Arla Foods Annual Report 2020 slide image

Arla Foods Annual Report 2020

Management Review Our Strategy CASH FLOW (CONTINUED) Our Brands and Commercial Segments Our Responsibility Our Governance Our Performance Review Our Consolidated Financial Statements Our Consolidated Environmental, Social and Governance Data Strong operational cash flow and increased investments Free operating cash flow is a measure of the amount of cash generated by normal operations. Cash flow from operating activities decreased by 5 per cent to EUR 731 million compared with EUR 773 million last year, mainly due to postponed declaration of VAT and duties offset by extended payment terms for employee income taxes in Denmark. Improved net working capital contributed a modest positive net cash release of EUR 4 million whilst still maintaining the previously years trend of improving the net working capital position. Cash flow from investment activities amounted to EUR 488 million compared with EUR 571 million last year. The overall investment level last year was higher due to the acquisition of the cheese business in Bahrain, however 2020 included a record high CAPEX investment of EUR 478 million. The free operating cash flow ended at EUR 219 million. Cash flow from financing activities was EUR -293 million. A supplementary payment of EUR 127 million was issued in relation to the 2019 profit allocation and further payments, representing EUR 22 million from individual capital instruments, were paid out to owners who resigned or retired. Cash flow from other financing activities amounted to EUR 144 million and related to repayment of net interest bearing debt of EUR 90 million, payments to pension schemes of EUR 36 million and transactions with non-controlling interests of EUR 18 million. Combined cash and cash equivalents as of 31 December 2020 were EUR 126 million, compared to EUR 187 million last year. The movement was due to a net cash out-flow of EUR 50 million during 2020 and exchange rate adjustments on cash funds of EUR 11 million. An insignificant amount of cash and cash equivalents at 31 December 2020 was deposits in restricted accounts. Accounting policies The consolidated cash flow statement is presented according to the indirect method, with cash flow from operating activities determined by adjusting EBITDA for the effects of non-cash items such as undistributed results in joint ventures and associates, changes in working capital items and other non-cash items. Development in cash flow (EURM) 1000 800 600 400 200 0 -200 909 4 -182 EBITDA 731 -488 Net working capital with impayments a Other payme nope and adjustment pact on operating cash flow Cash flow from operating activities Investing activities 72 ARLA FOODS ANNUAL REPORT 2020 Free cash flow 243 -149 leaving members Supplementary payments Other financing activities -144 50 Reduction in cash
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