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124 Unilever Annual Report and Accounts 2012Financial statements
NOTES TO THE ONSOLIDATED FINANIAL STATEMENTS UNILEVER ROUP continued
18 Fnancal nstruments far value rsk continued
Sgnfcant unobservable nputs used n Level 3 far values
The only individually material asset valued using Level 3 techniques is a particular unlisted investment with a carrying value at
year end of €197 million. A change in one or more of the inputs to reasonably possible alternative assumptions would not change
fair value significantly.
alculaton of far values
The fair values of the financial assets and liabilities are defined as being the amounts at which the instruments could be exchanged
or liability settled in an arm’s length transaction between knowledgeable, willing parties. The following methods and assumptions
have been used to estimate the fair values:
Assets and labltes carred at far value
• The fair values of quoted investments falling into Level 1 are based on current bid prices.
• The fair values of unquoted available-for-sale financial assets are based on recent trades in liquid markets, observable market
rates, discounted cash flow analysis and statistical modelling techniques such as Monte Carlo simulation. If all significant inputs
required to fair value an instrument are observable, the instrument is included in Level 2. If one or more of the significant inputs is
not based on observable market data, the instrument is included in Level 3.
• Derivatives are valued using valuation techniques with market observable inputs. The models incorporate various inputs including
the credit quality of counter-parties, foreign exchange spot and forward rates, interest rate curves and forward rate curves of the
underlying commodities.
• For listed securities where the market is not liquid, and for unlisted securities, valuation techniques are used. These include the use of
recent arm’s length transactions, reference to other instruments that are substantially the same and discounted cash flow calculations.
Other fnancal assets and labltes (far values for dsclosure purposes only)
• Cash and cash equivalents, trade and other current receivables, bank loans and overdrafts, trade payables and other current
liabilities have fair values that approximate to their carrying amounts due to their short-term nature.
• The fair values of preference shares and listed bonds are based on their market value.
• Non-listed bonds, other loans, bank loans and non-current receivables and payables are based on the net present value of the
anticipated future cash flows associated with these instruments using rates currently available for debt on similar terms, credit risk
and remaining maturities.
• Fair values for finance lease creditors have been assessed by reference to current market rates for comparable leasing arrangements.
19 Provsons19 Provsons
Provisions are recognised where a legal or constructive obligation exists at the balance sheet date, as a result of a past event,
where the amount of the obligation can be reliably estimated and where the outflow of economic benefit is probable.
Provsons
 mllon
2012
€ million
2011
Due within one year 361 393
Due after one year 846 908
Total provisions 1,207 1,301
Movements durng 2012
 mllon
Restructurng
 mllon
Legal
 mllon
Dsputed
ndrect taxes
 mllon
Other
 mllon
Total
1 January 2012 348 81 654 218 1,301
Income statement:
Charges 255 24 359 48 686
Releases (70) (6) (190) (9) (275)
Utilisation (240) (36) (80) (46) (402)
Currency translation (3) (2) (95) (3) (103)
31 December 2012 290 61 648 208 1,207
The provision for disputed indirect taxes is comprised of a number of small disputed items. The largest elements relate to disputes
with Brazilian authorities. Due to the nature of the disputes, the timing of provision utilisation and any cash outflows is uncertain.
The majority of disputed items attract an interest charge.
No individual items within the remaining provisions are significant. Unilever expects that the issues relating to these restructuring,
legal and other provisions will be substantively resolved within five years.