Unilever 2007 Annual Report Download - page 83

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Unilever Annual Report and Accounts 2007 81
Financial statements continued
Notes to the consolidated accounts Unilever Group
3 Gross profit and operating costs
€ million € million € million
2007 2006 2005
Turnover 40 187 39 642 38 401
Cost of sales (20 558) (20 093) (19 539)
Gross profit 19 629 19 549 18 862
Distribution and selling costs (9 489) (9 486) (9 078)
Administrative expenses(a) (4 895) (4 655) (4 710)
Operating profit 5 245 5 408 5 074
(a) Includes amortisation of finite-lived intangible assets and impairment of goodwill and intangible assets.
The following items are disclosed on the face of the income statement as separate disclosure provides additional information to users to help
them better understand underlying business performance.
€ million € million € million
2007 2006 2005
Restructuring (875) (704) (328)
Business disposals, impairments and other:
Gain/(loss) on disposals of group companies 297 179 132
Impairments –(14) (397)
(Provision for)/release of Brazilian sales tax 931 16
Gains on US healthcare and UK pensions –266 –
Restructuring costs are incurred as Unilever continues to simplify the organisation, reorganise operations and support functions and redevelop the
portfolio. They primarily relate to redundancy and retirement costs. The significant costs incurred in 2007 are in respect of new multi-country
organisations announced and several factory closures. Business disposals generate both costs and revenues which are not reflective of underlying
performance. Impairment charges are primarily recognised for goodwill other than where included in restructuring or as part of business disposals.
In 2005 an impairment charge of €363 million was recognised in respect of Slim•Fast.
The gains on US healthcare arose from the introduction of an annual cap on the benefits which each participant can claim. The gain in the UK
resulted from reducing deferred pensions where they are taken early.
Other items within operating costs include:
€ million € million € million
2007 2006 2005
Staff costs (5 537) (5 355) (5 745)
Raw and packaging materials and goods purchased for resale (15 588) (15 655) (15 106)
Amortisation of finite-lived intangible assets and software (140) (157) (99)
Depreciation of property, plant and equipment (804) (787) (770)
Advertising and promotions (5 289) (5 203) (4 918)
Exchange gains/(losses): (15) (25) 19
On underlying transactions (10) (10) (6)
On covering forward contracts (5) (15) 25
Lease rentals: (477) (451) (421)
Minimum operating lease payments (488) (455) (423)
Contingent operating lease payments –(3) (3)
Less: Sub-lease income relating to operating lease agreements 11 75
Total expenditure on research and development in 2007, including costs incurred under some of the headings reported above, was €868 million
(2006: €906 million; 2005: €932 million).