Unilever 2011 Annual Report Download - page 83

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80
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS UNILEVER GROUP continued
4C. Share-based compensation plans continued
To satisfy the options granted, certain NV group companies hold 33,219,526 (2010: 42,033,393) ordinary shares of NV or PLC, and trusts
in Jersey and the United Kingdom hold 3,042,111 (2010: 4,838,277) PLC shares. The trustees of these trusts have agreed, until further
notice, to waive dividends on these shares, save for the nominal sum of 0.01p per 31/9p ordinary share. Shares acquired during 2011
represent 0.27% of the Group’s called up capital. The balance of shares held in connection with share plans at 31 December 2011
represented 1.2% (2010: 1.5%) of the Group’s called up capital.
The book value of €799 million (2010: €937 million) of all shares held in respect of share-based compensation plans for both NV and
PLC is eliminated on consolidation by deduction from other reserves. Their market value at 31 December 2011 was €954 million
(2010:€1,083 million).
At 31 December 2011 there were no options for which the exercise price was above market price.
Shares held to satisfy options and related trusts are accounted for in accordance with IAS 32 ‘Financial Instruments: Presentation’ and
SIC 12 ‘Consolidation of Special Purpose Entities’. All differences between the purchase price of the shares held to satisfy options
granted and the proceeds received for the shares, whether on exercise or lapse, are charged to reserves. The basis of the charge to
operating profit for the economic value of options granted is discussed on page 79.
Between 31 December 2011 and 28 February 2012, 5,789,685 shares were granted and 75,466 shares were forfeited related to the
performance share plans.
5. Net finance costs
Net finance costs is the net of finance costs and finance income, including net finance costs in relation to pensions and
similarobligations.
Finance income includes income on cash and cash equivalents and income on other financial assets. Finance costs include interest
costs in relation to financial liabilities.
Borrowing costs which are not capitalised are recognised based on the effective interest method.
Net finance costs
€ million
2011
€ million
2010
€ million
2009
Finance costs (540) (491) (504)
Bank loans and overdrafts (59) (38) (47)
Bonds and other loans (472) (441) (429)
Dividends paid on preference shares (5) (6) (7)
Net gain/(loss) on derivatives for which hedge accounting is not applied(a) (4) (6) (21)
On foreign exchange derivatives (379) (601) (168)
Exchange difference on underlying items 375 595 147
Finance income 92 77 75
Pensions and similar obligations(b) 71 20 (164)
(377) (394) (593)
(a) For further details of derivatives for which hedge accounting is not applied please refer to note 16D on page 98.
(b) Net finance costs in respect of pensions and similar obligations are analysed in note 4B on page 76.
6. Taxation
6A. Income tax
Income tax on the profit for the year comprises current and deferred tax. Income tax is recognised in the income statement except
to the extent that it relates to items recognised directly in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the
balance sheet date, and any adjustments to tax payable in respect of previous years.
Unilever Annual Report and Accounts 2011
Financial statements