Arla Foods Consolidated Annual Report 2021
94
Arla Foods Consolidated Annual Report 2021 / Consolidated Financial Statements / Notes
Funding
4.1 FINANCIAL RISKS
Table 4.1.2.a Exchange rates
2021
Closing rate
2020
Change
2021
Average rate
2020 Change
EUR/GBP
EUR/SEK
EUR/DKK
EUR/USD
EUR/SAR
0.839
0.903
7.1%
0.860
10.241
10.081
-1.6%
10.145
7.437
7.441
0.1%
7.437
0.889
10.483
7.454
1.133
1.230
7.9%
1.182
1.140
4.253
4.616
7.9%
4.434
4.279
3.3%
3.2%
0.2%
-3.7%
-3.6%
Table 4.1.2.b Currency exposure
Contents
III
Risk mitigation
The group's external exposure is calculated as external
financial assets and liabilities denominated in currencies
other than the functional currency of each legal entity,
plus any external derivatives converted at group level
into currency risk against DKK, i.e. EUR/DKK, USD/DKK
etc. The same also applies to the group's net internal
exposure. The aggregate of the group's external and
internal currency exposure is the net exposure, which is
outlined in Table 4.1.2.b.
Net foreign currency investments in subsidiaries, as well
as instruments hedging those investments, are
excluded.
According to the treasury and funding policy, the
Treasury department can hedge:
• Up to 15 months of the net forecasted cash receipts
and payables
Up to 100 per cent of net recognised trade receiva-
bles and trade payables.
The currency exposure is continuously managed by the
Treasury department. Individual currency exposures are
hedged in accordance with the treasury and funding
policy.
Financial instruments used to hedge the currency
exposure do not necessarily need to qualify for hedge
accounting, and hence some of the applied financial
instruments, i.e. some option strategies, are accounted
for as fair value through the income statement.
Arla Foods amba's functional currency is DKK. However,
the risk in relation to the EUR currency is assessed in the
same manner as for DKK. The Executive Management
Team has the discretion to decide if and when
investments in foreign operations should be hedged
(translation risks) with an obligation to inform the Board
of Directors at the next meeting.
Balance sheet
exposure
Hedging
Potential
accounting impact
Open
positions
of future
cash flows
External
Income
exposure Sensitivity statement
Other
compre-
hensive
income
Risk
2021
EUR/DKK
-86
USD/DKK*
GBP/DKK
SEK/DKK
SAR/DKK
8229
278
192
1%
-1
44
-252
-207
5%
25
-418
-393
5%
12
-49
-37
5%
1217
-176
-167
5%
3
ه نه نه
-13
-21
-2
-9
2020
EUR/DKK
-94
-10
-104
1%
USD/DKK*
10
-197
-187
5%
GBP/DKK
-9
-415
-424
5%
SEK/DKK
-35
-87
-122
5%
-2
1112
-1
-10
-21
-4
SAR/DKK
8
-187
-179
5%
-9
*Incl. AEDView entire presentation