Unilever 2006 Annual Report Download - page 115

112 Unilever Annual Report and Accounts 2006
Financial Statements (continued)
25 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 2006 2006 2006 2005 2005 2005
Buildings(a) 137 94 43 160 95 65
Plant and machinery 159 15 144 170 18 152
296 109 187 330 113 217
The commitments fall due as follows:
Within 1 year 71 10 61 75 11 64
After 1 year but within 2 years 68 8 60 60 10 50
After 2 years but within 3 years 22 6 16 56 6 50
After 3 years but within 4 years 17 6 11 14 6 8
After 4 years but within 5 years 10 5 5 13 6 7
After 5 years 108 74 34 112 74 38
296 109 187 330 113 217
(a) All leased land is classified as operating leases.
€million €million
Long-term operating lease commitments 2006 2005
Land and buildings 1257 1472
Plant and machinery 360 459
1617 1931
€million €million €million €million
Other Other
Operating Operating commit- commit-
leases leases ments ments
Operating lease and other commitments fall due as follows 2006 2005 2006 2005
Within 1 year 342 339 471 365
After 1 year but within 2 years 294 297 261 323
After 2 years but within 3 years 243 267 192 62
After 3 years but within 4 years 182 222 175 40
After 4 years but within 5 years 156 209 153 23
After 5 years 400 597 528 18
1617 1931 1780 831
The Group has sublet part of the leased properties under operating leases. Future minimum sublease payments of €16 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 10 on page 90. The increase in other commitments as at 31 December 2006 is due to
outsourcing initiatives.
Contingent liabilities areeither 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 turninto an obligation in the future. The Group believes that incurred losses in any of these matters would not have
amaterial 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
2006 was some €439 million (2005: €349 million). This includes amounts relating to some of the legal proceedings mentioned on page 8.
Examples of the second type of contingent liability areguarantees issued by group companies. At 31 December 2006 these amounted to
some €105 million (2005: €113 million). Included in this are discounted trade bills with a value of €23 million (2005: €25 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 2006 was €41 million (2005: €39 million). The fair value of guarantees is not
material in either 2005 or 2006.
Notes to the consolidated accounts Unilever Group