Arla Foods Consolidated Annual Report 2021

137 Arla Foods Consolidated Annual Report 2021 / Glossary GLOSSARY Contents III ArlagårdenⓇ is the name of our quality assurance programme. BEPS is an acronym referring to base erosion and profit shifting. These are tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations. Biogas is the mixture of gases produced by the breakdown of organic matter in the absence of oxygen, primarily consisting of methane and carbon dioxide. At Arla, biogas is primarily produced from cow manure. Biomass is plant or animal material used for energy production. It can be purposely grown energy crops, wood or forest residues, waste from food crops, horticulture, food processing, animal farming, or human waste from sewage plants. Brand share measures revenue from strategic brands as a proportion of total revenue, and is defined as the ratio of revenue from strategic branded products to total revenue. CAPEX is an abbreviation of capital expenditure. Capacity cost is defined as the cost of running the general business, and includes staff costs, maintenance, energy, cleaning, IT, travel and consultancy etc. Carbon sequestration refers to a natural or artificial process by which carbon dioxide is removed from the atmosphere and held in solid or liquid form. CPI is an abbreviation of Consumer Price Index. Digital engagement is defined as the number of interactions consumers have across digital channels. The interaction is measured in a number of different ways, for example, by viewing a video on all media channels for more than 10 seconds, visiting a webpage, commenting, liking or sharing on our social media channels. Digital reach is defined as engagement with Arla's digitial content, i.e. spending more than 2 minutes on our website, watching our videos to the end on YouTube, and liking or commenting on content on our social media platforms. EBIT is an abbreviation of earnings before interest and tax, and is a measure of earnings from operations. EBITDA is an abbreviation of earnings before interest, tax, depreciation and amortisation from ordinary operations. EBIT margin measures EBIT as a percentage of total revenue. EMEA is an acronym referring to Europe, the Middle East and Africa. Equity ratio is the ratio of equity, excluding minority interests, to total assets, and is a measure of the financial strength of Arla. FMCG is an acronym for fast-moving consumer goods. Free cash flow is defined as cash flow from operating activities after deducting cash flow from investing activities. FTE is an acronym for full-time equivalents. FTEs are defined as the contractual working hours of an employee compared to a full-time contract in the same position and country. The FTE figure is used to measure the active workforce counted in full-time positions. An FTE of 1.0 is equivalent to a full-time worker, while an FTE of 0.5 equals half of the full workload. GDPR is an acronym for the General Data Protection Regulation, which regulates data protection and privacy in the European Union (EU) and the European Economic Area (EEA). It also addresses the transfer of personal data outside the EU and EEA areas. The GDPR aims primarily to give control to individuals over their personal data and to simplify the regulatory environment for international business by unifying the regulation within the EU. Global industry share is a measure of the total milk consumption for producing commodity products relative to the total milk consumption, i.e. based on volumes. Commodity products are sold with lower or no value added, typically via business- to-business sales for other companies to use in their production as well as via industry sales of cheese, butter or milk powder. Greenhouse Gas Protocol (GHGP) provides accounting and reporting standards, sector guidance, calculation tools to account for greenhouse gas emissions. It establishes a comprehensive, global, standardised framework for measuring and managing emissions from private and public sector operations, value chains, products, cities, and policies. Incoterms refer to International Commercial Terms. These are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) relating to international commercial law. They are widely used in international commercial transactions or procurement processes and their use is encouraged by trade councils, courts and international lawyers. Innovation pipeline is defined as the net incremental revenue generated from innovation projects up to 36 months from their launch. Interest cover is the ratio of EBITDA to net interest costs. International share of business is defined as the revenue from the International zone as a percentage of of revenue from the International and Europe zones. Lactalbumin, also known as 'whey protein', is the albumin contained in milk and obtained from whey.

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