Unilever 2007 Annual Report Download - page 136

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134 Unilever Annual Report and Accounts 2007
Financial statements continued
Notes 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 as
modified by the revaluation of financial assets classified as ‘available-for-
sale investments’, ‘financial assets at fair value through profit or loss’,
and ‘derivative financial instruments’ in accordance with the accounting
policies set out below which have been consistently applied.
Accounting policies
The principal accounting policies are as follows:
Intangible assets
Intangible assets comprise trademarks purchased after 1 January 1998
and are amortised in the profit and loss account over their expected
useful lives of up to a maximum of 20 years. They are subject to
review for impairment in accordance with United Kingdom Financial
Reporting Standard 11 ‘Impairment of Fixed Assets and Goodwill’
(FRS 11). Any impairment is charged to the profit and loss account
as it arises.
Fixed asset investments
Shares in group companies are stated at cost less any amounts written
off to reflect a permanent impairment. Any impairment is charged to
the profit and loss account as it arises.
Financial instruments
The company’s accounting policies under United Kingdom generally
accepted accounting principles (UK GAAP) namely FRS 25 ‘Financial
Instruments: Presentation’, FRS 26 ‘Financial Instruments:
Measurement’ and FRS 29 ‘Financial Instruments: Disclosures’ are the
same as the Unilever Group’s accounting policies under International
Financial Reporting Standards (IFRS) namely IAS 32 ‘Financial
Instruments: Presentation’, IAS 39 ‘Financial Instruments: Recognition
and Measurement’ and IFRS 7 ‘Financial Instruments: Disclosures’. The
policies are set out under the heading ‘Financial instruments’ in note 1
to the consolidated accounts on pages 73 and 74. PLC is taking the
exemption for not providing all the financial instruments disclosures,
because IFRS 7 disclosures are given in note 17 to the consolidated
accounts on pages 97 to 101.
Deferred taxation
Full provision is made for deferred taxation on all significant timing
differences arising from the recognition of items for taxation purposes
in different periods from those in which they are included in the
company’s accounts. Full provision is made at the rates of tax
prevailing at the year end unless future rates have been enacted
or substantively enacted. Deferred tax assets and liabilities have not
been discounted.
Shares held by employee share trusts
Shares held to satisfy options are accounted for in accordance with
UK GAAP, namely FRS 25 ‘Financial Instruments: Presentation’ and
Urgent Issues Task Force abstract 38 ‘Accounting for ESOP Trusts’
(UITF 38). All differences between the purchase price of the shares
held to satisfy options granted and the proceeds received for the
shares, whether on exercise or lapse, are charged to other reserves.
Dividends
Under Financial Reporting Standard 21 ‘Events after the Balance Sheet
Date’ (FRS 21), proposed dividends do not meet the definition of a
liability until such time as they have been approved by shareholders
at the Annual General Meeting. Therefore, we do not recognise a
liability in any period for dividends that have been proposed but will
not be approved until after the balance sheet date. This holds for
external dividends as well as intra-group dividends paid to the parent
company.