Arla Foods Consolidated Annual Report 2021
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Arla Foods Consolidated Annual Report 2021 / Consolidated Financial Statements / Notes
Funding
4.2 FINANCIAL ITEMS
Contents
III
סון
LOWER INTEREST EXPENSES OFFSET BY HIGHER EXCHANGE RATE LOSSES
Net financial costs decreased by EUR 11 million to EUR
61 million mainly due to lower interest expenses, which
were partly offset by higher exchange rate.
Net interest expenses amounted to EUR 40 million,
representing a decrease of EUR 14 million compared to
last year due to the expiry of old interest hedges and
new interest rate hedges at attractive interest rates.
Average interest expenses, excluding interest related to
pension assets and liabilities, were 1.8 per cent
compared to 2.3 per cent last year. Interest cover
increased to 23.7 compared to 17.0 last year.
Exchange rate losses relate primarily to the devaluation
of the Lebanese, Nigerian and Argentine currencies,
which amounted to EUR 21 million.
2021
2020
Accounting policies
Financial income and financial costs as well as
capital gains and losses are recognised in the income
statement at amounts that can be attributed to the year.
Financial items comprise realised and unrealised value
adjustments of securities and currency adjustments
of financial assets and financial liabilities, as well
as the interest portion of financial lease payments.
Additionally, realised and unrealised gains and losses
on derivatives not classified as hedging contracts are
included. Borrowing costs from general borrowing, or
loans that directly relate to the acquisition, construction
or development of qualified assets are attributed to the
costs of such assets and are therefore not included in
financial costs.
Capitalisation of interest was performed by using an
interest rate matching the group's average external
interest rate in 2021. Financial income and financial
costs relating to financial assets and financial liabilities
were recognised using the effective interest method.
Table 4.2 Financial income and financial costs
(EURM)
Financial income:
Interest securities, cash and cash equivalents
Fair value adjustments and other financial income
Total financial income
257
77
14
Financial costs
Interest on financial instruments measured at amortised cost
-45
-54
Net exchange rate losses
-28
-25
-2
-2
Interest on pension liabilities
Interest transferred to property, plant and equipment
7
8
Fair value adjustments and other financial costs
-7
-6
-75
-79
Total financial costs
-61
-72
Net financial costsView entire presentation