Unilever 2011 Annual Report Download - page 106

103
20. Commitments and contingent liabilities continued
Long-term operating lease commitments
€ million
2011
€ million
2010
Land and buildings 1,199 1,243
Plant and machinery 429 357
1,628 1,600
Operating lease and other commitments fall due as follows:
€ million
Operating
leases
2011
€ million
Operating
leases
2010
€ million
Other
commit-
ments
2011
€ million
Other
commit-
ments
2010
Within 1 year 381 364 1,087 1,181
Later than 1 year but not later than 5 years 836 844 1,078 1,632
Later than 5 years 411 392 99 141
1,628 1,600 2,264 2,954
The Group has sublet part of the leased properties under operating leases. Future minimum sublease payments of €58 million are
expected to bereceived.
Other commitments principally comprise commitments under contracts to purchase materials and services. They do not include
commitments for capital expenditure, which are reported in note 10 on pages 86 and 87.
Contingent liabilities are either possible obligations that will probably not require a transfer of economic benefits, or present obligations
that may, but probably will not, require a transfer of economic benefits. It is not appropriate to make provisions for contingent liabilities,
but there isa chance that they will result in an obligation in the future. The Group does not believe that any of these contingent liabilities
will result in a material loss.
Contingent liabilities arise in respect of litigation against 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
2011 was €246 million (2010: €228 million).
Legal proceedings
The Group is involved from time to time in legal and arbitration proceedings arising in the ordinary course of business. Details of the
significant outstanding legal proceedings and ongoing regulatory investigations are as follows:
Competition matters
On 13 April 2011, Unilever announced a settlement with the European Commission after its investigation into the implementation of the
European Industry’s Code of Good Environmental Practice. As part of the settlement, a payment of €104 million was agreed. This
amount fell within the provision made by Unilever in its 2010 results.
The settlement related to the implementation of an industry-wide initiative to concentrate laundry detergents with proven benefits for
the environment. The Commission’s investigation found that certain aspects of the implementation of this complex initiative infringed
European competition rules.
Ongoing compliance with competition laws is of key importance to Unilever. As the approach to enforcement of competition authorities
globally continues to evolve, it is possible that our industry may on occasions be the focus of investigations. It is Unilever’s policy to
co-operate fully with competition authorities whenever questions or issues arise. In addition the Group will continue to reinforce and
enhance our internal competition law compliance programme on an ongoing basis. Where specific issues arise provisions are made
and contingent liabilities disclosed to the extent appropriate.
Tax case in Brazil
During 2004 in Brazil, and in common with many other businesses operating in that country, one of our Brazilian subsidiaries received a
notice ofinfringement 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 was comparable with restructurings done by many companies in Brazil. The Group
believes that the likelihood of a successful challenge by the tax authorities is remote, however, there can be no guarantee of success in
court.
Unilever Annual Report and Accounts 2011
Financial statements