Unilever 2014 Annual Report Download - page 51

FOREIN URRENIES
The consoldated fnancal statements are presented n euros
Thefunctional currencies of NV and PLC are euros and sterling
respectively. Items included in the financial statements of
individual group companies are recorded in their respective
functional currency which is the currency of the primary
economic environment in which each entity operates.
Foreign currency transactions in individual group companies are
translated into functional currency using exchange rates at the
date of the transaction. Foreign exchange gains and losses
fromsettlement of these transactions, and from translation
ofmonetary assets and liabilities at year-end exchange rates,
arerecognised in the income statement except when deferred
in equity as qualifying hedges.
In preparing the consolidated financial statements, the balances
in individual group companies are translated from their functional
currency into euros. The income statement, the cash flow
statement and all other movements in assets and liabilities
are translated at average rates of exchange as a proxy for the
transaction rate, or at the transaction rate itself if more
appropriate. Assets and liabilities are translated at year-end
exchange rates.
The ordinary share capital of NV and PLC is translated in
accordance with the Equalisation Agreement. The difference
between the value for PLC and the value by applying the
year-end rate of exchange is taken to other reserves (see note
15B on page 111).
The effect of exchange rate changes during the year on net assets
of foreign operations is recorded in equity. For this purpose net
assets include loans between group companies and any related
foreign exchange contracts where settlement is neither planned
nor likely to occur in the foreseeable future.
The roup apples hedge accountng to certan exchange
dfferences arsng between the functonal currences of a foregn
operaton and NV or PL as approprate, regardless of whether
the net nvestment s held drectly or through an ntermedate
parent Dfferences arsng on retranslaton of a fnancal lablty
desgnated as a foregn currency net nvestment hedge are
recorded n equty to the extent that the hedge s effectve These
dfferences are reported wthn proft or loss to the extent that the
hedge s neffectve
umulatve exchange dfferences arsng snce the date of
transton to IFRS of 1 January 2004 are reported as a separate
component of other reserves In the event of dsposal or part
dsposal of an nterest n a group company ether through sale or
as a result of a repayment of captal, the cumulatve exchange
dfference s recognsed n the ncome statement as part of the
proft or loss on dsposal of group companes
RITIAL AOUNTIN ESTIMATES AND JUDEMENTS
The preparaton of fnancal statements requres management to
make udgements, estmates and assumptons n the applcaton
of accountng polces that affect the reported amounts of assets,
labltes, ncome and expenses Actual results may dffer from
these estmates Estmates and udgements are contnuously
evaluated and are based on hstorcal experence and other
factors, ncludng expectatons of future events that are beleved
to be reasonable Revsons to accountng estmates are
recognsed n the perod n whch the estmate s revsed and
n any future perod affected
1 AOUNTIN INFORMATION AND POLIIES
The accountng polces adopted are the same as those whch
were appled for the prevous fnancal year, except as set out
below under the headng ‘Recent accountng developments’
UNILEVER
The two parent companes, NV and PL, together wth ther group
companes, operate as a sngle economc entty (the Unlever
roup, also referred to as Unlever or the roup) NV and PL
have the same Drectors and are lnked by a seres of agreements,
ncludng an Equalsaton Agreement, whch are desgned so that
the postons of the shareholders of both companes are as closely
as possble the same as f they held shares n a sngle company
The Equalsaton Agreement provdes that both companes adopt
the same accountng prncples It also requres that dvdends
and other rghts and benefts attachng to each ordnary share
of NV, be equal n value to those rghts and benefts attachng to
each ordnary share of PL, as f each such unt of captal formed
part of the ordnary share captal of one and the same company
BASIS OF ONSOLIDATION
Due to the operatonal and contractual arrangements referred to
above, NV and PL form a sngle reportng entty for the purposes
of presentng consoldated fnancal statements Accordngly, the
fnancal statements of Unlever are presented by both NV and
PL as ther respectve consoldated fnancal statements roup
companes ncluded n the consoldaton are those companes
controlled by NV or PL ontrol exsts when the roup has the
power to drect the actvtes of an entty so as to affect the return
on nvestment
The net assets and results of acqured busnesses are ncluded n
the consoldated fnancal statements from ther respectve dates
of acquston, beng the date on whch the roup obtans control
The results of dsposed busnesses are ncluded n the
consoldated fnancal statements up to ther date of dsposal,
beng the date control ceases
Intra-group transactons and balances are elmnated
The company ncome statement for NV s ncluded n the
consoldated fnancal statements An abbrevated ncome
statement has been dsclosed n the NV company accounts on
page 131 n accordance wth Artcle 2402 of the Dutch vl ode
OMPANIES LEISLATION AND AOUNTIN STANDARDS
The consoldated fnancal statements have been prepared n
accordance wth Internatonal Fnancal Reportng Standards (IFRS)
as adopted by the European Unon (EU), IFRI Interpretatons and n
accordance wth Part 9 of Book 2 of the Dutch vl ode and the UK
ompanes Act 2006 applcable to companes reportng under IFRS
They are also n complance wth IFRS as ssued by the Internatonal
Accountng Standards Board (IASB)
These fnancal statements are prepared under the hstorcal cost
conventon unless otherwse ndcated
AOUNTIN POLIIES
Accountng polces are ncluded n the relevant notes to the
consoldated fnancal statements These are presented as text
hghlghted n grey on pages 90 to 128 The accountng polces
below are appled throughout the fnancal statements
88 Unilever Annual Report and Accounts 2014Financial statements
NOTES TO THE ONSOLIDATED FINANIAL STATEMENTS
UNILEVER ROUP