Unilever 2007 Annual Report Download

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Disclaimer
Notes to the Annual Report and Accounts This PDF version of the Unilever Annual Report
and Accounts 2007 is an exact copy of the document provided to Unilever’s shareholders.
Certain sections of the Unilever Annual Report and Accounts 2007 have been audited.
Sections that have been audited are set out on pages 69 to 121, 125 to 126, 128 to 130
and 133 to 135. The auditable part of the report of the Remuneration Committee as set
out on page 49 has also been audited.
The maintenance and integrity of the Unilever website is the responsibility of the Directors;
the work carried out by the auditors does not involve consideration of these matters.
Accordingly, the auditors accept no responsibility for any changes that may have occurred
to the financial statements since they were initially placed on the website.
Legislation in the United Kingdom and the Netherlands governing the preparation and
dissemination of financial statements may differ from legislation in other jurisdictions.
Disclaimer Except where you are a shareholder, this material is provided for information
purposes only and is not, in particular, intended to confer any legal rights on you.
This Annual Report and Accounts does not constitute an invitation to invest in Unilever
shares. Any decisions you make in reliance on this information are solely your responsibility.
The information is given as of the dates specified, is not updated, and any forward-looking
statements are made subject to the reservations specified on the final page of the Report.
Unilever accepts no responsibility for any information on other websites that may be
accessed from this site by hyperlinks.

Table of contents

  • Page 1
    ..., intended to confer any legal rights on you. This Annual Report and Accounts does not constitute an invitation to invest in Unilever shares. Any decisions you make in reliance on this information are solely your responsibility. The information is given as of the dates specified, is not updated...

  • Page 2
    Annual Report and Accounts 2007 Growing as One Adding Vitality to life

  • Page 3
    ... shares listed on the London Stock Exchange and, as American Depositary Receipts, on the New York Stock Exchange. The two parent companies, NV and PLC, together with their group companies, operate as a single economic entity (the Unilever Group, also referred to as Unilever or the Group). NV and PLC...

  • Page 4
    ... refer to the Directors' Report and the Financial Statements within this Annual Report and Accounts. Our mission and corporate purpose Unilever's mission is to add Vitality to life. We meet everyday needs for nutrition, hygiene and personal care with brands that help people feel good, look good...

  • Page 5
    ...Non-Executive Director. In our Board meetings, we have discussed a wide range of topics including the Group's annual plan, performance in key markets such as Russia and China, organisation and talent, and the role of science and technology. We also reviewed and fully agreed the Unilever strategy and...

  • Page 6
    ... Group Chief Executive I am pleased to report on a good year for Unilever - one in which we continued to grow competitively, consistently and profitably. With a clear growth strategy and an organisational structure to support it, there is growing evidence of improved momentum in our business...

  • Page 7
    ... vitality drinks brand in Indonesia and - only recently - Inmarko, the leading ice cream business in Russia. These transactions accelerate our strategy of building leadership positions in fast-growing markets. This is the right strategy for Unilever but - like any strategy - it is only as good as...

  • Page 8
    Report of the Directors continued About Unilever Description of business Unilever is one of the world's leading suppliers of fast moving consumer goods across Foods and Home and Personal Care categories. Unilever's portfolio includes some of the world's best known and most loved brands. Turnover ...

  • Page 9
    ... supply chain networks, and deploying brands and innovations effectively, focused on excellent execution in the marketplace. The regions are accountable for the delivery of in-year financial results including growth, profits and cash ï¬,ow, and in-year development of market shares. The Europe...

  • Page 10
    ...strategic direction of the supply chain and are accountable for long-term value creation in the business, as measured by longer-term market share development, category growth, innovation metrics and brand health. Building on the success of the One Unilever programme, Foods and Home and Personal Care...

  • Page 11
    ...in Foods and Home and Personal Care. These activities include: • Unilever Ventures, an early-stage business development fund for businesses from both inside and outside Unilever; • Langholm Capital, an independent fund investing in private European companies with above-average longer-term growth...

  • Page 12
    ... Unilever change from a multi-local to a globally aligned business through strategic alliances and partnerships with key global suppliers; improving IT capabilities and processes; improving overall IT infrastructure and service value; and strategic outsourcing in selected key areas. Property, plant...

  • Page 13
    ... above, that Unilever N.V., Unilever PLC and Unilever United States, Inc. allegedly conspired with certain other companies to fix prices of oral, home and personal care products in the United States. The Unilever parties deny the claims and intend to defend the action. Tax cases Brazil During 2004...

  • Page 14
    ...cant step was taken by our ice cream brand Ben & Jerry's, which announced plans to invest â,¬2.4 million over the five years 2007-2012 in reducing its impact on climate change through initiatives covering every stage of its European production process. 12 Unilever Annual Report and Accounts 2007

  • Page 15
    ...Outlook Our strategy is to focus our resources on our priority areas of Vitality, personal care, and developing and emerging markets, where we are well placed to achieve sustainable profitable growth with our brands and strong value creation for our shareholders. This is the basis for our strategic...

  • Page 16
    ... back office support operations, forming multi-country organisations and converging regional processes and systems. Building on the experiences of 2007, we will continue to manage the risks in this area diligently and develop clear action plans in an attempt to mitigate these risks. Key to this is...

  • Page 17
    ... Directors continued Operating Review - Regions Basis of reporting In this Operating Review we comment on our changes in revenue on the basis of underlying sales growth (USG). This measure reï¬,ects the change in revenue at constant rates of exchange, (average exchange rates for the preceding year...

  • Page 18
    .... The UK, our largest European business, returned to growth in the year with good results across several foods and personal care ranges. Although laundry sales declined, there were promising signs of progress in market share with Persil regaining its position as the country's leading laundry brand...

  • Page 19
    ...our categories. Market growth in home care and personal care slowed somewhat in the second half year, but this was compensated for by robust demand in foods. Our own sales in the US grew solidly, up 3.2% for the year, despite lower sales of ice cream. Our business in Mexico made good progress in the...

  • Page 20
    ... areas like ice cream and deodorants. China remains a key priority and grew strongly for the third consecutive year. We drove growth across all income levels, from highly affordable packs to premium positions. This was supported by new brands and products that leveraged our global platforms and...

  • Page 21
    ... large Home and Personal Care ranges but also in Foods as a result of strong performances in ice cream and savoury. Thailand had a disappointing year through weak demand and intense competition. A major programme of activities was undertaken to correct this. Unilever Annual Report and Accounts 2007...

  • Page 22
    ...to information about managing skin complaints. Our deodorant brands also made good progress in 2007, with Axe and Rexona both achieving double-digit growth. Rexona is the world's leading deodorant brand and Axe holds a leading position in male deodorants. Oral Care returned to growth in Europe while...

  • Page 23
    ... a number of countries - China, Russia, Brazil (three of the biggest hair care markets in the world), the Philippines, Pakistan, Egypt and Arabia. The brand has an innovative formula with superior anti-dandruff active delivery technology and is our first major Asian hair brand mix to go global. Its...

  • Page 24
    .../Lynx, the world's second-largest deodorant brand, made a triumphant entry into the Japanese market and quickly became the country's top-selling male deodorant. The launch followed an extensive study of the young Japanese male, examining his attitude towards dating, use of deodorants and purchasing...

  • Page 25
    ...currencies into euros using annual average exchange rates; balance sheet amounts are translated at year-end rates except for the ordinary capital of the two parent companies. These are translated at the rate referred to in the Equalisation Agreement of 31⁄ 9p = â,¬0.16 (see Corporate governance on...

  • Page 26
    ... Group. The structure of the agreement is such that there is joint control of the newly formed entity and therefore it is accounted for by Unilever as a joint venture. Other business disposals in 2007 involved the sale of local Brazilian margarine brands. To further develop our heart health brand...

  • Page 27
    ... and note 25 on page 112. Unilever Annual Report and Accounts 2007 25 Final dividends for 2007 are subject to approval at the Annual General Meetings. If approved, this will bring the total regular dividend to â,¬0.75 per share for NV and 51.11p for PLC, an increase of 7% excluding the additional...

  • Page 28
    ... liquidity Unilever aims to be in the top third of a reference group including 20 other international consumer goods companies for Total Shareholder Return, as explained on page 32. The Group's financial strategy supports this objective and provides the financial ï¬,exibility to meet its strategic...

  • Page 29
    ... the One Unilever programme, Foods and Home and Personal Care will be combined into a single category structure. To reï¬,ect our strategic focus on growth in developing markets, operations in Central and Eastern Europe will be managed as part of an enlarged region comprising Asia, Africa and Central...

  • Page 30
    ... or loss. Changes in fair value of net investment hedges in relation to foreign subsidiaries are recognised directly in equity. Pensions and similar obligations The assets and liabilities of the plans are recognised at fair values in the balance sheet. Pension accounting requires certain assumptions...

  • Page 31
    ... Shareholder Return (TSR) which is a key metric. Measures of long-term value creation Unilever's ambition for the creation of value for shareholders is measured by Total Shareholder Return over a rolling three-year period compared with a peer group of 20 other international consumer goods companies...

  • Page 32
    ... to measure progress against our longer-term value creation goals as outlined to investors. UFCF is cash ï¬,ow from group operating activities, less net capital expenditure, less charges to operating profit for share-based compensation and pensions, and less tax (adjusted to reï¬,ect an ungeared...

  • Page 33
    Report of the Directors continued Financial Review continued Return on invested capital (ROIC) ROIC expresses the returns generated on capital invested in the Group. The progression of ROIC is used by Unilever to measure progress against our longer-term value creation goals outlined to investors. ...

  • Page 34
    ...2006 vs 2005 Total Shareholder Return (TSR) TSR measures the returns received by a shareholder, capturing both the increase in share price and the value of dividend income (assuming dividends are re-invested). Unilever's TSR performance is compared with a peer group of competitors over a three-year...

  • Page 35
    ... Unilever Share Dealing Code), the Risk Management Policy, the Corporate Pensions Policy and the Accounting and Reporting Policy. The Code of Business Principles is Unilever's statement of values and represents the standard of conduct we require from all of our employees. Our Code of Ethics applies...

  • Page 36
    ... strategy; approval of the corporate Annual Plan; review of risks and controls; authorisation of major transactions; preparation of the Annual Report and Accounts; declaration of dividends; agreement of quarterly results announcements; convening of shareholders' meetings; nominations for Board...

  • Page 37
    ... and clear information. The Group Chief Executive has been entrusted, within the parameters set out in the Articles of Association of NV and PLC and 'The Governance of Unilever', with all the Boards' powers, authorities and discretions in relation to the operational management of Unilever. The Group...

  • Page 38
    ... of these key Board committees are described on pages 37 and 38. The profile set by the Boards for the Non-Executive Directors and the chart used for orderly succession planning can be seen on our website at www.unilever.com/investorcentre/corpgovernance 36 Unilever Annual Report and Accounts 2007

  • Page 39
    ... of the Executive Directors, the remuneration scales and arrangements for Non-Executive Directors and the remuneration of the tier of management directly below the Boards. The Committee is advised by the Group Secretary on matters of Corporate Governance. Unilever Annual Report and Accounts 2007 37

  • Page 40
    ... transactions and other activities between companies in the Unilever Group. 5 of 5 1 of 3 5 of 5 (a) Attendance is expressed as number of meetings attended out of number eligible to attend. The detailed report of the Remuneration Committee to shareholders on Directors' remuneration is on pages...

  • Page 41
    ... the NV Articles of Association allowing Unilever to implement the opportunity of electronic communication. Accordingly, the Board of Directors is now authorised to decide upon the use of this means of communication. Voting rights To be entitled to attend and vote at NV General Meetings shareholders...

  • Page 42
    ... and Dutch tax and exchange control laws applicable at that time. Under the Equalisation Agreement, the two companies are permitted to pay different dividends in the following exceptional circumstances: • If the average annual sterling/euro exchange rate changed so substantially from one year to...

  • Page 43
    ... exchange rate, as the price for one new PLC share. Neither company can issue or reduce capital without the consent of the other. The Articles of Association of NV establish that any payment under the Equalisation Agreement will be credited or debited to the income statement for the financial year...

  • Page 44
    ... with Article 98 of Book 2 of the Netherlands Civil Code, until 15 November 2008 to cause the Company to buy in its own shares and depositary receipts therefor, within the limits set by law (10% of the issued share capital), either through purchase on a stock exchange or otherwise, at a price...

  • Page 45
    ....unilever.com/Investorcentre/corpgovernance Following implementation of the EU Takeover Directive, certain information is required to be disclosed in relation to control and share structures and interests of NV and PLC. Such disclosures, which are not covered elsewhere in this Annual Report, include...

  • Page 46
    Report of the Directors continued Corporate governance continued Board and Committee structures NV is a multinational company with activities and shareholders located all over the world. It has a one-tier board, consisting of both Executive and, as a majority, Non-Executive Directors. We achieve ...

  • Page 47
    ... Remuneration and Nomination Committees, to be present at both meetings. The Chairman ensures that a majority of Directors attend both meetings and that at least one member of each Committee attends each AGM. Requirements - the United States Both NV and PLC are listed on the New York Stock Exchange...

  • Page 48
    ... President Home and Personal Care Europe 2001. Business Group President, Latin America 1999. Chairman, Unilever Thai Holdings 1995. Chairman, Unilever Malaysia 1992. External appointments include: Non-Executive Director, InterContinental Hotels Group PLC. Non-Executive Directors Professor Genevieve...

  • Page 49
    ... Asia Africa April 2005. Joined Unilever 1976. He is also Non-Executive Chairman, Hindustan Lever. Previous posts include: Business Group President, Home and Personal Care, North America 2004. Business Group President, Home and Personal Care, Latin America 2001 and Senior Vice President, Hair Care...

  • Page 50
    ... planning and talent management with the Group Chief Executive. The Committee reviewed and agreed new the terms of appointment of Non-Executive Directors in line with best practice. Process for the appointment of Directors Unilever has formal procedures for evaluation of the Boards, the Board...

  • Page 51
    ... and structure of Unilever's incentive plans. At our 2007 AGMs, shareholders approved the introduction of a new share-based incentive plan which appropriately aligned our programme with our peer company market. The Committee also increased the annual incentive opportunity for Executive Directors...

  • Page 52
    ... to a number of key measures of Group performance to create alignment with strategy, business priorities, and shareholder value. The total remuneration package for Executive Directors is intended to be competitive in a global market, with a strong emphasis on performance related pay. Internal and...

  • Page 53
    ... shareholders. Global Share Incentive Plan (GSIP) Under the GSIP, annual awards of shares in NV and PLC are granted to Executive Directors. The actual number of shares received at vesting after three years depends on the satisfaction of performance conditions. Unilever Annual Report and Accounts...

  • Page 54
    ... value of the matching shares on vesting. Executive Directors' pensions The policy beginning in 2007 is that new Executive Directors will be members of the all-employee pension arrangement in their home country (or an alternative of similar value) and will pay employee contributions at the same rate...

  • Page 55
    ..., Unilever provides support to Executive Directors in relation to spouse's travel expenses when travelling together on company business. This amount is capped at 5% of base salary and for 2007 totalled â,¬168 559 (including related taxes payable). (c) Bonus of the year 2007. Includes: the value of...

  • Page 56
    ...of the Directors continued Report of the Remuneration Committee continued Comments on long-term incentive arrangements • Global Share Incentive Plan The first award was made in 2007 with a performance period 1 January 2007 to 31 December 2009. Vesting will be in May 2010 (three years after award...

  • Page 57
    ... Report of the Remuneration Committee continued Executive Directors' conditional share awards under the TSR Long-Term Incentive Plan The following conditional shares were outstanding from grants made in 2004 to 2006. From 2007 onwards no new awards will be made under this Plan as a new plan...

  • Page 58
    ...Weighted average exercise price Options outstanding above market price at 31 December 2007 Weighted average exercise price Share type Number of options Number of options First exercisable date Final expiry date Patrick Cescau Executive Plan Executive Plan NL All-Employee Plan UK ShareSave Plan...

  • Page 59
    ... in transfer value during 2007 of market changes for the UK based Executive Directors together with additional service and the Executive Directors being one year closer to retirement and exchange rate movements (for pensions denominated in currency other than euros). There have been no salary...

  • Page 60
    ...16 shares and PLC shares are ordinary 31⁄ 9p shares. (b) Numbers are excluding unvested matching shares. (c) Balances include under NV 38 715 NV New York shares and under PLC 10 220 PLC ADRs. The Executive Directors, in common with other employees of PLC and its United Kingdom subsidiaries, had...

  • Page 61
    Report of the Directors continued Report of the Remuneration Committee continued Non-Executive Directors The following section contains detailed information and commentary on the Non-Executive Directors' annual fees and share interests. The Non-Executive Directors receive fees from both NV and PLC....

  • Page 62
    ... shares are ordinary 31⁄ 9p shares. (b) Shareholding is as from date of appointment. There were no changes in the interests of the Non-Executive Directors and their connected persons in NV and PLC ordinary shares between 31 December 2007 and 1 March 2008. 60 Unilever Annual Report and Accounts...

  • Page 63
    ... specialists) on market data, reward trends and performance-related pay. Towers Perrin also provides general consultancy advice to Unilever group companies on employee rewards, pension, communications and other human resource matters. The Group Secretary attends all Committee meetings and advises on...

  • Page 64
    ... to internal controls over financial reporting; • review of the application of information and communication technology; • a review of the annual pension report and pensions related accounting and proposals; • annual review of anti-fraud arrangements; • a review of tax planning policy; and...

  • Page 65
    ... to develop a common approach to supplier evaluation through self-assessment and shared audit. The Committee endorsed Unilever's commitment to responsible sourcing and offered suggestions to reinforce communication around the Business Partner Code. Corporate responsibility strategy Committee members...

  • Page 66
    This page has been intentionally left blank 64 Unilever Annual Report and Accounts 2007

  • Page 67
    ... 1 Accounting information and policies 2 Segment information 3 Gross profit and operating costs 4 Staff costs 5 Net f finance costs 6 Taxation 7 Combined earnings per share 8 Dividends on ordinary capital 9 Goodwill and intangible assets 10 Property, plant and equipment 11 Other non-current assets...

  • Page 68
    ... operating company and regional level. Regions review, on an ongoing basis, the risks faced by their group and the related internal control arrangements, and provide written reports to the Group Chief Executive. Unilever's corporate internal audit function plays a key role in providing an objective...

  • Page 69
    ... company accounts of Unilever N.V. for the year ended 31 December 2007. Directors' responsibility The Directors are responsible for the preparation and fair presentation of the consolidated accounts in accordance with International Financial Reporting Standards as adopted by the European Union and...

  • Page 70
    ... have been prepared under the accounting policies set out in note 1 on pages 72 to 76. We have reported separately on the parent company accounts of Unilever PLC for the year ended 31 December 2007 and on the information in the Report of the Remuneration Committee that is described as having been...

  • Page 71
    ...-for-sale financial assets Actuarial gains/(losses) on pension schemes net of tax Currency retranslation gains/(losses) net of tax(a) Net income/(expense) recognised directly in equity Net profit Total recognised income and expense 21 Attributable to: Minority interests Shareholders' equity 84...

  • Page 72
    ... statements Unilever Group Consolidated balance sheet as at 31 December â,¬ million 2007 â,¬ million 2006 Goodwill 9 Intangible assets 9 Property, plant and equipment 10 Pension asset for funded schemes in surplus 20 Deferred tax assets 12 Other non-current assets 11 Total non-current assets...

  • Page 73
    ...payments Share buy-back programme Other movements on treasury stock Other financing activities Net cash ï¬,ow from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of foreign exchange rate changes Cash...

  • Page 74
    ...parent companies, NV and PLC, together with their group companies, operate as a single economic 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, which are designed...

  • Page 75
    ... at fair value (the transaction price) adjusted, in the case of instruments not classified as fair value through profit or loss, by directly attributable transaction costs. Financial assets Market purchases and sales of financial assets are recognised using value date accounting. Financial assets...

  • Page 76
    ... amount, are recognised in the income statement. Changes in fair value of net investment hedges in relation to foreign subsidiaries are recognised directly in equity. Gains and losses accumulated in equity are included in the income statement when the foreign operation is partially disposed of or...

  • Page 77
    ... accounts Unilever Group 1 Accounting information and policies (continued) Taxation Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity. Current...

  • Page 78
    ... Notes to the consolidated accounts Unilever Group 1 Accounting information and policies (continued) Retirement benefits Pension accounting requires certain assumptions to be made in order to value our obligations and to determine the charges to be made to the income statement. These figures are...

  • Page 79
    ... Notes to the consolidated accounts Unilever Group 2 Segment information Our primary reporting segments are geographic, comprising our three operating regions of Europe, The Americas and Asia Africa. The home countries of the Unilever Group are the Netherlands and the United Kingdom. Turnover for...

  • Page 80
    ... segment Corporate liabilities Total liabilities Capital expenditure 2007 2006 Depreciation of property, plant and equipment 2007 2006 2005 Amortisation of finite-lived intangible assets and software 2007 2006 2005 Europe â,¬ million The Americas â,¬ million Asia Africa â,¬ million Total 14...

  • Page 81
    ... sales of ice cream, tea, weight management products, and nutritionally enhanced staples sold in developing markets. Personal care - including sales of skin care and hair care products, deodorants and anti-perspirants, and oral care products. Home care and other operations - including sales of home...

  • Page 82
    ... the consolidated accounts Unilever Group 2 Segment information (continued) â,¬ million Savoury, dressings and spreads â,¬ million Ice cream and beverages â,¬ million â,¬ million Home care and other â,¬ million Analysis by product area 2005 Turnover Operating profit Net finance costs Share of net...

  • Page 83
    ...disposals of group companies Impairments (Provision for)/release of Brazilian sales tax Gains on US healthcare and UK pensions (875) 297 - 9 - (704) 179 (14) 31 266 (328) 132 (397) 16 - Restructuring costs are incurred as Unilever continues to simplify the organisation, reorganise operations and...

  • Page 84
    ... (11) (384) (702) (192) (5 745) (a) In 2006 includes gains of â,¬266 million arising from changes in US post-retirement healthcare plans and UK pension plans. Average number of employees during the year Europe The Americas Asia Africa '000 2007 '000 2006 '000 2005 44 44 87 175 47 46 96 189 51 46...

  • Page 85
    ...31 - (5) 2 (2) 2 (1) (1) 26 (b) The computed tax rate used is the average of the standard rate of tax applicable in the European countries in which Unilever operates, weighted by the amount of profit before taxation generated in each of those countries. Unilever Annual Report and Accounts 2007 83

  • Page 86
    ... ventures Share of net profit/(loss) of associates 2 332 26 50 2 408 2 700 76 - 2 776 5 184 2 266 17 36 2 319 2 451 61 - 2 512 4 831 2 379 11 (20) 2 370 2 115 36 (5) 2 146 4 516 Taxation Europe Parent and group companies: Current taxes payable Deferred taxation Accelerated depreciation Pensions...

  • Page 87
    ... the â,¬0.05 NV preference shares were cancelled. Calculation of average number of share units Average number of shares: NV PLC Less shares held by employee share trusts and companies Combined average number of share units for all bases except diluted earnings per share Add shares issuable in 2038...

  • Page 88
    ... Notes to the consolidated accounts Unilever Group 8 Dividends on ordinary capital Dividends paid on ordinary capital during the year Final NV dividend for the prior year of â,¬0.47 per share (2006: â,¬0.44; 2005 â,¬0.42) Final PLC dividend for the prior year of 32.04p per share (2006: 30.09p; 2005...

  • Page 89
    ...ve years and applying a terminal value multiple thereafter would not result in a value in use that would cause impairment. The growth rates used to estimate future performance beyond the periods covered by our annual planning and strategic planning processes do not exceed the long-term average rates...

  • Page 90
    ... 2007 Depreciation 1 January 2007 Disposals of group companies Depreciation charge for the year Disposals Currency retranslation Reclassification as held for sale Other adjustments 31 December 2007 Net book value 31 December 2007 Includes payments on account and assets in course of construction...

  • Page 91
    ... sale. (b) Includes â,¬(18) million relating to discontinued operations. Included in the above is property, plant and equipment under a number of finance lease agreements, for which the book values are as follows: â,¬ million â,¬ million Plant and equipment â,¬ million Total Net book value Gross...

  • Page 92
    ...Holdings Inc., Palmci, Langholm Capital Partners and Physic Ventures. Other Unilever Ventures assets (excluding Langholm) are included under 'Other non-current financial assets' above. Analysis of listed and unlisted investments Investments listed on a recognised stock exchange Unlisted investments...

  • Page 93
    ...million charge reported under discontinued operations in the income statement. (b) Of the total movement in equity of â,¬235 million, â,¬7 million arises as a result of currency retranslation. At the balance sheet date, the Group has unused tax losses of â,¬1 471 million and tax credits amounting to...

  • Page 94
    ... to the consolidated accounts Unilever Group 14 Trade and other receivables Trade and other receivables Due within one year Trade receivables Prepayments and accrued income Other receivables â,¬ million 2007 â,¬ million 2006 2 965 467 762 4 194 3 054 441 759 4 254 Credit terms for customers are...

  • Page 95
    ... the balance sheet, the total value is eliminated again. The other leg of the currency derivatives is shown in note 16 as a liability. (b) Includes fair value of financial liability-related derivatives amounting to â,¬78 million (2006: â,¬36 million). Unilever Annual Report and Accounts 2007 93

  • Page 96
    ... to dividend and liquidation proceeds remains linked, using the official euro conversion rate, to the amount in Dutch guilders originally paid up on these shares. The euro conversion did not alter the dividend entitlements of the cumulative preference shares. 94 Unilever Annual Report and Accounts...

  • Page 97
    ...% Bonds 2007 (Thai baht) South Africa 10.200% Bonds 2008 (South African rand) Commercial paper (South African rand) Other countries Total other group companies Total bonds and other loans (a) Values are based on fair value hedge accounting and do not include a valuation of the credit risk. (b) Of...

  • Page 98
    ... period Amount Average of fixing interest rate for following for following year year Liabilities - 2007 Euro(c) Sterling US dollar Swedish krona Swiss francs Japanese yen Thai baht Australian dollar Other Euro leg of currency derivatives mainly relating to intra-group loans(d) Total Liabilities...

  • Page 99
    ... shareholder return. Unilever manages the liquidity requirements by the use of short-term and long-term cash ï¬,ow forecasts. Unilever maintains access to global debt markets through an infrastructure of short-term and long-term debt programmes. In addition to this, Unilever has committed credit...

  • Page 100
    ... collateral Credit risk related to the use of treasury instruments is managed on a group basis. This risk arises from transactions with banks like cash and cash equivalents, deposits and derivative financial instruments. To reduce the credit risk, Unilever has concentrated its main activities with...

  • Page 101
    ... other financial assets and â,¬(337) million (2006: â,¬(350) million) is included under financial liabilities. The impact of exchange rate movements on the fair value of forward exchange contracts used to hedge net investments is recognised in reserves. Unilever Annual Report and Accounts 2007 99

  • Page 102
    ... liabilities relating to the fair values of derivatives used as net investment hedges. The remaining balances are shown under trade and other receivables and other liabilities. Sensitivity to not applying hedge accounting Derivatives have to be reported at fair value. Those derivatives used for...

  • Page 103
    ... capital structure of the company is based on management's judgement of the appropriate balancing of all key elements of its financial strategy in order to meet the company's strategic and day-to-day needs. Annually the overall funding plan is presented to the Board for approval. Return on Invested...

  • Page 104
    ... shares provision â,¬ million Disputed indirect taxes â,¬ million Net liability of associate 1 662 â,¬ million Other provisions Movements during 2007 1 January 2007 Disposal of group companies Income statement: New charges Releases Utilisation Currency retranslation 31 December 2007 Total...

  • Page 105
    ... the largest proportion of the assets in equities which the Group believes offer the best returns over the long term commensurate with an acceptable level of risk. The pension funds also have a proportion of assets invested in property, bonds, hedge funds and cash. The majority of assets are managed...

  • Page 106
    ...date and applies to these rates suitable risk premiums that take account of historic market returns and current market long-term expectations for each asset class. For the most important pension plans, representing approximately 80% of all defined benefit plans by liabilities, the assumptions used...

  • Page 107
    ...fit plans Long-term rates of return expected â,¬ million â,¬ million % 31 December 2005 Other postemployment benefit plans Long-term rates of return expected Pension plans Pension plans Pension plans Assets of principal plans: Equities Bonds Property Other Assets of other plans Present value...

  • Page 108
    ... accounts Unilever Group 20 Pensions and similar obligations (continued) Income statement The charge to the income statement comprises: â,¬ million 2007 â,¬ million 2006 â,¬ million 2005 Charged to operating profit: Defined benefit pension and other benefit plans Current service cost Employee...

  • Page 109
    ...the income statement. (c) Certain obligations have been reclassified as employee benefit obligations. Funded status of plans at the year end â,¬ million 2007 â,¬ million 2006 â,¬ million 2005 â,¬ million 2004 Total assets Total pension liabilities Net liabilities Less unrecognised surplus Pension...

  • Page 110
    ... stock Share-based payment credit(a) Dividends paid to minority shareholders Currency retranslation gains/(losses) net of tax Other movements in equity 31 December 2005 Total recognised income and expense for the year Dividends on ordinary capital (Purchase)/sale/reduction of treasury stock(b) Share...

  • Page 111
    ... dividends on their ordinary shares in NV. Share-based compensation The Group operates a number of share-based compensation plans involving options and awards of ordinary shares of NV and PLC. Full details of these plans are given in note 29 on pages 117 to 119. Unilever Annual Report and Accounts...

  • Page 112
    ...to income statement: Operating profit Financing Transfers to inventories/non-current assets 31 December 1 74 1 1 - 9 85 (5) 12 (4) (2) (2) (2) 1 Unilever acquired 68 891 470 ordinary shares of NV and 2 461 202 ordinary shares of PLC through purchases on the stock exchanges during the year. These...

  • Page 113
    ... value of share options and awards granted to employees. (b) As part of the review of Unilever's corporate structure, and in the light of the constitutional and operational arrangements which enable Unilever N.V. and Unilever PLC to operate as nearly as practicable as a single company, the Directors...

  • Page 114
    ... obligations under environmental legislation. None of our Directors or Officers is involved in any legal proceedings which are material as aforesaid. Nonetheless, we give further information on pages 10 and 11 about certain current legal proceedings. 112 Unilever Annual Report and Accounts 2007

  • Page 115
    ... shareholdings in the Unilever businesses in South Africa and Israel. In the reorganised shareholding Unilever has a majority share in a single South African business and fully owns the Unilever Israel foods and home and personal care business. As a result of this transaction, Unilever has reported...

  • Page 116
    ... â,¬ million 2005 - - - - 1 033 - - 1 033 1 033 - 1 033 170 - - 170 164 6 170 1 397 102 2 1 501 1 271 230 1 501 227 20 1 248 226 22 248 Foods Personal care - - - Operating profit Europe The Americas Asia Africa - - - - Foods Personal care - - - 114 Unilever Annual Report and Accounts 2007

  • Page 117
    ...sale (part of disposal groups) Trade payables and other liabilities Deferred taxation (10) (3) (13) - - - Total assets at 31 December 2007 are included in the geographical segments as follows: Europe â,¬31 million; The Americas â,¬127 million; and Asia Africa â,¬1 million. Unilever Annual Report...

  • Page 118
    ... accounts Unilever Group 28 Reconciliation of net profit to cash ï¬,ow from operating activities Cash ï¬,ow from operating activities Net profit Taxation Share of net profit of joint ventures/associates and other income from non-current investments Net finance costs: Finance income Finance cost...

  • Page 119
    ... description of the method and significant assumptions used to estimate the fair values of options and the weighted average information, are given below for each type of plan, for NV, PLC and New York shares on a combined basis. Unilever will not grant share options in total in respect of Executive...

  • Page 120
    ... accounts Unilever Group 29 Share-based compensation plans (continued) 2007 2006 2005 Option value information Fair value per option Valuation assumptions: Expected option term Expected volatility Expected dividend yield Risk-free interest rate â,¬4.33 3.5 years 27.5% 3.2% 4.6% â,¬3.10 3.5 years...

  • Page 121
    ... of share-based compensation plans of NV and its subsidiaries and the North American plans, and 18 296 234 (2006: 29 315 519) ordinary shares in NV or PLC in respect of share-based compensation plans of PLC and its subsidiaries. To satisfy the options granted, certain NV group companies hold 68...

  • Page 122
    ... full market value via an open bidding/tendering process managed by independent property consultants. 31 Key management personnel Key management personnel are defined as the members of UEx together with the Non-Executive Directors. Key management compensation Salaries and short-term employee bene...

  • Page 123
    ... the One Unilever programme, Foods and Home and Personal Care will be combined into a single category structure. To reï¬,ect our strategic focus on growth in developing markets, operations in Central and Eastern Europe will be managed as part of an enlarged region comprising Asia, Africa and Central...

  • Page 124
    ... reporting during 2006 and 2007. Figures for 2005 and 2004 also reï¬,ect this classification, and therefore differ from those originally published for those years. Consolidated income statement Continuing operations: Turnover Operating profit Net finance costs Income from non-current investments...

  • Page 125
    ... 25 382 6 059 5 417 36 858 588 511 1 099 Operating profit Foods Home and Personal Care 2 868 2 377 5 245 Total assets Foods Home and Personal Care Corporate 24 381 7 491 5 430 37 302 Capital expenditure Foods Home and Personal Care 801 624 1 425 Unilever Annual Report and Accounts 2007 123

  • Page 126
    ... Unilever Group Exchange rates The information in the following table is based on exchange rates between euros and US dollars and between euros and sterling. These translation rates were used in preparation of the accounts: 2007 2006 2005 2004 2003 Year end â,¬1 = US $ â,¬1 = £ Annual average...

  • Page 127
    ... amount of profit and assets shown in the Unilever Group accounts. The Directors consider that those companies not listed are not significant in relation to Unilever as a whole. Full information as required by Articles 379 and 414 of Book 2 of the Civil Code in the Netherlands has been filed by...

  • Page 128
    ... Principal group companies and non-current investments Unilever Group as at 31 December 2007 Group companies (continued) % Turkey Unilever Sanayi ve Ticaret Türk A.S ,. United Kingdom Unilever UK Ltd. Unilever PLC(a) Unilever UK Holdings Ltd. Unilever UK & CN Holdings Ltd. United States of America...

  • Page 129
    ... under the accounting policies set out therein. We have reported separately on the consolidated accounts of the Unilever Group for the year ended 31 December 2007. Directors' responsibility The Directors are responsible for the preparation and fair presentation of the company accounts in accordance...

  • Page 130
    ...xed investments after taxation and other income and expenses after taxes. The company accounts of Unilever N.V. do not contain a cash ï¬,ow statement as this is not required by book 2 of the Civil Code in the Netherlands. The Board of Directors 10 March 2008 128 Unilever Annual Report and Accounts...

  • Page 131
    ... investments Shares in group companies are stated at cost less any amounts written off to reï¬,ect a permanent impairment. Any impairment is charged to the profit and loss account as it arises. In accordance with Article 385.5 of Book 2 of the Civil Code in the Netherlands, Unilever N.V. shares...

  • Page 132
    ...ficates held to meet employee share options Changes in present value of net pension liability 31 December â,¬ million 2007 â,¬ million 2006 Movements during the year: 1 January PLC shares held in connection with share options NV shares held by group companies Additions(a) Decreases 31 December...

  • Page 133
    ... be accounted for in shareholders' equity as an appropriation of retained earnings in the year ended 31 December 2008. During 2007, a final dividend of â,¬0.47 per share (totalling â,¬775 million) was paid in respect of the dividend declared for the year ended 31 December 2006. Special controlling...

  • Page 134
    ... accounts of Unilever PLC for the year ended 31 December 2007 which comprise the balance sheet and the related notes. These parent company accounts have been prepared under the accounting policies set out therein. We have also audited the information in the Report of the Remuneration Committee...

  • Page 135
    ... company accounts for PLC. Under the terms of Financial Reporting Standard 1 (revised 1996) 'Cash Flow Statements' (FRS 1) a cash ï¬,ow statement is not included, as the cash ï¬,ows are included in the consolidated cash ï¬,ow statement of the Unilever Group. On behalf of the Board of Directors...

  • Page 136
    ... to the company accounts Unilever PLC Accounting information and policies Basis of preparation The accounts have been prepared in accordance with applicable United Kingdom accounting standards and the United Kingdom Companies Act 1985. The accounts are prepared under the historical cost convention...

  • Page 137
    ... accounted for in shareholders' equity as an appropriation of retained earnings in the year ending 31 December 2008. During 2007, a final dividend of 32.04p per share (totalling £412 million) was paid in respect of the dividend declared for the year ended 31 December 2006. Unilever Annual Report...

  • Page 138
    ... agreeing the terms and conditions under which business transactions with their suppliers are conducted. The directors' reports of the United Kingdom operating companies give information about their supplier payment policies as required by the UK Companies Act 1985. PLC, as a holding company, does...

  • Page 139
    Shareholder information Shareholder information Analysis of shareholding Significant shareholders of NV As far as we are aware the only holders of more than 5% (as referred to in the Act on Financial Supervision in the Netherlands) in the NV share capital (apart from the Foundation Unilever NV ...

  • Page 140
    ... a prohibition to perform any of the actions indicated in those regulations without a licence. To date no regulations of this type have been issued which are applicable to Unilever N.V. There are currently no exchange controls affecting PLC shareholders. 138 Unilever Annual Report and Accounts 2007

  • Page 141
    ... trading markets upon which Unilever shares are listed are Euronext Amsterdam for NV depositary receipts of ordinary and preference shares and the London Stock Exchange for PLC ordinary shares. NV ordinary shares mainly trade in the form of depositary receipts for shares. In the United States, NV...

  • Page 142
    ... information continued Shareholder information continued Nature of the trading market (continued) Share prices at 31 December 2007 The share price of the ordinary shares at the end of the year were as follows: NV per â,¬0.16 ordinary share in Amsterdam NV per â,¬0.16 ordinary share in New York PLC...

  • Page 143
    ... by US holders of NV and PLC shares are the result of changes in exchange rate between the equalisation of the dividends and the date of payment. The interim dividend is normally 35% of the previous year's total normal dividend per share, based on the stronger of our two parent currencies over the...

  • Page 144
    ... for 2007 Announced 7 February 2008 and to be declared 14 May 2008 (PLC) and 15 May 2008 (NV). Ex-dividend date Record date Payment date NV PLC NV - New York Registry Shares PLC - American Depositary Receipts Interim dividends for 2008 To be announced 30 October 2008. 19 21 19 21 May May May...

  • Page 145
    ... investor/analyst presentations. You can also view this year's and prior years' Annual Review and Annual Report and Accounts documents at www.unilever.com/investorcentre PLC shareholders can elect not to receive paper copies of the Annual Review, the Annual Report and Accounts and other shareholder...

  • Page 146
    ... Distribution 8 Diversity 9-10 Dividends 25, 86, 141, 142 Earnings per share 41, 69, 85 Employees 9 Equalisation Agreement 40-41 Equity 108 Europe 15-16, 77-79 Exchange rates 1, 23, 72, 124 Executive Directors 35-36, 46, 51-58 Exports 8 Finance and liquidity 26 Finance costs and income 82 Financial...

  • Page 147
    ... Annual Report on Form 20-F is available, free of charge, upon request to Unilever PLC, Investor Relations Department, Unilever House, 100 Victoria Embankment, London EC4Y 0DY, United Kingdom. Designed and produced by Unilever Communications in conjunction with Addison Corporate Marketing Typeset...

  • Page 148
    ...Rotterdam Number: 24051830 Unilever PLC Unilever House 100 Victoria Embankment London EC4Y 0DY United Kingdom T +44 (0)20 7822 5252 F +44 (0)20 7822 5951 Unilever PLC registered office Unilever PLC Port Sunlight Wirral Merseyside CH62 4ZD United Kingdom Registered in England and Wales Company Number...