Unilever 2009 Annual Report Download

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Notes to the Annual Report and Accounts This PDF version of the Unilever Annual Report
and Accounts 2009 is an exact copy of the document provided to Unilever’s shareholders.
Certain sections of the Unilever Annual Report and Accounts 2009 have been audited.
These are on pages 79 to 128, 131 to 132 and those parts noted as audited within
the Directors’ Remuneration Report on pages 71 to 73.
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.
Disclaimer

Table of contents

  • Page 1
    ... Unilever Annual Report and Accounts 2009 have been audited. These are on pages 79 to 128, 131 to 132 and those parts noted as audited within the Directors' Remuneration Report on pages 71 to 73. The maintenance and integrity of the Unilever website is the responsibility of the Directors; the work...

  • Page 2
    Annual Report and Accounts 2009 Creating a better future every day

  • Page 3
    ... Annual Report comprises regulated information within the meaning of sections 1:1 and 5:25c of the Dutch Financial Markets Supervision Act. Our brands Our strong portfolio of foods, home and personal care brands is trusted by consumers the world over. Our top 13 brands account for total sales of...

  • Page 4
    ...We work to create a better future every day. We help people feel good, look good and get more out of life with brands and services that are good for them and good for others. We will inspire people to take small, everyday actions that can add up to a big difference for the world. We will develop new...

  • Page 5
    ... tier managers â,¬89m invested in community programmes worldwide The Unilever Group Unilever is one of the world's leading suppliers of fast moving consumer goods. We aim to meet everyday consumer needs for nutrition, hygiene and personal care with brands and services that help people to feel good...

  • Page 6
    ... in total waste per tonne of production over the period 1995-2009 • 11 years as sector leader of the Dow Jones Sustainability Indexes p20 Case study: Foodsolutions Case study: Comfort Salt reductions Unilever in the UK is supporting government efforts to reduce levels of salt in food consumed...

  • Page 7
    ... has sharpened the strategy, improved execution in the market place, sharpened the emphasis on innovation and injected a new sense of energy and urgency into the Group. Our investors have recognised this. Unilever was ranked fifth on total shareholder return in its peer group of 21 companies. Paul...

  • Page 8
    ... Executive Officer We targeted four key areas of activity: Bigger and better innovations, rolled out faster and to more markets Our innovations are getting bigger and better. The One Unilever structure allows for faster roll-out across multiple geographies. Dove Minimising Deodorant, for example...

  • Page 9
    ... go on growing in line with our ambitions. And we will do it in a way that continues to make our consumers, customers, partners and employees proud to be associated with Unilever. Thank you for your support over 2009. Paul Polman Chief Executive Officer 6 Unilever Annual Report and Accounts 2009

  • Page 10
    ... on living our values are essential for keeping the best people. We believe our operating framework allows us to balance scale and global expertise to develop successful products with the local consumer intimacy needed to market and sell them. More on p14 Unilever Annual Report and Accounts 2009 7

  • Page 11
    ... develop our products to keep pace with changes in consumer lifestyles and to appeal to people at all income levels. Success means getting bigger and better innovations into the market faster, supported by the very best marketing. In the UK, understanding that consumers are looking for value without...

  • Page 12
    ... up our focus on a number of areas identified as critical to success such as open innovation, clinicals and patents. Bigger, better, faster In laying the foundations for growth, we are focusing on rolling out more innovations faster and to more markets. Unilever Annual Report and Accounts 2009 9

  • Page 13
    ... our country teams who are using them as the basis of plans for their local markets. This approach has already shown excellent results in many of the markets in which we operate. Case study: Walmart USA Winning in Walmart Using hit album releases to sell our personal care products? The Soundcheck...

  • Page 14
    ..., while in the coming year, the concept is being rolled out around the business. Coffee ice cream dream Unilever is gaining momentum in the North American ice cream market with a partnership to produce an own-brand super-premium ice cream for Starbucks. Unilever Annual Report and Accounts 2009 11

  • Page 15
    ...cant value During 2009 we launched a single strategy for the supply chain - One Unilever Supply Chain - putting customers and consumers at the heart of everything we do. The principal objectives for our supply chain are to deliver top-quality products with world-class service at a competitive cost...

  • Page 16
    ... scale. So in 2009 we set up a new business unit, Unilever Enterprise Support (UES). It will be operational in April 2010 and will bring together many of these activities as a key part of our initiatives to drive down costs. The best return on brand and customer investment Unilever is the second...

  • Page 17
    ... organisational structures; • revising our recruitment strategy and approach; • reviewing our retention schemes; • improving core processes such as decision making; • focusing on culture and employee engagement; • using development and training programmes to build capability levels. So...

  • Page 18
    ...We are already making progress. Our Board of Directors comprises six nationalities and the nine members of the Unilever Executive team come from six different countries. This combination delivers a wealth of experience in emerging markets which is critical to our future business success. In terms of...

  • Page 19
    Report of the Directors Performance 2009 Financial overview In 2009 our growth momentum was strong despite a challenging environment. Our market share is improving and our brands are stronger. Our leading positions in developing and emerging markets were strengthened and we made encouraging ...

  • Page 20
    ...market and positioning the brand effectively has been key to Surf's 12.5% growth in 2009, underscoring our decision in 2008 to sell our North American laundry business to focus on stronger investment opportunities elsewhere. and more @ www.unilever.com/surf Unilever Annual Report and Accounts 2009...

  • Page 21
    ... consumers with essential information such as levels of key nutrients. The health claims we make are based on rigorous scientific evidence and are externally checked. During 2009 the European Union formally approved Unilever's claim that the active ingredient in our Flora/Becel pro.activ products...

  • Page 22
    ...consumer poll. We work with a wide range of partners to help promote the importance of handwashing. Launched in 2008, Global Handwashing Day is an annual event backed by the Public-Private Partnership for Handwashing with Soap, of which Unilever is a founding partner. In 2009 more than 80 countries...

  • Page 23
    ... water, promoting biodiversity and using less energy. Palm oil is used in both food and home and personal care products. We have committed to have all our palm oil purchases externally certified as sustainable by 2015. Working with Greenpeace, we have built a global coalition of some 40 companies...

  • Page 24
    ... in 2001. In 2009 Unilever was the only company recognised as 'best practice' by the Natural Value Initiative's Ecosystem Services Benchmark, a tool developed with six institutional investors to help asset managers identify companies that are actively managing the risks and opportunities related to...

  • Page 25
    ...53. Chief Executive Officer since January 2009. Appointed Director October 2008. President, Kilimanjaro Blind Trust. Patron, Leaders for Nature, an International Union for Conservation of Nature (IUCN) initiative. Various positions within Procter & Gamble Co. 1979-2001, Group President Europe and Of...

  • Page 26
    ...Non-Executive Director, Clarian Health Partners, Hill-Rom Holdings, Eaton Corporation and the Lilly Endowment. Member of Finance Committee, Indianapolis Museum of Art. Executive Vice-President, Chief Financial Officer and Director, Eli Lilly and Company 1996-2006. Byron Grote7 Nationality: American...

  • Page 27
    ... (AMET) 2005, President, Africa Regional Group 2004, National Manager, Unilever South Africa, 2000, Managing Director Lever Pond's South Africa 1997, Vice President, Home and Personal Care for the Africa Business Group 1994. Vindi Banga President Foods, Home & Personal Care Nationality: Indian. Aged...

  • Page 28
    ... levels and to trade consumers up to higher added value products as needs change with rising incomes. We have an outstanding geographic footprint in D&E markets. Our focus is to maintain and develop our leading category and brand positions in our D&E strongholds, such as Brazil, India, South Africa...

  • Page 29
    ...-to-market operations in their geographic territory. The focus is primarily to build and develop relationships with customers, to develop the regional supply chain to deliver customer service and asset productivity, and to deploy brands and innovations effectively, focused on excellent execution in...

  • Page 30
    ... principles of business partners, shared services and centres of expertise. The top management team, called the Unilever Executive (UEx), consists of the CEO with eight direct reports, including regional Presidents for Western Europe, the Americas and Asia Africa CEE, one global President for the...

  • Page 31
    ...we give many examples of the ways in which our brand portfolio is being actively managed in support of our strategic objectives. Our employees We believe in providing an environment where individuals can achieve their goals, both professionally and personally. In order to attract and retain the best...

  • Page 32
    ..., key technologies, process, information and service allow Unilever to simplify its IT operations to better exploit global scale in IT. For example, this common approach facilitates the move towards regional supply chain organisations and the development of regional shared service centres...

  • Page 33
    ... the inside back cover. be aiming to regain market share in many of our key markets and categories and will enhance their activity plans accordingly. We expect heightened levels of competitive challenge to our many leadership positions based on innovation and wide-ranging brand support. We are well...

  • Page 34
    ...discount' chains and to the 'traditional' trade via distributors in many developing countries. We develop joint business plans with all our key customers, including detailed investment plans and customer service objectives, and regularly monitor progress. Unilever Annual Report and Accounts 2009 31

  • Page 35
    ... department. On tax, we maintain high quality tax compliance procedures and documentation, execute prudent tax planning strategies and make proper provision for current and deferred taxation. Deferred tax assets are reviewed regularly for recoverability. 32 Unilever Annual Report and Accounts 2009

  • Page 36
    Description of risk Consumer safety and environmental sustainability • Maintaining high social and environmental standards • Designing and producing products that are safe for consumers • Building an environmentally sustainable business Unilever has developed a strong corporate reputation over...

  • Page 37
    ...procedures and training are reinforced and enhanced on an ongoing basis. There is a Legal Policy which sets out the specific activities and processes for which employees must seek the agreement of internal legal counsel in advance of making a commitment. 34 Unilever Annual Report and Accounts 2009

  • Page 38
    ..., product safety and quality, the environment, ethical research, use of certain ingredients in our products, risk management, accounting and reporting, share dealing and corporate disclosure, pension fund management, treasury management, taxation and transfer pricing. Processes Unilever operates...

  • Page 39
    ... by the Boards of Directors. Details of the activities of the Audit Committee in relation to this can be found in the Report of the Audit Committee on page 63. Further statements on compliance with the specific risk management and control requirements in the Dutch Corporate Governance Code, the UK...

  • Page 40
    ... 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 56). Certain discussions within this Financial Review 2009 and in the Financial Review 2008 starting on page 47...

  • Page 41
    ... key developments in the year included a significant and broad-based improvement in customer service, the acquisition of the Baltimor sauce business in Russia and the establishment of the regional supply chain centre in Singapore. With this in place and related IT systems development progressing...

  • Page 42
    ...UK business. Other key developments in 2009 included the region beginning to fully leverage the power of a single IT system to improve operational execution and drive efficiencies. We also announced the acquisition of the personal care business of Sara Lee. Unilever Annual Report and Accounts 2009...

  • Page 43
    ... of market risks, including the effects of changes in foreign exchange rates, interest rates and liquidity. Further details of the management of these risks are given in note 15 on page 104 to 106, which are incorporated and repeated here by reference. 40 Unilever Annual Report and Accounts 2009

  • Page 44
    ... offers its pension plans around the world a simplified externally managed investment vehicle to implement their strategic asset allocation models currently for equities and hedge funds. The aim is to provide a high-quality, well-diversified risk controlled vehicle. Cash ï¬,ow â,¬ million 2009...

  • Page 45
    ... the sale of our oil palm plantation business in the Democratic Republic of Congo to Feronia Inc, for an undisclosed sum. On 25 September 2009 we announced a binding offer to acquire the personal care business of the Sara Lee Corporation for â,¬1.275 billion in cash. The Sara Lee brands involved...

  • Page 46
    ...defined benefit plan surplus or deficit in the balance sheet comprises the total for each plan of the fair value of plan assets less the present value of the defined benefit obligation (using a discount rate based on high-quality corporate bonds). Pension accounting requires certain assumptions...

  • Page 47
    ...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. We communicate the contribution of the business to this objective...

  • Page 48
    ... activities â,¬ million 2009 â,¬ million 2008 â,¬ million 2007 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 49
    ...of exchange rates (%) Turnover growth (%) 3.5 0.6 (3.0) (2.7) (1.7) 7.4 0.4 (1.8) (4.8) 0.8 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...

  • Page 50
    ... and the Bertolli olive oil business, as well as through the acquisition of Inmarko, the market leader in ice cream in Russia. We also made further progress in the simplification of our supply chain network in Europe with the establishment of a regional European supply chain company in Switzerland...

  • Page 51
    ... ice cream company in Russia, and it performed strongly with both sales and profits ahead of plan. We reshaped our portfolio in Côte d'Ivoire with the completion of the disposal of our palm oil business and the acquisition of soap brands in the same country. On an underlying basis the operating...

  • Page 52
    ... home and personal care businesses. The remaining 45% is held by Jerónimo Martins 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...

  • Page 53
    ... to undertake. PLC's and NV's Articles of Association are drafted to give a wide scope and provide that the primary objectives are: to carry on business as a holding company, to manage any companies in which it has an interest and to operate and carry into effect the Equalisation Agreement. It is...

  • Page 54
    ... business. Ongoing training is provided for Directors by way of site visits, presentations, circulated updates, teach-ins at Board or Board committee meetings on, among other things, Unilever's business, environmental, social and corporate governance, regulatory developments and investor relations...

  • Page 55
    ... within Unilever. It is our policy to set the level of severance payments for Executive Directors at no more than one year's salary, unless the Boards, at the proposal of the Remuneration Committee, find this manifestly unreasonable given the circumstances or unless dictated by applicable law. We...

  • Page 56
    ... the US. Our Boards consider all of our Non-Executive Directors to be independent of Unilever following the conclusion of a thorough review of all relevant relationships of the Non-Executive Directors, and their related or connected persons. The UK Combined Code on Corporate Governance suggests that...

  • Page 57
    ... to the shareholders. Nomination Committee The Nomination Committee recommends to the Boards candidates for the positions of Director. It also has responsibilities for succession planning and oversight of corporate governance matters. It is supplied with information by the Group Secretary. The...

  • Page 58
    ...to hold shares in NV or PLC. However, the remuneration arrangements applicable to our Executive Directors require them to build and retain a personal shareholding in Unilever. Indemnification Directors' indemnification, including the terms thereof, is provided for in Article 19 of NV's Articles of...

  • Page 59
    ... PLC allocate funds for the dividend from their parts of the current profits and free reserves. We pay the same amount on each NV share as on one PLC share calculated at the relevant exchange rate. As agreed at the 2009 AGMs and separate meetings of ordinary shareholders, the Equalisation Agreement...

  • Page 60
    ...at the prevailing 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...

  • Page 61
    ... by the Foundation Unilever NV Trust Office (Stichting Administratiekantoor Unilever N.V.), a trust office with a board independent of Unilever. As part of its corporate objects, the Foundation issues depositary receipts in exchange for these shares. 58 Unilever Annual Report and Accounts 2009

  • Page 62
    ... may make from time to time and it is available on our website at www.unilever.com/Investorrelations/corp_governance Requirements - European Union Following implementation of the European Takeover Directive, certain information is required to be disclosed in relation to control and share structures...

  • Page 63
    ... be the drivers of shareholder value creation and relative total shareholder return. Unilever therefore believes that the interests of the business and shareholders are best served by linking the long-term share plans to the measures as described in the Directors' Remuneration Report on page 67 and...

  • Page 64
    ...for Directors on the UK Combined Code' ('The Turnbull Guidance'). The effectiveness of the system of internal control, including processes in relation to financial reporting and preparation of consolidated accounts, has been reviewed by the Audit Committee. The Committee reviewed Unilever's overall...

  • Page 65
    ...34. Our approach to risk management and systems of internal control are described on page 35. Based on an evaluation by the Boards, the Chief Executive Officer and the Chief Financial Officer concluded that the design and operation of the Group's disclosure controls and procedures, including those...

  • Page 66
    ... to internal controls over financial reporting; • review of the application of information and communication technology; • review of the annual pension report and the impact of financial volatility on pensions; • annual review of anti-fraud arrangements; • review of tax planning policy...

  • Page 67
    ... the business. Both groups are chaired by Vindi Banga, President Foods, Home and Personal Care and member of the Unilever Executive. The Committee's terms of reference and details of the Unilever Sustainable Development Group are available on our website at www.unilever.com Meetings Meetings are...

  • Page 68
    ... to address the matter in detail and welcomed the revised approach that the Group put in place to adjust its labour practices. Leon Brittan Chairman of the Corporate Responsibility and Reputation Committee Louise Fresco Narayana Murthy Hixonia Nyasulu Unilever Annual Report and Accounts 2009 65

  • Page 69
    ... Committee follows the agreed Board Profile of potential Non-Executive Directors, which takes into account the roles of Non-Executive Directors set out in the Dutch Corporate Governance Code and the UK Combined Code on Corporate Governance. Under the terms of The Governance of Unilever the Boards...

  • Page 70
    ...received by Executive Directors over 2009 reï¬,ect Unilever's good underlying progress towards its longer-term objectives especially in the current tough trading environment. Remuneration Committee It is the role and terms of reference of the Remuneration Committee (the Committee) to make proposals...

  • Page 71
    ... Base Salary Pension benefits Annual Incentive Longer-term: Share Matching Plan Longer-term: Global Share Incentive Plan Our linkage between business objectives and performance-related pay It is Unilever's policy for the performance-related pay of Executive Directors to be linked to key Group...

  • Page 72
    ... Base salary Base salaries are reviewed annually with effect from 1 January taking into account our competitive market position, individual performance, Unilever's overall performance and levels of increase in the rest of the organisation. 2009 outcomes Base salaries for Executive Directors were...

  • Page 73
    ...' Remuneration Report (continued) Proposed changes from 2010 onwards Annual Bonus For Executive Directors, we are replacing underlying sales growth and trading contribution with underlying volume growth, underlying operating margin and trade working capital improvement as drivers for the business...

  • Page 74
    ... in 2009 Remuneration for individual Executive Directors (audited) Annual Emoluments 2009 Allowances and other payments(a) â,¬ '000 Name and Base Country Base salary â,¬ '000 Value of benefits(b) â,¬ '000 Bonus â,¬ '000 Total â,¬ '000 Jim Lawrence (UK)(d) Paul Polman (UK)(e) Total 2009 Total...

  • Page 75
    ... 01/04/2015 Executive Directors' interests in shares (audited) Shares held at 1 January 2009(b) Shares held at 31 December 2009(b) Share type(a) Jim Lawrence(c) Paul Polman (a) NV shares are ordinary â,¬0.16 shares and PLC shares are ordinary 31⁄9p shares. (b) Numbers are excluding unvested...

  • Page 76
    ...-Executive Directors Policy Non-executive directors receive annual fees from NV and PLC. No other remuneration is given in respect of their non-executive duties. The Board determines non-executive fee levels within a total annual limit specified in the Articles of Association. In 2007 shareholders...

  • Page 77
    This page is intentionally blank 74 Unilever Annual Report and Accounts 2009

  • Page 78
    ... from operating activities 29 Share-based compensation plans 30 Related party transactions 31 Remuneration of auditors 32 Events after the balance sheet date Financial record Principal group companies and non-current investments Auditor's report - Unilever N.V. Company accounts - Unilever N.V. Notes...

  • Page 79
    ...Dutch Civil Code (in the case of the NV parent company accounts), give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and the NV and PLC entities taken as a whole; and • the Report of the Directors includes a fair review of the development and...

  • Page 80
    ... position of the Unilever Group as at 31 December 2009, and of its result and its cash ï¬,ows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and as issued by the International Accounting Standards Board and with Part 9 of Book...

  • Page 81
    ... the nine provisions of the 2008 Combined Code specified for our review. Other matter We have reported separately on the parent company accounts of Unilever PLC for the year ended 31 December 2009 and on the information in the Directors' Remuneration Report that is described as having been audited...

  • Page 82
    ..., consolidated balance sheet and consolidated cash ï¬,ow statement relate to notes on pages 83 to 128, which form an integral part of the consolidated financial statements. Accounting policies of the Unilever Group are set out in note 1 on pages 83 to 86. Unilever Annual Report and Accounts 2009...

  • Page 83
    ... statements Unilever Group Consolidated statement of comprehensive income for the year ended 31 December â,¬ million 2009 â,¬ million 2008 â,¬ million 2007 Fair value gains/(losses) net of tax: On cash ï¬,ow hedges On available-for-sale financial assets Actuarial gains/(losses) on pension schemes...

  • Page 84
    Consolidated balance sheet as at 31 December â,¬ million 2009 â,¬ million 2008 Goodwill 9 Intangible assets 9 Property, plant and equipment 10 Pension asset for funded schemes in surplus 19 Deferred tax assets 17 Other non-current assets 11 Total non-current assets Inventories 12 Trade and other ...

  • Page 85
    ... and other direct payments made by the Group in respect of pensions and similar obligations) are not included in the consolidated cash ï¬,ow statement. Cash ï¬,ows relating to discontinued operations included above are set out in note 27 on page 125. 82 Unilever Annual Report and Accounts 2009

  • Page 86
    ...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 so that the position of the shareholders of...

  • Page 87
    ...1 Accounting information and policies (continued) Indefinite-lived intangibles are not amortised, but are subject to an annual review for impairment (or more frequently if necessary). Any impairment is charged to the income statement as it arises. Unilever monitors the level of product development...

  • Page 88
    ...-Scholes models or a multinomial pricing model. Shares held by employee share trusts The assets and liabilities of certain PLC trusts, NV and group companies which purchase and hold NV and PLC shares to satisfy options granted are included in the consolidated accounts. The book value of shares held...

  • Page 89
    ... the accounting for hedges of a net investment in foreign operations. • IFRIC 18 'Transfers of Assets from Customers' relating to treatment of items of property plant and equipment or cash to acquire or construct such assets received from customers. Not adopted by the Group The Group is currently...

  • Page 90
    ...569) 5,814 102 50 (944) (648) (a) Restructuring, disposals and other one-off items. See note 3 on page 89 for further information. (b) Including the reversal of provisions following sale of edible oil business in Côte d'Ivoire (see note 26 on page 123). Unilever Annual Report and Accounts 2009 87

  • Page 91
    ...- including sales of ice cream, tea-based beverages, 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...

  • Page 92
    ...lease income relating to operating lease agreements (5,223) (15,267) (168) (851) (5,302) (33) (19) (14) (472) (475) (3) 6 (5,274) (16,489) (168) (788) (5,055) 108 77 31 (487) (495) - 8 (5,537) (15,588) (140) (804) (5,289) (15) (10) (5) (477) (488) - 11 Unilever Annual Report and Accounts 2009 89

  • Page 93
    ... number of employees during the year Asia, Africa and Central & Eastern Europe The Americas Western Europe 98 41 29 168 â,¬ million 2009 100 42 32 174 â,¬ million 2008 96 44 35 175 â,¬ million 2007 Key management compensation Salaries and short-term employee benefits Non-Executive Directors...

  • Page 94
    ... tax applicable in the countries in which Unilever operates, weighted by the amount of profit before taxation generated in each of those countries. For this reason the rate may vary from year to year according to the mix of profit and related tax rates. Unilever Annual Report and Accounts 2009 91

  • Page 95
    ... share units 2008 2007 2009 Number of shares at 1 January (net of treasury stock) Net movements in shares under incentive schemes Share buy-back Number of shares at 31 December 2,789.1 15.1 - 2,804.2 2,853.1 11.4 (75.4) 2,789.1 2,889.9 29.7 (66.5) 2,853.1 92 Unilever Annual Report and Accounts...

  • Page 96
    ...capital Dividends paid on ordinary capital during the year Final NV dividend for the prior year Final PLC dividend for the prior year Interim NV dividend for the current year Interim PLC dividend for the current year â,¬ million 2009...62 (11) (1,928) 17,047 Unilever Annual Report and Accounts 2009 93

  • Page 97
    ... the major product groups within the CGUs ranging from 16% to 20% Western Europe, 19% to 20% The Americas and 10% to 12% AAC. The growth rates and margins used to estimate future performance are based on past performance and our experience of growth rates and margins achievable in our key markets as...

  • Page 98
    ... adjustments 31 December 2009 Depreciation 1 January 2009 Disposals of group companies Depreciation charge for the year Disposals Currency Retranslation Reclassification as held for sale Other adjustments 31 December 2009 Net book value 31 December 2009 Includes payments on account and assets in...

  • Page 99
    ... â,¬ million Plant and equipment â,¬ million Total Net book value Gross book value Depreciation 31 December 2009 Gross book value Depreciation 31 December 2008 Buildings 189 (24) 165 177 (25) 152 207 (150) 57 243 (146) 97 396 (174) 222 420 (171) 249 96 Unilever Annual Report and Accounts 2009

  • Page 100
    ... in carrying value of Pepsi/Lipton International was recorded in relation to the extension of the Pepsi/Lipton joint venture for ready-to-drink tea in January 2008. (h) Associates as at 31 December 2009 primarily comprise our investment in Langholm Capital Partners. Other Unilever Ventures assets...

  • Page 101
    ... statements Notes to the consolidated financial statements Unilever Group 12 Inventories Inventories Raw materials and consumables Finished goods and goods for resale â,¬ million 2009 â,¬ million 2008 1,298 2,280 3,578 1,437 2,452 3,889 Inventories with a value of â,¬91million (2008: â,¬134...

  • Page 102
    ...to determine fair value are given in note 15 on page 108. (e) Includes â,¬463 million (â,¬393 million available-for-sale and â,¬70 million fair value through profit or loss) relating to an employee savings programme. For related liabilities see page 101. Unilever Annual Report and Accounts 2009 99

  • Page 103
    ...are entitled to dividends at the rates indicated. The 4% preference capital of NV is redeemable at par at the company's option either wholly or in part. The other classes of preferential share capital of NV are not unilaterally redeemable by the company. 100 Unilever Annual Report and Accounts 2009

  • Page 104
    ... 2009 Unilever started fair value hedge accounting for the 4.625% Euro bonds and the 3.375% Euro bonds. (i) Includes â,¬427 million liabilities to be repaid during 2010 in relation to the closure of an employee savings programme. For related assets see page 99. Unilever Annual Report and Accounts...

  • Page 105
    ...Notes to the consolidated financial statements Unilever Group 14 Financial assets and liabilities (continued) Interest rate profile and currency analysis of financial assets The table set out below takes into account the various interest rate swaps and forward foreign currency contracts entered...

  • Page 106
    ... to â,¬212 million (2008: â,¬207 million) and fair value of financial liability-related derivatives amounting to â,¬107 million (2008: â,¬219 million). Interest rate The average interest rate on short-term borrowings in 2009 was 2.3% (2008: 4.2%). Unilever Annual Report and Accounts 2009 103

  • Page 107
    ...ow hedge accounting. Regional groups monitor compliance with this foreign exchange policy. At the end of 2009, there was no material exposure from companies holding assets and liabilities other than in their functional currency. In addition, as Unilever conducts business in many foreign currencies...

  • Page 108
    ...raise funds. Operational cash ï¬,ow provides the funds to service the financing of financial liabilities and enhance 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...

  • Page 109
    ... forward foreign exchange contracts represent the gain or loss on revaluation of the contracts at the year-end forward exchange rates. The fair values of interest rate derivatives are based on the net present value of the anticipated future cash ï¬,ows. 106 Unilever Annual Report and Accounts 2009

  • Page 110
    ...shows the fair values of derivatives outstanding at year end designated as hedging instruments in hedges of net investments in foreign operations: Fair values of derivatives used as hedges of net investments in foreign entities Current Foreign exchange derivatives â,¬ million Assets 2009 â,¬ million...

  • Page 111
    ... by reference to current market rates for comparable leasing arrangements. • The Group enters into derivative financial instruments with various counterparties. Derivatives valued using valuation techniques with market observable inputs are mainly interest rate swaps, foreign exchange forward...

  • Page 112
    ... under IAS 39, fair value movements are recognised in the cash ï¬,ow reserve. Capital management The Group's financial strategy supports Unilever's aim 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 113
    ... and the calculation of Unilever's Return on Invested Capital. Unilever is not subject to covenants in any of its significant financing agreements. Income statement sensitivity to changes in foreign exchange rates The values of debt, investments and related hedging instruments, denominated in...

  • Page 114
    ... No liability has been recognised in respect of these differences because the Group is in a position to control the timing of the reversal of the temporary differences, and it is probable that such differences will not reverse in the foreseeable future. Unilever Annual Report and Accounts 2009 111

  • Page 115
    ... to the consolidated financial statements Unilever Group 17 Deferred taxation (continued) Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred income taxes relate to the...

  • Page 116
    ...its pension plans around the world a simplified externally managed investment vehicle to implement their strategic asset allocation models, currently for bonds, equities and hedge funds. The aim is to provide a high quality, well-diversified, risk-controlled vehicle. Assumptions With the objective...

  • Page 117
    ...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 at 31 December 2009...

  • Page 118
    ... the countries where they are situated. Balance sheet The assets, liabilities and surplus/(deficit) position of the pension and other post-employment benefit plans and the expected rates of return on the plan assets at the balance sheet date were: 31 December 2009 â,¬ million % Long-term rates of...

  • Page 119
    ...fit payments by the Group in respect of unfunded plans are currently expected to be about â,¬215 million in 2010 (2009 actual: â,¬234 million). Total cash costs of pensions are expected to be around â,¬700 million in 2010 (2009 actual: â,¬1.3 billion). 116 Unilever Annual Report and Accounts 2009

  • Page 120
    ... million After tax 2008 Fair value gains/(losses) on financial instruments Actuarial gains/(losses) on pension schemes Currency redistribution gains/(losses) 163 38 396 (58) (20) - 105 18 396 (204) (3,127) (1,688) 40 834 - (164) (2,293) (1,688) Unilever Annual Report and Accounts 2009 117

  • Page 121
    ... between exercise and grant price of share options. (b) The share-based payment credit relates to the reversal of the non-cash charge recorded against operating profit in respect of the fair value of share options and awards granted to employees. 118 Unilever Annual Report and Accounts 2009

  • Page 122
    ...143) For information on the rights of shareholders of NV and PLC and the operation of the Equalisation Agreement, see Corporate governance on pages 56 and 57. A nominal dividend of 6% is paid on the deferred stock of PLC, which is not redeemable. Internal holdings The ordinary shares numbered 1 to...

  • Page 123
    ... value of share options and awards granted to employees. (c) 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 124
    ...group companies, investigations by competition, regulatory and fiscal authorities and obligations arising under environmental legislation. The estimated total of such contingent liabilities at 31 December 2009 was some â,¬205 million (2008: â,¬355 million). Unilever Annual Report and Accounts 2009...

  • Page 125
    ... as follows: Competition investigations As previously reported, in June 2008 the European Commission initiated an investigation into potential competition law infringements in the European Union in relation to consumer detergents. Unilever has received a number of requests for information from the...

  • Page 126
    ...Ltd. reached agreement to reorganise their respective 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...

  • Page 127
    ... economic swap in South Africa. The results of disposed businesses are included in the consolidated accounts up to their date of disposal. The following table sets out the effect of acquisitions in 2009, 2008 and 2007 on the consolidated balance sheet. The fair values currently established for all...

  • Page 128
    ...Non-current assets held for sale Property, plant and equipment 9 9 Total assets at 31 December 2009 are included in the geographical segments as follows: Asia, Africa and Central & Eastern Europe â,¬3 million; The Americas â,¬14 million; Western Europe â,¬ nil. Unilever Annual Report and Accounts...

  • Page 129
    ... Plan. The numbers in this note include those for Executive Directors shown in the Directors' Remuneration Report on pages 67 to 73 and those for key management personnel shown in note 4 on page 90. No awards were made to Executive Directors in 2007, 2008 or 2009 under the Unilever North America...

  • Page 130
    ...priced above market value. The basis of the charge to operating profit for the economic value of options granted is discussed on page 126. Between 31 December 2009 and 1 March 2010, no grants were made and 144,276 shares were forfeited related to the performance share plans. Unilever Annual Report...

  • Page 131
    ...payable to JohnsonDiversey in connection with the sale of Unilever branded products through their channels amounted to approximately â,¬20 million in 2009 (2008: â,¬24 million). Langholm Capital Partners invests in private European companies with above-average longer-term growth prospects. Since the...

  • Page 132
    ... for our reporting during 2006-2009. Figures for 2005 also reï¬,ect this classification, and therefore differ from those originally published for that year. Consolidated income statement Continuing operations: Turnover Operating profit Net finance costs Income from non-current investments Pro...

  • Page 133
    ... received 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. Following agreement at the 2009 AGMs and separate meetings of ordinary shareholders, the Equalisation Agreement was modified to facilitate...

  • Page 134
    ... audited and published. Group companies % Argentina Unilever de Argentina S.A. Australia Unilever Australia Ltd. Belgium Unilever Belgium BVBA/SPRL (Unibel) Brazil Unilever Brasil Ltda. Canada Unilever Canada Inc. Chile Unilever Chile Home and Personal Care Ltda. China Unilever Services (He Fei) Co...

  • Page 135
    ...non-current investments Unilever Group as at 31 December 2009 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 Conopco, Inc. Unilever Capital...

  • Page 136
    ... for the preparation of the Report of the Directors in accordance with Part 9 of Book 2 of the Netherlands Civil Code. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the company accounts that are free from...

  • Page 137
    ...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 2 March 2010 134 Unilever Annual Report and Accounts 2009

  • Page 138
    ... of a tax grouping for Dutch corporate income tax purposes. The members of the fiscal entity are jointly and severally liable for any taxes payable by the Dutch tax grouping. Fixed investments Shares in group companies PLC shares held in connection with share options â,¬ million 2009 â,¬ million...

  • Page 139
    ... (2008: â,¬15,343 million). This is made up of the Parent Unilever N.V. â,¬10,657 million (2008: â,¬10,602 million), other NV group companies â,¬5,730 million (2008: â,¬4,732 million) and joint ventures and associates â,¬71 million (2008: â,¬9 million). 136 Unilever Annual Report and Accounts 2009

  • Page 140
    ... holders of ordinary shares in proportion to the nominal value of their respective holdings of ordinary shares. The General Meeting can only decide to make distributions from reserves on the basis of a proposal by the Board and in compliance with the law and the Equalisation Agreement. Proposed pro...

  • Page 141
    ... they give a true and fair view. Our responsibility is to audit the parent company accounts in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors. This report...

  • Page 142
    ...' (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 M Treschow Chairman P Polman Chief Executive Officer 2 March 2010 Unilever Annual Report and Accounts 2009 139

  • Page 143
    .... 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. 140 Unilever Annual Report and Accounts 2009

  • Page 144
    ... 22 to the consolidated accounts on page 119. Other reserves 1 January Change in book value of shares 31 December £ million 2009 £ million 2008 Post balance sheet event On 4 February 2010 the Directors announced a dividend of £0.1704 per Unilever PLC ordinary share. The dividend is payable from...

  • Page 145
    ... Directors' Reports of the United Kingdom operating companies give information about their supplier payment policies as required by the UK Companies Act 2006. PLC, as a holding company, does not itself make any relevant payments in this respect. Employee involvement and communication Unilever's UK...

  • Page 146
    ... by an employee share trust and Unilever group companies to satisfy options granted under PLC's employee share schemes are given in note 29 to the consolidated accounts on pages 126 to 127. Corporate Centre Unilever PLC Unilever House 100 Victoria Embankment London EC4Y 0DY Unilever PLC Registered...

  • Page 147
    ... to, PLC's ordinary shares. During this period, and as notified, certain of these holdings reduced to below the reporting 3% threshold. The table above sets out the notifiable interest of shares or voting rights attributable to PLC as at 1 March 2010. 144 Unilever Annual Report and Accounts 2009

  • Page 148
    ... 1,310,156,361 1.23 1.45 1.22 0.98 0.85 0.78 1.10 12.38 80.01 100.00 Purchases of shares during 2009 In March 2009 Unilever group companies purchased 29,666 NV ordinary shares for â,¬0.4 million and 27,769 PLC ordinary shares also for â,¬0.4 million. Unilever Annual Report and Accounts 2009 145

  • Page 149
    ... 3 January 2011 1 October 2010 Contact details Rotterdam London Unilever N.V. Investor Relations Department Weena 455, PO Box 760 3000 DK Rotterdam The Netherlands Unilever PLC Investor Relations Department Unilever House 100 Victoria Embankment London EC4Y 0DY United Kingdom Telephone +44 (0)20...

  • Page 150
    Website Shareholders are encouraged to visit our website www.unilever.com which has a wealth of information about Unilever. Any information on or linked from the website is not incorporated by reference into this Annual Report and Accounts. There is a section designed specifically for investors at ...

  • Page 151
    ...-117 Personal care 28, 88 Post balance sheet events 42, 128 Preference shares and dividends 100, 146 Principal group companies 131-132 Property, plant and equipment 84, 95-96 Provisions 43, 85, 112 Receivables 98 Regions 26, 38-39, 47-49, 87 Related party transactions 27, 128 Remuneration Committee...

  • Page 152
    ... 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 at www.addison.co.uk. Board photography by Jaap van den Beukel and Igor Emmerich. Product photography...

  • Page 153
    ... 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: 41424 www.unilever...