Unilever 2003 Annual Report Download - page 89

Notes to the consolidated accounts
Unilever Group
86 Unilever Annual Report & Accounts and Form 20-F 2003
4 Exceptional items
€ million € million € million
2003 2002 2001
Restated Restated
Included in operating profit
Restructuring (470) (1 163) (1 506)
Other, principally business disposals 370 461 927
Total (100) (702) (579)
These amounts, which include amounts relating to joint ventures, are mainly included in administrative expenses.
Exceptional items are those items within ordinary activities which, because of their size or nature, are disclosed to give a proper understanding
of the underlying result for the period. These include restructuring charges in connection with reorganising businesses (comprising impairment
of fixed assets, costs of severance, and other costs directly attributable to the restructuring), and profits and losses on disposal of businesses.
United Kingdom FRS 3 would require profits and losses on disposal of most businesses to be excluded from operating profit. However, because
the business disposals above and the restructuring costs are part of a series of linked initiatives, separate presentation would not give a true and
fair view and therefore we have included all exceptional items arising from these initiatives on a single line in operating profit. Costs associated
with restructuring, such as training, are recognised as they arise and are not treated as exceptional.
The exceptional items in 2003, 2002 and 2001 principally relate to a series of linked initiatives (the ‘Path to Growth’), announced on
22 February 2000 to align the organisation behind plans for accelerating growth and expanding margins and to restructuring arising
from the integration of Bestfoods. The total net cost of these programmes is estimated to be €6.2 billion over five years, most of which is
expected to be exceptional restructuring costs. Provisions for these costs and asset write downs are being recognised as necessary consultations
are completed and plans finalised.
In 2003, €0.3 billion of net costs have been incurred under Path to Growth programmes, of which a net €0.1 billion is exceptional. To date,
which is four years into the five-year programme, the total net cost incurred is €5.4 billion, of which a net €4.5 billion is exceptional.
In 2002, exceptional items included €1.1 billion of Path to Growth net costs. Other exceptional items in 2002 included the release of provisions
(€98 million) against environmental exposures when events showed that the provisions were no longer required. These provisions were
originally recorded on the acquisition of the Bestfoods business.
In 2001, exceptional items included €1.4 billion of Path to Growth net costs and €811 million gain on the sale of brands to secure regulatory
approval for the acquisition of Bestfoods.
Information relating to the cash flows arising from restructuring is given in note 19 on page 108. Information relating to business disposals is
given in note 25 on page 112.
5 Interest
€ million € million € million
2003 2002 2001
Total interest payable and similar charges (1 173) (1 446) (1 914)
Group interest payable and similar charges:
Bank loans and overdrafts (158) (186) (451)
Bonds and other loans (965) (1 228) (1 463)
Share of interest payable of joint ventures (2) (5) –
Share of interest payable of associates (48) (27) –
Group interest receivable and similar income(a) 320 247 210
Exchange differences 626 (3)
(847) (1 173) (1 707)
Less: interest capitalised on businesses held for resale ––61
Total net interest (847) (1 173) (1 646)
(a) Includes in 2003 one-off credits of €23 million in respect of profit on the sale of the JohnsonDiversey senior discount note and €13 million
in respect of the early termination of an interest rate swap.
Other finance income/(cost) in respect of pensions and similar obligations is not included above but is analysed in note 17 on page 99.