Arla Foods Consolidated Annual Report 2021
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Arla Foods Consolidated Annual Report 2021 / Consolidated Financial Statements / Notes
Revenue and costs
1.2 OPERATIONAL COSTS
Revenue and costs
1.3 OTHER OPERATING INCOME AND COSTS
Contents
III
Accounting policies
Production costs
Production costs cover direct and indirect costs related
to production, including volume movements in inventory
and related inventory revaluation. Direct costs comprise
purchase of milk from owners, inbound transport
costs, packaging, additives, consumables, energy and
variable salaries directly related to production. Indirect
costs comprise other costs related to production
of goods, including depreciation and impairment
losses on production-related materials and other
supply chain related costs. The purchase of milk from
cooperative owners is recognised at prepaid prices for
the accounting period and therefore does not include
the supplementary payment, which is classified as
distributions to owners and recognised directly in equity.
Sales and distribution costs
Costs relating to sales staff, the write-down of receivables,
sponsorships, research and development, depreciation
and impairment losses are recognised as sales and
distribution costs. Sales and distribution costs also
include marketing expenses relating to investment in the
group's brands, such as the development of marketing
campaigns, advertisement, exhibits, and others.
Administration costs
Administration costs relate to management and
administration, including administrative staff, office
premises and office costs, as well as depreciation
and impairment.
anD POSITIVE HEDGING IMPACT
Other operating income and costs, net, amounted to
EUR 35 million, compared to EUR 9 million last year.
This was primarily attributable to positive effects from
energy commodity hedges, negative effects from
currency hedges, sale of fixed assets and other items
that were not part of the regular dairy business.
Accounting policies
Other operating income and costs consist of items
outside the regular course of dairy business activities,
including items such as gains and losses relating to the
settlement of disputes, revaluation gains from step
acquisition of entities, the net result from financial
hedging activities and the net result from the
production and sale of energy from our biogas plants.
Furthermore, this item includes gains and losses from
the disposal of fixed assets no longer used within our
dairy operations.
2021
2020
Table 1.3 Other operating income and costs
(EURM)
Sale of electricity
28
24
Income from hedging instruments transferred from equity
36
14
Gain on disposal of intangible assets and PP&E
17
15
Other items
29
8
Other operating income
110
61
Cost related to sale of electricity
-24
-29
Cost of hedging instruments transferred from equity
Other items
-38
-12
-13
-11
Other operating costs
-75
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