Unilever 2006 Annual Report Download - page 136

Unilever Annual Report and Accounts 2006 133
Financial Statements (continued)
Notes to the company accounts Unilever N.V.
Accounting information and policies
Basis of preparation
The company accounts of Unilever N.V. comply in all material respects
with legislation in the Netherlands. As allowed by Article 362.1 of
Book 2 of the Civil Code in the Netherlands, the company accounts
are prepared in accordance with United Kingdom accounting
standards, unless such standards conflict with the Civil Code in
the Netherlands which would in such case prevail.
The accounts are prepared under the historical cost convention as
modified by the revaluation of financial assets classified as ‘available-
for-sale investments’, ‘financial assets at fair value through profit
or loss’, and ‘derivative financial instruments’ in accordance with
the accounting policies set out below which have been
consistently applied.
Accounting policies
The principal accounting policies areas follows:
Fixed investments
Shares in group companies are stated at cost less any amounts written
offto reflect a permanent impairment. Any impairment is charged
to the profit and loss account as it arises. In accordance with Article
385.5 of Book 2 of the Civil Code in the Netherlands, Unilever N.V.
shares held by Unilever N.V. subsidiaries are deducted from the
carrying value of those subsidiaries. This differs from the accounting
treatment under United Kingdom Urgent Issues Task Force abstract
37 ‘Purchases and sale of own shares’ (UITF 37) which would require
these amounts to be included within fixed investments.
Financial instruments and derivative financial instruments
The company’s accounting policies under United Kingdom generally
accepted accounting principles (UK GAAP) namely FRS 25 ‘Financial
Instruments: Disclosure and Presentation’ and FRS 26 ‘Financial
Instruments: Measurement’ are the same as the Unilever Group’s
accounting policies under International Financial Reporting Standards
(IFRS) namely IAS 32 ‘Financial Instruments: Disclosure and
Presentation’ and IAS 39 ‘Financial Instruments: Recognition and
Measurement’. The policies are set out under the heading ‘Financial
instruments’ in note 1 to the consolidated accounts on pages 75 and
76. Unilever N.V. is taking the exemption for not providing all the
financial instruments disclosures, because IAS 32 disclosures are given
in note 17 to the consolidated accounts on pages 99 to 101.
Deferred taxation
Full provision is made for deferred taxation on all significant timing
differences arising from the recognition of items for taxation purposes
in different periods from those in which they are included in the
company's accounts. Full provision is made at the rates of tax
prevailing at the year end unless future rates have been enacted
or substantively enacted. Deferred tax assets and liabilities have
not been discounted.
Own shares held
Own shares held by the company are accounted for in accordance
with Dutch law and United Kingdom UITF 37. All differences between
the purchase price of the shares held to satisfy options granted and
the proceeds received for the shares, whether on exercise or lapse, are
charged to reserves.
Retirement benefits
Unilever N.V. has accounted for pensions and similar benefits under
the United Kingdom Financial Reporting Standard 17 'Retirement
benefits' (FRS 17). The operating and financing costs of defined
benefit plans are recognised separately in the profit and loss account;
service costs are systematically spread over the service lives of
employees, and financing costs are recognised in the periods in which
they arise. Variations from expected costs, arising from the experience
of the plans or changes in actuarial assumptions, are recognised
immediately in the statement of total recognised gains and losses. The
costs of individual events such as past service benefit enhancements,
settlements and curtailments are recognised immediately in the profit
and loss account. The liabilities and, where applicable, the assets of
defined benefit plans are recognised at fair value in the balance sheet.
The charges to the profit and loss account for defined contribution
plans are the company contributions payable and the assets of such
plans are not included in the company balance sheet.
Dividends
Under Financial Reporting Standard 21 ‘Events after the Balance Sheet
Date’ (FRS 21), proposed dividends do not meet the definition of a
liability until such time as they have been approved by shareholders at
the Annual General Meeting. Therefore, we do not recognise a liability
in any period for dividends that have been proposed but will not be
approved until after the balance sheet date. This holds for external
dividends as well as intra-group dividends paid to the parent company.