Unilever 2005 Annual Report Download - page 46

Report of the Directors
Unilever Annual Report and Accounts 2005 43
Corporate governance
(continued)
As mentioned on page 35, a proposal to amend the Equalisation
Agreement will be put to shareholders at the 2006 AGMs. More
information on this proposal can be found in the notices to these
AGMs which can be found at
www.unilever.com/investorcentre/agms.
Combined earnings per share
Because of the Equalisation Agreement and the other
arrangements between NV and PLC, we calculate earnings per
share on a combined basis. The calculation is based on the
average amount of NV’s and PLC’s ordinary share capital in issue
during the year. In the calculation, we apply the formula
contained in the Equalisation Agreement to arrive at the
appropriate total number of shares in issue for the combined
business, expressed separately in terms of NV shares of €0.51
shares and PLC shares of 1.4p. The net profit attributable to
ordinary shares is divided by each of these combined share
numbers to arrive at an earnings per share figure expressed in
terms of each of the two share types.
Further information about these calculations, and about the
calculation of earnings per share on a diluted basis, can be found
in note 8 on page 97.
Despite the Equalisation Agreement, NV and PLC are separate
companies, and are subject to different laws and regulations
governing dividend payments in the Netherlands and the United
Kingdom. In our combined earnings per share calculation, we
assume that both companies will be able to pay their dividends
out of their part of our profits. This has always been the case in
the past, but if we did have to make a payment from one to the
other it could result in additional taxes, and reduce our combined
earnings per share.
Share capital
NV’s issued share capital on 31 December 2005 was made up of:
• €291 503 709 split into 571 575 900 ordinary shares of €0.51
each;
• €1 089 072 split into 2 400 ordinary shares numbered 1 to
2 400, known as special shares; and
• €120 280 425 split into several classes of cumulative preference
shares.
PLC’s issued share capital on 31 December 2005 was made up of:
• £40 760 420 split into 2 911 458 580 ordinary shares of 1.4p
each; and
• £100 000 of deferred stock.
For NV share capital, the euro amounts quoted in this document
are representations in euros on the basis of Article 67c of Book 2
of the Civil Code in the Netherlands, rounded to two decimal
places, of underlying share capital in Dutch guilders, which have
not been converted into euros in NV’s Articles of Association or in
the Equalisation Agreement. Until conversion formally takes place
by amendment of the Articles of Association, the entitlements to
dividends and voting rights are based on the euro equivalent of
the underlying Dutch guilder according to the official euro
exchange rate.
As mentioned on page 35, proposals to simplify the relationship
between the NV and PLC shares by establishing a one-to-one
equivalence in their underlying economic value will be put to
shareholders at the 2006 AGMs. More information on this
proposal can be found in the notices to these AGMs and these
can be found at www.unilever.com/investorcentre/agms.
Stichting Administratiekantoor Unilever N.V. (Foundation
NV Trust Office)
N.V. Nederlandsch Administratie- en Trustkantoor (Nedamtrust),
an independent trust company under the Netherlands law, had an
agreement with NV to issue depositary receipts against NV shares.
As part of its corporate objects Nedamtrust was able to:
• issue depositary receipts;
• carry out administration for the shares which underlie the
depositary receipts it has issued; and
• exercise voting rights for these underlying shares.
The depositary receipts issued by Nedamtrust against NV shares
were known as Nedamtrust certificates. They were traded and
quoted on Euronext Amsterdam and other European stock
exchanges. Nedamtrust had issued certificates for NV’s ordinary
and NV 7% cumulative preference shares, and almost all the NV
shares traded and quoted in Europe were in the form of these
certificates. The exception is that there are no certificates for NV’s
4% and 6% cumulative preference shares.
In October 2005, Nedamtrust held a meeting of the holders
of Nedamtrust certificates to approve the transfer of the
administration of the underlying shares to a new trust office,
Stichting Administratiekantoor Unilever N.V. (Foundation NV Trust
Office). These proposals were made in order for the trust office to
be fully compliant with the Dutch Corporate Governance Code.
The holders of the Nedamtrust certificates approved the transfer
of the administration of the NV shares held by Nedamtrust to the
new Foundation NV Trust Office with a majority of 99.6% of the
votes cast; approximately 23% of all outstanding Nedamtrust
certificates were represented. The meeting furthermore expressed
its confidence in the board of the Foundation.
The Foundation NV Trust Office was incorporated on 31 October
2005. The transfer of the administration of the NV shares from
Nedamtrust to the Foundation took place on 13 January 2006.
The Foundation NV Trust Office and its arrangements are fully
compliant with the Dutch Corporate Governance Code.
The text that follows describes the arrangements of the new
Foundation NV Trust Office following acceptance by the certificate
holders of the transfer of the administration of the underlying NV
shares.