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75
Unilever Annual Report & Accounts and Form 20-F 2000 Financial Statements
Notes to the consolidated accounts
Unilever Group
Unilever Annual Report & Accounts and Form 20-F 2000Unilever Annual Report & Accounts and Form 20-F 2000
30 Financial instruments continued
Master netting agreements are in place for the majority of interest rate derivative instruments. The risk in the event of default by a
counterparty is determined by the extent to which market prices have moved since the contracts were made. The Group believes that the
risk of incurring such losses is remote.
The follow ing table summarises the fair values and carrying amounts of the various classes of financial instruments as at 31 December:
million
Fair value Carrying amount
2000 1999 2000 1999
Financial assets:
Other fixed investments 340 123 340 109
Current investments 660 1 477 660 1 477
Cash 2 613 3 996 2 613 3 996
3 613 5 596 3 613 5 582
Financial liabilities:
Bonds and other loans (27 237) (2 760) (26 892) (2 724)
Bank loans and overdrafts (2 870) (2 065) (2 849) (2 065)
(30 107) (4 825) (29 741) (4 789)
Derivatives:
Interest rate sw aps – assets 52 32 95 54
– liabilities (95) (59) (40) —
Foreign exchange contracts – assets 650 42 650 42
– liabilities (492) (171) (492) (171)
The fair values of fixed investments are based on their market values. The fair values of unlisted fixed investments are not materially
different from their carrying amounts. Current investments, cash, bank loans and overdrafts have fair values which approximate to their
carrying amounts because of their short-term nature. The fair values of forward foreign exchange contracts represent the unrealised
gain or loss on revaluation of the contracts to year-end rates of exchange. The fair values of bonds and other loans, interest rate
sw aps and forward rate agreements are based on the net present value of the discounted anticipated future cash flows associated
with these instruments.
Currency exposures
Group treasury manages the foreign exchange exposures that arise from the Group’s financing and investing activities in accordance with
Group policies.
The objectives of Unilever’s foreign exchange policies are to allow operating companies to manage foreign exchange exposures that arise
from trading activities effectively within a framew ork of control that does not expose the Group to unnecessary foreign exchange risks.
Operating companies are required to cover substantially all foreign exchange exposures arising from trading activities and each company
operates w ithin a specified maximum exposure limit. Business Groups monitor compliance w ith these policies. Compliance with the Group’s
policies means that the net amount of monetary assets and liabilities at 31 December 2000 that are exposed to currency fluctuations is
not material.
31 Combined earnings per share
cents
Fl. 1.12 Fl. 1.12 Fl. 1 1.4p 1.4p 1.25p
2000 1999 1998 2000 1999 1998
Basic earnings per share 1.07 2.63 2.63 16.08 39.48 39.47
Basic earnings per share before exceptional items
and amortisation of goodwill and intangibles 3.21 2.83 2.59 48.20 42.44 38.87
Diluted earnings per share 1.05 2.57 2.57 15.69 38.50 38.51
Earnings per share on a SSAP 15 basis 1.06 2.60 2.58 15.94 39.06 38.63
Basis of calculation:
The calculations of combined earnings per share are based on the net profit attributable to ordinary capital divided by the average number
of share units representing the combined ordinary capital of NV and PLC in issue during the year, after deducting shares held to meet
Unilever employee share options w hich are not yet vested. For the calculation of combined ordinary capital the exchange rate of £1 = Fl. 12
has been used, in accordance with the Equalisation Agreement. On 10 M ay 1999 the 1.25p ordinary shares of PLC were consolidated, so
that every 112 1.25p ordinary shares w ere replaced by 100 1.4p ordinary shares. The Fl. 1 ordinary shares of NV were consolidated, so that
100 Fl. 1.12 ordinary shares replaced every 112 Fl. 1 ordinary shares. This consolidation w as associated w ith the payment on 9 June 1999 of
a special dividend, so that the economic impact was that of a share buy back at fair value at that date and therefore, in accordance w ith