Unilever 2006 Annual Report Download - page 86

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Unilever Annual Report and Accounts 2006 83
Financial Statements (continued)
Notes to the consolidated accounts Unilever Group
3Gross profit and operating costs
€million €million € million
2006 2005 2004
Turnover 39 642 38 401 37 168
Cost of sales (20 093) (19 539) (18 942)
Gross profit 19 549 18 862 18 226
Distribution and selling costs (9 486) (9 078) (8 025)
Administrative expenses(a) (4 655) (4 710) (6 220)
Operating profit 5408 5074 3 981
(a) Includes amortisation of finite-lived intangible assets and impairment of goodwill and intangible assets.
The following items are disclosed on the face of the income statement as separate disclosure provides additional information to users to help
them better understand underlying business performance.
€million €million € million
2006 2005 2004
Restructuring (704) (328) (913)
Business disposals, impairments and other
Gain/(loss) on disposals of group companies 179 132 264
Impairments (14) (397) (1 003)
(Provision for)/release of Brazilian sales tax 31 16 (169)
Gains on US healthcareand UK pensions 266 – –
Restructuring costs are incurred as the business continues to reorganise operations and support functions. They primarily relate to redundancy
and retirement costs. Business disposals generate both costs and revenues which are not reflective of underlying performance. Impairment
charges are primarily recognised for goodwill other than where included in restructuring or as part of business disposals. In 2005 and 2004
significant impairment charges were recognised in respect of Slim•Fast, respectively €363 million and €791 million.
The gains on US healthcare arise from the introduction of an annual cap on the benefits which each participant can claim. The gain in the UK
results from reducing deferred pensions if they are taken early.
Other items within operating costs include:
€million €million € million
2006 2005 2004
Staffcosts (5 355) (5 745) (5 708)
Raw and packaging materials and goods purchased for resale (15 655) (15 106) (14 278)
Amortisation of finite-lived intangible assets and software (157) (99) (64)
Depreciation of property, plant and equipment (787) (770) (949)
Advertising and promotions (5 203) (4 918) (4 365)
Exchange gains/(losses) (25) 19 (97)
Lease rentals (451) (421) (389)
Minimum operating lease payments (455) (423) (393)
Contingent operating lease payments (3) (3) (5)
Less: Sub-lease income relating to operating lease agreements 759
Total expenditureon research and development in 2006, including costs incurred under some of the headings reported above, was €906 million
(2005: €932 million; 2004: €972 million).