Unilever 2005 Annual Report Download - page 26

Report of the Directors
Unilever Annual Report and Accounts 2005 23
Financial review
(continued)
On 9 February 2006 Unilever announced its intention to sell the
majority of its frozen foods businesses in Europe. The intended
sale includes the frozen food portfolio under the Iglo and Birds
Eye brands in Austria, Belgium, France, Germany, Greece, Ireland,
the Netherlands, Portugal, Spain and the United Kingdom.
For further information on the impact of acquisitions and
disposals refer also to the cash flow section of this review on
page 24 and to note 28 on page 128.
Dividends and market capitalisation
The proposed final dividend of €1.32 per €0.51 share brings the
dividends paid and proposed on the NV ordinary capital to
€1.98 per €0.51 share (2004: €1.89), an increase of 5% per
share. The proposed final dividend of 13.54p per 1.4p share
brings the dividends paid and proposed on the PLC ordinary
capital to 20.31p per 1.4p share (2004: 19.15p), an increase of
6% per share. The 2005 final proposed and interim paid
dividends of €1 905 million (2004: €1 832 million) represented
51% (2004: 66%) of net profit attributable to shareholders’
equity for the year.
Unilever’s combined market capitalisation at 31 December 2005
was €57.5 billion (2004: €49.3 billion).
Balance sheet
Goodwill and intangible assets at 31 December 2005 were
€1 048 million higher than in 2004. Currency movements added
€1 575 million, offset by Slim•Fast impairment, disposals and the
reclassification of assets held for sale. Inventories and current
trade receivables were €1 050 million higher, reflecting currency
movements and the low position achieved at the end of 2004.
Total equity has increased by €2 250 million since 1 January. Net
profit added €3 975 million and currency retranslation and fair
value gains €540 million. Treasury stock, which is deducted from
equity, was used for the conversion of the €0.05 preference
shares. This reduced borrowings by €1 380 million and increased
equity by €930 million. Subsequent purchases of treasury stock
and parent company dividends reduced equity by €1 262 million
and €1 867 million respectively.
The net debt position (see page 19) at 31 December 2004 was
€9 663 million which increased on 1 January 2005 to €11 185 million
as a result of the application of IAS 32/39 and IFRS 5 from this date.
Closing net debt was €10 502 million, a decrease of €683 million
since 1 January. Purchases of treasury stock were €1 276 million
(including the share buy-back program of €500 million) and
proceeds of business disposals were €804 million. The €1 380
million net debt reduction on conversion of the €0.05 preference
shares was largely offset by currency movements.
At 31 December 2005, cash and cash equivalents and financial
assets (including the positive fair value of derivatives relating to
borrowings amounting to €250 million) amounted to €2 114
million (2004: €2 603 million); borrowings, including finance
leases, amounted to €12 616 million (2004: €12 266 million). The
net of these cash and borrowing positions, being the net debt,
amounted to €10 502 million (2004: € 9 663 million).
Unilever manages the related interest rate and currency exposures
based on this net debt position. Taking into account the various
cross currency swaps and other derivatives, 60% of Unilever's net
debt was in US dollars (2004: 96%) and 17% in euros (2004:
(28)% financial assets), with the remainder spread over a large
number of other currencies. The currency distribution of total
borrowings was as follows: 51% in US dollars (2004: 58%) and
20% in euros (2004: 15%) with the remainder spread over a
large number of other currencies. Further details of the currency
analyses are given in note 17 on page 106 and note 18 on page
109.
Unilever has committed credit facilities in place to support its
commercial paper programmes and for general corporate
purposes. The undrawn committed credit facilities in place at the
end of 2005 were: bilateral committed credit facilities totalling
US $4 292 million, bilateral notes commitments totalling
US $200 million and bilateral money market commitments
totalling US $1 725 million. Further details regarding these
facilities are given in note 18 on page 109.
In September, a total of €750 million of term financing was raised
through issuance of a 10 year Eurobond.
Unilever is satisfied that its financing arrangements are adequate
to meet its working capital needs for the foreseeable future.
Unilever’s contractual obligations at the end of 2005 included
capital expenditure commitments, borrowings, lease commitments
and other commitments. A summary of certain contractual
obligations at 31 December 2005 is provided in the table below.
Further details are set out in the following notes to the accounts:
note 11 on page 100, note 18 on page 108, note 19 on pages
110 to 112 and note 27 on page 127.
Contractual obligations at 31 December 2005
€ million € million € million € million € million
Due Due in
within Due in Due in over
Total one year 1-3 years 3-5 years 5 years
Long-term debt 8 447 1 990 2 229 1 884 2 344
Operating lease
obligations 1 931 339 564 431 597
Purchase obligations(a) 240 165 55 20 –
Finance leases 330 75 116 27 112
Other long-term
commitments 591 200 330 43 18
(a) Raw and packaging materials and finished goods.