Unilever 2001 Annual Report Download - page 31

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Unilever Annual Report & Accounts and Form 20-F 2001
>28
FINANCIAL REVIEW
The figures quoted in this review are in euros, at current
rates of exchange, unless otherwise stated. The profit and
loss and cash flow information is translated at average rates
of exchange for the relevant year and the balance sheet
information at year-end rates of exchange.
For definitions of key ratios referred to in this review please
refer to page 91.
Results – 2001 compared with 2000
Total turnover, which includes Group turnover plus the
Group’s share of joint venture turnover, rose by 9% to
52 206 million.
Group turnover increased by 8% to 51 514 million.
This increase was driven by underlying sales growth of 4%,
compared with 1.5% in 2000, combined with a net effect
from acquisitions and disposals of an increase of 7%. The
most significant of these was the acquisition of Bestfoods
and the disposal of Elizabeth Arden and some European
soups and sauces brands. This growth was offset by a 3%
strengthening of the average exchange rate for the euro
against the basket of Unilever currencies.
As a result of the Bestfoods acquisition, the Group’s share
of joint venture turnover increased by 43% to 692 million.
Group operating profit BEIA of 7 149 million increased
by 25% for the year. The improvement in margin by 1.9%
to 13.9% reflects the ongoing contribution from Path to
Growth restructuring and procurement savings and the
successful integration of Bestfoods.
Amortisation of goodwill and intangibles was 1 387 million
compared with 435 million in 2000. The increase is
primarily the result of a full year’s amortisation charge for
acquisitions made partway through 2000. Included in this
charge was 1 170 million for Bestfoods and 193 million
as a result of other acquisitions in 2000, principally Slim•Fast,
Ben & Jerry’s, Cressida and Amora Maille.
Given the significance of the goodwill arising from the
purchase of Bestfoods, our application of asset impairment
accounting standards is important. We have reviewed the
goodwill related to the Bestfoods acquisition, by considering
actual and planned growth rates of Bestfoods brands
and the actual and planned synergy savings arising from
its integration.
Exceptional items for the year were 588 million, which
includes 1 515 million of restructuring investment and
profits on disposals of 927 million. Of the latter,
811 million relates to the profit on the sale of the
brands to secure regulatory approval for our acquisition
of Bestfoods and 114 million in respect of the sale of
Unipath. Associated costs included within operating profit
BEIA were 373 million for the year.
The restructuring exceptional items incurred in the year
primarily relate to the series of initiatives we announced
on 22 February 2000 to accelerate growth and expand
margins, and to restructuring arising from the integration
of Bestfoods. The total net cost of these programmes
is estimated to be 6.2 billion, the majority of which is
expected to be exceptional. To date, 3.9 billion has
been incurred, of which 3.4 billion is exceptional and
0.5 billion is associated costs. The 811 million profit
on the sale of brands to secure regulatory approval
for the acquisition of Bestfoods is not part of this amount.
Group operating profit increased by 57% to 5 174 million,
primarily being the net impact of acquisitions and disposals
offset by an increase in the amortisation charge.
The share of operating profit of joint ventures increased to
84 million (2000: 57 million), reflecting a full year of the
Bestfoods’ joint ventures.
An overview of operating performance by region and
product category is included in the Regional and Category
texts on pages 14 and 19 respectively.
Net interest cost rose to 1 646 million compared with
632 million in 2000. This reflects the increase in the level
of borrowings during 2000 to fund acquisitions, principally
Bestfoods. Cash generation from disposals during the
year, along with proceeds from the sale of the European
bakery business in 2000, reduced the interest charge by
approximately 80 million. Net interest cover for the year
was just over three times. The net interest cover on the basis
of EBITDA (bei) was five times for the year.
The Group’s effective tax rate for the year was 42.7%
(2000: 51.5%). This rate reflects the non-deductibility of
goodwill amortisation and a tax rate on the net exceptional
charges of 39%. The underlying tax rate for normal trading
operations was in line with 2000.
Minority interests increased 11% to 239 million (2000:
215 million) as a result of a strong performance in India.
Net profit rose by 66% to 1 838 million. Combined
earnings per share were up 70%. Combined earnings per
share BEIA increased by 11%.
Return on capital employed increased slightly to 9% from
8% in 2000.
Results – 2000 compared with 1999
Total turnover rose by 16% to 48 066 million.
Group turnover also increased 16% to 47 582 million.
2 945 million, representing 7% of this growth, came
from the impact of acquisitions in 2000, primarily Bestfoods.
On the basis of 1999 results, the impact of disposals,
principally the European bakery business, was a reduction