Unilever 2009 Annual Report Download - page 43

Financial Review 2009 (continued)
40 Unilever Annual Report and Accounts 2009
Report of the Directors About Unilever
The main source of liquidity continues to be cash generated from
operations. Unilever is satisfied that its financing arrangements are
adequate to meet its working capital needs for the foreseeable
future.
The currency distribution of total financial liabilities (excluding the
currency leg of currency derivatives relating to intra-group loans)
at the end of 2009 was as follows: 36% in US dollars (2008:
46%), and 28% in euros (2008: 27%), with the remainder spread
across a number of countries.
Unilever manages interest rate and currency exposures of its net
debt position. Taking into account the various cross-currency
swaps and other derivatives, 89% of Unilever’s net debt was in
US dollars (2008: 91%) and 44% in sterling (2008: 18%), partly
offset by financial asset balances in euros amounting to 59% of
net debt (2008: 33%), and with the remainder spread over a large
number of other currencies.
Treasury
Unilever Treasury’s role is to ensure that appropriate financing is
available for all value-creating investments. Additionally, Treasury
delivers financial services to allow operating companies to manage
their financial transactions and exposures in an efficient, timely
and low-cost manner.
Unilever Treasury operates as a service centre and is governed by
policies and plans approved by the Boards. In addition to policies,
guidelines and exposure limits, a system of authorities and
extensive independent reporting covers all major areas of activity.
Performance is monitored closely. Reviews are undertaken
periodically by the corporate internal audit function.
The key financial instruments used by Unilever are short- and
long-term borrowings, cash and cash equivalents, and certain
straightforward derivative instruments, principally comprising
interest rate swaps and foreign exchange contracts. The
accounting for derivative instruments is discussed in note 15 on
page 106. The use of leveraged instruments is not permitted.
Other relevant disclosures are given in notes 14 and 15 on pages
99 to 110, which are incorporated and repeated here by
reference.
Unilever Treasury manages a variety 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.
Balance sheet
€ million € million
2009 2008
Goodwill and intangible assets 17,047 16,091
Other non-current assets 9,158 8,876
Current assets 10,811 11,175
Current liabilities (11,599) (13,800)
Total assets less current liabilities 25,417 22,342
Non-current liabilities 12,881 11,970
Shareholders’ equity 12,065 9,948
Minority interest 471 424
Total capital employed 25,417 22,342
Goodwill and intangibles at 31 December 2009 were €1.0 billion
higher than in 2008, as a result of currency movements and
acquisition activity. The increase in other non-current assets is
mainly due to an increase in property, plant and equipment to
€6.6 billion compared with €6.0 billion in 2008.
Inventories were lower by €0.3 billion and trade receivables were
lower by around €0.4 billion. Cash and cash equivalents were
slightly higher at €2.6 billion.
Current liabilities were €2.2 billion lower at €11.6 billion following
short-term borrowing repayments during the year. There was a
significant reduction of €2.6 billion in financial liabilities due within
one year, and an increase of €0.6 billion in trade payables and
other current liabilities. Provisions were €0.3 billion lower at
€0.4 billion.
Non-current liabilities rose by €0.9 billion compared with 2008.
Financial liabilities due after one year were €1.3 billion higher at
€7.7 billion due to bonds issued during 2009. Pension liabilities
were €0.5 billion lower than in 2008.
The overall net liability for all pension arrangements was €2.6
billion at the end of 2009, down from €3.4 billion at the end of
2008. Funded schemes showed an aggregate deficit of €0.8 billion
and unfunded arrangements a liability of €1.8 billion. The
reduction in the overall balance sheet liability was largely due to
increased asset values, partly offset by lower discount rates for
liabilities as well as one-off contributions.
Total shareholders’ equity rose by €2.1 billion in the year. Net
profit added €3.4 billion, with currency, fair value and actuarial
gains and other movements adding a further €0.8 billion.
Dividends paid in the year totalled €2.1 billion.
Unilever’s contractual obligations at the end of 2009 included
capital expenditure commitments, borrowings, lease commitments
and other commitments. A summary of certain contractual
obligations at 31 December 2009 is provided in the table below.
Further details are set out in the following notes to the accounts:
note 10 on page 95, note 14 on page 100 to and note 25 on
page 121.