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126 Unilever Annual Report and Accounts 2005
Notes to the consolidated accounts
Unilever Group
26 Retained profit
€ million € million € million € million € million € million
NV NV PLC PLC Total Total
Movements during the year 2005 2004 2005 2004 2005 2004
31 December 2004 8 331 (684) 7 647
Accounting policy change for financial instruments(a) (1 500) 1 907 407
1 January 6 831 7 321 1 223 (315) 8 054 7 006
Recognised income and expense through retained profit 3 092 1 520 733 636 3 825 2 156
Preference dividends(b) –(28) –––(28)
Final dividends 2003 on ordinary capital –(630) –(486) –(1 116)
Interim dividends 2004 on ordinary capital –(343) –(260) –(603)
Final dividends 2004 on ordinary capital (710) –(519) –(1 229) –
Interim dividends 2005 on ordinary capital (363) –(275) –(638) –
Conversion of preference shares (199) –––(199) –
(Purchase)/sale of treasury stock –7–––7
Share-based compensation credit(c) 132 152 54 70 186 222
Adjustment arising from change in ownership of group companies(d) (70) 332 70 (332) ––
Other movements in retained profit 8–8316 3
31 December 8 721 8 331 1 294 (684) 10 015 7 647
Of which retained by:
Parent companies 9 463 7 693 2 145 1 553 11 608 9 246
Other group companies (668) 731 (837) (2 235) (1 505) (1 504)
Joint ventures and associates (74) (93) (14) (2) (88) (95)
8 721 8 331 1 294 (684) 10 015 7 647
(a) Due to the adoption of IAS 32 and IAS 39 with effect from 1 January 2005, intra-group preference shares are now classified as debt
instead of equity. The relative ownership of these preference shares has resulted in a re-alignment of balances between NV and PLC.
(b) From 1 January 2005, Unilever has adopted IAS 32 ‘Financial Instruments: Disclosure and Presentation’ which requires preference shares
that provide for a fixed preference dividend to be classified as borrowings and preference dividends to be recognised in the income
statement. In accordance with the transition rules for IAS 32, 2004 has not been restated.
(c) The share-based compensation credit relates to the reversal of the non-cash charge recorded against operating profit in respect of the fair
value of share options and awards granted to employees.
(d) During 2002, as part of the legal and fiscal integration of the Bestfoods businesses, a number of internal ownership changes took place.
These internal transactions, which took place at fair value, did not involve any third party and therefore had no effect on the results or net
assets of the consolidated Unilever Group. The historical cost of the net assets of the business transferred by PLC was greater than the
historical cost of the net assets of the business transferred by NV. As it would be inappropriate to recognise revaluations to assets and
liabilities of the Group arising from internal transactions, this imbalance led to NV recording an unrealised gain of €1 646 million on the
transfer, while PLC recorded an equal and opposite goodwill balance which is eliminated on consolidation. Further re-organisations in
subsequent years have produced similar types of adjustments.
Cumulative goodwill written off directly to reserves prior to the transition to IFRSs on 1 January 2004 was €5 199 million for NV and
€2 063 million for PLC.