Unilever 2008 Annual Report Download - page 39

Financial Review continued
36 Unilever Annual Report and Accounts 2008
Report of the Directors
Balance sheet
€ million € million
2008 2007
Goodwill and intangible assets 16 091 16 755
Other non-current assets 8 876 10 619
Current assets 11 175 9 928
Current liabilities (13 800) (13 559)
Total assets less current liabilities 22 342 23 743
Non-current liabilities 11 970 10 924
Shareholders’ equity 9 948 12 387
Minority interest 424 432
Total capital employed 22 342 23 743
Goodwill and intangibles at 31 December 2008 were €0.7 billion
lower than in 2007, as a result of currency movements and
acquisition and disposal activity. Property, plant and equipment
was slightly lower than last year at €6.0 billion. The decrease in
other non-current assets is mainly due to a reduction in funded
pension schemes in surplus.
The overall net liability for all pension arrangements was €3.4
billion at the end of 2008, up from €1.1 billion at the end of
2007. Funded schemes showed an aggregate deficit of €1.4
billion and unfunded arrangements a liability of €2.0 billion. The
increase in the overall balance sheet liability was largely due to
falls in asset values on world markets, partly offset by higher
discount rates for liabilities.
Inventories were at a similar level to the end of 2007, and trade
receivables were lower by around €0.4 billion. Cash and cash
equivalents were €1.5 billion higher than the prior year, reflecting
the decision to maintain strong liquidity and the proceeds of the
sale of the Bertolli olive oil business.
Current liabilities rose slightly to €13.8 billion as a result of
€0.6 billion higher financial liabilities partially offset by a decrease
of €0.2 billion in trade payables and other current liabilities and
€0.2 billion lower provisions.
Non-current liabilities rose by €1.0 billion compared with 2007.
The increase in pension liabilities was partly offset by a reduction
in deferred tax liabilities of €0.4 billion, while financial liabilities
rose by €0.9 billion.
The increase in financial liabilities resulted from bonds issued
during the year, partially offset by debt repayments, as detailed on
page 35.
Total shareholders’ equity fell by €2.4 billion in the year. Net
profit added €5.3 billion, but was partly offset by currency and
fair value/actuarial losses of €4.2 billion. Dividends paid in the
year totalled €2.1 billion and there was a €1.4 billion movement
in treasury stock, largely explained by the share buy-back
programme of €1.5 billion.
Unilever’s contractual obligations at the end of 2008 included
capital expenditure commitments, borrowings, lease commitments
and other commitments. A summary of certain contractual
obligations at 31 December 2008 is provided in the table below.
Further details are set out in the following notes to the accounts:
note 10 on page 99, note 16 on page 105, note 17 on page 108
and note 25 on page 125.
Contractual obligations at 31 December 2008
€ 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 7 289 1 110 2 080 1 763 2 336
Operating lease
obligations 1 491 344 444 286 417
Purchase obligations(a) 344 263 69 12 -
Finance leases 381 37 62 40 242
Other long-term
commitments 1 796 459 724 534 79
(a) Raw and packaging materials and finished goods.
Off-balance sheet arrangements
SIC interpretation 12 ‘Consolidation-Special Purpose Entities’
(SIC 12) requires that entities with which we have relationships
are considered for consolidation in the consolidated accounts
based on relative sharing of economic risks and rewards rather
than based solely on share ownership and voting rights. We
periodically review our contractual arrangements with potential
special purpose entities (SPEs) as defined by SIC 12. The most
recent review has concluded that that there are no significant SPE
relationships which are not already appropriately reflected in the
accounts. Information concerning guarantees given by the Group
is stated in note 25 on page 125.
Cash flow
€ million € million € million
2008 2007 2006
Net cash flow from
operating activities 3 871 3 876 4 511
Net cash flow from/(used in)
investing activities 1 415 (623) 1 155
Net cash flow from/(used in)
financing activities (3 130) (3 009) (6 572)
Net increase/(decrease) in cash
and cash equivalents 2 156 244 (906)
Cash and cash equivalents increased by €2.2 billion when
translated at average 2008 exchange rates. After recognising
the changes in exchange rates, amounts in the balance sheet
at 31 December 2008 were €1.5 billion higher than at
31 December 2007. Net cash flow from operating activities, at
€3.9 billion, was at a similar level to 2007. Lower cash cost of
pensions more than offset higher restructuring charges and a
€0.2 billion increase in working capital. Tax paid was also €0.1
billion higher, resulting from additional one-off tax payments in
2008.
The increase of €2.0 billion in net cash flow from investing
activities when compared with 2007 is explained by the significant
level of completed disposal activity in the year.
Cash flows associated with financing activities included payment
of dividends of €2.1 billion in 2008 and €2.2 billion in 2007. In
addition, €1.5 billion was returned to shareholders in both 2007
and 2008 in the form of share buy-backs.
At 31 December 2008, the net debt position was €8.0 billion, a
decrease of €0.3 billion compared with 2007.