Unilever 2001 Annual Report Download - page 72

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Unilever Annual Report & Accounts and Form 20-F 2001
NOTES TO THE CONSOLIDATED ACCOUNTS
Unilever Group
>69
Financial Statements
15 Financial instruments continued
The following table summarises the fair values and carrying
amounts of the various classes of financial instruments as at
31 December:
million million million million
Fair value Carrying amount
2001 2000 2001 2000
Financial assets:
Other fixed investments 176 340 176 340
Current investments 439 660 439 660
Cash 1 862 2 613 1 862 2 613
2 477 3 613 2 477 3 613
Financial liabilities:
Bonds and other loans (23 125) (27 237) (22 607) (26 892)
Bank loans and overdrafts (2 899) (2 870) (2 893) (2 849)
(26 024) (30 107) (25 500) (29 741)
Derivatives:
Interest rate swaps
– assets 151 52 134 95
– liabilities (293) (95) (10) (11)
Foreign exchange
contracts – assets 190 650 190 650
– liabilities (347) (492) (347) (492)
The fair values of listed fixed investments are based on their
market values. The fair values of unlisted fixed investments are
not materially different from their carrying amounts. Current
investments, cash, bank loans and overdrafts have fair values which
approximate to their carrying amounts because of their short-term
nature. The fair values of forward foreign exchange contracts
represent the unrealised gain or loss on revaluation of the contracts
to year-end rates of exchange. The fair values of bonds and other
loans, interest rate swaps and forward rate agreements are based
on the net present value of the discounted anticipated future cash
flows associated with these instruments.
In November 2001, NV entered into a forward purchase contract
with a counterparty bank to buy 10 000 000 PLC shares at 559p
per share in November 2006. If the PLC share price falls by more
than 5% below 559p, cash collateral for the difference must be
placed with the counterparty bank.
Currency exposures
Treasury manages the foreign exchange exposures that arise from
Unilever’s financing and investing activities in accordance with
Unilever policies.
The objectives of Unilever’s foreign exchange policies are to allow
operating companies to manage foreign exchange exposures that
arise from trading activities effectively within a framework of control
that does not expose Unilever to unnecessary foreign exchange
risks. Operating companies are required to cover substantially all
foreign exchange exposures arising from trading activities and each
company operates within a specified maximum exposure limit.
Business Groups monitor compliance with these policies.
Compliance with the Group’s policies means that the net amount
of monetary assets and liabilities at 31 December 2001 that are
exposed to currency fluctuations is not material.
16 Trade and other creditors
million million
2001 2000
Due within one year:
Trade creditors 4 882 5 386
Social security and sundry taxes 534 438
Accruals and deferred income 3 196 2 709
Taxation on profits 977 1 027
Dividends 1 057 944
Others 1 287 1 185
11 933 11 689
Due after more than one year:
Accruals and deferred income 246 231
Taxation on profits 377 565
Others 182 223
805 1 019
Total trade and other creditors 12 738 12 708
17 Pensions and similar obligations
million million
2001 2000
These are predominantly long-term liabilities:
Unfunded pension plans 1 414 1 663
Funded pension plans 987 794
Post-retirement health benefits 1 284 1 214
3 685 3 671
Less asset balances reclassified as debtors
due after more than one year 13 917 748
4 602 4 419
Movements during the year:
1 January 4 419
Currency retranslation 4
Bestfoods adjustment (b) (see note 24)201
Profit and loss account 326
Payments (a) (138)
Acquisitions/disposals (2)
Other adjustments (b) (208)
31 December 4 602
(a) Net of refunds received from pension funds totalling
297 million.
(b) In addition a fair value adjustment of 466 million was made
to Bestfoods pension prepayments.
In most countries the Group operates defined benefit plans based
on employee pensionable remuneration and length of service.
These are either externally funded or unfunded, with provisions
maintained in the Group balance sheet. All are subject to regular
actuarial review. Actuarial valuations are carried out by external
consultants or actuaries employed by the Unilever Group using the
projected unit method. The actuarial assumptions used to calculate
the benefit obligation vary according to the country in which the
plan is situated.
The principal defined benefit plans, representing over 90% of all
defined benefit plans by market value of assets and net provisions,
were last formally valued in the past three years and the results of
these valuations then updated to the year-end.