Unilever 2005 Annual Report Download - page 16

Report of the Directors
Unilever Annual Report and Accounts 2005 13
About Unilever
(continued)
March 2006. We have completed the implementation of an SAP
based system, which simplifies and harmonises processes across
Arabia, Israel and Turkey – a project successfully delivered in an
extremely challenging environment.
An initiative to standardise operational IT processes and
procedures globally started in 2005 and has delivered on plan.
We have set world-class objectives for this programme and the
implementations in 2005 won the ‘best project of the year’ in the
2005 ITsmf awards. To support the innovation agenda,
the internal management system had a significant upgrade and
has been deployed to 16 000 users world-wide.
Corporate venture activities
Unilever has allocated €250 million to its venturing activities in
order to create business opportunities that will help build our core
business interests in Foods and Home and Personal Care. These
activities include:
• Unilever Technology Ventures, which invests in technology
funds and start up companies. Investments have been made in
haplotyping genomics technology, systems biology, radio
frequency identification, water purification and surface
chemistry.
• Unilever Ventures, which is an early-stage business development
fund for businesses from both inside and outside Unilever.
Investments include Persil Services in the UK, Pond’s Institute
Beauty Centre in Spain and the Biotechnology Application
Centre in the Netherlands.
• Langholm Capital, which is an independent fund investing in
private European companies with above-average longer-term
growth prospects. Investments include Physcience, a
supplements business in France, Lumene, a natural personal
care business in Finland, Dorset Cereals in the UK and Just
Retirement, a financial services business in the UK.
Competition
We have a wide and diverse set of competitors in our consumer
goods businesses. Many of our competitors also operate on
an international scale, but others have a narrower regional or
local focus.
Competition is a normal part of business. We aim to compete
and give value to our consumers, customers and shareholders
in three ways:
• by continually developing new and improved products;
• by sharing our innovations and concepts with our businesses
all around the world; and
• by striving to lower the cost of our sourcing, manufacturing
and distribution processes while still maintaining, and
improving, the quality of our products.
We support efforts to create a more open competitive
environment through the liberalisation of international trade.
We support the full implementation of the Single European Market
and inclusion of other European countries in the European Union.
Distribution and selling
Unilever’s products are generally sold through its sales force and
through independent brokers, agents and distributors to chain,
wholesale, co-operative and independent grocery accounts, food
service distributors and institutions. Products are distributed
through distribution centres, satellite warehouses, company-
operated and public storage facilities, depots and other facilities.
Exports
We sell our products in nearly all countries throughout the world
and manufacture in many of them. We export a wide range of
products to countries where we do not make them. For example,
inside the European Union we make many of our products in only
a few member countries, for sale in all of them. The chosen
manufacturing configuration is generally determined by an
optimised regional sourcing strategy which takes account of
requirements for innovation, quality, service, cost and flexibility.
Seasonality
Certain of our businesses, such as ice creams, are subject to
significant seasonal fluctuations in sales. However, Unilever
operates globally in many different markets and product
categories. No individual element of seasonality is likely to be
material to the results of the Group as a whole.
Related party transactions
Transactions with related parties are conducted in accordance
with the transfer pricing policies described in note 1 on page 85
and consist primarily of sales to joint ventures and associates.
Other than those disclosed in this report, there were no related
party transactions that were material to the Group or to the
related parties concerned that are required to be reported in 2005
or the preceding year.
In approximately 40 countries, our associated company,
JohnsonDiversey Inc., acts as Unilever’s sole and exclusive sales
agent for professional channels, in respect of cleaning products,
in return for which it receives an agency fee. In 2004 Patrick
Cescau, Group Chief Executive, purchased a house from a group
company ultimately owned by NV. The full Boards, acting on the
recommendation of the Remuneration Committee and without
participation of Mr Cescau, gave their prior approvals to the
purchase, which was made at full market value based on two
independent valuations of the property.
Further information is given in note 32 on page 142.
Intellectual property
We have a large portfolio of patents and trademarks, and we
conduct some of our operations under licences which are based
on patents or trademarks owned or controlled by others. We are
not dependent on any one patent or group of patents. We use
our best efforts to protect our brands and technology.