Unilever 2001 Annual Report Download - page 54

Unilever Annual Report & Accounts and Form 20-F 2001
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Financial Statements
ACCOUNTING INFORMATION AND POLICIES
Unilever Group
Unilever
The two parent companies, NV and PLC together with their
group companies, operate as nearly as is practicable as a
single entity (the Unilever Group, also referred to as Unilever
or the Group). NV and PLC have the same directors and are
linked by a series of agreements, including an Equalisation
Agreement, which are designed so that the position of the
shareholders of both companies is as nearly as possible the
same as if they held shares in a single company.
The Equalisation Agreement provides for both companies
to adopt the same accounting principles and requires as
a general rule the dividends and other rights and benefits
(including rights on liquidation) attaching to each Fl. 12
(5.445) nominal of ordinary capital of NV to be equal in
value at the relevant rate of exchange to the dividends and
other rights and benefits attaching to each £1 nominal of
ordinary share capital of PLC, as if each such unit of capital
formed part of the ordinary capital of one and the same
company. For additional information please refer to Control
of Unilever on page 107.
Basis of consolidation
By reason of the operational and contractual arrangements
referred to above and the internal participating interests set
out in note 20 on page 74, NV and PLC and their group
companies constitute a single group under Netherlands and
United Kingdom legislation for the purposes of presenting
consolidated accounts. Accordingly, the accounts of the
Unilever Group are presented by both NV and PLC as
their respective consolidated accounts. These accounts are
supplemented in notes 21 and 22 on page 75 and note 29
on page 88 by additional information for the NV and PLC
parts of the Group in which group companies are
consolidated according to respective ownership.
Reporting currency
Historically, the consolidated financial statements of the
Unilever Group have been prepared in both guilders and
sterling. With effect from 1 January 2000, Unilever replaced
the guilder and sterling with the euro for reporting
purposes. The consolidated financial statements for years
prior to 2000 have been restated to euros at the rate of
1.00 = Fl. 2.20371, the fixed conversion rate announced
on 31 December 1998. The consolidated financial statements
reported in euro depict the same trends as previously
reported in guilders. However, they do not necessarily represent
the same trends as previously reported in sterling. Also, the
trends shown by the consolidated financial statements may
not be comparable with those of other companies that also
report in euros if those other companies previously reported
in a currency other than the guilder.
Companies legislation
The consolidated accounts of the Unilever Group comply
with Book 2 of the Civil Code in the Netherlands and the
United Kingdom Companies Act 1985. The Company
accounts, the notes to those accounts and the further
statutory information given for each of NV and PLC comply
with legislation in the Netherlands and the United Kingdom
respectively. As explained under ‘Group companies’ on
page 52, in order to give a true and fair view, the
presentation of the consolidated capital and reserves
differs from that specified by the United Kingdom
Companies Act 1985.
Accounting standards
The accounts are prepared under the historical cost
convention and comply in all material respects with
applicable accounting principles in the Netherlands
and with United Kingdom Accounting Standards.
The accounting policies of the Unilever Group are set out
on pages 51 to 53. Material variations from United States
generally accepted accounting principles are set out on
pages 94 to 96.
United Kingdom Statement of Standard Accounting Practice
Number 15 (SSAP 15) requires that no provision should be
made for deferred taxation where it is probable, based on
reasonable assumptions, that a liability will not crystallise.
In this respect, SSAP 15 is not in agreement with Dutch law
as currently applied. For this reason, and because of the
Equalisation Agreement, full provision continues to be
made for deferred taxation. The effects of this departure
from SSAP 15 are shown in note 6 on page 63, note 7
on page 64 and note 18 on page 73.
United Kingdom Urgent Issues Task Force Abstract 13 (UITF
13) requires that NV or PLC shares held by employee trusts
to satisfy options should be classified by the sponsoring
company as fixed assets. Dutch law requires such shares
to be accounted for within capital and reserves. In order to
comply with Dutch law and the Equalisation Agreement, the
requirements of UITF 13 have not been followed. All shares
held internally are accounted for in accordance with Dutch
GAAP. The effects of this departure are shown in note 22
on page 75.
United Kingdom Financial Reporting Standard 17
‘Retirement benefits’ mandates that certain disclosures
relating to retirement benefits be made in financial
statements for accounting periods ending on or after
22 June 2001. These disclosures are shown in note 17 on
page 69. The full requirements of the standard, which will
change the basis of accounting for retirement benefits, are
required to be implemented for accounting periods ending
on or after 22 June 2003. This standard will have
a significant impact on Unilever’s reported results.
United Kingdom Financial Reporting Standard 18
‘Accounting policies’ became mandatory for accounting
periods ending on or after 22 June 2001. The standard
requires that Unilever selects the most appropriate
accounting policies and treatments in all circumstances.
Unilever’s policies were already entirely consistent with
this new standard.