Unilever 2009 Annual Report Download - page 44

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Unilever Annual Report and Accounts 2009 41
Contractual obligations at 31 December 2009
€ 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 8,823 1,334 2,129 2,066 3,294
Interest on financial
liabilities 3,143 411 614 449 1,669
Operating lease
obligations 1,488 301 462 320 405
Purchase obligations(a) 403 270 89 21 23
Finance leases 369 34 50 41 244
Other long-term
commitments 1,973 614 826 392 141
(a) For 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 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 15 on page 105.
Cash flow
€ million € million € million
2009 2008 2007
Net cash flow from
operating activities 5,774 3,871 3,876
Net cash flow from/(used in)
investing activities (1,263) 1,415 (623)
Net cash flow from/(used in)
financing activities (4,301) (3,130) (3,009)
Net increase/(decrease) in cash
and cash equivalents 210 2,156 244
Cash and cash equivalents increased by €0.2 billion when
translated at average 2009 exchange rates. After recognising
the changes in exchange rates, amounts in the balance sheet
at 31 December 2009 were slightly higher at €2.6 billion.
Net cash flow from operating activities of €5.8 billion was €1.9
billion higher than in 2008, benefiting from active management of
working capital, net of one-off contributions to several pension
funds. Tax paid was €0.5 billion lower, mainly resulting from tax on
disposals in 2008. Under investing activities, net capital
expenditure was €0.2 billion higher than in 2008. Several group
companies were sold in 2008, generating significant cash inflows.
Acquisitions included Inmarko in 2008 and TIGI and Baltimor in
2009. Unilever bought back shares during 2008 for €1.5 billion,
which largely accounts for the movement in financing activities.
At 31 December 2009, the net debt position was €6.4 billion, a
decrease of €1.6 billion compared with 2008.
Dividends and market capitalisation
Dividends per share
Interim dividends in respect of 2008 of €0.2600 per NV ordinary
share and £0.2055 per PLC ordinary share were declared and paid
in 2008. Final dividends in respect of 2008 of €0.5100 per NV
ordinary share and £0.4019 per PLC ordinary share and interim
dividends in respect of 2009 of €0.2700 per NV ordinary share and
£0.2422 per PLC ordinary share were declared and paid in 2009.
As agreed at the AGMs and at meetings of ordinary shareholders
in May 2009 Unilever has with effect from 1 January 2010 moved
to an arrangement of paying quarterly dividends. The first
quarterly interim dividends of €0.1950 per NV ordinary share and
£0.1704 per PLC ordinary share were declared on 4 February
2010, to be payable in March 2010.
Unilever’s combined market capitalisation rose from €46.9 billion
at the end of 2008 to €63.4 billion at 31 December 2009.
Pensions investment strategy
The Group’s investment strategy in respect of its funded
pension plans is implemented within the framework of the
various statutory requirements of the territories where the
plans are based. The Group has developed policy guidelines for
the allocation of assets to different classes with the objective of
controlling risk and maintaining the right balance between risk
and long-term returns in order to limit the cost to the Group of
the benefits provided. To achieve this, investments are well
diversified, such that the failure of any single investment would
not have a material impact on the overall level of assets. The plans
invest the largest proportion of the assets in equities, which the
Group believes offer the best returns over the long term
commensurate with an acceptable level of risk. The pension funds
also have a proportion of assets invested in property, bonds, hedge
funds and cash. The majority of the assets are managed by a
number of external fund managers with a small proportion
managed in-house. Unilever has a pooled investment vehicle
(Univest) which it believes 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.