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Notes to the consolidated accounts Unilever Group
98 Unilever Annual Report and Accounts 2007
Financial statements continued
17 Financial instruments and treasury risk management (continued)
The following table shows Unilever’s contractually agreed (undiscounted) cash flows payable under financial liabilities and derivative assets and
liabilities as at the balance sheet date:
€ million € million € million € million € million € million
Net carrying
amount as
Due within Due between Due between Due 3 years shown in
Undiscounted cash flows 1 year 1 and 2 years 2 and 3 years and beyond Total balance sheet
2007
Non derivative financial liabilities:
Financial liabilities excluding related derivatives
and finance lease creditors (4 101) (1 060) (1 314) (2 877) (9 352) (9 243)
Interest on financial liabilities (304) (270) (236) (1 916) (2 726)
Finance lease creditors including related finance cost (81) (41) (36) (362) (520) (311)
Trade payables and other liabilities
excluding social security and sundry taxes(a) (7 643) (204) – – (7 847) (7 847)
(12 129) (1 575) (1 586) (5 155) (20 445)
Derivative financial liabilities:
Interest rate derivatives:
Derivative contracts - receipts 643215
Derivative contracts - payments (9) (4) (3) (2) (18)
Foreign exchange derivatives:
Derivative contracts - receipts 5 315 22 22 45 5 404
Derivative contracts - payments (5 411) (26) (26) (52) (5 515)
(99) (4) (4) (7) (114) (116)(b)
31 December (12 228) (1 579) (1 590) (5 162) (20 559)
2006
Non derivative financial liabilities:
Financial liabilities excluding related derivatives
and finance lease creditors (4 338) (405) (280) (3 601) (8 624) (8 601)
Interest on financial liabilities (328) (234) (219) (2 251) (3 032)
Finance lease creditors including related finance cost (71) (68) (22) (135) (296) (187)
Trade payables and other liabilities
excluding social security and sundry taxes(a) (7 452) (261) – – (7 713) (7 713)
(12 189) (968) (521) (5 987) (19 665)
Derivative financial liabilities:
Interest rate derivatives:
Derivative contracts - receipts 2 – – – 2
Derivative contracts - payments (3) (3) (2) (1) (9)
Foreign exchange derivatives:
Derivative contracts - receipts 5 272 100 – – 5 372
Derivative contracts - payments (5 302) (121) – – (5 423)
(31) (24) (2) (1) (58) (60)(b)
31 December (12 220) (992) (523) (5 988) (19 723)
(a) See note 18 on page 102.
(b) Includes financial liability-related derivatives amounting to €(95) million (2006: €(47) million).
Credit risk on banks and received 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 a limited
group of banks that have secure credit ratings. Per bank, individual risk limits are set based on its financial position, credit ratings, past experience
and other factors. The utilisation of credit limits is regularly monitored. To reduce the credit exposures, netting agreements are in place with
Unilever’s principal banks that allow Unilever, in case of a default, to net assets and liabilities across transactions. To further reduce Unilever’s credit
exposures, Unilever has collateral agreements with Unilever’s principal banks based on which they need to deposit securities and/or cash as a
collateral for their obligations in respect of derivative financial instruments. At 31 December 2007 the collateral received by Unilever amounts to
€nil (2006: €2 million). At 31 December 2007 there was no significant concentration of credit risk with any single counterparty.