Arla Foods Consolidated Annual Report 2021
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Arla Foods Consolidated Annual Report 2021 / Consolidated Financial Statements / Notes
Capital employed
3.3 JOINT VENTURES AND ASSOCIATES
Contents
III
Financial comments
The share of the profit or loss in joint ventures and
associates increased by 82 per cent to EUR 53 million
compared to EUR 28 million last year, and relates
primarily to the profit or loss from our investments in
Mengniu and Lantbrukarnas Riksförbund (LRF).
COFCO Dairy Holdings Limited (CDH) and
China Mengniu Dairy Company Limited (Mengniu)
The group's proportionate share of the net asset value
of CDH including the investment in Mengniu is EUR 416
million, compared to EUR 343 million last year. The carrying
amount of the investment in CDH includes goodwill
amounting to EUR 149 million, compared to EUR 138
million last year driven by the development in HKD and CNY.
The fair value of the indirect share in Mengniu equals
EUR 1,043 million, compared to EUR 1,024 million
last year based on the official listed share price at
31 December 2021.
The investment in CDH is part of the China business
unit and is currently managed in China, along with
sales activities with similar characteristics. The need
for impairment of the investment is tested at the China
Recognised value of associates and
joint ventures, 2021
business unit level, using the expected future net
cash flow. Impairment risks include substantial and
long-term reductions in leading share indexes in Asia,
the issue of import restrictions on dairy products in
China, or an adverse and permanent reduction in the
expected performance of Mengniu. As the fair value
exceeds the carrying amount of the investment, there
is no indication of impairment. Mengniu reported
group revenue of EUR 9,664 million and a profit of
EUR 445 million in 2020. Consolidated figures are
not available for the CDH group. CDH holds no other
significant investment than the investment in Mengniu
and reported revenue relates to received dividend
payments from Mengniu. Through the investment in
CDH, Arla holds a 5,3 per cent indirect investment in
Mengniu. See table 3.3.b for more details on CDH.
Joint ventures
The carrying amount of joint ventures decreased
to EUR 20 million compared to EUR 40 million last
year. The decrease results from the sale of Biolac
in November 2021. The remaining value primarily
relates to the German joint venture ArNoCo. The
carrying amount does not include goodwill.
Recognised value of associates and
joint ventures, 2020
Table 3.3.a Associates and Joint ventures
Value of associates and joint ventures
(EURM)
Share of equity in COFCO Dairy Holdings Ltd.
Goodwill in COFCO Dairy Holdings Ltd.
Share of equity in immaterial associates
Recognised value of associates
2021
2020
267
205
149
138
94
87
510
430
Share of equity in immaterial joint ventures
Recognised value of associates and joint ventures
20
40
530
470
Table 3.3.b COFCO Dairy Holdings Ltd.
Disclosures of financial information*
(EURM)
Revenue
Net profit/loss
Non-current assets
Dividends received
Ownership share
Group share of net profit/loss
Recognised value
COFCO Dairy Holdings Ltd. has no other significant assets or liabilities.
* Based on latest available financial reporting
Fair value based on listed share price
2021
2020
16
-23
16
729
702
12
0
30%
30%
36
21
416
343
1,043
1,024
530
MILLION EUR
470
MILLION EUR
Share of equity in CDH/Mengniu 50%
Goodwill in CDH/Mengniu 28%
Share of equity in immaterial associates 18%
Share of equity in immaterial joint ventures 4%
Share of equity in CDH/Mengniu 44%
■Goodwill in CDH/Mengniu 29%
■Share of equity in immaterial associates 19%
Share of equity in immaterial joint ventures 8%
Table 3.3.c Transactions with associates and joint ventures
(EURM)
2021
2020
Sale of goods
Purchase of goods
Trade receivables*
Trade payables*
5835
56
109
68
68
13
-5
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* Included in other receivables and other payablesView entire presentation