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Unilever Annual Report and Accounts 2011
Report of the Directors About Unilever
25
On 10 February 2011 we issued two series of senior notes:
(a) US$500 million at 2.75% maturing in 2016; and
(b) US$1.0 billion at 4.25% maturing in 2021. On 31 March 2011
we issued CNY300million notes at 1.15% maturing in 2014.
On2December 2011 we redeemed our Swiss francs
400millionnotes.
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.
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
plans approved by the Boards. In addition to 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-term
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
16 on page 93 and on page 98. The use of leveraged instruments is
not permitted.
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 16 on pages 94 to 97, which are incorporated and
repeated here by reference.
Cash flow
€ million
2011
€ million
2010
€ million
2009
Net cash flow from
operating activities 5,452 5,490 5,774
Net cash flow from/(used in)
investing activities (4,467) (1,164) (1,263)
Net cash flow from/(used in)
financing activities 411 (4,609) (4,301)
Net increase/(decrease) in cash
and cash equivalents 1,396 (283) 210
Cash and cash equivalents
at 1 January 1,966 2,397 2,360
Effect of foreign exchange
rate changes (384) (148) (173)
Cash and cash equivalents
at 31 December 2,978 1,966 2,397
Cash and cash equivalents increased by €1.4 billion when
translated at average 2011 exchange rates. After recognising the
changes in exchange rates, cash and cash equivalents in the
balance sheet at 31 December 2011 were €1.0 billion higher at
€3.0 billion.
Net cash flow from operating activities of €5.5 billion was in line
with 2010. Net capital expenditure was €0.3 billion higher than
2010. There was a net cash outflow of €1.7 billion for acquisition
and disposal activities, primarily the acquisition of Alberto Culver
and the disposal of the Sanex business. The movement in
financing activities is explained by an inflow from third-party
borrowings.
At 31 December 2011, the net debt position was €8.8 billion, an
increase of €2.1 billion compared to 2010. The outflow from
dividends, acquisitions, tax, net capital expenditure and interest
plus the negative impact of foreign exchange rates together
exceeded the cash inflow from operating activities and business
disposals.
Market capitalisation and dividends
Unilever’s combined market capitalisation rose from €64.8 billion
at the end of 2010 to €73.9 billion at 31 December 2011.
Information on dividends is set out in note 8 on page 83.
Basis of reporting and critical accounting policies
The accounting policies that are most significant in connection
with our financial reporting are set out in note 1 on pages 68 to 69.