Unilever 2013 Annual Report Download

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DISLAIMER
NOTES TO THE ANNUAL REPORT AND AOUNTS
This PDF version of the Unilever Annual Report and Accounts 2013 is an exact copy of the
printed document provided to Unilever’s shareholders.
Certain sections of the Unilever Annual Report and Accounts 2013 have been audited.
These are on pages 90 to 135, 137 to 141, 143 to 145, and those parts noted as audited within
the Directors’ Remuneration Report on pages 73 to 81.
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.
DISLAIMER
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
    ...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...

  • Page 2
    ANNUAL REPORT AND ACCOUNTS 2013 MAKING SUSTAINABLE LIVING COMMONPLACE

  • Page 3
    ... feel good, look good and get more out of life. Our first priority is to our consumers - then customers, employees, suppliers and communities. When we fulfil our responsibilities to them, we believe that our shareholders will be rewarded. UNILEVER SUSTAINABLE LIVING PLAN (USLP) Our Annual Report...

  • Page 4
    ...' reports 90 Consolidated income statement 90 Consolidated statement of comprehensive income 91 Consolidated statement of changes in equity 92 Consolidated balance sheet 93 Consolidated cash flow statement 94 Notes to the consolidated financial statements 136 Company accounts Shareholder information...

  • Page 5
    ... well balanced with volume 2.5% and price 1.8%. • Emerging markets, now 57% of our business, grew underlying sales by 8.7% but were flat in current currency. • Developed markets reported negative underlying sales growth for the year of 1.3%, with Europe down 1.1% and North America 1.5%. WHAT...

  • Page 6
    ... Plan (USLP) commitments on pages 22 and 23. They will continue to be included in our online Unilever Sustainable Living Report for 2013 to be published in April 2014. FINANCIAL UNDERLYING SALES GROWTH 2013 CORE OPERATING MARGIN 2013 UNDERLYING VOLUME GROWTH 2013 FREE CASH FLOW 2013 4.3% 2012...

  • Page 7
    ... US remains our largest operation in terms of turnover so it was a fitting location for 2013's corporate strategy review which included increased interaction between the Directors and members of the Unilever Leadership Executive. In Spain the Boards saw the robustness of Unilever's business model in...

  • Page 8
    ... of presenting consolidated financial statements. Accordingly, the accounts of the Unilever Group are presented by both NV and PLC as their respective consolidated financial statements. The same people sit on the Boards of NV and PLC and other officers are officers of both companies. Any references...

  • Page 9
    ... of results was equally good, with 55% of our business winning share. Growth was driven by Personal Care and Home Care, which continue to outperform the markets and our competitive set. Most of the growth came from emerging markets, which now account for 57% of our business. FINANCIAL PERFORMANCE...

  • Page 10
    ... North America Dave Lewis Personal Care 15 10 Harish Manwani Chief Operating Officer 11 Nitin Paranjpe Home Care 12 Antoine de Saint-Affrique Foods 13 Pier Luigi Sigismondi Chief Supply Chain Officer 14 Ritva Sotamaa Chief Legal Officer 15 Keith Weed Chief Marketing and Communication Officer...

  • Page 11
    ... global scale to help deliver sustainable, profitable growth by seeking to add value at every step in the value chain by enhancing product quality and customer service, and rolling out innovations faster across all markets. See page 18 8 Strategic report Unilever Annual Report and Accounts 2013

  • Page 12
    ...business further. New and improved products are the result of investment in R&D and, together with effective marketing, strengthen our brand equity. This results in profitable volume growth, self-perpetuating the virtuous circle of growth. ER L ATI ON OP S PE Unilever Annual Report and Accounts...

  • Page 13
    ... high-quality products which make a connection with people's lives and needs, bringing a promise to the consumer and driving sustainable, profitable growth. A stream of innovations is helping us create 'brands with purpose'. We aim to grow our business and improve our margins by building on our...

  • Page 14
    ... new premium products to the UK in 2013, it is showing how our brands continue to find new ways to stimulate growth and set new trends. BUILDING ON OUR HERITAGE Our portfolio contains many brands which are embedded in people's lives and with which consumers feel a long-standing connection. We want...

  • Page 15
    ... Open Innovation and the New Business Unit. Together, they aim to harness rapidly-evolving science and leverage the work of external academia, small and medium sized enterprises, and start-ups, to develop new science and breakthrough technologies. WINNING MARKET SHARE IN EMERGING MARKETS Emerging...

  • Page 16
    ... the total number of stock-keeping units (SKUs) that we sell, in order to focus on those which will best drive our growth and margins. OVERVIEW OF RISKS BRAND PREFERENCE As a branded goods business, Unilever's success depends on the value and relevance of our brands and products to consumers across...

  • Page 17
    ... Survey in 2013. 2012: 73% NO.1 26 in countries The percentage of persons of each sex who were Unilever managers. 2012: 60% male, 40% female Fast-moving consumer goods employer of choice among students. 2012: No.1 in 20 countries 14 Strategic report Unilever Annual Report and Accounts 2013

  • Page 18
    ... that was designed to touch millions of people in 2013. And, at the One Young World summit in Johannesburg in October 2013, our Chief Executive Officer urged 1,200 delegates from 190 countries to become a force for good. As well as generating a positive buzz around our employer brand, our aim with...

  • Page 19
    ...Winning Balance' at the tenth Stevie Awards for Women in Business, as well as a Catalyst Award for Creating a Gender-Balanced Workforce in Different Cultures. We were included in The Times Top 50 Employers for Women in the UK, The Working Mother 100 Best Companies in North America and the Corporate...

  • Page 20
    ... safety through visible leadership, the positive behaviour of our people, the design of our plants, facilities and products, and by implementing safe systems and procedures throughout Unilever. Unilever Annual Report and Accounts 2013 Through our Vision Zero strategy - zero fatalities, zero injuries...

  • Page 21
    ... VER LE PROFITABLE VOLUME GROWTH ENTIRE VALUE C HA IN OUR OPERATIONS REACHING UP, REACHING DOWN Because the aspirations and budgets of consumers are different, we aim to meet them through a segmented market strategy - which requires a segmented product portfolio and a segmented supply chain to...

  • Page 22
    ... innovate, deliver quality products and roll out repeatable working models across countries more quickly is critical to our success in the market. We're working hard to achieve high levels of product quality and consumer satisfaction, and making substantial investments in new manufacturing capacity...

  • Page 23
    ...and number one overall for companies based in Europe. LEVERAGING ENTIRE VALUE CHAIN We have more than 100,000 suppliers and we deliver to more than 8 million stores. By working with these and other partners we can reach more consumers, develop new products, build new capacity, increase margins, and...

  • Page 24
    ... Successful customer relationships are vital to our business and continued growth. SUPPLY CHAIN HARNESSING THE BENEFITS OF SCALE Through supply chain efficiencies we created savings of â,¬1.5 billion and released â,¬0.2 billion of working capital in 2013. We manage our factory network globally...

  • Page 25
    ... it with our virtuous circle of growth. In place since 2010, the USLP is increasingly helping to drive profitable growth for our brands, to save costs and to fuel innovation. TE, LESS RISK WAS SS LE UNILEVER SUSTAINABLE LIVING PLAN IMPROVING HEALTH AND WELL-BEING By 2020 we will help more than...

  • Page 26
    ... portfolio are evolving in ways which are increasing our footprint: our Personal Care business has expanded in shower and hair products via the Alberto Culver acquisition (which accounts for three percentage points of the GHG increase) and our laundry business has experienced high levels of growth...

  • Page 27
    ... Unilever Annual Report and Accounts 2013 DRIVING BUSINESS SUCCESS Our focus on making sustainable living commonplace for our consumers is helping to drive profitable growth. In the three years since the USLP became operational, we have found the benefits are accelerating. By looking at product...

  • Page 28
    ...and Unilever Sustainable Living Plan. Mark Goldring, Chief Executive, Oxfam GB OVERVIEW OF RISKS SUSTAINABILITY The success of our business depends on finding sustainable solutions to support long-term growth. See Risks on page 34 LIFEBUOY - THREE YEARS OF DOUBLE-DIGIT GROWTH Our health soap brand...

  • Page 29
    ... for the year ended 31 December 2013 2012 (Restated)(1) % change 2011 2012 2013 UNDERLYING VOLUME GROWTH* 3.4% 2.5% 1.6% 2011 2012 2013 CORE OPERATING MARGIN* 13.5% 13.7% 14.1% Turnover (â,¬ million) Operating profit (â,¬ million) Core operating profit* (â,¬ million) Profit before tax...

  • Page 30
    ... operating margin increased by 0.6 percentage points, adding â,¬65 million, with higher gross margins, including the benefit of the low cost business model programme partly offset by increased advertising and promotions. KEY DEVELOPMENTS Unilever Annual Report and Accounts 2013 Strategic report...

  • Page 31
    .../RUB The Americas Europe 40% 33% 27% Asia/AMET/RUB The Americas Europe 37% 38% 25% UNILEVER GROUP Turnover â,¬ million 2013 USG % 2013 UVG % 2013 Turnover â,¬ million 2012 USG % 2012 UVG % 2012 Turnover â,¬ million 2011 USG % 2011 UVG % 2011 Unilever Total Emerging markets Developed markets 49...

  • Page 32
    ... 2012, and currency headwinds. Unilever has consistently enjoyed a negative working capital position as a result of tight management attention across the supply chain - indicative of careful attention to maintaining a strong financial and liquidity position. Better forecasting and planning processes...

  • Page 33
    ... year and as forecast for 2014. FINANCE AND LIQUIDITY The Group's financial strategy provides the financial flexibility to meet strategic and day-to-day needs. Our current long-term credit rating is A+/A1 and our current short-term credit rating is A1/P1. We aim to maintain a competitive balance...

  • Page 34
    ... risks, including the effects of changes in foreign exchange rates, interest rates, commodity costs and liquidity. Further details of the management of these risks are given in note 16 on pages 120 to 125. BASIS OF REPORTING AND CRITICAL ACCOUNTING POLICIES The consolidated financial statements...

  • Page 35
    ... (%) Turnover growth (%)(a) 7.3 - (0.2) (6.8) (0.2) 10.0 4.4 (0.5) 2.3 17.0 FREE CASH FLOW (FCF) Within the Unilever Group, free cash flow (FCF) is defined as cash flow from operating activities, less income taxes paid, net capital expenditures and net interest payments and preference dividends...

  • Page 36
    ...costs Depreciation, amortisation and impairment Changes in working capital Pensions and similar provisions less payments Provisions less payments Elimination of (profits)/losses on disposals Non-cash charge for share-based compensation Other adjustments Cash flow from operating activities Income tax...

  • Page 37
    ... operating margin and strong cash flow. ORGANISATION The Unilever Boards assume overall accountability for the management of risk and for reviewing the effectiveness of Unilever's risk management and internal control systems. The Boards have established a clear organisational structure with well...

  • Page 38
    ... and are increasingly being centralised and automated into transactional and other information technology systems. ASSURANCE AND RE-ASSURANCE Assurance on compliance with the Code of Business Principles and all of our Code Policies is obtained annually from Unilever management via a formal...

  • Page 39
    ... strategies into projects and category plans, develop products and relevant brand communication and successfully roll out new products to our consumers. WHAT WE ARE DOING TO MANAGE THE RISK PORTFOLIO MANAGEMENT Unilever's strategic investment choices will affect the long-term growth and profits...

  • Page 40
    ... our product quality, science, and communications experts, to ensure timely and effective market place action. SYSTEMS AND INFORMATION Unilever's operations are increasingly dependent on IT systems and the management of information. We interact electronically with customers, suppliers and consumers...

  • Page 41
    ...emerging markets have given us experience operating and developing our business successfully during periods of economic, political or social change. TREASURY AND PENSIONS Unilever is exposed to a variety of external financial risks in relation to Treasury and Pensions. Changes to the relative value...

  • Page 42
    ... defined benefit pension plans, most now closed to new employees, which are exposed to movements in interest rates, fluctuating values of underlying investments and increased life expectancy. Changes in any or all of these inputs could potentially increase the cost to Unilever of funding the schemes...

  • Page 43
    ... experience: Chief financial officer, BP plc. Member, UK Business, Government Forum on Tax and Globalisation. Vice-chairman, UK Government's Public Services Productivity Panel MARY MA Non-Executive Director Nationality Chinese Age 61 Appointed May 2013 Committee membership: Audit Key areas of...

  • Page 44
    ..., Unilever UK and Ireland. Managing Director, UK home and personal care business. Senior Vice-President for Home and Personal Care, Central and Eastern Europe; Current external appointments: Nonexecutive director, British Sky Broadcasting Group PLC HARISH MANWANI Chief Operating Officer Nationality...

  • Page 45
    ... chaired by and reports to the CEO. For ULE members' biographies see page 41. EXECUTIVE DIRECTORS During 2013, Unilever continued to have two Executive Directors, the CEO and Chief Financial Officer (CFO), who are also members of the ULE and are full-time employees of Unilever. GROUP SECRETARY The...

  • Page 46
    ... Non-Executive Directors to meet senior managers around Unilever's global business and in turn allow them to gain a deeper understanding of the business. CHANGES TO THE BOARD During 2013 the NCGC engaged the services of an executive search agency to assist with the recruitment of new NonExecutive...

  • Page 47
    ... evolve. DATE 2013 EVALUATION (INTERNAL) AGREED ACTIONS Continue to provide more discussion time for the Non-Executive Directors in both Board meetings and NonExecutive Director only meetings Continue to include agenda items where both management and Non-Executive Directors co-present Chairman to...

  • Page 48
    ...conducted a thorough review of the NonExecutive Directors', and their related or connected persons', relevant relationships referencing the criteria set out in 'The Governance of Unilever' which is derived from the relevant best practice guidelines in the Netherlands, UK and US. The Boards currently...

  • Page 49
    ... Annual Report and Accounts and Notice of AGMs have been published on our website, instead of receiving printed copies. VOTING RIGHTS NV shareholders can cast one vote for each â,¬0.16 nominal capital that they hold. This means that they can cast one vote for each NV ordinary share or NV New York...

  • Page 50
    ... value creation and relative total shareholder return. Unilever therefore believes that the interests of the business and shareholders are best served by linking our long-term share plans to the measures as described in the Directors' Remuneration Report and has not included a non-financial...

  • Page 51
    ... five years (bpp II.2.5). Our remuneration policy requires Executive Directors to build and retain a personal shareholding in Unilever. In addition, the Compensation and Management Resources Committee approved that with effect from 1 January 2014 Executive Directors will be required to hold 100% of...

  • Page 52
    ...used in manufacturing as well as water and waste and targets for the new factories we are building. See page 20 and our online Unilever Sustainable Living Report (to be published at the end of April 2014) for further detail. In line with the Companies Act 2006 (Strategic Report and Directors' Report...

  • Page 53
    ... views, attitudes and levels of engagement. The Directors' Reports of the United Kingdom operating companies contain more details about how they have communicated with their employees during 2013. REQUIREMENTS - THE UNITED STATES Both NV and PLC are listed on the New York Stock Exchange (NYSE...

  • Page 54
    ... and Unilever Group companies to satisfy options granted under PLC's employee share schemes are given on page 52 and in note 4 to the consolidated accounts on pages 104 and 105. NV may issue shares not yet issued and grant rights to subscribe for shares only pursuant to a resolution of the General...

  • Page 55
    ...2013 Unilever Group companies purchased 330,000 PLC American Depositary Receipt of shares, each representing one PLC ordinary share with a nominal value of 31⁄9p for â,¬10.04 million. This represents 0.025% of the called-up share capital of PLC. 52 Governance Unilever Annual Report and Accounts...

  • Page 56
    ... to reporting and governance • Continual assessment of the corporate risks for which the Audit Committee has oversight and related mitigation/response plans • Review of Unilever's major change programmes • Review of non-financial KPIs Unilever Annual Report and Accounts 2013 Governance...

  • Page 57
    ... by management. At the request of the Board the Committee considered whether the 2013 Annual Report and Accounts was fair, balanced and understandable and whether it provided the necessary information for shareholders to assess the Group's performance, business model and strategy. The Committee were...

  • Page 58
    ... audits and accountants' reports; and - internal control reviews. Several types of engagements are prohibited, including: • bookkeeping or similar services; • systems design and implementation related to financial information or risk management; • valuation services; • actuarial services...

  • Page 59
    ... group of Unilever's senior executives who are accountable for driving sustainable growth. The insights from these groups help to keep the Boards informed of current and emerging trends and any potential risks arising from sustainability issues. During 2013 the Boards reviewed the terms of reference...

  • Page 60
    ... into the impacts of its extended value chain from working with NGO partners such as Oxfam. The Committee reviewed the findings from Oxfam's study of Unilever in Vietnam2 and welcomed the policies and processes being developed by Unilever. Unilever Annual Report and Accounts 2013 Governance 57

  • Page 61
    ...themselves for election each year at the Annual General Meetings. The 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 62
    ... listings; • Understanding of human resources and remuneration in large international companies; • Experience in financial administration, accounting policies and internal control; • Risk management of multinationals with share listings; • Understanding of the markets where Unilever...

  • Page 63
    ... DEAR SHAREHOLDERS, Last year the Compensation and Management Resources Committee (the Committee) made significant changes to the structure of the Directors' Remuneration Report in preparation for the new remuneration reporting regulations in the UK which came into effect from 1 October 2013. We...

  • Page 64
    ... senior management, are shareholders in our business. During the year, therefore, the Committee approved the introduction of a new global employee share plan for those employees who do not currently participate in equity incentive arrangements. We will start the process of implementing this scheme...

  • Page 65
    ... of Executive Directors of the calibre required to implement our strategy. Reflects the individual's skills, experience, performance and role within the Group. OPERATION Set by the Boards on the recommendation of the Committee and generally reviewed once a year, with new salaries usually effective...

  • Page 66
    ...retirement. Executive Directors are entitled to participate on the same terms as all UK employees in the Unilever PLC 2005 Sharesave Plan and the Sharebuy scheme known as the Unilever PLC Share Incentive Plan. OPPORTUNITY Provision of death, disability and medical insurance cover, actual tax return...

  • Page 67
    ... of shareholder value. The ability to recognise performance through annual bonus enables us to control our cost base flexibly and react to events and market circumstances. OPERATION Unilever performance measures and personal goals for the Executive Directors are set by the Committee on an annual...

  • Page 68
    ... Committee shall operate the MCIP in accordance with the plan rules. The Committee may adjust and/or amend awards to take account of variations in the share capital, a change in the certification of Unilever N.V. shares, demerger, a special dividend, rights issues or other corporate events affecting...

  • Page 69
    ...shall operate the GSIP in accordance with the plan rules. The Committee may adjust and/ or amend awards to take account of variations in the share capital, a change in the certification of Unilever N.V. shares, demerger, a special dividend, rights issues or other corporate events affecting the value...

  • Page 70
    ...EMPHASIS ON PERFORMANCE-RELATED PAY It is Unilever's policy that the total remuneration package for Executive Directors should be competitive with other global companies and that a significant proportion should be performance-related. The Committee typically reviews, on at least an annual basis, the...

  • Page 71
    ...-line profit growth that Unilever believes will build shareholder value over the longer term. Total shareholder return measures Unilever's success relative to peers. The following sets out the performance measures for short- and long-term executive incentive plans to be awarded in 2014 as well...

  • Page 72
    ...The remuneration arrangements applicable to our Executive Directors require them to build and retain a personal shareholding in Unilever (by the later of 2015 or five years from the date of appointment) to align their interests with those of Unilever's long-term shareholders. Unilever Annual Report...

  • Page 73
    ...' REMUNERATION REPORT CONTINUED SERVICE CONTRACTS POLICY IN RELATION TO EXECUTIVE SERVICE CONTRACTS AND PAYMENTS IN THE EVENT OF LOSS OF OFFICE PROVISION NOTICE PERIOD CURRENT SERVICE CONTRACTS • 12 months' notice from Unilever; • 6 months' notice from the Executive Director. This is in line...

  • Page 74
    ... by the Group; and • fee levels paid in other global non-financial services companies based in Europe. Fees are paid in cash. OPERATION Unilever applies a modular fee structure for Non-Executive Directors to ensure we fairly reflect the roles and responsibilities for Committee membership and...

  • Page 75
    ...-Executive Directors are currently appointed for a one-year term, subject to satisfactory performance, re-nomination at the discretion of the Boards on the recommendation of the Nominating and Corporate Governance Committee and re-election at forthcoming annual shareholder meetings. It is Unilever...

  • Page 76
    ...Executive Directors, for the years 2012 (restated) and 2013. (AUDITED) Paul Polman CEO (UK) (â,¬'000s) 2013 2012 (Restated) Jean-Marc Huët CFO (UK) (â,¬'000s) 2013 2012 (Restated) Base salary (a) Fixed allowances and other benefits (b) Annual bonus (c) GSIP performance shares - (required by UK law...

  • Page 77
    ... This resulted in the CFO receiving a bonus of 105% of his base salary. This is calculated as follows: Target bonus: 100% of base salary = £714,000 Unilever's 2013 performance ratio = 95% Personal performance multiplier = 110% £746,130 (105% of base salary) 2014 MCIP AWARDS (BASED ON 2013 ANNUAL...

  • Page 78
    ... returns for our shareholders with underlying operating margin improving 0.19 percentage points. Cash flow performance has also been strong, funding future investment in growth. On the basis of this performance, the Committee determined that GSIP awards granted to Executive Directors in 2011...

  • Page 79
    DIRECTORS' REMUNERATION REPORT CONTINUED OTHER IMPLEMENTATION INFORMATION FOR 2013 SCHEME INTERESTS AWARDED IN THE YEAR (AUDITED) PLAN BASIS OF AWARD MAXIMUM FACE VALUE OF AWARDS (£) CEO: £1,742,332 CFO: £390,678 THRESHOLD VESTING (% OF TARGET AWARD) Four equally weighted long-term performance ...

  • Page 80
    ... date of acquisition or the open market value at the date of measurement. The euro/sterling/US $ exchange rate to be applied will be the prevailing rate on the chosen date. With effect from 1 January 2014 Executive Directors will be required to hold shares to the value of 100% of their shareholding...

  • Page 81
    DIRECTORS' REMUNERATION REPORT CONTINUED MANAGEMENT CO-INVESTMENT PLAN (AUDITED) Balance of conditional shares at 1 January 2013 Share type Conditional shares awarded in 2013(a) Performance period 1 January 2013 to 31 December 2015 Price at award Dividend shares accrued during the year(d) Balance of...

  • Page 82
    ... other benefits are not known until the year end. In line with the Policy table above, Executive Directors will be provided with death, disability and medical insurance cover and actual tax return preparation costs in 2014. Unilever also pays the CEO's social security obligations in his country of...

  • Page 83
    ... awards vest (capped at 150% under the MCIP) for maximum performance. For the relative TSR measure, Unilever's TSR is measured against a comparator group of other consumer goods companies. TSR measures the return received by a shareholder, capturing both the increase in share price and the value...

  • Page 84
    ...up a personal shareholding of at least one times their annual fees over the five years from 1 January 2012 (or appointment if later). The table shows the interests in NV and PLC ordinary shares of Non-Executive Directors and their connected persons as at 31 December 2013. There has been no change in...

  • Page 85
    ... of our dual listing status. Benefits (not including pension) % change from 2012 to 2013 CEO(a) UK and Dutch management (a) Salary Bonus(b) FIVE-YEAR HISTORICAL TOTAL SHAREHOLDER RETURN (TSR) PERFORMANCE The table below includes: • growth in the value of a hypothetical £100 holding over...

  • Page 86
    ... services including tax compliance, transfer pricing, financial transformation, IT restructuring and sourcing strategies advice to Unilever. Deloitte is a member of the Remuneration Consultants Group and, as such, voluntarily operates under the code of conduct in relation to executive remuneration...

  • Page 87
    ...balance sheet Consolidated cash flow statement Notes to the consolidated financial statements 1 Accounting information and policies 2 Segment information 3 Gross profit and operating costs 4 Employees 4A Staff and management costs 4B Pensions and similar obligations 4C Share-based compensation plans...

  • Page 88
    ... Civil Code (in the 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; and • The Strategic Report includes a fair review of the development and performance...

  • Page 89
    ... the Annual Report and Accounts 2013 of the Unilever Group for the year ended 31 December 2013, which comprise the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated balance sheet, consolidated cash flow statement...

  • Page 90
    ... is primarily structured and monitored across four key categories being Personal Care, Foods, Refreshment and Home Care. The consolidated financial statements are a consolidation of the Group's reporting units which include operating businesses, centralised functions and supply chain entities. In...

  • Page 91
    ... units relating to Foods, and because it involves complex and subjective judgements by the Directors about near term and long term sales growth rates, commodity prices and the projected operating margins. We evaluated the Directors' cash flow forecasts; including comparing them to the latest Board...

  • Page 92
    ... the report to shareholders by the Board on Directors' remuneration. We have no exceptions to report arising from these responsibilities. OTHER MATTER We have reported separately on the parent company financial statements of Unilever PLC for the year ended 31 December 2013 and on the information in...

  • Page 93
    ...STATEMENT for the year ended 31 December â,¬ million 2013 Notes â,¬ million 2012 (Restated)(a) â,¬ million 2011 (Restated)(a) Turnover Operating profit After (charging)/crediting non-core items Net finance costs Finance income Finance costs Pensions and similar obligations Share of net profit/(loss...

  • Page 94
    ...based payment credit relates to the non-cash charge recorded against operating profit in respect of the fair value of share options and awards granted to employees. (c) Includes the impact of acquisition of non-controlling interest. (b) Unilever Annual Report and Accounts 2013 Financial statements...

  • Page 95
    FINANCIAL STATEMENTS UNILEVER GROUP CONTINUED CONSOLIDATED BALANCE SHEET as at 31 December â,¬ million 2013 Notes â,¬ million 2012 (Restated) Assets Non-current assets Goodwill Intangible assets Property, plant and equipment Pension asset for funded schemes in surplus Deferred tax assets Financial ...

  • Page 96
    CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 December â,¬ million 2013 Notes â,¬ million 2012 (Restated) â,¬ million 2011 (Restated) Net profit Taxation Share of net profit of joint ventures/associates and other income/(loss) from non-current investments Net finance costs Operating profit...

  • Page 97
    .... The results of disposed businesses are included in the consolidated financial statements up to their date of disposal, being the date control ceases. Intra-group transactions and balances are eliminated. The company income statement for NV is included in the consolidated financial statements. An...

  • Page 98
    ... Group and have been adopted for the first time in these financial statements, with no material impact: • IAS 19 'Employee benefits (Revised)' changes a number of disclosure requirements and restricts the accounting options available for defined benefit pension plans. The return on pension plan...

  • Page 99
    ... sales of goods 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. Turnover is...

  • Page 100
    ... excluding financial assets, deferred tax assets and pension assets for funded schemes in surplus. No other country had turnover or non-current assets (as shown above) greater than 10% of the Group total. ADDITIONAL INFORMATION BY GEOGRAPHIES Although the Group's operations are managed by product...

  • Page 101
    ... Non-core items are disclosed on the face of the income statement to provide additional information to users to help them better understand underlying business performance. â,¬ million 2013 â,¬ million 2012 â,¬ million 2011 Acquisition and disposal related costs Gain/(loss) on disposal of group...

  • Page 102
    ... number of employees during the year Asia/AMET/RUB The Americas Europe 97 43 34 174 â,¬ million 2013 94 43 35 172 â,¬ million 2012 92 42 35 169 â,¬ million 2011 Key management compensation Salaries and short-term employee benefits Non-Executive Directors' fees Post-employment benefits Share...

  • Page 103
    ... FINANCIAL STATEMENTS UNILEVER GROUP CONTINUED 4B. PENSIONS AND SIMILAR OBLIGATIONS CONTINUED DESCRIPTION OF PLANS In many countries the Group operates defined benefit pension plans based on employee pensionable remuneration and length of service. The majority of plans are either final salary...

  • Page 104
    ... the income statement comprises: â,¬ million 2013 Notes â,¬ million 2012 (Restated) â,¬ million 2011 (Restated) Charged to operating profit: Defined benefit pension and other benefit plans: Current service cost Employee contributions Special termination benefits Past service cost including (losses...

  • Page 105
    ... Current service cost Employee contributions Special termination benefits Past service costs including losses/(gains) on curtailments Settlements Actual return on plan assets (excluding amounts in net finance income/charge) Interest cost Interest income Actuarial gain/(loss) arising from changes...

  • Page 106
    ...2012 (Restated) Other postemployment benefit plans Pension plans Pension plans Total Assets Equities Total - Europe - North America - Other Fixed Income Total - Government bonds - Investment grade Corporate bonds - Other Fixed Income Derivatives Private Equity Property and Real Estate Hedge Funds...

  • Page 107
    ... return (TSR) for senior executives. A summary of the status of the Performance Share Plans as at 31 December 2013, 2012 and 2011 and changes during the years ended on these dates is presented below: 2013 Number of shares 2012 Number of shares 2011 Number of shares Outstanding at 1 January Awarded...

  • Page 108
    ... 2013 2012 2011 Share award value information Fair value per share award during the year â,¬28.91 â,¬25.02 â,¬22.91 ADDITIONAL INFORMATION At 31 December 2013, shares and options in NV or PLC totalling 14,505,562 (2012: 16,823,830) were held in respect of share-based compensation plans of NV...

  • Page 109
    ... differ from the income tax paid in the consolidated cash flow statement primarily because of deferred tax arising on temporary differences and payment dates for income tax occurring after the balance sheet date. â,¬ million 2013 Tax charge in income statement Current tax Current year Over/(under...

  • Page 110
    ... million Income statement â,¬ million â,¬ million As at 31 December 2012 (Restated) Other Movements in 2013 and 2012 Pensions and similar obligations Provisions Goodwill and intangible assets Accelerated tax depreciation Tax losses Fair value gains Fair value losses Share-based payments Other 750...

  • Page 111
    ... number of share units Average number of shares: NV PLC Less shares held by employee share trusts and companies Combined average number of share units Add shares issuable in 2038 Add dilutive effect of share-based compensation plans Diluted combined average number of share units 2013 2012 2011...

  • Page 112
    ... balance sheet date' on page 133. Total dividends declared in relation to 2013 were â,¬1.08 (2012: â,¬0.97) per NV ordinary share and £0.91 (2012: £0.79) per PLC ordinary share. 9. GOODWILL AND INTANGIBLE ASSETS GOODWILL Goodwill is initially recognised based on the accounting policy for business...

  • Page 113
    ... in use has been calculated as the present value of projected future cash flows. A pre-tax discount rate of 7.4% was used. For the significant CGUs, the following key assumptions were used in the discounted cash flow projections: 110 Financial statements Unilever Annual Report and Accounts 2013

  • Page 114
    ... terminal value multiple to the final year cash flows. The growth rates used are consistent with our annual planning and strategic planning processes. We have performed sensitivity analyses around the base assumptions and have concluded that no reasonable possible changes in key assumptions would...

  • Page 115
    ... of further losses is discontinued, except to the extent that the Group has an obligation to make payments on behalf of the investee. Biological assets are measured at fair value less costs to sell with any changes recognised in the income statement. â,¬ million 2013 â,¬ million 2012 Interest in...

  • Page 116
    ...our investments in Langholm Capital Partners. During the year we partially disposed of our investment in Langholm Capital Partners and formed a new relationship with Capvent Asia Consumer Fund Ltd. Other Unilever Ventures assets are included under 'Other non-current non-financial assets'. The joint...

  • Page 117
    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS UNILEVER GROUP CONTINUED 13. TRADE AND OTHER CURRENT RECEIVABLES CONTINUED Trade and other current receivables Due within one year Trade receivables Prepayments and accrued income Other receivables â,¬ million 2013 â,¬ million 2012 2,852 516 1,463 4,...

  • Page 118
    ... balance sheet in line with A+/A1 rating (see below); • secure funding at lowest costs for the Group's operations, M&A activity and external dividend payments (see below); • protect the Group's financial results and position from financial risks (see note 16); • maintain market risks...

  • Page 119
    ... on the rights of shareholders of NV and PLC and the operation of the Equalisation Agreement, see the Corporate Governance report on page 42. A nominal dividend of 6% is paid on the deferred stock of PLC, which is not redeemable. 116 Financial statements Unilever Annual Report and Accounts 2013

  • Page 120
    ... financial information in relation to HUL is shown below. HUL Balance sheet as at 31 December 2013 Non-current assets Current assets Current liabilities Non-current liabilities HUL Comprehensive income for the year ended 31 December 2013 Turnover Profit after tax Total comprehensive income HUL Cash...

  • Page 121
    ... exclude trade and other current receivables and trade payables and other liabilities which are covered in notes 13 and 14 respectively. (b) Financial liabilities include â,¬6 million (2012: â,¬1 million) of secured liabilities. 118 Financial statements Unilever Annual Report and Accounts 2013

  • Page 122
    ...5,180 8,421 58 6 754 749 568 567 - 412 378 691 340 218 169 124 111 69 14 10 5,180 8,479 Information in relation to the derivatives used to hedge bonds and other loans within a fair value hedge relationship is shown in note 16. Unilever Annual Report and Accounts 2013 Financial statements 119

  • Page 123
    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS UNILEVER GROUP CONTINUED 16. TREASURY RISK MANAGEMENT DERIVATIVES AND HEDGE ACCOUNTING Derivatives are measured at fair value with any related transaction costs expensed as incurred. The treatment of changes in the value of derivatives depends on their ...

  • Page 124
    ... amount as shown in balance sheet Undiscounted cash flows 2013 Non-derivative financial liabilities: Preference shares Bank loans and overdrafts Bonds and other loans At amortised cost Subject to fair value hedge accounting Finance lease creditors Other financial liabilities Trade payables Issued...

  • Page 125
    ...124. 16B. MANAGEMENT OF MARKET RISK Unilever's size and operations result in it being exposed to the following market risks that arise from its use of financial instruments: • commodity price risk; • currency risk; and • interest rate risk. The above risks may affect the Group's income and...

  • Page 126
    ...-year basis would have led to an additional â,¬39 million debit in equity from derivatives in cash flow hedge relationships (2012: â,¬111 million debit). (a) See the split in fixed and floating-rate interest in the following table. Unilever Annual Report and Accounts 2013 Financial statements...

  • Page 127
    ...THE CONSOLIDATED FINANCIAL STATEMENTS UNILEVER GROUP CONTINUED 16B. MANAGEMENT OF MARKET RISK CONTINUED The following table shows the split in fixed and floating rate interest exposures, taking into account the impact of interest rate swaps and cross-currency swaps: â,¬ million 2013 â,¬ million 2012...

  • Page 128
    ... on the trade date. At that point, they are classified as: (i) held-to-maturity investments; (ii) loans and receivables; (iii) available-for-sale financial assets; or (iv) financial assets at fair value through profit or loss. Unilever Annual Report and Accounts 2013 Financial statements 125

  • Page 129
    ... investments in a number of companies and financial institutions in Europe, India and the US, including â,¬84 million (2012: â,¬98 million) of assets in a trust to fund benefit obligations in the US (see also note 4B on page 103). 126 Financial statements Unilever Annual Report and Accounts 2013

  • Page 130
    ... cash flow statement â,¬ million 2013 â,¬ million 2012 2,285 (241) 2,044 2,465 (248) 2,217 17B. CREDIT RISK Credit risk is the risk of financial loss to the Group if a customer or counter-party fails to meet its contractual obligations. Additional information in relation to credit risk on trade...

  • Page 131
    ... 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...

  • Page 132
    ... the accounting policy relating to that specific asset. The corresponding liability is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance costs in the income statement and reduction of the lease obligation so as to achieve a constant rate of...

  • Page 133
    ... legislation. The estimated total of such contingent liabilities at 31 December 2013 was â,¬719 million (2012: â,¬236 million). The Group does not believe that any of these contingent liabilities will result in a material loss. 130 Financial statements Unilever Annual Report and Accounts 2013

  • Page 134
    ... US $580 million. On 19 November 2013 Unilever signed an agreement for the sale of its Soft & Beautiful, TCB and Pro-Line Comb-Thru brands to Strength of Nature for an undisclosed amount. The sale excludes TCB's business in Africa. Unilever Annual Report and Accounts 2013 Financial statements 131

  • Page 135
    ...acquisition in December 2011, the Group acquired the remaining 18% of the outstanding share capital in Concern Kalina. The table below shows the impact of disposals on the Group during the year. The results of disposed businesses are included in the consolidated financial statements up to their date...

  • Page 136
    ...financial statements and Group reporting returns of subsidiary companies. (c) In addition, â,¬1 million of statutory audit fees were payable to PricewaterhouseCoopers in respect of services supplied to associated pension schemes (2012: â,¬1 million; 2011: â,¬1 million). 25. EVENTS AFTER THE BALANCE...

  • Page 137
    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS UNILEVER GROUP CONTINUED 25. EVENTS AFTER THE BALANCE SHEET DATE CONTINUED On 21 January 2014 Unilever announced a quarterly dividend with the 2013 fourth quarter results of â,¬0.2690 per NV ordinary share and £0.2222 per PLC ordinary share. On 21 ...

  • Page 138
    ... PRINCIPAL GROUP COMPANIES AND NON-CURRENT INVESTMENTS CONTINUED % Ownership Switzerland Unilever Americas Supply Chain Company AG Unilever Finance International AG Unilever Supply Chain Company AG Unilever Schweiz GmbH Thailand Unilever Thai Trading Ltd. (a) a a a a d See 'Basis of consolidation...

  • Page 139
    ... 2013, 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 We have reported separately on the consolidated financial statements of Unilever Group...

  • Page 140
    ... income and expenses after taxes. Under the terms of Financial Reporting Standard 1 (revised 1996) 'Cash Flow Statements' (FRS 1) a cash flow statement is not included, as the cash flows are included in the consolidated cash flow statement of Unilever Group. Unilever Annual Report and Accounts 2013...

  • Page 141
    ... after the balance sheet date. This holds for external dividends as well as intra-group dividends paid to the parent company. FINANCIAL INSTRUMENTS NV accounting policies under United Kingdom generally accepted accounting principles (UK GAAP) namely FRS 25 'Financial Instruments: Presentation', FRS...

  • Page 142
    ...which payment notice was required at either 31 December 2013 or 31 December 2012. SHARE PREMIUM ACCOUNT The share premium shown in the balance sheet is not available for the issue of bonus shares or for repayment without incurring withholding tax payable by NV. This is despite the change in tax law...

  • Page 143
    ... the Directors' Remuneration Report on pages 60 to 83, incorporated and repeated here by reference. Information on key management compensation is provided in note 4A to the consolidated group financial statements on page 99. At the balance sheet date, Unilever N.V. has unused tax credits amounting...

  • Page 144
    ...Meeting on 14 May 2014 for the appointment of KPMG N.V. as auditors of Unilever N.V. The present appointment will end at the conclusion of the Annual General Meeting. PROPOSED PROFIT APPROPRIATION â,¬ million 2013 â,¬ million 2012 Profit for the year (available for distribution) Dividend To profit...

  • Page 145
    ... on the Group financial statements of Unilever PLC for the year ended 31 December 2013. OPINIONS ON MATTERS PRESCRIBED BY THE COMPANIES ACT 2006 In our opinion: • The information given in the Strategic Report and the Directors' Report for the financial year for which the Parent Company financial...

  • Page 146
    ...a cash flow statement is not included, as the cash flows are included in the consolidated cash flow statement of the Unilever Group. ON BEHALF OF THE BOARD OF DIRECTORS M Treschow Chairman P Polman Chief Executive Officer 4 March 2014 Unilever Annual Report and Accounts 2013 Financial statements...

  • Page 147
    ... through profit or loss', and 'derivative financial instruments' in accordance with the accounting policies set out below which have been consistently applied. DIVIDENDS Under FRS 21 'Events after the Balance Sheet Date', proposed dividends do not meet the definition of a liability until such time...

  • Page 148
    ... at 4.0% issued in 2009 maturing December 2014 and commercial paper. (f) This includes £400 million note at 4.75% issued in 2009 maturing June 2017 (year-end value amortised cost £398 million). REMUNERATION OF AUDITORS The parent company accounts of Unilever PLC are required to comply with The...

  • Page 149
    ... 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 2013 results Quarterly dividend announced with the Q1 2014 results Quarterly dividend announced with...

  • Page 150
    ... 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, performance charts, financial...

  • Page 151
    ...Off-balance sheet arrangements n/a Operating costs 98 Operating profit 26, 96-98 Outlook 34 Payables 114 Pensions and similar obligations 99-104 Personal Care 10, 27, 96 Post balance sheet events 133, 141, 145 Preference shares and dividends 105, 146 Principal group companies 134-135 Property, plant...

  • Page 152
    ...; Unilever's investment choices in its portfolio management; inability to find sustainable solutions to support long-term growth; customer relationships; the recruitment and retention of talented employees; disruptions in our supply chain; the cost of raw materials and commodities; the production of...

  • Page 153
    ...24051830 UNILEVER PLC 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: 41424 For further information...