Final Results
Unilever PLC
07 February 2008
FOURTH QUARTER AND ANNUAL RESULTS 2007
KEY FINANCIALS
(unaudited)
Fourth Quarter 2007 € million Full Year 2007
Increase/(Decrease) Increase/(Decrease)
Current Current Constant Current Current Constant
rates rates rates rates rates rates
Continuing operations:
9 890 2 % 5 % Turnover 40 187 1 % 5 %
1 097 3 % 11 % Operating profit 5 245 (3)% 1 %
1 070 3 % 10 % Pre-tax profit 5 184 7 % 11 %
782 (13)% (6)% Net profit from continuing operations 4 056 10 % 14 %
787 (63)% (59)% Net profit from total operations* 4 136 (18)% (15)%
0.25 (12)% (5)% EPS from continuing operations (Euros) 1.32 12 % 16 %
0.25 (64)% (61)% EPS from total operations* (Euros) 1.35 (18)% (15)%
* Includes €1.2 billion profit on disposal of frozen foods businesses in Europe
in the fourth quarter of 2006, as discontinued operations.
STRONG FINISH TO A GOOD YEAR
Full Year Financials
• Underlying sales growth of 5.5%. Operating margin of 13.1%, with an
underlying improvement of 0.2 percentage points.
• Earnings per share from continuing operations up 12%.
• Proposed final dividend of €0.50 per NV ordinary share and 34.11p per PLC
ordinary share, raising the total regular dividend for the year by 7% for
both NV and PLC. Share buy-back of at least €1.5 billion planned for
2008.
Fourth Quarter Financials
• Underlying sales growth of 6.1%, including 3.0% from pricing.
• Operating margin of 11.1%, with an underlying improvement of 0.2
percentage points, after an increase in advertising and promotions of 0.6
percentage points of sales.
Operational Highlights of the Year
• Widespread growth across regions and categories consistent with our
strategy of concentrating resources on developing and emerging markets,
personal care and Vitality focused innovation.
• Marked improvement in Europe: growth of 2.8% in the year, and a strong
fourth quarter.
• Increasing contribution from price in response to rising commodity costs.
• Strong cost savings programmes delivering €1 billion in the year.
Accelerated restructuring plan progressing well.
• Further steps to shape the portfolio including the announcements of
the acquisition of the leading Russian ice cream company Inmarko, the
extension of the Pepsi/Lipton partnership and the disposals of Lawry's and
Boursin.
GROUP CHIEF EXECUTIVE COMMENT
'The fourth quarter was a strong finish to a good year. 2007 marks the third
successive year of accelerating sales growth and came with an underlying
improvement in margin. This is clear evidence that our strategy of focusing
resources on faster growing and profitable segments is succeeding.
The re-shaping of the business and the acceleration of our change programme are
bringing real benefits. They make Unilever a more flexible and resilient
company, better placed to meet the challenges of operating in a tougher economic
and cost environment.
We therefore remain confident of achieving our 2010 goals - for an operating
margin in excess of 15% while delivering consistent, competitive growth along
the way.
In 2008 we expect underlying sales growth to be towards the upper end of our
3-5% target range and to see a further underlying improvement in operating
margin.'
Patrick Cescau, Group Chief Executive 7 February 2008
ENQUIRIES
Media: Media Relations Team Investors: Investor Relations Team
UK +44 20 7822 6805 tim.johns@unilever.com +44 20 7822 6830 investor.relations@unilever.com
NL +31 10 217 4844
tanno.massar@unilever.com
There will be a web cast of the results presentation available at:
www.unilever.com/ourcompany/investorcentre/results/quarterlyresults/default.asp
UNILEVER FOURTH QUARTER AND ANNUAL RESULTS 2007
In the following commentary we report underlying sales growth (USG) at constant
exchange rates, excluding the effects of acquisitions and disposals. Turnover
includes the impact of exchange rates, acquisitions and disposals. Unilever
uses 'constant rate' and 'underlying' measures primarily for internal
performance analysis and targeting purposes. We also use the movements in
Ungeared Free Cash Flow and Return On Invested Capital to measure progress
against our longer-term value creation goals. Unilever believes that such
measures provide additional information for shareholders on underlying business
performance trends. Such measures are not defined under IFRS and are not
intended to be a substitute for GAAP measures of turnover, profit and cash flow.
Further information about these measures is available on our website at
www.unilever.com/ourcompany/investorcentre.
1. SUMMARY OF BUSINESS PERFORMANCE FOR THE YEAR
Underlying sales growth has been consistently strong throughout the year,
averaging 5.5% and with 6.1% in the fourth quarter. There has been an
increasing contribution from pricing, 1.8% for the year and rising to 3.0% in
the fourth quarter, in response to sharply higher commodity costs.
The steady underlying improvement in Europe has continued, with 2.8% growth in
the year. The fourth quarter was particularly strong, at 5.5%, against a weaker
comparator. The Americas were up by 4.1% in the year, with Brazil and Mexico
improving through the year, while the US grew solidly at 3.2%. Asia Africa has
shown consistent, broad-based growth across countries and categories throughout
the year, up by 11.1%.
All categories grew well in 2007. Personal care, our fastest growing category,
benefited from innovations rolled out faster across countries. Home care was
also well ahead for the year, driven by a focus on our strongest brands and the
launch of new products with added value benefits, notably in household cleaning
and fabric conditioners.
A more focused innovation programme is delivering good results in savoury,
dressings and spreads, with an emphasis on products that offer Vitality benefits
such as naturalness, authenticity, lower fat or cholesterol reduction. In ice
cream, there was strong growth in Developing and Emerging markets and we gained
market share in Europe but performance in the US was weaker. It was another
very good year for Lipton. This was achieved both through sales of leaf tea,
which are consolidated in turnover, and excellent growth in the ready-to-drink
partnership with PepsiCo, which are not.
Investment in advertising and promotions was increased in line with sales and is
deployed effectively behind priority initiatives.
Commodity cost increases accelerated through the year, with an impact of 2.2
percentage points of sales for the 12 months. However we were able to more than
counter this through savings programmes and pricing actions.
Good progress has been made with the accelerated change programme announced in
August. There was a step-up in the delivery of cost savings in the fourth
quarter. We have announced a series of initiatives to support the re-shaping of
the portfolio through acquisitions, disposals and joint ventures.
2. FINANCIAL COMMENTARY
2.1 Turnover
Underlying sales growth was 5.5% for the year, and 6.1% in the fourth quarter.
Turnover growth, including the effects of disposals and exchange rates was 1.4%
for the year and 1.7% for the quarter.
2.2 Operating profit
Full Year
Operating profit for the year was 3% lower, and the operating margin at 13.1%
was 0.5 percentage points lower than a year ago. The lower margin was entirely
due to a higher net charge for restructuring, disposals and one-off items.
Before the impact of these items, the operating margin showed an underlying
increase of 0.2 percentage points. Advertising and promotions as a percentage
of sales was in line with last year.
The net charge for restructuring, disposals and one-off items in 2007 was €569
million. This was made up of restructuring charges of €875 million, partly
offset by disposal profits of €306 million. The disposal profits include €214
million arising from the reorganisation of our interests in South Africa, which
was a fair value economic swap but resulted in an accounting profit.
In comparison, the net charge for restructuring, disposals and one-off items in
2006 was €242 million. Restructuring charges of €704 million were offset by
disposal profits of €196 million and by one-off gains from US health care and UK
pension plans of €266 million.
Fourth Quarter
Operating profit was 3% higher than a year ago in the fourth quarter. The
operating margin at 11.1% was up by 0.2 percentage points. The net level of
restructuring, disposals and one-off gains in 2006 was at a similar level in
both years, so before these items the operating margin was also up by 0.2
percentage points. Advertising and promotions as a percentage of sales was 0.6
points higher than last year in the quarter.
2.3 Finance costs and tax
Costs of financing net borrowings were 13% lower in the year with the impact of
movements in the US dollar exchange rate more than offsetting higher rates.
The credit on pensions financing increased to €158 million, reflecting an
improved funding position of our schemes in 2007 compared with 2006.
The tax rate was 22% for the year, compared with 24% in 2006, and again
benefited from the favourable settlement of prior year tax audits and a lower
tax charge on disposals. For 2008 we expect a tax rate closer to our long-term
guidance of 26%.
2.4 Joint ventures, associates and other income from non-current investments
Our share in net profit from joint ventures increased by around 30% in the year,
mainly driven by continuing strong growth in the partnerships between Lipton and
PepsiCo for ready-to-drink tea.
The combined share of net profit in associates and other income from non-current
investments was €89 million in the year, up from €66 million last year. These
largely reflect gains from our venture capital funds in both years.
2.5 Net profit and earnings per share
For the full year, net profit from continuing operations grew by 10%, while EPS
on the same basis grew by 12%.
Net profit, including discontinued operations, was 18% lower than last year,
which included the profit on disposal of European frozen foods businesses in the
fourth quarter.
2.6 Dividends
The 2007 interim dividend was paid on 5 December 2007 at €0.25 per share for NV
and 17.00p for PLC. The Boards will recommend to the Annual General Meetings
final dividends of €0.50 per ordinary share of Unilever N.V. and 34.11p per
ordinary share of Unilever PLC. This will bring the total dividend per share to
€0.75 for NV and 51.11p for PLC, an increase of 7% in each case, excluding the
additional one-off payment made in 2006.
2.7 Share buy-backs
The €1.5 billion share buy-back programme was announced in March 2007 and was
completed by the end of the year. A further programme of at least €1.5 billion
is planned for 2008.
2.8 Cash flow
Cash flow from operating activities, at €5.2 billion, was €0.4 billion lower
than in 2006 due to higher cash costs of restructuring and increased
contributions to pension funding. There was a further small improvement in
working capital.
Income tax paid was €0.2 billion higher than in 2006 because of the timing of
payments. Taking the last two years together, cash tax paid was at similar
level to the tax charges in the income statement.
Net capital expenditure increased slightly to €1.0 billion. The increase was
entirely in Asia Africa, supporting the priority for growth in the region.
The €1.1 billion movement in treasury stocks reflects the net effect of share
buy-backs of €1.5 billion and the exercise of share options of €0.4 billion.
Ungeared free cash flow was €3.8 billion, which was €0.4 billion lower than a
year earlier, including the effect of the higher cash restructuring costs and
increased capital expenditure.
Net debt at the year end was €8.3 billion, compared with €7.5 billion at the end
of 2006.
2.9 Return on invested capital
Return on invested capital was 12.7% in 2007. This represented an improvement
from 11.5% in 2006, adjusted for the profit on the disposal of frozen foods.
2.10 Balance sheet
Balance sheet values have been affected by the appreciation of the euro against
many of the currencies of the Group's operations.
The funding position of pension funds has improved significantly over the past
12 months. This is reflected in increases in the values of schemes in surplus
and reductions in the liabilities for unfunded schemes and funded schemes in
deficit. There are consequent movements in deferred tax.
Goodwill and intangible assets includes goodwill created on the reorganisation
of our interests in South Africa and Israel.
The increase in other non-current assets includes a capital injection in the
Pepsi/Lipton partnership.
2.11 Pensions
The funding position of the Group's main pension arrangements has improved since
the end of 2006 due largely to accelerated funding contributions and reduced
liabilities from higher discount rates, net of slightly increased inflation and
life expectancy assumptions. Changes have been reported throughout 2007 in each
quarter's balance sheet.
The overall net liability for all arrangements was €1.1 billion at the end of
2007, a reduction from €3.1 billion at the end of 2006. Funded schemes show an
aggregate surplus of €1.2 billion, while unfunded arrangements show a liability
of €2.3 billion. During 2007, some previously unfunded arrangements were
partially funded with €0.3 billion reported as part of contributions paid.
3. OPERATIONAL REVIEW
3.1 Europe
Fourth Quarter 2007 Full Year 2007
% %
% Underlying % Underlying
2007 2006 Change sales growth 2007 2006 Change sales growth
3 740 3 615 3.4 5.5 Turnover (€ million) 15 205 15 000 1.4 2.8
2.9 5.3 Operating Margin (%) 11.0 12.7
Includes (%):
(8.1) (7.3) - RDIs* (4.0) (2.2)
- 3.3 - Gain on UK Pensions - 0.8
* Restructuring, business disposals and impairments
Growth
The region sustained its improving trend in 2007 with underlying sales growth of
2.8% for the year. The improvement has been driven by a relentless focus on
innovation, on improving the quality and value of our existing products and on
better execution. Consumer demand has been steady throughout the year in our
categories.
Our business finished the year strongly with growth of 5.5% in the fourth
quarter, albeit against a relatively weak prior year comparator. This included
a small boost of around 0.5% from sales ahead of a system implementation in the
UK and January price increases, notably in Germany. In the quarter we saw good
volumes and positive pricing of 1.3%.
Overall we have seen improving trends almost everywhere. Russia was the
outstanding performer. All major countries grew in the year, including the UK,
Germany, Italy and the Netherlands. In France sales were slightly up in a
challenging market.
Profitability
The operating margin, at 11.0% for the year, reflects a higher net charge for
restructuring, disposals and one-off items compared with 2006. Before these
items, the operating margin showed an underlying improvement of 0.9 percentage
points driven by lower overheads as a result of the One Unilever programme and
lower costs of advertising and promotions.
Accelerating change
There has been substantial progress with portfolio development and
restructuring.
At the start of 2008 we: completed the expansion of the successful international
partnership for Lipton ready-to-drink tea with PepsiCo to include all countries
in Europe; completed the sale of Boursin, and announced the acquisition of
Inmarko.
We have formed four new multi-country organisations and have announced the
streamlining or closure of ten factories. The roll-out of a single SAP system
across the region continues with two-thirds of turnover in the region now on
stream and full implementation expected to be complete by the end of 2008.
Innovation
Innovations continued to be mainly targeted at Vitality opportunities. In ice
cream we introduced Frusi frozen yoghurt with wholegrain cereals and real fruit
pieces, and low calorie Solero Smoothies. Lipton Linea slimming teas were
launched in France, Switzerland and Portugal. Growth in Hellmann's has been
boosted by the new extra light mayonnaise with citrus fibre technology.
The new Dove pro•age range of products is building well in Europe as
well as elsewhere, and Dove summer glow self-tanning and body lotions are now
available in most countries. Clear anti-dandruff shampoo has been launched in
Russia, with good consumer response. 'Small and Mighty' concentrated liquid
laundry detergents were launched in six European countries.
3.2 The Americas
Fourth Quarter 2007 Full Year 2007
% %
% Underlying % Underlying
2007 2006 Change sales growth 2007 2006 Change sales growth
3 334 3 448 (3.3) 3.7 Turnover (€ million) 13 442 13 779 (2.4) 4.1
14.5 16.7 Operating Margin (%) 14.7 15.8
Includes (%):
(0.9) (3.4) - RDIs* (0.7) (1.0)
- 4.2 - US Healthcare gain - 1.0
* Restructuring, business disposals and impairments
Growth
Underlying sales grew by 4.1% in the year, with an increasing contribution from
pricing which was up 2.6% for the year, and 4.0% in the fourth quarter.
In the US, overall consumer demand has held up well in our categories. Market
growth in home care and personal care slowed somewhat in the second half year,
but this was compensated for by robust demand in foods. Our own sales in the US
grew solidly, up 3.2% for the year, despite lower sales of ice cream. Growth in
the fourth quarter was slightly lower at 2.1%, largely due to the timing of
innovation and promotional activity.
Our business in Mexico made good progress in the second half of the year and
Brazil showed an improved performance in the fourth quarter. Argentina, Andina
and Central America performed well throughout.
Profitability
The operating margin, at 14.7% for the year, was 1.1 percentage points lower
than a year ago. Before the impact of restructuring, disposals and one-off
items, the margin was 0.4 percentage points lower than last year. This was due
to an increase in advertising and promotions and the impact of substantial cost
increases which have not yet been fully offset by price increases and savings
programmes.
Accelerating change
The One Unilever programme is simplifying operations throughout the region.
Argentina, Mexico and Brazil all moved to single head offices in 2007, while the
US will follow in early 2008. Sales force integration is underway in a number
of countries. A single SAP system has been implemented in the US, with all of
Latin America already on one system.
We have set up a joint venture with Perdigao to develop our heart health
margarine Becel in Brazil and have disposed of our local Brazilian margarine
brands. We have also announced an agreement for the disposal of Lawry's
seasonings, and the sale process of the North American laundry business is under
way.
Innovation
New varieties of Knorr bouillons and soups in Latin America have helped to build
further the brand's Vitality credentials. Hellmann's 'real' campaign highlights
its simple ingredients, naturally rich in Omega 3, in both the US and Latin
America. Cholesterol-lowering mini-drinks were introduced to the US as Promise
Activ SuperShots.
Innovation in personal care reflected the more global approach. Clear
anti-dandruff shampoo was successfully launched in Brazil, while the Dove
pro•age range of skin care, deodorants and shampoos was introduced in the
US at the same time as in Europe. In laundry, the 'Dirt is Good' platform
continued to build across Latin America, now including a variant with built-in
fabric softener.
3.3 Asia Africa
Fourth Quarter 2007 Full Year 2007
% %
% Underlying % Underlying
2007 2006 Change sales growth 2007 2006 Change sales growth
2 816 2 664 5.7 10.0 Turnover (€ million) 11 540 10 863 6.2 11.1
17.9 11.1 Operating Margin (%) 13.8 12.2
Includes (%):
6.3 (1.6) - RDIs* 1.1 (0.3)
* Restructuring, business disposals and impairments
Growth
The strong underlying growth of 11.1% for the year reflects both the vibrancy of
these markets and the high priority we place on building our business in the
region. It includes a healthy balance of volume, up by over 7%, and price, up
by over 3%.
Growth has been consistent throughout the year and was broad-based across
categories and countries. This included established markets such as India,
Indonesia, the Philippines, South Africa and Turkey, which all grew in double
digits, and big categories such as laundry and personal wash. It also includes
more recent priorities for growth such as China, and emerging categories like
ice cream and deodorants.
We have been driving growth across all income levels, from highly affordable
packs to premium positions and we have introduced new brands and products that
capitalise on our global platforms.
Profitability
The operating margin, at 13.8%, was 1.6 percentage points higher than last year.
This included the €214 million accounting profit resulting from the
reorganisation of our shareholdings in South Africa. Before the effects of this
transaction, disposals and restructuring charges, the operating margin showed an
underlying increase of 0.2 percentage points. The improvement was driven by the
benefits of volume growth, pricing actions and the delivery of savings
programmes which more than offset higher input costs and increased advertising
and promotions.
Accelerating change
We announced the acquisition of the Buavita brand of fruit-based vitality drinks
in Indonesia, which was completed early in January 2008.
As part of the One Unilever programme we now have a single SAP system in place
in four countries as the basis for a common regional platform, while the
reorganisation of our shareholdings in South Africa and Israel facilitates the
new organisation.
Innovation
The new, more global, approach to innovation was evident in the 2007 programme.
Clear anti-dandruff shampoo was launched in China, Arabia, Egypt, Pakistan and
the Phillipines. In Japan, we launched Axe and Dove pro•age. An
improved range of Dove shower products was extended to North East Asia, while
Lifebuoy soap was launched in South Africa and a new variant brought to India.
In laundry, the new 'Dirt is Good' product, packaging and communication were
introduced to Thailand.
The 'Moo' range of ice creams containing super absorbent calcium for children's
development was extended throughout the region. Knorr seasonings have been
rejuvenated with premium ingredients, as in Europe, and in China we launched a
new form of Knorr bouillions for preparing thick soups. At the same time new,
more affordable, tubs and sachets are attracting new users of spreads in several
countries.
SAFE HARBOUR STATEMENT
This announcement may contain forward-looking statements, including '
forward-looking statements' within the meaning of the United States Private
Securities Litigation Reform Act of 1995. Words such as 'expects', '
anticipates', 'intends' or the negative of these terms and other similar
expressions of future performance or results, including financial objectives to
2010, and their negatives are intended to identify such forward-looking
statements. These forward-looking statements are based upon current
expectations and assumptions regarding anticipated developments and other
factors affecting the Group. They are not historical facts, nor are they
guarantees of future performance. Because these forward-looking statements
involve risks and uncertainties, there are important factors that could cause
actual results to differ materially from those expressed or implied by these
forward-looking statements, including, among others, competitive pricing and
activities, consumption levels, costs, the ability to maintain and manage key
customer relationships and supply chain sources, currency values, interest
rates, the ability to integrate acquisitions and complete planned divestitures,
physical risks, environmental risks, the ability to manage regulatory, tax and
legal matters and resolve pending matters within current estimates, legislative,
fiscal and regulatory developments, political, economic and social conditions in
the geographic markets where the Group operates and new or changed priorities of
the Boards. Further details of potential risks and uncertainties affecting the
Group are described in the Group's filings with the London Stock Exchange,
Euronext Amsterdam and the US Securities and Exchange Commission, including the
Annual Report on Form 20-F. These forward-looking statements speak only as of
the date of this document. Except as required by any applicable law or
regulation, the Group expressly disclaims any obligation or undertaking to
release publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in the Group's expectations with regard
thereto or any change in events, conditions or circumstances on which any such
statement is based.
OTHER INFORMATION
Supplementary information in US Dollars and Sterling is available on our website
at:
www.unilever.com/ourcompany/investorcentre.
The results for the first quarter 2008 will be published on 8 May 2008.
CONDENSED FINANCIAL STATEMENTS
INCOME STATEMENT
(unaudited)
Fourth Quarter € million Full Year
2007 2006 Increase/ 2007 2006 Increase/
(Decrease) (Decrease)
Current Constant Current Constant
rates rates rates rates
Continuing operations:
9 890 9 727 2 % 5 % Turnover 40 187 39 642 1 % 5 %
1 097 1 062 3 % 11 % Operating profit 5 245 5 408 (3)% 1 %
After (charging)/crediting:
(400) (469) Restructuring (875) (704)
245 45 Business disposals and impairments 306 196
- 266 Gains on US healthcare and UK - 266
pensions
(48) (83) Net finance costs (252) (721)
26 27 Finance income 147 128
(126) (117) Finance costs (550) (590)
3 - Preference shares provision (7) (300)
49 7 Pensions and similar obligations 158 41
20 27 Share in net profit/(loss) of joint 102 78
ventures
- 32 Share in net profit/(loss) of 50 36
associates
1 4 Other income from non-current 39 30
investments
1 070 1 042 3 % 10 % Profit before taxation 5 184 4 831 7 % 11 %
(288) (144) Taxation (1 128) (1 146)
782 898 (13)% (6)% Net profit from continuing operations 4 056 3 685 10 % 14 %
5 1 202 Net profit/(loss) from discontinued 80 1 330
operations
787 2 100 (63)% (59)% Net profit for the period 4 136 5 015 (18)% (15)%
Attributable to:
66 68 Minority interests 248 270
721 2 032 (65)% (61)% Shareholders' equity 3 888 4 745 (18)% (15)%
Combined earnings per share
0.25 0.29 (12)% (5)% Continuing operations (Euros) 1.32 1.19 12 % 16 %
0.24 0.28 (13)% (6)% Continuing operations - diluted 1.28 1.15 11 % 15 %
(Euros)
0.00 0.42 Discontinued operations (Euros) 0.03 0.46
0.01 0.41 Discontinued operations - diluted 0.03 0.45
(Euros)
0.25 0.71 (64)% (61)% Total operations (Euros) 1.35 1.65 (18)% (15)%
0.25 0.69 (64)% (61)% Total operations - diluted (Euros) 1.31 1.60 (18)% (15)%
STATEMENT OF RECOGNISED INCOME AND EXPENSE
(unaudited)
€ million Full Year
2007 2006
Fair value gains/(losses) on financial instruments net of tax 86 21
Actuarial gains/(losses) on pension schemes net of tax 542 853
Currency retranslation gains/(losses) net of tax (413) (335)
Net income/(expense) recognised directly in equity 215 539
Net profit for the period 4 136 5 015
Total recognised income and expense for the period 4 351 5 554
Attributable to:
Minority interests 237 242
Shareholders' equity 4 114 5 312
CASH FLOW STATEMENT
(unaudited)
€ million Full Year
2007 2006
Operating activities
Cash flow from operating activities 5 188 5 574
Income tax paid (1 312) (1 063)
Net cash flow from operating activities 3 876 4 511
Investing activities
Interest received 146 125
Net capital expenditure (983) (934)
Acquisitions and disposals (50) 1 777
Other investing activities 264 187
Net cash flow from/(used in) investing activities (623) 1 155
Financing activities
Dividends paid on ordinary share capital (2 182) (2 602)
Interest and preference dividends paid (552) (605)
Change in financial liabilities 1 338 (3 281)
Share buy-back programme (1 500) -
Other movements on treasury stock 442 98
Other financing activities (555) (182)
Net cash flow from/(used in) financing activities (3 009) (6 572)
Net increase/(decrease) in cash and cash equivalents 244 (906)
Cash and cash equivalents at the beginning of the year 710 1 265
Effect of foreign exchange rate changes (53) 351
Cash and cash equivalents at the end of period 901 710
BALANCE SHEET
(unaudited)
€ million As at As at
31 December 31 December
2007 2006
Non-current assets
Goodwill and intangible assets 16 755 17 206
Property, plant and equipment 6 284 6 276
Pension asset for funded schemes in surplus 2 008 1 697
Deferred tax assets 1 003 1 266
Other non-current assets 1 324 1 126
Total non-current assets 27 374 27 571
Current assets
Inventories 3 894 3 796
Trade and other current receivables 4 194 4 254
Current tax assets 367 125
Cash and cash equivalents 1 098 1 039
Other financial assets 216 273
Non-current assets held for sale 159 14
Total current assets 9 928 9 501
Current liabilities
Financial liabilities (4 166) (4 458)
Trade payables and other current liabilities (8 017) (7 838)
Current tax liabilities (395) (579)
Provisions (968) (1 009)
Liabilities associated with non-current assets held for sale (13) -
Total current liabilities (13 559) (13 884)
Net current assets/(liabilities) (3 631) (4 383)
Total assets less current liabilities 23 743 23 188
Non-current liabilities
Financial liabilities due after one year 5 483 4 377
Pensions and post-retirement healthcare benefits liabilities:
Funded schemes in deficit 827 1 379
Unfunded schemes 2 270 3 398
Provisions 694 826
Deferred tax liabilities 1 213 1 003
Other non-current liabilities 437 533
Total non-current liabilities 10 924 11 516
Equity
Shareholders' equity 12 387 11 230
Minority interests 432 442
Total equity 12 819 11 672
Total capital employed 23 743 23 188
NOTES TO THE FINANCIAL STATEMENTS
(unaudited)
1 SEGMENTAL ANALYSIS BY GEOGRAPHY
Continuing operations - Fourth Quarter
€ million Europe Americas Asia Africa Total
Turnover
2006 3 615 3 448 2 664 9 727
2007 3 740 3 334 2 816 9 890
Change 3.4 % (3.3)% 5.7 % 1.7 %
Impact of:
Exchange rates (0.8)% (6.0)% (3.5)% (3.4)%
Acquisitions 0.0 % 0.0 % 0.0 % 0.0 %
Disposals (1.2)% (0.8)% (0.4)% (0.8)%
Underlying sales growth 5.5 % 3.7 % 10.0 % 6.1 %
Price 1.3 % 4.0 % 4.0 % 3.0 %
Volume 4.2 % (0.3)% 5.8 % 3.0 %
Operating profit
2006 191 575 296 1 062
2007 107 485 505 1 097
Change current rates (44.0)% (15.6)% 70.4 % 3.3 %
Change constant rates (42.4)% (8.8)% 82.9 % 11.3 %
Operating margin
2006 5.3 % 16.7 % 11.1 % 10.9 %
2007 2.9 % 14.5 % 17.9 % 11.1 %
Includes restructuring, business disposals and
impairments, and Q4 2006 gains on UK pensions and
US healthcare plans
2006 (4.0)% 0.8 % (1.6)% (1.6)%
2007 (8.1)% (0.9)% 6.3 % (1.6)%
Continuing operations - Full Year
€ million Europe Americas Asia Africa Total
Turnover
2006 15 000 13 779 10 863 39 642
2007 15 205 13 442 11 540 40 187
Change 1.4 % (2.4)% 6.2 % 1.4 %
Impact of:
Exchange rates 0.0 % (5.8)% (4.0)% (3.1)%
Acquisitions 0.0 % 0.1 % 0.1 % 0.1 %
Disposals (1.5)% (0.6)% (0.4)% (0.9)%
Underlying sales growth 2.8 % 4.1 % 11.1 % 5.5 %
Price (0.1)% 2.6 % 3.4 % 1.8 %
Volume 2.9 % 1.5 % 7.4 % 3.7 %
Operating profit
2006 1 903 2 178 1 327 5 408
2007 1 678 1 971 1 596 5 245
Change current rates (11.9)% (9.5)% 20.2% (3.0)%
Change constant rates (11.7)% (3.4)% 27.6% 1.3 %
Operating margin
2006 12.7 % 15.8 % 12.2 % 13.6 %
2007 11.0 % 14.7 % 13.8 % 13.1 %
Includes restructuring, business disposals and
impairments, and Q4 2006 gains on UK pensions and
US healthcare plans
2006 (1.4)% 0.0 % (0.3)% (0.6)%
2007 (4.0)% (0.7)% 1.1 % (1.4)%
2 SEGMENTAL ANALYSIS BY PRODUCT AREA
Continuing operations - Fourth Quarter
€ million Savoury, Ice cream Home care Home and
dressings and Personal and personal
and spreads beverages Foods care other care Total
Turnover
2006 3 709 1 416 5 125 2 786 1 816 4 602 9 727
2007 3 772 1 449 5 221 2 831 1 838 4 669 9 890
Change 1.7 % 2.3 % 1.9 % 1.6 % 1.2 % 1.4 % 1.7 %
Impact of:
Exchange rates (2.9)% (3.7)% (3.1)% (4.2)% (3.0)% (3.8)% (3.4)%
Acquisitions 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %
Disposals (1.0)% 0.5 % (0.6)% (1.0)% (1.2)% (1.1)% (0.8)%
Underlying sales growth 5.8 % 5.7 % 5.7 % 7.2 % 5.6 % 6.6 % 6.1 %
Operating profit
2006 499 (37) 462 471 129 600 1 062
2007 587 (49) 538 404 155 559 1 097
Change current rates 17.7 % (32.6)% 16.5 % (14.2)% 19.4 % (6.9)% 3.3 %
Change constant rates 27.0 % 0.2 % 28.9 % (9.2)% 22.7 % (2.3)% 11.3 %
Operating margin
2006 13.5 % (2.6)% 9.0 % 16.9 % 7.0 % 13.0 % 10.9 %
2007 15.6 % (3.3)% 10.3 % 14.3 % 8.4 % 12.0 % 11.1 %
Continuing operations - Full Year
€ million Savoury, Ice cream Home care Home and
dressings and Personal and personal
and spreads beverages Foods care other care Total
Turnover
2006 13 767 7 578 21 345 11 122 7 175 18 297 39 642
2007 13 988 7 600 21 588 11 302 7 297 18 599 40 187
Change 1.6 % 0.3 % 1.1 % 1.6 % 1.7 % 1.6 % 1.4 %
Impact of:
Exchange rates (2.7)% (3.0)% (2.8)% (3.8)% (3.0)% (3.5)% (3.1)%
Acquisitions 0.1 % 0.1 % 0.1 % 0.1 % 0.0 % 0.0 % 0.1 %
Disposals (0.7)% (0.8)% (0.7)% (1.0)% (1.2)% (1.1)% (0.9)%
Underlying sales growth 5.0 % 4.2 % 4.7 % 6.7 % 6.1 % 6.5 % 5.5 %
Operating profit
2006 1 993 900 2 893 1 913 602 2 515 5 408
2007 2 059 809 2 868 1 786 591 2 377 5 245
Change current rates 3.3 % (10.2)% (0.9)% (6.6)% (1.8)% (5.5)% (3.0)%
Change constant rates 8.1 % (6.2)% 3.6 % (2.6)% 2.4 % (1.4)% 1.3 %
Operating margin
2006 14.5 % 11.9 % 13.6 % 17.2 % 8.4 % 13.7 % 13.6 %
2007 14.7 % 10.6 % 13.3 % 15.8 % 8.1 % 12.8 % 13.1 %
3 ACCOUNTING INFORMATION AND POLICIES
The condensed interim financial statements are based on International Financial
Reporting Standards (IFRS) as adopted by the EU and IFRS as issued by the
International Accounting Standards Board, and have been prepared in accordance
with International Accounting Standard (IAS) 34 'Interim Financial Reporting'.
The basis of preparation is consistent with the year ended 31 December 2006
except that:
• Finance lease creditors and funding-related derivatives have been
reclassified in the balance sheet in order to facilitate the presentation
of net debt. Comparatives for 31 December 2006 have been restated
accordingly; and
• Line items relating to borrowings in the balance sheet have been renamed
to financial liabilities to align with the requirements of IFRS 7
'Financial Instruments - Disclosures' which Unilever has adopted as at
1 January 2007.
The condensed financial statements are shown at current exchange rates, while
percentage year-on-year changes are shown at both current and constant exchange
rates to facilitate comparison.
The income statement on page 10, the statement of recognised income and expense
and the cash flow statement on page 11 and the movements in equity on page 17
are translated at rates current in each period.
The balance sheet on page 12 and the analysis of net debt on page 18 are
translated at period-end rates of exchange.
The financial statements attached do not constitute the full financial
statements within the meaning of Section 240 of the UK Companies Act 1985. Full
accounts for Unilever for the year ended 31 December 2006 have been delivered to
the Registrar of Companies. The auditors' report on these accounts was
unqualified and did not contain a statement under Section 237(2) or Section 237
(3) of the UK Companies Act 1985.
4 TAXATION
The tax rate for 2007 was 22% compared with 24% for 2006. The tax rate is
calculated by dividing the tax charge by pre-tax profit excluding the
contribution of joint ventures and associates. The tax charge for 2007 includes
€165 million (2006: €177 million) relating to United Kingdom taxation.
5 DISCONTINUED OPERATIONS
Operating profit of discontinued operations (excluding profit/loss on disposals)
was as follows:
Fourth Quarter
€ million Europe Americas Asia Africa Total
2006 7 - - 7
2007 - - - -
Full Year
€ million Europe Americas Asia Africa Total
2006 170 - - 170
2007 - - - -
The net cash flows attributable to the discontinued operations in respect of
operating, investing and financing activities for the year were €(4) million,
€80 million and €nil million respectively (2006: €79 million, €1 618 million and
€(1) million).
6 COMBINED EARNINGS PER SHARE
The earnings per share information given below, including the comparative
amounts for 2006, is expressed in terms of the nominal share values which have
applied since 22 May 2006 following the split of NV shares and the consolidation
of PLC shares which were approved at the 2006 AGMs.
The combined earnings per share calculations are based on the average number of
share units representing the combined ordinary shares of NV and PLC in issue
during the period, less the average number of shares held as treasury stock.
In calculating diluted earnings per share, a number of adjustments are made to
the number of shares, principally the following: (i) conversion into PLC
ordinary shares in the year 2038 of shares in a group company under the
arrangements for the variation of the Leverhulme Trust and (ii) the exercise of
share options by employees.
Earnings per share for total operations for the full year were calculated as
follows:
2007 2006
Combined EPS Thousands of units
Average number of combined share units 2 874 620 2 883 258
€ million
Net profit attributable to shareholders' equity 3 888 4 745
Combined EPS (Euros) 1.35 1.65
Combined EPS - Diluted Thousands of units
Adjusted average number of combined share units 2 976 125 2 972 468
Combined EPS - diluted (Euros) 1.31 1.60
Earnings per share in US Dollars and Sterling
Combined EPS (Dollars) 1.84 2.06
Combined EPS - diluted (Dollars) 1.78 2.00
Combined EPS (Pounds) 0.92 1.12
Combined EPS - diluted (Pounds) 0.89 1.09
The numbers of shares included in the calculation of earnings per share is an
average for the period. During the period the following movements in shares
have taken place:
Millions
Number of shares at 31 December 2006 (net of treasury stock) 2 889.9
Net movements in shares under incentive schemes 29.7
Share buy-back (66.5)
Number of shares at 31 December 2007 2 853.1
7 DIVIDENDS
The Boards have resolved to recommend to the Annual General Meetings for PLC and
NV, to be held on 14 May 2008 and 15 May 2008 respectively, the declaration of
final dividends in respect of 2007 on the Ordinary capitals at the following
rates which are equivalent in value at the rate of exchange applied in terms of
the Equalisation Agreement between the two companies:
Unilever N.V.
€0.50 per ordinary share* (2006: €0.47). Together with the interim dividend
already paid, this brings the total of NV's interim and final dividends for 2007
to €0.75 per ordinary share (2006: €0.70).
* Unilever N.V. ordinary shares and Unilever N.V. depositary receipts for
ordinary shares.
Unilever PLC
34.11p per ordinary share (2006: 32.04p). Together with the interim dividend
already paid, this brings the total of PLC's interim and final dividends for
2007 to 51.11p per ordinary share (2006: 47.66p).
The NV final dividend will be paid on 19 June 2008, to shareholders registered
at close of business on 21 May 2008 and will go ex-dividend on 19 May 2008.
The PLC final dividend will be paid on 19 June 2008, to shareholders registered
at close of business on 23 May 2008 and will go ex-dividend on 21 May 2008.
Dividend on New York shares of NV
The New York shares of NV will go ex-dividend on 19 May 2008; US dollar checks
for the final dividend on the New York shares of €0.16 nominal amount after
deduction of Netherlands withholding tax at the appropriate rate, converted at
the euro/dollar European Central Bank rate of exchange on 15 May 2008 will be
mailed on 18 June 2008, to holders of record at the close of business on 21 May
2008. If converted at the euro/dollar rate of exchange on 6 February 2008, the
NV final dividend would be US $0.7311 per New York share (2006 final dividend:
US $0.6363 actual payment) before deduction of Netherlands withholding tax.
With the interim dividend in respect of 2007 of US $0.3612 at the actual euro/
dollar conversion rate, already paid, this would result in a total for regular
interim and final dividends in respect of 2007 of US $1.0923 per New York Share
(2006: US $0.9297 actual payment).
Dividend on American Depositary Receipts of PLC
The American Depositary Receipts will go ex-dividend on 21 May 2008; US Dollar
checks for the final dividend on the American Depositary Receipts in PLC
converted at the sterling/dollar rate of exchange current in London on 14 May
2008 will be mailed on 18 June 2008, to holders of record at the close of
business on 23 May 2008. If converted at the sterling/dollar rate of exchange
on 6 February 2008, the PLC final dividend would be US $0.6684 per American
Depositary Receipt in PLC (2006 final dividend: US $0.6357 actual payment).
With the interim dividend in respect of 2007 of US $0.3525 at the actual
sterling/dollar conversion rate, already paid, this would result in a total for
regular interim and final dividends in respect of 2007 of US $1.0209 per
American Depositary Receipt in PLC (2006: US $0.9340 actual payment).
8 MOVEMENTS IN EQUITY
€ million Full Year
2007 2006
Equity at 1 January 11 672 8 765
Total recognised income and expense for the period 4 351 5 554
Dividends (2 070) (2 684)
Movement in treasury stock (1 054) 118
Share-based payment credit 140 111
Dividends paid to minority shareholders (251) (184)
Currency retranslation gains/(losses) net of tax (18) (6)
Other movements in equity 49 (2)
Equity at the end of the period 12 819 11 672
During the quarter we completed the purchase of shares to the value of €1.5
billion under the share buy-back programme announced in March 2007.
9 RECONCILIATION OF NET PROFIT TO CASH FLOW FROM OPERATING ACTIVITIES
€ million Full Year
2007 2006
Net profit 4 136 5 015
Taxation 1 137 1 332
Share of net profit of joint ventures/associates and other income from non-current (191) (144)
investments
Net finance costs 252 725
Operating profit (continuing and discontinued operations) 5 334 6 928
Depreciation, amortisation and impairment 943 982
Changes in working capital 27 87
Pensions and similar provisions less payments (910) (1 038)
Restructuring and other provisions less payments 145 107
Elimination of (profits)/losses on disposals (459) (1 620)
Non-cash charge for share-based compensation 118 120
Other adjustments (10) 8
Cash flow from operating activities 5 188 5 574
10 NET DEBT
€ million As at As at
31 December 31 December
2007 2006
Total financial liabilities (9 649) (8 835)
Financial liabilities due within one year (4 166) (4 458)
Financial liabilities due after one year (5 483) (4 377)
Cash and cash equivalents as per balance sheet 1 098 1 039
Cash and cash equivalents as per cash flow statement 901 710
Add bank overdrafts deducted therein 197 329
Financial assets 216 273
Net debt (8 335) (7 523)
There was a repayment of 5.000% bonds of US $650 million and an issuance of
4.625% bonds of €750 million during the quarter.
11 ACQUISITIONS AND DISPOSALS
On 5 November 2007, Unilever announced that it had reached an agreement to sell
Boursin to Le Groupe Bel for €400 million. This transaction was completed on
3 January 2008.
On 14 November 2007, Unilever signed a definitive agreement with McCormick &
Company, Incorporated to sell its Lawry's and Adolph's branded seasoning blends
and marinades business in the US and Canada for US $605 million. This
transaction is expected to be completed subject to regulatory approval, in 2008.
On 4 February 2008, Unilever announced that it had signed an agreement to
purchase Inmarko, a leading Russian ice cream company, for an undisclosed sum.
This business had a turnover of approximately €115 million in 2007. The deal is
subject to regulatory approval and is expected to be completed in the first half
of 2008.
12 RESTRUCTURING
Restructuring costs of €875 million in the year included €541 million under
various organisation changes within the One Unilever programme, and €174 million
in connection with restructuring of the supply chain in Europe.
7 February 2008
This information is provided by RNS
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