Arla Foods Consolidated Annual Report 2021
70
Arla Foods Consolidated Annual Report 2021 / Consolidated Financial Statements / Primary Statements
EQUITY / CONTINUED
Contents
III
B Accounting policies and regulations according to Articles of Association and IFRS
Common capital
Recognised in the capital account are technical
items such as actuarial gains or losses on defined
benefit pension schemes, effects from disposals and
acquisitions of non-controlling interests in subsidiaries
and exchange rate differences in equity instruments
issued to owners. Furthermore, the capital account is
impacted by agreed contributions from new owners of
the cooperative.
Recognised in the reserve for special purposes is the
annual profit appropriation to common capital. It may,
upon the Board of Director's proposal, be applied by the
Board of Representatives for the full or partial offsetting
of material extraordinary losses or impairment in
accordance with article 20.1 (iii) of the Articles of
Association.
Individual capital
Individual capital instruments are regulated in article
20 of the Articles of Association and the general
membership terms.
Equity instruments issued as contributed individual
capital relate to amounts transferred as part of the
annual profit appropriation. The individual balances carry
interest at CIBOR 12 months +1.5 per cent that are
approved and paid out together with the supplementary
payment in connection with the annual profit
appropriation.
Delivery-based owner certificates are equity instruments
issued to the original Danish and Swedish owners. Issue
of these instruments ceased in 2010.
Injected individual capital are equity instruments
issued in connection with cooperative mergers and
when new owners enter the cooperative.
Balances on delivery-based owner certificates and
injected individual capital instruments carry no interest.
Balances on contributed individual capital, delivery-based
owner certificates and on injected individual capital
can be paid out over three years upon termination of
membership to Arla Foods amba in accordance with
the Articles of Association, subject to the Board of
Representatives' approval. Balances are denominated
in the currency relevant to the country in which owners
are registered. Foreign currency translation adjustments
are calculated annually and the effect is transferred to
the capital account.
Proposed supplementary payment to owners is
recognised separately in equity until approved by the
Board of Representatives.
Other equity accounts
Reserve for value adjustments of hedging instruments
comprises the fair value adjustment of derivatives
classified as and meeting the conditions for hedging of
future cash flows where the hedged transaction has not
yet been realised.
Reserve for fair value adjustments through OCI
comprises the fair value adjustments of mortgage
credit bonds classified as financial assets measured at
fair value through other comprehensive income.
Reserve for foreign currency translation adjustments
comprises foreign currency translation differences
arising during the translation of the financial statements
of foreign companies, including value adjustments
relating to assets and liabilities that constitute part
of the group's net investment and value adjustments
relating to hedging transactions securing the group's
net investment.
Non-impairment clause
Under the Articles of Association, no payment may be
made by Arla Foods amba to owners that impairs the
sum of the capital account and equity accounts
prescribed by law and IFRS. The non-impairment clause
is assessed on the basis of the most recent annual
report presented under IFRS. Individual capital accounts
and reserve for special purposes are not covered by the
non-impairment clause.
Non-controlling interests
Subsidiaries are fully recognised in the consolidated
financial statements. Non-controlling interests' share of
the results for the year and of the equity in subsidiaries
is recognised as part of the consolidated results and
equity, respectively, but is listed separately.
On initial recognition, non-controlling interests are
measured at either the fair value of the equity interest
or the proportional share of the fair value of the
acquired companies' identified assets, liabilities and
contingent liabilities. The measurement of non-con-
trolling interests is selected on a transactional basis.
Milk payment to owners
The on-account settlement of owner milk is recognised
as a production cost in the income statement.
The supplementary payment is based on the result for
the year as part of the profit appropriation. The
supplementary payment is recognised as a reserve on
the equity statement until approved by the Board of
Representatives, based on a recommendation by the
Board of Directors.View entire presentation