Arla Foods Consolidated Annual Report 2021
104
Arla Foods Consolidated Annual Report 2021 / Consolidated Financial Statements / Notes
Funding
4.4 DERIVATIVES
Hedging of future cash flows
The group uses forward currency to hedge currency
risks on expected future net revenue and costs. Interest
rate swaps are used to hedge risks against movements
in expected future interest payments, and commodity
swaps are used for energy hedging.
Fair value of hedge instruments not qualifying for
hedge accounting (financial hedge)
The group uses currency options which hedge
forecasted sales and purchases. Some of these options
do not qualify for hedge accounting and the fair value
adjustment is therefore recognised directly in the
income statement.
Currency swaps are used as part of the daily liquidity
management. The objective of the currency swaps is to
match the timing of in- and outflow of foreign currency
cash flows.
Table 4.4.b Value adjustment of hedging instruments
(EURM)
Deferred gains and losses on cash flow hedges arising during the year
Value adjustments of hedging instruments reclassified to other operating income and costs
Value adjustments of hedging instruments reclassified to financial items
Total value adjustment of hedging instruments recognised in
other comprehensive income during the year
Table 4.4.a Hedging of future cash flows from highly probable forecast transactions
(EURM)
Expected recognition
2021
in income statement
Fair value
Carrying
value
recognised
in OCI
2022
2023
2024 2025
After
2025
Currency contracts
-17
-17
-17
Interest rate contracts
-24
-24
-8
-6
1
-11
Commodity contracts
27
27
26
1
Hedging of future cash flow
-14
-14
1
-5
1
-11
Expected recognition
in income statement
Fair value
Carrying
value
recognised
in OCI
2021
2022 2023 2024
After
2024
2020
Currency contracts
Interest rate contracts
Commodity contracts
Hedging of future cash flow
-53
2625
11
11
11
-66
-66
-11
-10
-9
-8
-28
2
1
1
-53
1
-9
-9
-8
-28
Contents
III
2021
2020
12
38
3
-5
24
8
39
41
Accounting policies
Derivatives are recognised from the trade date and
measured in the financial statements at fair value.
Positive and negative fair values of derivatives are
recognised as separate items in the balance sheet.
Fair value hedging
Changes in the fair value of derivatives which meet the
criteria for hedging the fair value of recognised assets
and liabilities, are recognised alongside changes in the
value of the hedged asset or the hedged liability for the
portion that is hedged.
Cash flow hedging
Changes in the fair value of derivatives that are
classified as hedges of future cash flows and effectively
hedge changes in future cash flows, are recognised in
other comprehensive income as a reserve for hedging
transactions under equity until the hedged cash
flows impact the income statement. The reserve for
hedging instruments under equity is presented net
of tax. The cumulative gains or losses from hedging
transactions that are retained in equity are reclassified
and recognised under the same item as the basic
adjustment for the hedged item. The accumulated
change in value recognised in other comprehensive
income is recycled to the income statement once the
hedged cash flows affect the income statement or
are no longer likely to be realised. For derivatives that
do not meet the criteria for classification as hedging
instruments, changes in fair value are recognised as
they occur in the income statement, under financial
income and costs.View entire presentation