Unilever 2000 Annual Report Download - page 49

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Unilever Annual Report & Accounts and Form 20-F 2000 Financial Statements
Accounting information and policies
Unilever Group
Unilever
The two parent companies, NV and PLC, operate as nearly
as is practicable as a single entity (the Unilever Group, also
referred to as Unilever or the Group). NV and PLC have the
same directors and are linked by a series of agreements,
including an Equalisation Agreement, w hich is designed
so that the position of the shareholders of both companies
is as nearly as possible the same as if they held shares in a
single company.
The Equalisation Agreement provides for both companies
to adopt the same accounting principles and requires as
a general rule the dividends and other rights and benefits
(including rights on liquidation) attaching to each Fl. 12
nominal of ordinary capital of NV to be equal in value at the
relevant rate of exchange to the dividends and other rights
and benefits attaching to each £1 nominal of ordinary share
capital of PLC, as if each such unit of capital formed part
of the ordinary capital of one and the same company.
Basis of consolidation
By reason of the operational and contractual arrangements
referred to above and the internal participating interests set
out in note 21 on page 65, NV and PLC and their group
companies constitute a single group under Netherlands and
United Kingdom legislation for the purposes of presenting
consolidated accounts. Accordingly, the accounts of the
Unilever Group are presented by both NV and PLC as
their respective consolidated accounts. These accounts are
supplemented in notes 22 and 23 on page 69 and note 35
on page 90 by additional information for the NV and PLC
parts of the Group in w hich group companies are
consolidated according to respective ow nership.
Reporting currency
Historically, the consolidated financial statements of the
Unilever Group have been prepared in both guilders and
sterling. With effect from 1 January 2000, Unilever replaced
the guilder and sterling w ith the euro for reporting
purposes. The consolidated financial statements for years
ended 31 December 1999 and 1998 have been restated
to euros at the rate of €1.00 = Fl. 2.20371, the fixed
conversion rate announced on 31 December 1998. The
consolidated financial statements reported in euro depict
the same trends as previously reported in guilders. However,
they do not necessarily represent the same trends as
previously reported in sterling. Also, the trends show n by the
consolidated financial statements may not be comparable
with those of other companies that also report in euros if
those other companies previously reported in a currency
other than the guilder.
Companies legislation
The consolidated accounts of the Unilever Group comply
with Book 2 of the Civil Code in the Netherlands and the
United Kingdom Companies Act 1985. The Company
accounts, the notes to those accounts and the further
statutory information given for each of NV and PLC comply
with legislation in the Netherlands and the United Kingdom
respectively. As explained under ‘Group companies’ on page
48, in order to give a true and fair view, the presentation
of the consolidated capital and reserves differs from that
specified by the United Kingdom Companies Act 1985.
Accounting standards
The accounts are prepared under the historical cost
convention and comply in all material respects w ith
applicable accounting principles in the Netherlands
and with United Kingdom Accounting Standards.
The accounting policies of the Unilever Group are set out
on pages 47 to 49. Material variations from United States
generally accepted accounting principles are set out on
pages 98 to 100.
United Kingdom Statement of Standard Accounting Practice
Number 15 (SSAP 15) requires that no provision should be
made for deferred taxation where it is probable, based on
reasonable assumptions, that a liability w ill not crystallise.
In this respect, SSAP 15 is not in agreement with Dutch law
as currently applied. For this reason, and because of the
Equalisation Agreement, full provision continues to be
made for deferred taxation. The effects of this departure
from SSAP 15 are show n in note 7 on page 57, note 19
on page 62 and note 31 on pages 75 and 76.
United Kingdom Urgent Issues Task Force Abstract 13 (UITF
13) requires that NV or PLC shares held by employee trusts
to satisfy options should be classified by the sponsoring
company as fixed assets. Dutch law requires such shares
to be accounted for within capital and reserves. In order to
comply with Dutch law and the Equalisation Agreement, the
requirements of UITF 13 have not been followed. All shares
held internally are accounted for in accordance with Dutch
GAAP. The effects of this departure are show n in note 23
on page 69.
United Kingdom Financial Reporting Standard 16 ‘Current
tax’ became mandatory for accounting periods ending on or
after 23 M arch 2000. The adoption of the standard did not
have a material impact on Unilever’s reported financial
position or results.
United Kingdom Financial Reporting Standard 17
‘Retirement benefits’ mandates that certain disclosures
relating to retirement benefits be made in financial
statements for accounting periods ending on or after 22
June 2001. The full requirements of the standard, w hich will
change the basis of accounting for retirement benefits, are
required to be implemented for accounting periods ending
on or after 22 June 2003. This standard will have a
significant impact on Unilever’s reported results.
United Kingdom Financial Reporting Standard 18
‘Accounting policies’ becomes mandatory for accounting
periods ending on or after 22 June 2001. Unilever’s policy
is already entirely consistent with this new standard.