Unilever 2010 Annual Report Download

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Disclaimer
Notes to the Annual Report and Accounts This PDF version of the Unilever Annual Report
and Accounts 2010 is an exact copy of the document provided to Unilever’s shareholders.
Certain sections of the Unilever Annual Report and Accounts 2010 have been audited.
These are on pages 72 to 123, 126 to 138 and those parts noted as audited within the
Directors’ Remuneration Report on pages 65 to 67.
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.

Table of contents

  • Page 1
    ...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...

  • Page 2
    Annual Report and Accounts 2010 Creating a better future every day

  • Page 3
    ... Committee Report of the Corporate Responsibility and Reputation Committee Report of the Nomination Committee Directors' Remuneration Report Our mission 40 41 56 58 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...

  • Page 4
    ... ice creams • Hellmann's • Knorr • Lipton • Lux • Omo • Rexona • Sunsilk Other information The brand names shown in this report are trademarks owned by or licensed to companies within the Unilever Group. This document contains certain statements that are neither reported financial...

  • Page 5
    ...of thousands of people in our supply chain. 132.62 2009: 142.16 6.46 2009: 6.52 Basis of reporting: our accounting policies are in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union (EU), and based on United Kingdom and Dutch law. They are also in...

  • Page 6
    ... financial statements. The same people sit on the Boards of the two parent companies. Any references to the Board in this document mean the Boards of NV and PLC. Products sold in more than 180 50yrs experience in Brazil, China, India and Indonesia Unilever Annual Report and Accounts 2010...

  • Page 7
    ...Unilever to win in increasingly competitive markets. A key element of the strategy is the ambitious plan to take advantage of the enormous growth opportunities offered by the emerging markets of Asia Africa CEE and Latin America. These markets already account for more than 50% of Unilever's business...

  • Page 8
    Report of the Directors About Unilever 1 Engaging with the business In addition to providing governance oversight, our experienced Board members actively engage with the business, helping to advance strategic issues by gaining a stronger insight into the Group and sharing their expertise. 1. Jeroen...

  • Page 9
    ... Polk - President Global Foods, Home & Personal Care 7. Pier Luigi Sigismondi - Czief Supply Czain Officer 8. Keitz Weed - Czief Marketing and Communication Officer 9. Jan Zijderveld - President Western Europe For UEx biographies please go to page 40 1 6 Unilever Annual Report and Accounts 2010

  • Page 10
    ...in 2010. We accelerated joint business planning witz key customers, improved customer service in every region and continued to develop a network of leading-edge Customer Insigzt and Innovation Centres (CiiCs), wzicz are well received by our retail partners. We expanded our footprint in general trade...

  • Page 11
    .... In developed markets, our supply chain ensures we give high quality service to our modern trade customers in places like the US and Western Europe. Underlying volume growth 4.8% Turnover Asia Africa CEE Underlying volume growth â,¬14.6bn 10.2% Turnover All numbers are at 31 December 2010...

  • Page 12
    ... HomegCare Underlying volume growtz 8.2% Turnover â,¬7.7bn • World number two in laundry and significant local strength in household cleaning. • Key brands include Omo/ Persil, Surf, Comfort, Cif and Pureit. • 78% of turnover in emerging markets. Unilever Annual Report and Accounts 2010 9

  • Page 13
    ...balances bolder long-term aspirations with a higher focus on execution and results delivery. â,¬80bn â,¬44bn â,¬40bn Environmental imdact Unilever brand On any given day, 2 billion people use a Unilever product. These multiple small actions add up to make a big difference to their lives, the lives...

  • Page 14
    ... markets. We zave made necessary czanges in our remuneration and working practices and are increasing investment in training and leaderszip development. Savoury, Dressings and Spreads Ice Cream and Beverages Personal Care Home Care For more go to page 18 Unilever Annual Report and Accounts 2010...

  • Page 15
    ... odour control and absence of wzite marks on clotzing. As a result, Rexona was one of our fastest growing brands in 2010. Bigger,gbetter,gfasterginnovation Successful innovation is tze lifeblood of any consumer goods company. For a business like Unilever, success means innovations tzat work globally...

  • Page 16
    ... personal care. We purczased ice cream brands in Greece and Denmark, and tze Sara Lee Personal Care business in Europe, Soutz Africa and tze Pzilippines. In September we announced an agreement to acquire tze Alberto Culver company, wzicz includes a range of outstanding zair and skin care brands sucz...

  • Page 17
    ... people are reaching income levels where they can start consuming our products for the first time. 5.7m new Comfort consumers in China 84% Lead market development Today, 5.9 billion people live in developing and emerging markets - in countries like Brazil, India and Indonesia. Unilever has deep...

  • Page 18
    .... Operating in markets across Europe, Asia and North America, in 2010/11 it once again awarded Unilever International Supplier of the Year. The 2010 Advantage International Survey, the industry standard for measuring business relationships in fast-moving consumer goods, showed that our position has...

  • Page 19
    Report of the Directors About Unilever Winning through continuous improvement Continuous improvement means doing everything a little better, every day. It is the key to sustainable growth. In 2010, we concentrated on improving speed and agility in the supply chain, while keeping costs competitive....

  • Page 20
    ...April 2010 to create a new business unit, the Unilever Americas Supply Chain Company, which will become operational in late 2011. Bringing together common systems and processes across all Unilever's supply chain operations, this will deliver even better service to our customers and consumers around...

  • Page 21
    .... In August, 400 Unilever Germany employees worked together in outlets of the REWE supermarket network, getting closer to a key customer, selling margarine to consumers - and raising â,¬100,000 for the World Food Programme's school meals project in Kenya. 18 Unilever Annual Report and Accounts 2010

  • Page 22
    ... frequency rate in 2010. Building a winning culture Ensuring a winning culture truly comes alive involves everyone from senior management to the shop floor. One of our Compass Award winners in 2010 was Unilever South Africa. They revitalised their business through an employee engagement drive...

  • Page 23
    .... To read more about our Sustainable Living Plan, please visit www.unilever.com/sustainability 20 Unilever Annual Report and Accounts 2010 Saving every drop Many of our consumers do their laundry by hand, particularly in developing and emerging markets. Our Comfort One Rinse fabric conditioner...

  • Page 24
    ... reduce diarrhoeal disease by 25% and acute respiratory infections by 19%. By 2015 Lifebuoy aims to change the hygiene behaviour of 1 billion consumers across Asia, Africa and Latin America by promoting the benefits of handwashing with soap at key times. Unilever Annual Report and Accounts 2010 21

  • Page 25
    ... in key emerging markets such as China, Indonesia, South Africa and Argentina. Western Europe afso saw strong vofume share gains, fed by the Netherfands, France and Itafy. Vofume shares were afso up in most of our core categories, with deodorants, skin cfeansing, househofd care, ice cream and...

  • Page 26
    ... the European Commission investigation into consumer detergents. Business disposafs incfude the disposaf of the Itafian frozen foods business. Consolidated income statement (highfights) for the year ended 31 December Increase/ â,¬ miffion 2010 2009 (Decrease) Turnover Operating profit Profit before...

  • Page 27
    ... units. Particufarfy strong progress was made in China, Indonesia, Turkey and South Africa. In the highfy competitive Indian market, vofume growth was strong, with improved performance throughout the year and the fourth quarter seeing the return of positive share momentum. Underfying price growth...

  • Page 28
    ... Operating profit at current rates of exchange grew by 53.4%. Afthough underfying margin improvement made an important contribution, the most significant factor behind this substantiaf increase was the profit achieved on the disposaf of the Itafian frozen foods business in the fourth quarter. Market...

  • Page 29
    ... Fruttare brand was expanded from its Latin American base into South East Asia. The Inmarko business in Russia afso made good progress. Underfying price growth was 0.1%, with higher price growth in tea and modestfy negative growth in ice cream. Operating margin for the year was down by 100 basis...

  • Page 30
    ... the year, incfuding Turkey and Vietnam, and the roff-out of the Surf brand continued into severaf new markets. Afthough our faundry business is strongest in emerging markets, performance was afso encouraging in a number of Western European markets, with good vofume growth and share gains in the UK...

  • Page 31
    ... in the overaff bafance sheet fiabifity was due to cash contributions made and good asset returns over the year offset by the impact of fower corporate bond rates on the cafcufation of pension fiabifities. Sharehofders' equity rose by â,¬2.4 biffion in the year. Net profit added â,¬4.2 biffion, with...

  • Page 32
    ... to meet strategic and day-to-day needs. The key efements of the financiaf strategy are: • appropriate access to equity and debt capitaf; • sufficient flexibifity for acquisitions that we fund out of current cash flows; • A+/A1 fong-term credit rating; • A1/P1 short-term credit rating...

  • Page 33
    .... Further information on underfying operating margin and the impact of RDIs is given on the face of our income statement and in note 3 on page 83. Financial instruments The Group uses certain financiaf instruments to manage foreign currency exchange rate, commodity price and interest rate risks...

  • Page 34
    ... rates (%) Turnover growth (%) 4.1 0.3 (0.8) 7.3 11.1 3.5 0.6 (3.0) (2.7) (1.7) Asia, Africa and Centraf & Eastern Europe 2010 vs 2009 2009 vs 2008 Operating profit Restructuring costs Business disposafs Impairments and other one-off items Underfying operating profit Turnover Operating margin...

  • Page 35
    ... from Group operating activities, fess income tax paid, fess net capitaf expenditure fess net interest and preference dividends paid. The reconcifiation of FCF to net profit is as foffows: Longer-term trends Financial records Five years' trends of the KPIs and other financiaf measures can be found...

  • Page 36
    ... underfying operating margin and strong cash flow. We are weff pfaced, with an impressive presence in emerging markets, more than 75% of our business in either category feadership or number two positions, a portfofio of strong brands, an increasingfy effective innovation programme and a dynamic new...

  • Page 37
    ...and manage our business. What we are doing to manage the risk Brands and Innovation • Design, devefopment and roff-out of consumer/customer refevant products and services Unifever's Mission is to hefp peopfe feef good, fook good and get more out of fife with brands and services that are good for...

  • Page 38
    Report of the Directors About Unifever Description of risk Financial/Treasury • Funding the ongoing operation of the business • Counterparty defauft in a financiaf institution • Managing currency and interest rate differences and movements • Efficientfy meeting our pension fund and tax ...

  • Page 39
    ... threats to our operations that coufd, if they materiafise, give rise to a major incident or crisis. We review the appropriateness of our incident response, business continuity and disaster recovery pfans taking into account externaf devefopments. 36 Unilever Annuaf Report and Accounts 2010

  • Page 40
    ... our boards of directors. Aff these risks coufd materiaffy affect the Group's business, our turnover, operating profits, net profits, net assets and fiquidity. There may be risks which are unknown to Unifever or which are currentfy befieved to be immateriaf. Unilever Annuaf Report and Accounts 2010...

  • Page 41
    ... our products, risk management, accounting and reporting, share deafing, corporate discfosure, pension fund management, treasury management and transfer pricing. Processes Unifever operates a wide range of processes and activities across aff its operations covering strategy, pfanning, execution and...

  • Page 42
    ...refation to this can be found in the Report of the Audit Committee on pages 56 and 57. Further statements on compfiance with the specific risk management and controf requirements in the Dutch Corporate Governance Code, the UK Combined Code and the US Securities Exchange (1934) & Sarbanes-Oxfey (2002...

  • Page 43
    ... North Africa, Chairman of the Nordic ice-cream business, Marketing Director Itafy, European Ofive Oif Category Director, and Generaf Manager - Sauces and Dressings Europe, the first Europeanisation of Unifever's foods business based in the Netherfands. 40 Unilever Annuaf Report and Accounts 2010

  • Page 44
    ...with special provisions in the Articles of Association of NV and PLC. NV shareholders PLC shareholders Directors NV Equalisation and other agreements PLC NV Owned Operating Companies Jointly Owned Operating Companies PLC Owned Operating Companies Unilever Annual Report and Accounts 2010 41

  • Page 45
    ...; convening of shareholders' meetings; nominations for Board appointments; approval of Board remuneration policy; review of the functioning of the Boards and their Committees; and • Corporate Social Responsibility. Our risk management approach and associated systems of internal control are of...

  • Page 46
    ... of NV and PLC. The Boards of N.V. Elma and United Holdings Limited comprise the members of the Nomination Committee, which comprise Non-Executive Directors of Unilever only. Group Secretary Following the 2009 evaluations, the Boards agreed to an enhanced Board training programme in 2010 that...

  • Page 47
    ... the Chief Executive Officer to ensure the successful functioning of the Boards whilst evaluating and monitoring compliance with Unilever's Code Policies and governance processes. The Chairman ensures that the Directors receive accurate, timely and clear information, in particular about the Group...

  • Page 48
    ... regulations and best practice, and takes into account the balance of skills, knowledge and experience on the Boards. The profile set by the Boards for the Non-Executive Directors and the schedule used for orderly succession planning can be found on our website at www.unilever.com/investorrelations...

  • Page 49
    ... During 2010, Unilever had two Executive Directors, the Chief Executive Officer and Chief Financial Officer, who were also members of UEx, and are full-time employees of Unilever. The Executive Directors submit themselves for re-election at the AGMs each year, and the Nomination Committee carefully...

  • Page 50
    ... the Report of the Audit Committee to the shareholders on pages 56 and 57. 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...

  • Page 51
    ... manner and that the information that is disclosed is complete and accurate in all material aspects. The Committee comprises the Group Controller (Chairman), the Group Secretary and Chief Legal Officer, the Group Treasurer and the NV Deputy Secretary. 48 Unilever Annual Report and Accounts 2010

  • Page 52
    ... meeting. More information on the exercise of voting rights can be found in NV's and PLC's Articles of Association and in the respective Notices of Meetings which can be found on our website at www.unilever.com/investorrelations/corp_governance. Holders of NV New York Registry Shares or PLC American...

  • Page 53
    ... and PLC respectively relating to the unity of management require the prior approval of meetings of the holders of the NV special shares and the PLC deferred stock. The Articles of Association of both NV and PLC can be found on our website at www.unilever.com/investorrelations/corp_governance. Right...

  • Page 54
    ... of NV and PLC. Under the Equalisation Agreement, NV and PLC must adopt the same financial periods and accounting policies. Each NV ordinary share represents the same underlying economic interest in the Unilever Group as each PLC ordinary share. The Equalisation Agreement can be found on our website...

  • Page 55
    ...for a period of at least five years (bpp II.2.5). Our shareholder-approved remuneration policy requires Executive Directors to build and retain a personal shareholding in Unilever. The Boards believe that this is in line with the spirit of the Dutch Code. 52 Unilever Annual Report and Accounts 2010

  • Page 56
    ... Governance Code, as required by article 3 of the Decree, can be found under 'Corporate Governance' within the section 'Requirements - the Netherlands' in this report; • the information concerning Unilever's risk management and control frameworks relating to the financial reporting process, as...

  • Page 57
    ... system of internal control, including processes in relation to financial reporting and preparation of consolidated financial statements, has been reviewed by the Audit Committee. The Audit Committee reviewed Unilever's overall approach to risk management and control, and its processes, outcomes and...

  • Page 58
    ...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 defined in United States Securities Exchange Act of 1934 - Rule 13a - 15(e), as at 31 December 2010 were...

  • Page 59
    ... of the Directors Governance Report of the Audit Committee The role and terms of reference of the Audit Committee are to assist the Boards in fulfilling their oversight responsibilities regarding the integrity of Unilever's financial statements, risk management and internal control, compliance with...

  • Page 60
    ... of reference are reviewed annually by the Committee taking into account relevant legislation and recommended good practice. The terms of reference are contained within 'The Governance of Unilever' and are also available on our website at www.unilever.com/investorrelations/corp_governance. Board...

  • Page 61
    ... page 116. Human rights Meetings are held quarterly and ad hoc as required. The Committee Chairman reports the conclusions to the Boards. In 2010 the Committee reviewed a range of topics including: Unilever's Code of Business Principles and supporting corporate policies; competition-related issues...

  • Page 62
    ... to review issues according to strategic business and reputational priorities. The Boards also evaluated the performance of the Committee. Sir Malcolm Rifkind Chairman of the Corporate Responsibility and Reputation Committee Louise Fresco Hixonia Nyasulu Unilever Annual Report and Accounts 2010 59

  • Page 63
    ... for election each year at the Annual General Meetings. The Nomination Committee is responsible for recommending candidates for nomination as Executive Directors (including the Chief Executive Officer) and Non-Executive Directors each year based on the process of evaluations referred to below. After...

  • Page 64
    ... Controller, Chief Legal Officer and Group Secretary; and • the design and terms of all share-based incentive plans. The Committee's key responsibilities in respect of Executive Directors include making proposals to the Boards on: • the remuneration policy; • individual salary levels, bonuses...

  • Page 65
    ...'s remuneration objectives. The Committee believes that Unilever's risk management processes provide the necessary controls to prevent inappropriate risk taking. For example, when the Committee reviews the structure and levels of performance-related pay for Executive Directors and other members of...

  • Page 66
    ... in terms of business results and leadership, including corporate social responsibility, to determine the actual bonus award for Executive Directors. 2010 outcomes Executive Directors receive annual awards of NV and PLC shares under the GSIP. The number of shares that vest after three years depends...

  • Page 67
    ...threshold to maximum. Executive Directors, the Unilever Executive and the top 100 managers are required to invest at least 25% of their annual bonus in Unilever's shares. The MCIP will first be operated in 2011 in respect of annual bonuses relating to the 2010 financial year. Ultimate remedy Grants...

  • Page 68
    ...of NV and PLC under the Share Matching Plan. It does not include matching shares awarded on a conditional basis in addition to the element of the bonus paid in shares which is disclosed in the Share Matching Plan table below. In addition, Unilever provides support to Executive Directors in relation...

  • Page 69
    ...of the class of shares indicated. None of the Directors' (Executive and Non-Executive) or other executive officers' shareholdings amounts to more than 1% of the issued shares in that class of share. Except as stated above, all shareholdings are beneficial. 66 Unilever Annual Report and Accounts 2010

  • Page 70
    Report of the Directors Governance Non-Executive Directors Policy Non-Executive Directors' interests in share capital (audited) Shares Shares held at 1 held at 31 January December 2010 (a) 2010 (a) Non-Executive Directors receive annual fees from NV and PLC. No other remuneration is given in ...

  • Page 71
    ... profit to cash flow 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...

  • Page 72
    ... 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. • The Report of the Directors includes a fair review of the development and performance of the business...

  • Page 73
    ..., the consolidated financial statements give a true and fair view of the financial position of the Unilever Group as at 31 December 2010, and of its result and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and...

  • Page 74
    ... Combined Code specified for our review and • certain elements of the report to shareholders by the Board on directors' remuneration. Other matters We have reported separately on the parent company financial statements of Unilever PLC for the year ended 31 December 2010 and on the information in...

  • Page 75
    Financial statements Financial statements Unilever Group Consolidated income statement for the year ended 31 December â,¬ million 2010 â,¬ million 2009 â,¬ million 2008 Turnover 2 Operating profit 2 After (charging)/crediting: Restructuring 3 Business disposals, impairments and other one-off items...

  • Page 76
    ... statement of changes in equity for the year ended 31 December â,¬ million 2010 â,¬ million 2009 â,¬ million 2008 Equity at 1 January Total comprehensive income for the year Dividends on ordinary capital Movement in treasury stock Share-based payment credit Dividends paid to non-controlling...

  • Page 77
    Financial statements Financial statements Unilever Group Consolidated balance sheet as at 31 December â,¬ million 2010 â,¬ million 2009 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 ...

  • Page 78
    Financial statements Consolidated cash flow statement for the year ended 31 December â,¬ million 2010 â,¬ million 2009 â,¬ million 2008 Cash flow from operating activities 28 Income tax paid Net cash flow from operating activities Interest received Purchase of intangible assets Purchase of ...

  • Page 79
    ... applied for the previous financial year, except as set out below under the heading 'Recent accounting developments'. Unilever The two parent companies, NV and PLC, together with their group companies, operate as a single economic entity (the Unilever Group, also referred to as Unilever or the Group...

  • Page 80
    ... sales of goods and services after the deduction of discounts, sales taxes and estimated returns. It does not include sales between group companies. Discounts given by Unilever include rebates, price reductions and incentives given to customers, promotional couponing and trade communication costs...

  • Page 81
    ... operating leases are charged to the income statement on a straight-line basis over the term of the lease. Research and market support costs Expenditure on research and market support, such as advertising, is charged to the income statement when incurred. 78 Unilever Annual Report and Accounts 2010

  • Page 82
    ... experience and planned growth rates and margins for the product groups. Please refer also to note 9 on pages 87 and 88. Pensions and similar obligations The Group operates a number of pension plans, including defined benefit plans. The defined benefit plan surplus or deficit in the balance sheet...

  • Page 83
    ...later than one year from the acquisition date would most likely be recorded in the income statement. Recent accounting developments Adopted by the Group From 1 January 2010, the Group adopted IFRS 3 'Business Combinations (Revised)' and IAS 27 'Consolidated and Separate Financial Statements (Amended...

  • Page 84
    ... income statement during the year in respect of the share-based compensation, impairment and provisions. Segment results are presented on the basis of operating profit. â,¬ million Asia Africa CEE â,¬ million The Americas â,¬ million Western Europe â,¬ million Total 20B0 Turnover Operating profit...

  • Page 85
    ... consolidated financial statements Unilever Group 2 Segment information (continued) The home countries of the Unilever Group are the Netherlands and the United Kingdom. Turnover and non-current assets (other than other non-current financial assets, deferred tax assets and pension assets for funded...

  • Page 86
    ... they would have been in prior years. The comparative information has not been re-presented. There is no impact on gross profit or operating profit in 2010, 2009 or 2008. (b) Includes gain on disposals of group companies, amortisation of finite-lived intangible assets and impairment of goodwill and...

  • Page 87
    ...year Asia, Africa and Central & Eastern Europe The Americas Western Europe 96 40 29 165 â,¬ million 2010 98 41 29 168 â,¬ million 2009 100 42 32 174 â,¬ million 2008 Key management compensation Salaries and short-term employee benefits Non-Executive Directors' fees Post-employment benefits Share...

  • Page 88
    ...of 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 2010 85

  • Page 89
    ... a group company which are convertible in the year 2038, as described in Corporate governance on page 50; and (ii) the effect of share-based compensation plans, details of which are set out in note 29 on pages 121 to 122. Calculation of average number of share units Average number of shares: NV PLC...

  • Page 90
    ...NV dividend for the current year Interim PLC dividend for the current year NV quarterly dividend announced with Q4 2009 results NV quarterly dividend announced with Q1 2010 results NV quarterly dividend announced with Q2 2010 results NV quarterly dividend announced with Q3 2010 results PLC quarterly...

  • Page 91
    ... product groups within the CGUs ranging from 18% to 21% Western Europe, 17% to 23% The Americas and 10% to 14% Asia Africa CEE. 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...

  • Page 92
    ... adjustments 31 December 2010 Depreciation 1 January 2010 Disposals of group companies Depreciation charge for the year Disposals Currency Retranslation Reclassification as held for sale Other adjustments 31 December 2010 Net book value 31 December 2010 Includes payments on account and assets in...

  • Page 93
    ... â,¬ million Plant and equipment â,¬ million Total Net book value Gross book value Depreciation 31 December 2010 Gross book value Depreciation 31 December 2009 Buildings B97 (36) B6B 189 (24) 165 205 (B60) 45 207 (150) 57 402 (B96) 206 396 (174) 222 90 Unilever Annual Report and Accounts 2010

  • Page 94
    ... contingent liabilities in relation to its interest in the joint ventures and associates. The Group has no outstanding capital commitments to joint ventures. Outstanding balances with joint ventures and associates are shown in note 30 on page 122. Unilever Annual Report and Accounts 2010 9B

  • Page 95
    ...current impairments 1 January Charged to current year income statement Reductions/releases Currency retranslation 31 December Other classes of assets in trade and other receivables do not include any impaired assets. B57 24 (35) B0 B56 165 27 (40) 5 157 92 Unilever Annual Report and Accounts 2010

  • Page 96
    ... used to determine fair value are given in note 15 on page 102. (f) Includes â,¬4 million (2009: â,¬70 million) fair value through profit or loss and â,¬nil (2009: â,¬393 million) available-for-sale, both relating to an employee savings programme. Unilever Annual Report and Accounts 2010 93

  • Page 97
    ...traded in the market in units of one tenth of their nominal value. The 6% and 7% cumulative preference shares of NV are entitled to dividends at the rates indicated. (h) The 4% cumulative preference shares were redeemed on 9 August 2010 against repayment of the face value. 94 onilever Annual Report...

  • Page 98
    ...During 2009 Unilever started fair value hedge accounting for the 4.625% Euro bonds and the 3.375% Euro bonds. (k) 2009 included â,¬427 million financial liabilities repaid during 2010 in relation to the closure of an employee savings programme. For related assets see page 93. onilever Annual Report...

  • Page 99
    ... again. The other leg of the currency derivatives is shown on page 97 as part of the interest rate profile of financial liabilities. (m) Includes fair value of financial liability-related derivatives amounting to â,¬403 million (2009: â,¬271 million). 96 onilever Annual Report and Accounts 2010

  • Page 100
    ... to â,¬208 million (2009: â,¬212 million) and fair value of financial liability-related derivatives amounting to â,¬303 million (2009: â,¬107 million). Interest rate The average interest rate on short-term borrowings in 2010 was 2.4% (2009: 2.3%). onilever Annual Report and Accounts 2010 97

  • Page 101
    ... of forward foreign exchange contracts on which hedge accounting is applied. Nevertheless, from time to time, currency revaluations on unhedged investments will trigger exchange translation movements in the balance sheet. Interest rate risks Unilever has an interest rate management approach aimed at...

  • Page 102
    Financial statements 15 Financial instruments and treasury risk management (continued) The following table shows Unilever's contractually agreed (undiscounted) cash flows payable under financial liabilities and derivative assets and liabilities as at the balance sheet date: â,¬ million â,¬ million ...

  • Page 103
    ... of financial assets best represents the Group's exposure of credit risk at the reporting date without taking account of any collateral held or other credit enhancements. To reduce the credit exposures, netting agreements are in place with Unilever's principal banks that allow Unilever, in case of...

  • Page 104
    Financial statements 15 Financial instruments and treasury risk management (continued) The impact of exchange rate movements on the fair value of forward exchange contracts used to hedge net investments is recognised in reserves. Derivatives for which hedge accounting is not applied This relates to...

  • Page 105
    ...financial statements Unilever Group 15 Financial instruments and treasury risk management (continued) The fair values of the financial assets and liabilities are included at the amount at which the instruments could be exchanged in a current transaction between willing parties other than in a forced...

  • Page 106
    ... This information is publicly available and is updated by the credit rating agencies on a regular basis. The capital structure of Unilever is based on management's judgement of the appropriate balancing of all key elements of its financial strategy in order to meet its strategic and day-to-day needs...

  • Page 107
    Financial statements Notes to the consolidated financial statements Unilever Group 15 Financial instruments and treasury risk management (continued) Income statement sensitivity to changes in foreign exchange rates The values of debt, investments and related hedging instruments, denominated in ...

  • Page 108
    ... Of the total movement in equity of â,¬(104) million, â,¬(1) million arises as a result of currency re-translation and â,¬(55) million as a result of acquisitions and disposals. At the balance sheet date, the Group has unused tax losses of â,¬1,515 million and tax credits amounting to â,¬78 million...

  • Page 109
    ... 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 110
    ... 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 bonds, equities and hedge funds. The aim...

  • Page 111
    ... at the balance sheet date and applies to 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...

  • Page 112
    ... 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 2010 â,¬ million % Long-term rates of return...

  • Page 113
    ...2008 Charged to operating profit: Defined benefit pension and other benefit plans Current service cost Employee contributions Special termination benefits Past service cost Settlements/curtailments Defined contribution plans Total operating cost 4 Charged to other finance income/(cost): Interest on...

  • Page 114
    ...charged)/ credit 2009 â,¬ million After tax 2009 Fair value gains/(losses) on financial instruments Actuarial gains/(losses) on pension schemes Currency redistribution gains/(losses) 41 158 460 2 (53) - 43 105 460 163 38 396 (58) (20) - 105 18 396 onilever Annual Report and Accounts 2010 111

  • Page 115
    ... 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. 112 Unilever Annual Report and Accounts 2010

  • Page 116
    ... a UK company to have an authorised share capital was abolished by the UK companies Act 2006. In May 2010 shareholders approved new Articles of Association which reflect this. For information on the rights of shareholders of NV and PLC and the operation of the Equalisation Agreement, see Corporate...

  • Page 117
    ... entities by NV or PLC. (b) The share-based compensation 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. (c) As part of the review of Unilever's corporate structure, and in...

  • Page 118
    ... 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 2010 was some â,¬228 million (2009: â,¬205 million). onilever Annual Report and Accounts 2010...

  • Page 119
    ... from the Federal Revenue Service. The notice alleges that a 2001 reorganisation of our local corporate structure was undertaken without valid business purpose. The dispute is in court and if upheld, will result in a tax payment relating to years from 2001 to the present day. The 2001 reorganisation...

  • Page 120
    ... the income statement for the year ended 31 December 2010. These acquisition-related costs are presented within RDI in calculating underlying operating profit. Since acquisition, the Personal Care business has contributed â,¬43 million to Group revenue and â,¬8 million to Group operating profit. If...

  • Page 121
    ... Notes to the consolidated financial statements Unilever Group 26 Acquisitions and disposals (continued) Other 2010 acquisitions and disposals On 18 January 2010 we announced a definitive agreement with Hormel Foods Corporation to sell our Shedd's Country Crock branded side dish business in the US...

  • Page 122
    ... 15 201 The results of disposed businesses are included in the consolidated financial statements up to their date of disposal. The following table sets out the effect of acquisitions in 2010, 2009 and 2008 on the consolidated balance sheet. The fair values currently established for all acquisitions...

  • Page 123
    ... Inventories Trade and other receivables 82 63 53 1 199 Non-current assets held for sale Property, plant and equipment 20 20 On 6 December 2010, the Group acquired the Sanex brand as part of the acquisition of Sara Lee's Personal Care business. The European Competition Authority's approval...

  • Page 124
    ... Executive Directors shown in the Directors' Remuneration Report on pages 61 to 67 and those for key management personnel shown in note 4 on page 84. No awards were made to Executive Directors in 2008, 2009 or 2010 under the Unilever North America 2002 Omnibus Equity Compensation Plan. Non-Executive...

  • Page 125
    ... the consolidated financial statements Unilever Group 29 Share-based compensation plans (continued) Additional information At 31 December 2010, there were options outstanding to purchase 32,928,940 (2009: 41,786,145) ordinary shares in NV or PLC in respect of share-based compensation plans of NV and...

  • Page 126
    ... of services supplied to associated pension schemes (2009: â,¬1 million; 2008: â,¬1 million). 32 Events after the balance sheet date On 3 February 2011 Unilever announced a quarterly dividend with the 2010 fourth quarter results of â,¬0.2080 per NV ordinary share and £0.1775 per PLC ordinary share...

  • Page 127
    Financial statements Financial record Unilever Group In the schedules below, figures within the income statement and for earnings per share reflect the classification between continuing and discontinued operations which has applied for our reporting during 2006-2010. Consolidated income statement ...

  • Page 128
    ... no account of interest receivable although Unilever's treasury operations involve both borrowing and depositing funds. Exchange rates Unilever reports its financial results and balance sheet position in euros. Other currencies which may significantly impact our financial statements are sterling...

  • Page 129
    ... the following code: NV 100% PLC 100% NV 55%; PLC 45% NV 65%; PLC 35% NV 3%; PLC 97% NV 15%; PLC 85% NV 18%; PLC 82% NV 64%; PLC 36% NV 66%; PLC 34% Due to the inclusion of certain partnerships in the consolidated group financial statements of Unilever, para 264(b) of the German trade law grants an...

  • Page 130
    Financial statements 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 Corporation Unilever United States, Inc....

  • Page 131
    ... give a true and fair view of the financial position of Unilever N.V. as at 31 December 2010, and of its result for the year then ended in accordance with United Kingdom accounting standards and with Part 9 of Book 2 of the Dutch Civil Code. Separate report on consolidated financial statements...

  • Page 132
    ... account for the year ended 31 December â,¬ million 2010 â,¬ million 2009 Income from fixed investments after taxation Other income and expenses Profit for the year 1,084 278 1,362 1,306 (19) 1,287 For the information required by Article 392 of Book 2 of the Civil Code in the Netherlands, refer...

  • Page 133
    ...at fair value through profit or loss', and 'derivative financial instruments' in accordance with the accounting policies set out below which have been consistently applied. Accounting policies The principal accounting policies are as follows: Fixed investments Shares in group companies are stated at...

  • Page 134
    ... â,¬62 million relating to NV's share of a provision for the potential infringement of competition law in the European Union. Further information is given in note 25 on page 116. Net pension liability â,¬ million 2010 â,¬ million 2009 Funded retirement benefit Unfunded retirement liability (6) 95...

  • Page 135
    ...million 2009 Post balance sheet event On 3 February 2011 the Directors announced a dividend of â,¬0.2080 per Unilever N.V. ordinary share. The dividend is payable from 16 March 2011 to shareholders registered at close of business on 11 February 2011. Special controlling rights under the Articles of...

  • Page 136
    ... company financial statements of Unilever PLC for the year ended 31 December 2010 which comprise the balance sheet and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally...

  • Page 137
    Financial statements Company accounts Unilever PLC Balance sheet as at 31 December £ million 2010 £ million 2009 Fixed assets Intangible assets Fixed asset investments Current assets Debtors due within one year Creditors due within one year Net current assets/(liabilities) Total assets less ...

  • Page 138
    .... 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. Unilever Annual Report and Accounts 2010 135

  • Page 139
    ... trademarks. Fixed asset investments Shares in group companies(b) £ million 2010 £ million 2009 1 January Change in book value of shares 31 December Profit retained 1 January Profit for the year Other income Final dividend 2008 on ordinary and deferred shares Interim dividend 2009 on ordinary and...

  • Page 140
    ... UK companies maintain formal processes to inform, consult and involve employees and their representatives. We recognise collective bargaining on a number of sites and engage with employees via the Sourcing Unit Forum including officer representation from the three recognised trade unions. Our sites...

  • Page 141
    ... Office Port Sunlight Wirral Merseyside CH62 4ZD Registered number 41424 Unifever PLC Registrars Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS99 6ZY By Order of the Board T E Loveff Secretary of Unilever PLC 1 March 2011 138 Unifever Annual Report and Accounts 2010

  • Page 142
    ... average of the closing price of the shares on Eurolist by Euronext Amsterdam for the five business days before the day on which the purchase is made. The above mentioned authorities are renewed annually. The Board of PLC may, under sections 551, 570 and 571 of the UK Companies Act 2006 and subject...

  • Page 143
    ... corporation, any foreign government or by any other legal or natural person. We are not aware of any arrangements the operation of which may at a subsequent date result in a change of control of Unilever. Purchases of shares during 2010 During 2010 Unilever group companies purchased 9,059,547 NV...

  • Page 144
    ... all four Unilever listings (NV ordinary shares, PLC ordinary shares, NV New York shares, and PLC ADRs). Announced Ex-dividend date Record date Payment date Quarterly Dividend announced with the Q4 2010 results Quarterly Dividend announced with the Q1 2011 results Quarterly Dividend announced with...

  • Page 145
    ... 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 www.unilever.com/investorrelations. It includes detailed coverage of the Unilever share price, our quarterly and annual results...

  • Page 146
    Notes Unifever Annual Report and Accounts 2010 143

  • Page 147
    ... 76, 87-88 Gross profit 83 Group structure 3, 76 Home Care 9, 27, 82 Ice Cream and Beverages 9, 26, 82 Impairment 78, 81, 83, 87-88 Income statement Innovation Intangible assets International Financial Reporting Standards Inventories Joint ventures Key management Key performance indicators Laws and...

  • Page 148
    ...Amsterdam and the US Securities and Exchange Commission, including the Group's Annual Report on Form 20-F for the year ended 31 December 2010 and the Annual Report and Accounts 2010. These forward-looking statements speak only as of the date of this document. Except as required by any applicable law...

  • Page 149
    ...Rotterdam Number: 24051830 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...