Unilever 2005 Annual Report Download - page 130

Financial Statements
Unilever Annual Report and Accounts 2005 127
Notes to the consolidated accounts
Unilever Group
27 Commitments and contingent liabilities
€ million € million € million € million € million € million
Future Future
minimum minimum
lease Finance Present lease Finance Present
payments cost value payments cost value
Long-term finance lease commitments 2005 2005 2005 2004 2004 2004
Buildings(a) 160 95 65 91 50 41
Plant and machinery 170 18 152 194 17 177
330 113 217 285 67 218
The commitments fall due as follows:
Within 1 year 75 11 64 55 – 55
After 1 year but within 2 years 60 10 50 53 7 46
After 2 years but within 3 years 56 6 50 49 5 44
After 3 years but within 4 years 14 6 8 47 3 44
After 4 years but within 5 years 13 6 7 615
After 5 years 112 74 38 75 51 24
330 113 217 285 67 218
(a) All leased land is classified as operating leases.
The Group has not sublet any part of the leased properties under finance lease.
€ million € million
Long-term operating lease commitments 2005 2004
Land and buildings 1 472 1 485
Plant and machinery 459 410
1 931 1 895
€ million € million € million € million
Other Other
Operating Operating commit- commit-
leases leases ments ments
Operating lease and other commitments fall due as follows 2005 2004 2005 2004
Within 1 year 339 334 365 291
After 1 year but within 2 years 297 280 323 254
After 2 years but within 3 years 267 250 62 169
After 3 years but within 4 years 222 231 40 46
After 4 years but within 5 years 209 193 23 11
After 5 years 597 607 18 193
1 931 1 895 831 964
The Group has sublet part of the leased properties under operating lease. Future minimum sublease payments of €28 million are expected to
be received.
Other commitments principally comprise commitments under contracts to purchase materials and services. They do not include commitments
for capital expenditure, which are reported in note 11 on page 100.
Contingent liabilities are either possible obligations that will probably not require a transfer of economic benefits, or present obligations that
may, but probably will not, require a transfer of economic benefits. It is not appropriate to make provisions for contingent liabilities, but there
is a chance that they will turn into an obligation in the future. The Group believes that incurred losses in any of these matters would not have
a material effect.
Examples of the first type of contingent liability arise in respect of litigation against group companies, investigations by competition, regulatory
and fiscal authorities and obligations arising under environmental legislation. The estimated total of such contingent liabilities at 31 December
2005 was some €349 million (2004: €275 million).
Examples of the second type of contingent liability are guarantees issued by group companies. At 31 December 2005 these amounted to
some €113 million (2004: €143 million). Included in this are discounted trade bills with a value of €25 million (2004: €45 million). We believe
that any loss arising in connection with these would not have a material effect on the Group’s financial condition or results of operations.
Guarantees given by parent or group companies that relate to liabilities already included in these consolidated accounts are excluded from
this total.
The total value of guarantees which arose or were revised in 2005 was €39 million (2004: €80 million). The fair value of guarantees is not
material in either 2004 or 2005.