefore, actual future results and trends may differ
materially from what is forecast in this report due to a variety of factors, please also refer to the disclaimer on page
40.
CAPITAL STRUCTURE POLICY AND CASH DISTRIBUTION
At the end of December 2021 and following another year of strong cash generation, Pandora’s leverage was only 0.4x
NIBD to EBITDA, below our capital structure policy of 0.5-1.5x. During the last couple of years, Pandora has
successfully decreased net working capital by DKK 3 billion. At the same time, capitalized lease liabilities have
decreased by more than DKK 1 billion. Combined, these two factors have decreased leverage by around 0.5x. As cash
distributions to shareholders are limited to the amount of free reserves in the Parent Company, the lower net working
capital and lease liabilities also currently impact the ability to reach the upper part of the leverage range. As of 31
December 2021, free reserves in the Parent Company amounted to DKK 7.5 billion.
During 2021, Pandora paid extraordinary dividends of total DKK 15 per share. In addition, from 5 May 2021 to 4
February 2022, Pandora bought back 4.8 million shares at an average price of around DKK 829 equivalent to a total
value of DKK 4.0 billion.
Based on the strong results for 2021, Pandora continues distributions to shareholders with a proposed dividend of
DKK 16 per share and a new share buyback programme of DKK 3.3 billion.
2023 TARGETS
Today, Pandora reconfirm its targets towards 2023 communicated at the Capital Markets Day in September 2021:
Pandora reconfirm its targets despite a much stronger 2021 performance, which increased the baseline (2021
revenue) for the organic growth CAGR from DKK 22.0 – 22.4 billion as assumed at the Capital Markets Day to DKK
23.4 billion realized in 2021. As a consequence hereof, Pandora today increase the absolute revenue target in 2023
from DKK 24.8-26.2 billion to DKK 27.0-28.1 billion.
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It should be noted that the upper end of the growth range has, naturally, become more difficult to reach due to the
strong US performance recognised in 2021. However, it should at the same time be noted that the low end of the
new target range of DKK 27.0 billion is above the high end of the old target range, DKK 26.2 billion. Please see building
blocks below:
Additionally, Pandora continue to see EBIT margin expansion ahead driven by operating leverage and reconfirm its
target of 25-27% EBIT margin in 2023. During 2022 and 2023, Pandora will continue to invest in driving sustainable
and long-term revenue growth.
As communicated at the Capital Markets Day, the EBIT margin pick up in the 25-27% range was mainly expected in
2023 among others because of the negative impact in 2022 from FX/commodities of -0.5% (unchanged from what
was communicated at the Capital Markets Day) – please also refer to the 2022 guidance bridge.
FOREIGN EXCHANGE AND COMMODITY ASSUMPTIONS AND IMPLICATIONS – AS OF JANUARY 31, 2022
Average 2021
Average 2022
2022 Y-Y Financial
Impact
USD/DKK
6.29
6.67
THB/DKK
0.20
0.20
GBP/DKK
8.39
8.95
CNY/DKK
0.98
1.05
AUD/DKK
4.72
4.70
Silver/USD (per ounce)
21.1
24.9
REVENUE (DKK million)
Approx. 700
EBIT (DKK million)
Approx. 100
EBIT margin (FX)
Approx. 0.5%
EBIT margin (Commodities)
Approx. -1.0%
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22 | 41
SUSTAINABILITY
Pandora's Sustainability Report 2021 is now live on pandoragroup.com
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23 | 41
OTHER EVENTS
OTHER IMPORTANT EVENTS IN Q4 2021 AND AFTER THE REPORTING PERIOD
Pandora has signed a letter of intent to assume ownership of 37 franchise stores in the US and Canada from Ben
Bridge Jeweler.
No subsequent events have occurred after the balance sheet date that required adjustment to or disclosure in the
consolidated financial statements.
FINANCIAL CALENDAR 2022
The financial calendar lists the expected dates of publication of financial announcements and the Annual
General Meeting in the 2022 financial year for Pandora A/S.
09 February 2022 Annual Report for 2021
10 March 2022 Annual General Meeting
04 May 2022 Interim Financial Report for the first quarter of 2022
16 August 2022 Interim Financial Report for the second quarter/first six months of 2022
08 November 2022 Interim Financial Report for the third quarter/first nine months of 2022
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24 | 41
2021 YEAR-TO-DATE DEVELOPMENT
REVENUE
Total revenue increased by 24% in local currency to DKK 23,394 million in 2021 compared with 2020. Organic growth
was 23%, reflecting good underlying performance but also that 2020 was heavily impacted by COVID-19.
GROSS PROFIT AND COSTS
Gross profit was DKK 17,803 million in 2021 (DKK 14,534 million in 2020), resulting in a gross margin of 76.1% in 2021
and down 0.4pp vs 2020 of 76.5% excluding restructuring costs.
Sales and distribution expenses excluding restructuring costs increased to DKK 6,352 million in 2021 (DKK 6,234
million in 2020), corresponding to 27.2% of revenue in 2021 (32.8% in 2020). The increase is the result of variable
costs related to the higher revenue, cost reductions implemented during the COVID-19 pandemic in 2020 and less
government support and rent concessions received in 2021. Rent concessions and government support have been
recognized in the profit and loss statement under Sales and Distribution expenses.
Marketing expenses excluding restructuring costs increased to DKK 3,587 million in 2021 (DKK 2,717 million in 2020),
resulting in a share of revenue of 15.3% in 2021 compared with 14.3% in 2020.
Administrative expenses excluding restructuring cost increased to DKK 2,026 million in 2021 compared with DKK
1,702 million in 2020, corresponding to 8.7% of revenue in 2021 (9.0% in 2020). The increase in absolute terms mainly
reflects the COVID-19 savings recognised in 2020.
EBIT
EBIT for 2021 was DKK 5,839 million – a significant increase compared with DKK 3,881 million excluding restructuring
costs for 2020, resulting in an EBIT margin of 25.0% in 2021 (20.4% in 2020 excluding restructuring costs). The
significant improvement in the EBIT margin is mainly a result of strong operating leverage as 2020 was very negatively
impacted by COVID-19.
NET FINANCIALS
Net financials amounted to a cost of DKK -461 million in 2021 vs a cost of DKK -190 million in 2020.
INCOME TAX EXPENSES
Income tax expenses amounted to DKK 1,218 million in 2021 compared with a tax expense of DKK 556 million in
2020, implying an effective tax rate for the Group of 22.6% for 2021 (22.3% in 2020). The increase in tax expenses
is mainly a function of the lapse of Programme NOW restructuring costs combined with the significant revenue growth
and resulting improvement in EBIT.
NET PROFIT
Net profit in 2021 was DKK 4,160 million vs DKK 1,938 million in 2020.
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9 FEBRUARY 2022 | INTERIM FINANCIAL REPORT Q4 2021 | COMPANY ANNOUNCEMENT No. 690| page
25 | 41
CONTACT
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 before the call.
The following numbers can be used by investors and analysts:
DK: +45 35445577
SE: +46 856642651
UK: +44 3333000804
US: +1 6319131422
Please use PIN: 28767262#
Link to webcast: https://streams.eventcdn.net/pandora/2021ar/
ABOUT PANDORA
Headquartered in C openh agen , Denmark , Pandora employs 27,000 people worldwide and crafts its jewellery at two
LEED Gold-certified facilities in Thailand using mainly recycled silver and gold. Pandora is committed to leadership
in sustainability and has set science-based targets to reduce greenhouse gas emissions by 50% across its own
operations and value chain by 2030. The company is listed on the Nasdaq Copenhagen stock exchange and
generated sales of DKK 23.4 billion (EUR 3.1 billion) in 2021.
For more information, please contact:
INVESTOR RELATIONS
John Bäckman
VP, Investor Relations, Tax & Treasury
+45 5356 6909
jobck@pandora.net
CORPORATE COMMUNICATIONS
Mads Twomey-Madsen
VP, Corporate Communications & Sustainability
+45 2510 0403
madt@pandora.net
Kristoffer Malmgren
Director, Investor Relations
+45 3050 1174
kram@pandora.net
Johan Melchior
Director, External Relations
+45 4060 1415
jome@pandora.net
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26 | 41
FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
DKK million
Notes
Q4 2021
Q4 2020
FY 2021
FY 2020
Revenue
3
Cost of sales
-2,188
-1,941
-5,590
-4,634
Gross profit
Sales, distribution and marketing expenses
-3,535
-3,060
-9,939
-9,155
Administrative expenses
-610
-678
-2,026
-2,536
Operating profit
Finance income
Finance costs
-228
-89
-613
-507
Profit before tax
Income tax expense
-563
-514
-1,218
-556
Net profit for the period
Earnings per share, basic, DKK
Earnings per share, diluted, DKK
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
DKK million
Q4 2021
Q4 2020
FY 2021
FY 2020
Net profit for the period
Other comprehensive income:
Items that may be reclassified to profit/loss for the
period
Exchange rate adjustments of investments in subsidiaries
-128
-609
Fair value adjustment of hedging instruments
-7
-417
Tax on other comprehensive income, hedging instruments,
income/expense
-58
-13
Items that may be reclassified to profit/loss for the
period, net of tax
-124
-416
Items not to be reclassified to profit/loss for the period
Actuarial gain/loss on defined benefit plans, net of tax
Items not to be reclassified to profit/loss for the period,
net of tax
Other comprehensive income, net of tax
-118
-410
Total comprehensive income for the period
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CONSOLIDATED BALANCE SHEET
DKK million
Notes
2021
31 December
2020
31 December
ASSETS
Goodwill
9
Brand
Distribution
Other intangible assets
Total intangible assets
Property, plant and equipment
Right-of-use assets
10
Deferred tax assets
Other financial assets
Total non-current assets
Inventories
Trade receivables
7
Right-of-return assets
Derivative financial instruments
5,6
Income tax receivable
Other receivables
Cash
Total current assets
Total assets
EQUITY AND LIABILITIES
Share capital
Treasury shares
-3,416
-93
Reserves
Retained earnings
Total equity
Provisions
Loans and borrowings
10
Deferred tax liabilities
Total non-current liabilities
Provisions
Refund liabilities
Contract liabilities
Loans and borrowings
10
Derivative financial instruments
5,6
Trade payables
Income tax payable
Other payables
Total current liabilities
Total liabilities
Total equity and liabilities
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
DKK million
Share
capital
Treasury
shares
Translation
reserve
Hedging
Reserve
Dividend
proposed
Retained
earnings
Total
equity
2021
Equity at 1 January
-93
Net profit for the period
Other comprehensive income, net of tax
-325
Total comprehensive income for the period
-325
Share-based payments
Purchase of treasury shares
-3,325
-3,325
Proposed dividend
-1,481
Dividend paid
-1,481
-1,479
Equity at 31 December
-3,416
-110
2020
Equity at 1 January
-1,964
Net profit for the period
Other comprehensive income, net of tax
-577
-410
Total comprehensive income for the period
-577
Share-based payments
Purchase of treasury shares
-431
-431
Sale of treasury shares
-509
Dividend paid
-836
-825
Equity at 31 December
-93
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CONSOLIDATED STATEMENT OF CASH FLOW
1
Cash comprises cash at bank and in hand.
The above cannot be derived directly from the income statement and the balance sheet.
DKK million
Notes
Q4 2021
Q4 2020
FY 2021
FY 2020
Operating profit
Depreciation and amortisation
Share-based payments
Change in inventories
-799
-96
Change in receivables
-380
-373
-77
Change in payables and other liabilities
Other non-cash adjustments
-155
Interest etc. received
Interest etc. paid
-322
-81
-468
-247
Income taxes paid
-478
-382
-832
-192
Cash flows from operating activities, net
Acquisitions of subsidiaries and activities, net of cash acquired
8
-6
-66
-12
Purchase of intangible assets
-83
-38
-289
-130
Purchase of property, plant and equipment
-101
-89
-296
-374
Change in other non-current assets
Proceeds from sale of property, plant and equipment
-2
Cash flows from investing activities, net
-172
-109
-631
-484
Acquisitions of non-controlling interests
-42
Dividend paid
-486
-1,479
-825
Purchase of treasury shares
-2,230
-3,325
-431
Sale of treasury shares
Proceeds from loans and borrowings
-693
Repayment of loans and borrowings
-1,654
-3,004
-9,073
Repayment of lease commitments
-280
-261
-991
-839
Cash flows from financing activities, net
-3,688
-1,910
-7,484
-3,571
Net increase/decrease in cash
-1,887
Cash at beginning of period
1
Exchange gains/losses on cash
-6
-62
Net increase/decrease in cash
-1,887
Cash at end of period
1
Cash flows from operating activities, net
4,073
4,062
6,228
5,975
- Interests etc. received
-1
-
-3
-3
- Interests etc. paid
322
81
468
247
Cash flows from investing activities, net
-172
-109
-631
-484
- Acquisition of subsidiaries and activities, net of cash acquired
-
6
66
12
Free cash flow excluding lease payments
4,221
4,041
6,128
5,747
Free cash flow including lease payments
3,941
3,780
5,137
4,908
Unutilised committed credit facilities
6,023
6,998
6,023
6,998
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ACCOUNTING NOTES
NOTE 1 – Accounting policies
The unaudited condensed consolidated interim financial statements have been prepared in accordance with IAS 34
‘Interim Financial Reporting’ as issued by the International Accounting Standards Board (IASB) and adopted by the
European Union and additional Danish disclosure requirements for interim financial reporting of listed companies.
The accounting policies applied are consistent with the accounting policies set out in the Annual Report 2021.
Due to rounding, numbers presented throughout this report may not add up precisely to the totals and percentages
may not precisely reflect the absolute figures.
Pandora presents financial measures in the interim financial report that are not defined according to IFRS. Pandora
believes that these non-GAAP measures provide valuable information to investors and Pandora’s management when
evaluating performance. Since other companies might calculate these differently from Pandora, they may not be
comparable to the measures used by other companies. These financial measures should therefore not be considered
a replacement for measures defined under IFRS. For the definitions of other alternative performance measures used
by Pandora which are not defined by IFRS, refer to note 5.6 in the consolidated financial statements in the Annual
Report 2021.
New standards, interpretations and amendments adopted by Pandora
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 2021. The implementation of these new or amended
standards and interpretations had no material impact on the financial statements for the period apart from the
amendment in IFRS 16. Pandora applied the extension of 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 effect of the amendment and its impact on financial statements is presented in note 10.
NOTE 2 – Significant accounting estimates and judgements
In preparing the consolidated interim 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 2021
to which we refer.
NOTE 3 – Segment and revenue information
Pandora's activities are segmented into two reportable segments (Global Business Units), each responsible for the
end-to-end performance of products. One Global Business Unit is responsible for Moments and Collabs, while the
other drives the newer collections and innovations.
The two operating segments include all channels relating to the distribution and sale of Pandora products.
The non-unit driven revenue, comprising mainly of franchise fees, is allocated to the different revenue categories
proportionately.
Management monitors the profitability of the operating segments separately for the purpose of making decisions
about resource allocation and performance management. Segment results are measured at gross profit as presented
in the table below.
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SEGMENT INFORMATION
DKK million
Moments and
Collabs
Style and
Upstream Innovation
Group
Q4 2021
Revenue
6,311
2,700
9,011
Cost of sales
-1,600
-588
-2,188
Gross profit
4,711
2,112
6,822
Operating expenses
-4,144
Consolidated operating profit (EBIT)
2,678
Profit margin (EBIT margin)
29.7%
Q4 2020
1
Revenue
5,602
2,288
7,891
Cost of sales
-1,411
-529
-1,941
Gross profit
4,191
1,759
5,950
Operating expenses
-3,738
Consolidated operating profit (EBIT)
2,212
Profit margin (EBIT margin)
28.0%
Restructuring costs
-296
Profit margin (EBIT margin) excl. restructuring costs
31.8%
FY 2021
Revenue
16,610
6,784
23,394
Cost of sales
-4,106
-1,485
-5,590
Gross profit
12,504
5,300
17,803
Operating expenses
-11,965
Consolidated operating profit (EBIT)
5,839
Profit margin (EBIT margin)
25.0%
FY 2020
1
Revenue
13,562
5,447
19,009
Cost of sales
-3,359
-1,275
-4,634
Gross profit
10,204
4,172
14,375
Operating expenses
-11,691
Consolidated operating profit (EBIT)
2,684
Profit margin (EBIT margin)
14.1%
Restructuring costs
-1,197
Profit margin (EBIT margin) excl. restructuring costs
20.4%
1
The ‘Garden’ collection has been re-allocated from Style and Upstream Innovation to Moments and Collabs in Q2 2021. Comparative figures for 2020 were restated
accordingly.
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REVENUE BY GLOBAL BUSINESS UNITS
DKK million
Q4 2021
Q4 2020
Sell-out
growth
vs 2020
Sell-out
growth
vs 2019
Share of
Revenue
FY 2021
FY 2020
1
Sell-out
growth
vs 2020
Sell-out
growth
vs 2019
Share of
revenue
Moments and Collabs
6,311
5,602
10%
12%
70%
16,610
13,562
20%
8%
71%
hereof Moments
5,510
4,654
14%
12%
61%
14,699
11,660
22%
6%
63%
hereof Collabs
801
948
-14%
15%
9%
1,911
1,902
3%
28%
8%
Style and Upstream Innovation
2,700
2,288
13%
12%
30%
6,784
5,447
19%
2%
29%
hereof Timeless
1,656
1,492
7%
0%
18%
4,091
3,318
19%
-12%
17%
hereof Signature
695
674
1%
27%
8%
1,990
1,739
12%
21%
9%
hereof Me
328
122
147%
57%
4%
656
390
42%
140%
3%
hereof Brilliance
20
-
n/a
n/a
0%
48
-
n/a
n/a
0%
Total revenue
9,011
7,891
11%
12%
100%
23,394
19,009
20%
7%
100%
1
The ‘Garden’ collection has been re-allocated from Style and Upstream Innovation to Moments and Collabs in Q2 2021. Comparative figures for 2020 were restated
accordingly.
Goods transferred at a point in time
8,981
7,861
23,321
18,939
Services transferred over time
30
30
73
70
Total revenue
9,011
7,891
23,394
19,009
REVENUE DEVELOPMENT IN THE KEY MARKETS
DKK million
Q4 2021
Q4 2020
Growth in
local
currency
FY 2021
FY 2020
Growth in
local
currency
US
2,523
1,982
21%
7,026
4,505
61%
China
222
322
-36%
1,126
1,261
-13%
UK
1,521
1,345
6%
3,314
2,960
8%
Italy
961
825
17%
2,443
2,021
21%
Australia
491
537
-12%
1,131
1,120
-4%
France
498
494
1%
1,122
1,154
-3%
Germany
478
418
15%
1,191
1,014
18%
Total top-7 markets
6,694
5,923
9%
17,353
14,036
24%
Rest of Pandora
2,316
1,967
17%
6,041
4,973
23%
Total revenue
9,011
7,891
11%
23,394
19,009
24%
REVENUE BY CHANNEL
DKK million
Q4 2021
Q4 2020
Growth in
local
currency
FY 2021
FY 2020
Growth in
local
currency
Retail physical stores
1
4,006
2,991
30%
9,945
7,943
25%
Retail online stores
2,465
2,533
-7%
5,977
5,483
8%
Wholesale and third-party distribution
2,539
2,366
5%
7,472
5,583
36%
Total revenue
9,011
7,891
11%
23,394
19,009
24%
1
Pandora does not own any of the premises (Land and buildings) where stores are operated. Pandora exclusively operates stores from leased premises.
The use of sales channels for the distribution of Pandora jewellery depends on the underlying market maturity and
varies within markets but is consistent when viewed between segments.
NOTE 4 – Seasonality of operations
Due to the seasonal nature of the jewellery business, higher revenue and profits are historically realised in the fourth
quarter.
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NOTE 5 – Financial risks
Pandora’s overall risk exposure and financial risks, including risks related to commodity prices, foreign currency, credit,
liquidity and interest rates, are described in the disclosures in note 4.4 in the consolidated financial statements in the
Annual Report 2021.
Outstanding committed loan facilities (end of December 2021)
Available facilities
DKK million
Maturity date
Drawn amount
DKK million
Available
liquidity
Revolving Credit Facilities
7,065
April 2026
1,041
6,023
Total
7,065
1,041
6,023
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 13).
See note 4.5 to the consolidated financial statements in the Annual Report 2021.
NOTE 7 – Trade receivables
NOTE 8 – Business combinations
In 2021, Pandora took over 29 concept stores in US in 2 business combinations. Net assets acquired mainly consist
of store properties, inventories and related liabilities. The total purchase price for the acquisitions was DKK 66 million.
Based on the purchase price allocations, goodwill was DKK 12 million. Goodwill from the acquisitions is mainly related
to the synergies from converting the stores from wholesale to Pandora owned retail. Of the goodwill acquired, DKK
12 million is deductible for income tax purposes.
Costs relating to the acquisitions were immaterial and are recognised as operating expenses in the income statement.
Contribution to Group revenue and net earnings from acquisitions for the period 1 January – 31 December 2021 was
DKK 307 million and DKK 93 million respectively. On a pro forma basis, if the acquisitions had been effective from 1
January 2021, the impact on Group revenue and net earnings for the period 1 January – 31 December 2021 would
have been approximately DKK 358 million and DKK 112 million.
DKK million
2021
30 December
2020
31 December
Receivables related to third-party distribution and wholesale
672
600
Receivables related to retail revenue sales
337
270
Total trade receivables
1,009
870
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ACQUISITIONS
DKK million
FY 2021
FY 2020
Distribution rights
13
-
Property, plant and equipment
84
4
Inventories
34
4
Assets acquired
131
8
Non-current liabilities
50
2
Other current liabilities
27
1
Liabilities assumed
77
3
Total identifiable net assets acquired
54
5
Goodwill arising on the acquisitions
12
2
Purchase consideration
66
7
Cash movements on acquisitions:
Consideration transferred regarding previous years
-
5
Net cash flow on acquisitions
66
12
Business combinations after the reporting period
No acquisitions, to an extent of significance to Pandora, took place after the reporting period.
NOTE 9 – Goodwill
DKK million
2021
31 December
2020
31 December
Cost at 1 January
4,247
4,416
Acquisition of subsidiaries and activities in the period
12
2
Exchange rate adjustments
159
-170
Cost at the end of the period
4,418
4,247
No impairment indication was identified based on the information regarding the market and the forecast. The latest
impairment test was carried out 31 December 2021 and the test confirmed a substantial headroom between the
carrying amount and the value in use. All the assumptions used are as described in the Annual Report 2021.
NOTE 10 – Assets and liabilities related to leases
Amounts recognised in the balance sheet:
RIGHT-OF-USE ASSETS
DKK million
2021
31 December
2020
31 December
Property
2,507
2,975
IT
3
5
Cars
14
18
Other
8
10
Total right-of-use assets
2,532
3,007
Out of the total decrease of DKK 0.5 billion in right-of-use-assets in the period 1 January – 31 December 2021, DKK
1 billion relates to store closures, depreciation and currency exchange movement, partially offset by a net increase
of DKK 0.5 billion as a result of renewals of lease contracts and new leases. The development in right-of-use-assets
is further affected by the timing of renewals of lease contracts and new leases including the negotiation of more
favourable leasing terms.
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
9 FEBRUARY 2022 | INTERIM FINANCIAL REPORT Q4 2021 | COMPANY ANNOUNCEMENT No. 690| page
35 | 41
LEASE LIABILITIES
DKK million
2021
31 December
2020
31 December
Non-current
1,724
2,066
Current
886
993
Total lease liabilities
2,610
3,059
Lease liabilities are recognised in loans and borrowings in the balance sheet.
Amounts recognised in the income statement:
RECOGNISED DEPRECIATION ON RIGHT-OF-USE ASSETS CHARGED TO THE INCOME STATEMENT FOR THE PERIOD
DKK million
1 January –
31 December 2021
1 January –
31 December 2020
Property
1,066
1,190
IT
1
1
Cars
9
11
Other
4
5
Total depreciation on right-of-use assets for the period
1,081
1,208
OTHER ITEMS RELATING TO LEASES
DKK million
1 January –
31 December 2021
1 January –
31 December 2020
Interest income from sub-leases
-
1
Interest expense
-99
-97
Total interest for the period
-99
-96
Costs recognised in the period for short term and low value leases were DKK 39 million (2020: DKK 33 million).
Expenses are recognised on a straight line basis.
Total cash outflow relating to leases was DKK 1,377 million for 2021 (2020: DKK 1,164 million). This comprises of
fixed lease payments in scope of IFRS 16 of DKK 991 million (2020: DKK 839 million), variable lease payments of DKK
248 million (2020: DKK 196 million), interest paid of DKK 99 million (2020: DKK 96 million) and short term and low
value leases of DKK 39 million (2020: DKK 33 million). Payments related to variable leases and short term and low
value leases are not included in the lease liabilities.
Due to COVID-19, Pandora has received rent concessions from landlords in 2021 amounting to DKK 56 million (2020:
DKK 112 million) of which DKK 4 million has been recognized in Q4 2021 (Q4 2020: DKK 24 million). In addition,
repayment of certain fixed leases has been negotiated and a cash settlement has been agreed with landlords and
deferred with immaterial effect in 2021 (2020: DKK 52 million).
Amendment to IFRS 16 Leases
In March 2021, the IASB issued Covid-19-Related Rent Concessions beyond 30 June 2021 - amendment to IFRS 16
Leases. The IASB extended the period of the relief to lessees arising as a direct consequence of the COVID-19
pandemic from 30 June 2021 to 30 June 2022. 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 modification. 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 modification. Pandora applied the
extension of the practical expedient for all contracts with rent concessions occurring as direct consequence of
COVID-19 and where it meets all conditions of the practical expedient.
Executive
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Cash Flow &
Balance sheet
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9 FEBRUARY 2022 | INTERIM FINANCIAL REPORT Q4 2021 | COMPANY ANNOUNCEMENT No. 690| page
36 | 41
As a result, rent concessions have been recognised in the profit and loss statement in 2021 amounting to DKK 56
million (2020: DKK 112 million) under Sales and Distribution expenses.
Overall financing cash flow is positively impacted by approximately DKK 56 million in 2021 (2020: DKK 164 million)
due to rent relief and rent deferrals.
NOTE 11 – Trade payables
The Group generally accepts that vendors sell-off their receivables arising from the sale of goods and services to the
Group to a third party. Pandora has established a supply chain financing programme where vendors can sell off their
receivables from Pandora at attractive terms, based on invoices approved by Pandora, but at the bank's sole dis-
cretion. Pandora is not directly or indirectly a party to these agreements. The amounts payable to suppliers included
in the supply chain financing programme are classified as trade payables in the balance sheet as well as in the cash
flow statement (working capital within cash flow from operations) and amounts to DKK 24 million at 31 December
2021 (DKK 26 million at 31 December 2020).
NOTE 12 – Contingent liabilities
Reference is made to note 5.1 to the consolidated financial statements in the Annual Report 2021.
NOTE 13 – Related parties
Related parties with significant interests
Other related parties of Pandora with significant influence include the Board and the Executive Management of this
Company and their close family members. Related parties also include companies in which the persons have control
or significant interests.
Transactions with related parties
Pandora did not enter into any significant transactions with members of the Board or the Executive Management,
except for compensation and benefits received because of their membership of the Board, employment with
Pandora or shareholdings in Pandora.
NOTE 14 – Store network, other points of sale development
Q4 2021
Q3 2021
Q4 2020
Growth
Q4 2021
/ Q3 2021
Growth
Q4 2021
/Q4 2020
Other points of sale (retail)
334
279
235
55
99
Other points of sale (wholesale)
3,255
3,256
3,602
-1
-347
Other points of sale (third-party)
565
570
565
-5
0
Other points of sale, total
4,154
4,105
4,402
49
-248
Executive
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highlights
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update
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review
Profitability
Cash Flow &
Balance sheet
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9 FEBRUARY 2022 | INTERIM FINANCIAL REPORT Q4 2021 | COMPANY ANNOUNCEMENT No. 690| page
37 | 41
NOTE 15 – Store network, concept store development
1
Total concept stores
O&O concept stores
Number
of concept
stores
Q4 2021
Number
of concept
stores
Q3 2021
Number
of concept
stores
Q4 2020
Growth
Q4 2021
/ Q3 2021
Growth
Q42021
/Q4 2020
Number
of concept
stores
O&O
Q4 2021
Growth
O&O
stores
Q4 2021
/ Q3 2021
Growth
O&O
stores
Q4 2021
/Q4 2020
US
388
386
403
2
-15
187
1
33
China
214
219
234
-5
-20
196
-7
-26
UK
211
211
217
-
-6
170
15
31
Italy
146
146
146
-
0
107
0
0
Australia
125
123
122
2
3
43
2
5
France
122
122
121
-
1
78
0
1
Germany
135
135
138
-
-3
132
0
-2
All markets
2,619
2,616
2,690
3
-71
1,423
20
41
1
Includes 7 key markets measured on revenue for FY 2020. All markets with 10 or more concept stores can be found in the Excel appendix uploaded on
www.pandoragroup.com
NOTE 16 – Commodity hedging
It is Pandora’s policy to hedge at least 70% of the Group’s expected gold and silver consumption based on a rolling
12-months production plan. The below table illustrates the timing of the hedges related to the purchase of silver for
production, i.e. excluding the time lag effect from inventory to Cost of sales (when the product is sold). The time-lag
from use in production to impact on Cost of sales is usually 2-7 months.
HEDGED AND REALISED PURCHASE PRICES (AT USE OF THE SILVER AND GOLD FOR PRODUCTION)
USD / OZ
Realised in
Q4 2021
Hedged
Q1 2022
Hedged
Q2 2022
Hedged
Q3 2022
Hedged
Q4 2022
Gold price
1,798
1,806
1,802
1,794
1,807
Silver price
25.02
25.65
25.59
23.72
23.44
Commodity hedge ratio, %
Realised
70-100%
70-90%
50-70%
30-50%
NOTE 17 – Subsequent events
As described in “Other events” in the Management review, Pandora is not aware of events after 31 December 2021,
which are expected to materially impact the Group’s financial position.
Executive
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Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
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Accounting
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9 FEBRUARY 2022 | INTERIM FINANCIAL REPORT Q4 2021 | COMPANY ANNOUNCEMENT No. 690| page
38 | 41
QUARTERLY OVERVIEW
DKK million
Q4 2021
Q3 2021
Q2 2021
Q1 2021
Q4 2020
Key financial highlights
Organic growth, %
10%
14%
84%
13%
4%
Organic growth, % vs 2019
15%
9%
13%
-3%
n/a
Sell-out growth incl. temporarily closed stores, %
11%
5%
62%
21%
1%
Sell-out growth incl. temporarily closed stores, % vs 2019
12%
9%
7%
-5%
n/a
Gross margin, %
1
75.7%
75.5%
77.1%
76.3%
75.7%
EBIT margin, %
1
29.7%
20.2%
25.2%
20.1%
31.8%
Consolidated income statement
Revenue
9,011
4,728
5,155
4,500
7,891
Earnings before interests, tax, depreciations and
amortisations (EBITDA)
3,267
1,393
1,762
1,416
2,896
Operating profit (EBIT)
2,678
957
1,301
903
2,212
Net financials
-211
-137
-21
-92
96
Net profit for the period
1,904
635
992
628
1,794
Financial ratios
Revenue growth, DKK, %
14%
16%
79%
8%
-1%
Revenue growth, local currency, %
11%
15%
85%
13%
4%
Gross margin, %
75.7%
75.5%
77.1%
76.3%
75.4%
EBITDA margin, %
36.3%
29.5%
34.2%
31.5%
36.7%
EBIT margin, %
29.7%
20.2%
25.2%
20.1%
28.0%
Effective tax rate, %
22.8%
22.5%
22.5%
22.5%
22.3%
Equity ratio, %
38%
40%
44%
41%
37%
NIBD to EBITDA, excl. restructuring costs
2
, x
0.4
0.5
0.4
0.6
0.5
Return on invested capital (ROIC)
2
, %
59%
48%
44%
29%
25%
Cash conversion incl. lease payments (excl. IFRS 16), %
147%
53%
98%
-65%
171%
Net working capital, % of last 12 months revenue
-5.0%
0.2%
-0.3%
-0.4%
-7.6%
Stock ratios
Total payout ratio (incl. share buyback), %
143%
211%
76%
-
-
Consolidated balance sheet
Total assets
18,542
18,173
18,277
19,211
19,984
Invested capital
9,884
11,141
11,136
11,675
10,540
Net working capital
-1,181
50
-57
-76
-1,447
Net interest-bearing debt (NIBD)
2,882
3,819
3,005
3,735
3,151
Equity
7,001
7,322
8,130
7,940
7,389
Consolidated statement of cash flow
Cash flow from operating activities
4,073
885
1,586
-316
4,062
Capital expenditure (CAPEX), DKK million
215
201
138
88
124
Capital expenditure, property, plant and equipment (CAPEX), DKK million
146
96
64
35
78
Free cash flow incl. lease payments (excl. IFRS 16), DKK
3,941
502
1,278
-586
3,780
1
2020 figures exclude Programme NOW restructuring costs.
2
Ratios are based on 12 months’ rolling EBITDA and EBIT, respectively.
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39 | 41
MANAGEMENT STATEMENT
EXECUTIVE MANAGEMENT
BOARD
9 FEBRUARY 2022 | INTERIM FINANCIAL REPORT Q4 2021 | COMPANY ANNOUNCEMENT No. 690| page
40 | 41
DISCLAIMER
This Company announcement contains forward-looking statements, including, but not limited to, guidance,
expectations, strategies, objectives and statements regarding future events or prospects with respect to the
Company’s future financial and operating results. Forward-looking statements include, without limitation, any
statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain
words such as "expect", "estimate", "intend", "will be", "will continue", "will result", "could", "may", "might" or any
variations of such words or other words with similar meanings. Forward-looking statements are subject to risks and
uncertainties that could cause the Company’s actual results to differ materially from the results discussed in such
forward-looking statements. Prospective information is based on management’s then current expectations or
forecasts. Such information is subject to the risk that such expectations or forecasts, or the assumptions underlying
such expectations or forecasts, may change. The Company assumes no obligation to update any such forward-looking
statements to reflect actual results, changes in assumptions or changes in other factors affecting such forward-
looking statements. Some important risk factors that could cause the Company’s actual results to differ materially
from those expressed in its forward-looking statements include, but are not limited to: economic and geopolitical
uncertainty (including interest rates and exchange rates), financial and regulatory developments, general changes in
market trends and end-consumer preferences, demand for the Company’s products, competition, the availability
and pricing of materials used by the Company, production- and distribution-related issues, IT failures, litigation,
pandemics, and other unforeseen factors. The nature of the Company’s business means that risk factors and
uncertainties may arise, and it may not be possible for management to predict all such risk factors, nor to assess the
impact of all such risk factors on the Company’s business or the extent to which any individual risk factor, or
combination of factors, may cause results to differ materially from those contained in any forward-looking statement.
Accordingly, forward-looking statements should not be relied on as a prediction of actual results.
