3rd May 2007 07:02
Unilever PLC03 May 2007 FIRST QUARTER RESULTS 2007 KEY FINANCIALS(unaudited) • million First Quarter 2007 Current Current Constant rates rates ratesContinuing operations: Turnover 9 528 0 % 5 %Operating profit 1 302 (8)% (3)%Pre-tax profit 1 332 2 % 5 %Net profit from continuing operations 1 052 5 % 9 %Net profit from total operations 1 074 1 % 5 % EPS from continuing operations (Euros) 0.34 6 % 9 %EPS from total operations (Euros) 0.35 2 % 5 % HIGHLIGHTS Financial Highlights • Underlying sales growth of 5.7%, mostly volume.• Operating margin of 13.7%, with an improvement of 0.4 percentage points before restructuring, disposals and impairments.• Earnings per share from continuing operations up 6%, with good results from joint ventures and associates, reduced finance costs and a lower tax rate.• Currency movements reduced turnover by 5% and earnings per share by 3%. Operational Highlights • Broad-based sales growth across regions and categories.• Better margin development driven by home and personal care.• Continuing improvement in Europe with underlying sales growth of 3.6%.• Strong first quarter innovation with bigger launches driving growth in personal care and developing and emerging markets.• Continued pace in the implementation of One Unilever and supply chain improvement programmes. GROUP CHIEF EXECUTIVE COMMENT We have had a good start to 2007, with broad-based sales growth across regionsand categories and improved margin development driven by home and personal care. Sales benefited from a strong innovation programme, especially in personal care,with several major launches in the quarter. Our European business performedwell, aided by a strong start in ice cream, the timing of price increases insome key markets and a favourable comparator. Sales growth has been accompaniedby an underlying improvement in our operating margin. This performance builds on the progress made in 2006 and is further evidence ofthe breadth and depth of our change programme. Our growth strategy is focusingresources behind clear priorities and delivering bigger, better innovation,faster roll-outs and more effective marketing mixes. New ways of working aretransforming our ability to deploy these innovations and to service customers ina more efficient way. Looking forward, we face a significant headwind from rising agriculturalcommodity costs which may require further pricing action. I am confident,however, that the combined benefit of organic growth in our 3-5% guidance rangeand improved efficiency leaves us well placed to achieve our margin objectivesfor 2007. The scale of change that has taken place in our business is very significant andis showing through in our results. Nevertheless we continue to look foropportunities to speed up the development of our portfolio through acquisitionsand disposals and to accelerate margin improvement towards world classbenchmarks. Patrick Cescau, Group Chief Executive3 May 2007 ENQUIRIES Media: Media Relations Team Investors: Investor Relations teamUK +44 20 7822 6805 [email protected] UK +44 20 7822 6830 [email protected] +31 10 217 4844 US +1 201 894 2615 [email protected]@unilever.com There will be a web cast of the results presentation available at:www.unilever.com/ourcompany/investorcentre/results/quarterlyresults/default.asp UNILEVER FIRST QUARTER RESULTS 2007 In the following commentary we report underlying sales growth (USG) at constantexchange rates, excluding the effects of acquisitions and disposals. Turnoverincludes the impact of exchange rates and acquisitions and disposals. Unileveruses 'constant rate' and 'underlying' measures primarily for internalperformance analysis and targeting purposes. We also use the movements inUngeared Free Cash Flow and Return On Invested Capital to measure progressagainst our longer-term value creation goals. Unilever believes that suchmeasures provide additional information for shareholders on underlying businessperformance trends. Such measures are not defined under IFRS or US GAAP and arenot intended to be a substitute for GAAP measures of turnover, profit and cashflow. Further information about these measures is available on our website atwww.unilever.com/ourcompany/investorcentre. 1. SUMMARY OF BUSINESS PERFORMANCE FOR THE FIRST QUARTER Underlying sales grew by 5.7%, mostly from volume and with 0.8% of priceincrease. Europe had a good start to the year with growth of 3.6%, helped by strong salesahead of the new ice cream season and a favourable comparator. The Americasgrew 3.2%. Sales in the US were ahead by 3.7% and there were good performancesin most countries in Latin America but Mexico declined against a strong quarterlast year and local competition held back growth in Brazil. Asia Africa grew11.8% boosted by a strong personal care innovation programme. All our categories grew in the quarter, with personal care particularly strong,at 8.4%, but notable contributions also from laundry, household cleaning,savoury and tea. Productivity has improved considerably as a result of our savings programmes,especially the move to 'One Unilever' business in each country around the world,and the benefit of volume leverage. These gains more than offset a continuedsharp rise in commodity costs, especially in Foods. Investment in advertising and promotions was maintained and continues to befocused behind our priorities for growth. 2. FINANCIAL COMMENTARY 2.1 Turnover Underlying sales growth of 5.7% was fully offset by adverse exchange ratemovements of 4.5% and net disposals of 1.0%. As a result, turnover was in linewith last year. 2.2 Operating profit Operating profit was 8% below the first quarter of last year, with the operatingmargin at 13.7%, 1.1 percentage points lower. Last year included significant profits on business disposals, while this year included higher restructuring charges and less disposal profits. Before these items the operating margin was 0.4 percentage points higher. Advertising and promotions was at a similar level to last year. Our savings programmes continue to deliver at a consistently high rate. Thecombined benefit of these, positive pricing, mix improvement and volume leveragemore than offset cost increases in the quarter. 2.3 Finance costs and tax Costs of financing net borrowings were 19% lower than last year through areduced level of net debt, which at the end of the quarter was €7.7 billion. The credit on pensions financing improved from €8 million to €34 million as aresult of the better funding position of our schemes and higher expected equityreturns. The tax charge was lower than last year, reflecting a better country mix. Wecontinue to expect a tax rate of around 24% for the year, with a particularlylow rate in the second quarter from the favourable completion of tax audits, andhigher rates in the second half. 2.4 Joint Ventures, associates and other income from non-current investments Our share in net profit from joint ventures increased from €18 million to €27million, mainly from good growth in the partnerships between Lipton and Pepsifor ready-to-drink tea. This profit now also includes our share of the fullresults from Portugal which has been restructured as a single company in whichwe have joint control. Share of net profit from associates was €48 million, mostly due to the placementof further equity by one of our venture capital fund investments. Profit on other non current investments of €25 million includes a one-off gainin Indonesia. 2.5 Net profit and earnings per share Net profit from continuing operations grew by 5%, while EPS on the same basiswas up 6%. Discontinued operations mainly relate to the business results of frozen foods(which was sold in the fourth quarter of 2006). In addition, the first quarterof both years includes performance-based contributions resulting from the saleof UCI in 2005. 2.6 Share buy-backs On 12 March 2007 we started the €1.5 billion share buy-back programme plannedfor 2007. By the end of April we had bought back shares to a value of €265million. 2.7 Cash flow Net cash flow from operating activities was €0.1 billion lower than last year,mainly due to higher cash restructuring costs. Capital expenditure outflow wasat a similar level to the first quarter of 2006. Cash and cash equivalents increased from €0.7 billion at the start of the yearto €1.2 billion at the end of the quarter while borrowings increased by asimilar amount. 2.8 Balance sheet We have evaluated the effects of market movements in the value of assets andliabilities of our major pension schemes, and now incorporate them in thebalance sheet each quarter in line with common practice. There was animprovement of €0.8 billion in the quarter. Working capital increases follow the normal seasonal pattern, some of the risein inventories being in ice cream. The changes in deferred tax balances are largely in response to movements inpension schemes. 2.9 Pensions The aggregate pension liability, net of assets and before tax, reduced furtherfrom €3.1 billion at the start of the year to €2.3 billion at the end of thefirst quarter reflecting higher interest rates. Within the combined balance,there is now an aggregate surplus of €1.0 billion on funded schemes, and aslightly reduced liability of €3.3 billion on unfunded schemes. 3. OPERATIONAL REVIEW 3.1 Europe First Quarter 2007 % % Underlying 2007 2006 change sales growth Turnover (• million) 3 544 3 471 2.1 3.6 Operating Margin (%) 14.4 16.8Includes:- Restructuring, business disposals and impairments (1.3) 1.0 Growth Europe had a strong start to the year, building on the progress made in 2006.We are now more competitive and are executing better as a result of the changesthat have been made over the past two years. Consumer demand picked up throughlast year and this has been sustained in the first quarter. Underlying sales grew by 3.6%, with volumes ahead by over 4% and a price declineof 0.7%. Sales in all categories were up. The highest growth rates were in icecream, where we anticipated an early start to the season with a strong 'sell-in', and in personal care from an extensive first quarter innovationprogramme. The return to growth in the UK was sustained with share gains in tea anddressings and good results from personal care innovation and in household care.These more than offset weaker performances in spreads, laundry and hair care.It was a good quarter in Germany, particularly in personal care, ice cream andspreads, and sales were additionally boosted by buying-in ahead of list priceincreases at the end of the quarter. The Netherlands continues to grow stronglydemonstrating the benefits of a well established 'One Unilever' approach. Sales in France were slightly ahead of last year, against a favourablecomparator. It remains a difficult market for us with flat consumer demand andpressure on pricing, and we are still managing through some operational issues. Growth in Russia of 10% was fuelled by excellent performances in householdcleaning and personal care. Innovation The current innovation programme clearly shows the way in which Vitality isreshaping our portfolio. Blue Band/Rama Idea!, a spread with extra nutrients that are good for the brain,built on its launch in most countries at the end of 2006 and Knorr Vie fruit andvegetable 'shots' were rolled out to Germany in the first quarter. Flora/Becelspreads fortified with Omega 3 were launched across the region, while Omega 3mini-drinks have been introduced to France, Greece and the Netherlands. Indressings, Hellmann's light with citrus fibre now offers the same taste but inan even lighter form. This year's ice cream range includes 'Milk-time' tubs,high in calcium - following a similar concept successful in Asia, Solero exotic,and Frusi, a healthy yoghurt and fruit snack. In personal care, Dove continues to broaden its appeal. Just launched, the Dovepro•age range of skin, deodorants and shampoos is specifically designedfor the over 50's, and the Dove range of 'glow' lotions with subtle self-tannershas been extended. The latest Axe deodorants come in a 'telescoping' can withupdated graphics and the addition of a new fragrance. 'Small and Mighty'concentrated liquid laundry detergents, which have been leading the move to themore efficient and environmentally friendly form in the US market, have beenlaunched under the Persil and Surf brands in the UK and Skip in France. Profitability The operating margin at 14.4% was 2.4 percentage points lower than a year agodue to a higher level of restructuring and less profit on disposals. Beforethese items, the margin was 0.1 percentage points lower than a year ago. Thenegative impacts of price reductions and higher commodity costs were largelyoffset by cost savings. 3.2 The Americas First Quarter 2007 % % Underlying 2007 2006 change sales growth Turnover (• million) 3 231 3 418 (5.5) 3.2 Operating Margin (%) 14.4 14.6Includes:- Restructuring, business disposals and impairments (0.6) (0.5) Growth Underlying sales grew by 3.2%, mostly from volume and with a good performance inthe US, but growth in Latin America was held back by Brazil and Mexico. Theenvironment has continued much as in 2006, with healthy market growth overallbut some slowdown in demand in Foods in parts of the region. The US grew by 3.7% and market shares are steady in aggregate. Growth wasboosted by a full innovation programme in personal care and a favourablecomparator in the first quarter last year when trade stocks were reduced.Bertolli frozen meals and innovations in tea performed particularly well.However sales in ice cream were lower, with further trade de-stocking as themarket adjusts to a lower level of promotional activity. We have also lost someshare in ice cream and our marketing plan is directed at correcting this. In Mexico, sales were well down on a very strong comparator last year whichincluded the sell-in of product ahead of the implementation of new systems atthe end of the first quarter of 2006. This should reverse in the secondquarter. Looking behind this timing effect, the return to growth in consumersales in the second half of last year has been sustained with good growth ofAdeS soy-based drinks and Knorr bouillons. Sales in Brazil were only slightly ahead, with volume gains largely offset bynegative pricing as we have repositioned our laundry brands against localcompetitors. Elsewhere in Latin America, there has been sustained strong growthacross all categories. Innovation First quarter foods innovations built on last year's programme. The premiumfrozen meals range has been further developed with new dishes under the Bertollibrand in the US and Knorr in Canada. In Latin America, Knorr has been buildingits 'Vitality' credentials with new varieties of bouillons and improved soups.Hellmann's 'real' campaign highlights its simple ingredients, naturally rich inOmega 3. In ice cream, we have extended Breyers 'double churn' in the US to fatfree, light and no sugar added variants, while innovations in Latin Americaaddress both Vitality and low income consumer opportunities. Innovation in personal care highlights the new more global approach. Axe hasbeen given the same new look in the US as elsewhere in the world, while newvariants of Degree/Rexona 'no white marks' deodorant have been introduced,including a version for men. The Dove pro•age range of skin, deodorantsand shampoos has been launched in the US at the same time as in Europe and thenew global mix of Clear anti-dandruff shampoo was introduced to Brazil at theend of the quarter. Profitability The operating margin of 14.4% was 0.2 percentage points lower than a year ago asa result of sharp increases in agricultural commodity costs. Investment inadvertising and promotions was held at last year's level in absolute terms, andwas slightly lower as a percentage of sales. 3.3 Asia Africa First Quarter 2007 % % Underlying 2007 2006 change sales growth Turnover (• million) 2 753 2 646 4.0 11.8 Operating Margin (%) 11.9 12.4Includes:- Restructuring, business disposals and impairments (0.7) 1.5 Growth The region continues to be a major driver of growth, with underlying sales aheadby 11.8% in markets which remain generally buoyant. Our growth is broad-basedacross all categories and all major countries. The first quarter also reflectedsome pipeline filling for an extensive innovation programme in personal care,including the launches of Clear in China and Axe in Japan. India returned to strong growth after a relatively weaker quarter at the end of2006. Highlights were good performances in laundry led by Surf and Wheel, skinpowered by Lux and hair care with all the major brands contributing. There werealso improved sales in tea. In China, most categories grew well, especially hair care. Indonesia showedcontinued strong growth momentum and there was a much improved performance inThailand. Sales in Japan were ahead in the quarter, boosted by personal care innovations.Australia had a good start to the year although individual category performanceremains mixed with ice cream, tea and deodorants well up, but lower marketpricing depressing sales in hair care. In South Africa, Flora, Knorr and our personal care brands led an improvinggrowth trend. In Turkey, we have raised prices, which held back volumes in anumber of categories. Innovation The strong personal care innovation programme in the first quarter reflects ourglobal priorities. The new global mix of Clear anti-dandruff shampoo is being launched in a numberof key markets around the world, with the brand being introduced for the firsttime in China and Arabia in the first quarter. In Turkey, the brand was updatedincluding a premium male range. Another major initiative has been the launch of Axe for the first time in Japan,where we also brought out new products in the Dove facial self-foaming facialwash and Lux hair styling ranges. Pond's anti-ageing face care products have been introduced in several countries,while in Indonesia we have launched two new hair care products: Doveanti-dandruff and Clear scalp oil control. The programme in foods was focused on Vitality initiatives. For example, inTurkey we have launched Amaze snacks which are good for the brain and acholesterol-lowering margarine with plant sterols under the Becel brand.Meanwhile, in Asia we have extended the 'Moo' range of ice creams containingsuper absorbent calcium for children's development. Profitability The operating margin, at 11.9%, was 0.5 percentage points lower than a year agowith higher restructuring costs and no profits on disposals. Before these itemsthere was an improvement of 1.7 percentage points. This reflects the benefits of volume growth, savings programmes and price increases to recover rising input costs. Investment in advertising and promotions was increased to support key innovation activities. SAFE HARBOUR STATEMENT: This announcement may contain forward-lookingstatements, including 'forward-looking statements' within the meaning of theUnited States Private Securities Litigation Reform Act of 1995. Words such as 'expects', 'anticipates', 'intends' or the negative of these terms and othersimilar expressions of future performance or results, including financialobjectives to 2010, and their negatives are intended to identify suchforward-looking statements. These forward-looking statements are based uponcurrent expectations and assumptions regarding anticipated developments andother factors affecting the Group. They are not historical facts, nor are theyguarantees of future performance. Because these forward-looking statementsinvolve risks and uncertainties, there are important factors that could causeactual results to differ materially from those expressed or implied by theseforward-looking statements, including, among others, competitive pricing andactivities, consumption levels, costs, the ability to maintain and manage keycustomer relationships and supply chain sources, currency values, interestrates, the ability to integrate acquisitions and complete planned divestitures,physical risks, environmental risks, the ability to manage regulatory, tax andlegal matters and resolve pending matters within current estimates, legislative,fiscal and regulatory developments, political, economic and social conditions inthe geographic markets where the Group operates and new or changed priorities ofthe Boards. Further details of potential risks and uncertainties affecting theGroup are described in the Group's filings with the London Stock Exchange,Euronext Amsterdam and the US Securities and Exchange Commission, including theAnnual Report on Form 20-F. These forward-looking statements speak only as ofthe date of this document. Except as required by any applicable law orregulation, the Group expressly disclaims any obligation or undertaking torelease publicly any updates or revisions to any forward-looking statementscontained herein to reflect any change in the Group's expectations with regardthereto or any change in events, conditions or circumstances on which any suchstatement is based. CONDENSED FINANCIAL STATEMENTS INCOME STATEMENT(unaudited) • million First Quarter 2007 2006 Increase/ (Decrease) Current Constant rates ratesContinuing operations: Turnover 9 528 9 535 0 % 5 % Operating profit 1 302 1 410 (8)% (3)%After (charging)/crediting: Restructuring (121) (61) Business disposals and impairments 35 119 Net finance costs (70) (121) Finance income 27 87 Finance costs (131) (216) Pensions and similar obligations 34 8 Share in net profit/(loss) of joint ventures 27 18Share in net profit/(loss) of associates 48 -Other income from non-current investments 25 3 Profit before taxation 1 332 1 310 2 % 5 % Taxation (280) (309) Net profit from continuing operations 1 052 1 001 5 % 9 % Net profit/(loss) from discontinued operations 22 58 Net profit for the period 1 074 1 059 1 % 5 % Attributable to: Minority interests 61 69 Shareholders' equity 1 013 990 2 % 5 % Combined earnings per share Continuing operations (Euros) 0.34 0.32 6 % 9 % Continuing operations - diluted (Euros) 0.33 0.31 7 % 10 % Discontinued operations (Euros) 0.01 0.02 Discontinued operations - diluted (Euros) 0.01 0.02 Total operations (Euros) 0.35 0.34 2 % 5 % Total operations - diluted (Euros) 0.34 0.33 3 % 6 % STATEMENT OF RECOGNISED INCOME AND EXPENSE(unaudited) • million First Quarter 2007 2006 Fair value gains/(losses) on financial instruments net of tax 1 (191)Actuarial gains/(losses) on pension schemes net of tax 450 10Currency retranslation gains/(losses) net of tax (13) 183 Net income/(expense) recognised directly in equity 438 2 Net profit for the period 1 074 1 059 Total recognised income and expense for the period 1 512 1 061 Attributable to: Minority interests 61 69 Shareholders' equity 1 451 992 MOVEMENTS IN EQUITY (unaudited)• million First Quarter 2007 2006 Equity at 1 January 11 672 8 765Total recognised income and expense for the period 1 512 1 061Movement in treasury stock (494) (21)Share-based payment credit 30 28Dividends paid to minority shareholders (6) (11)Currency retranslation gains/(losses) net of tax (3) (4)Other movements in equity 94 7Equity at the end of the period 12 805 9 825 BALANCE SHEET(unaudited) • million As at As at As at 31 March 31 December 1 April 2007 2006 2006 Non-current assetsGoodwill and intangible assets 17 137 17 206 17 892Property, plant and equipment 6 165 6 276 6 428Pension asset for funded schemes in surplus 1 779 1 697 1 026Deferred tax assets 1 164 1 266 1 602Other non-current assets 1 240 1 126 1 043Total non-current assets 27 485 27 571 27 991 Current assetsInventories 4 140 3 796 4 217Trade and other current receivables 4 833 4 254 4 962Current tax assets 160 125 144Other financial assets 266 273 759Cash and cash equivalents 1 535 1 039 1 969Non-current assets held for sale 17 14 403Total current assets 10 951 9 501 12 454 Current liabilitiesFinancial liabilities (5 102) (4 458) (6 575)Trade payables and other current liabilities (8 096) (7 838) (7 776)Current tax liabilities (664) (579) (544)Provisions (874) (1 009) (562)Liabilities associated with non-current assets held for sale - - (183)Total current liabilities (14 736) (13 884) (15 640)Net current assets/(liabilities) (3 785) (4 383) (3 186)Total assets less current liabilities 23 700 23 188 24 805 Non-current liabilitiesFinancial liabilities due after one year 4 353 4 377 6 402Pensions and post-retirement healthcare benefits liabilities: Funded schemes in deficit 785 1 379 2 342 Unfunded schemes 3 305 3 398 4 096Provisions 881 826 787Deferred tax liabilities 1 108 1 003 931Other non-current liabilities 463 533 422Total non-current liabilities 10 895 11 516 14 980 EquityShareholders' equity 12 234 11 230 9 365Minority interests 571 442 460Total equity 12 805 11 672 9 825Total capital employed 23 700 23 188 24 805 CASH FLOW STATEMENT(unaudited) • million First Quarter 2007 2006 Operating activitiesCash flow from operating activities 451 540Income tax paid (249) (237)Net cash flow from operating activities 202 303 Investing activitiesInterest received 11 76Net capital expenditure (194) (190)Acquisitions and disposals 14 143Other investing activities 64 (36)Net cash flow from/(used in) investing activities (105) (7) Financing activitiesDividends paid on ordinary share capital (157) (70)Interest and preference dividends paid (85) (152)Change in financial liabilities 647 275Movement on treasury stock (79) (19)Other financing activities (36) (9)Net cash flow from/(used in) financing activities 290 25 Net increase/(decrease) in cash and cash equivalents 387 321 Cash and cash equivalents at the beginning of the year 710 1 265 Effect of foreign exchange rate changes 63 (16) Cash and cash equivalents at the end of period 1 160 1 570 Reconciliation of net profit to cash flow from operating activities(unaudited) • million First Quarter 2007 2006 Net profit 1 074 1 059Taxation 282 331Share of net profit of joint ventures/associates and other income from non-current (100) (22)investmentsNet finance costs 70 123Operating profit (continuing and discontinued operations) 1 326 1 491Depreciation, amortisation and impairment 242 220Changes in working capital (956) (967)Pensions and similar provisions less payments (78) (42)Restructuring and other provisions less payments (63) (51)Elimination of (profits)/losses on disposals (55) (149)Non-cash charge for share-based compensation 37 28Other adjustments (2) 10Cash flow from operating activities 451 540 ANALYSIS OF NET DEBT(unaudited) • million As at As at 31 March 31 December 2007 2006 Total financial liabilities (9 455) (8 835)Financial liabilities due within one year (5 102) (4 458)Financial liabilities due after one year (4 353) (4 377)Cash and cash equivalents as per balance sheet 1 535 1 039Cash and cash equivalents as per cash flow statement 1 160 710Add bank overdrafts deducted therein 375 329Financial assets 266 273Net debt (7 654) (7 523) GEOGRAPHICAL ANALYSIS(unaudited) Continuing operations - First Quarter• million Europe Americas Asia Africa Total Turnover 2006 3 471 3 418 2 646 9 535 2007 3 544 3 231 2 753 9 528Change 2.1 % (5.5)% 4.0% (0.1)% Impact of: Exchange rates 0.4 % (7.9)% (6.6)% (4.5)% Acquisitions 0.3 % 0.0 % 0.2 % 0.2 % Disposals (2.1)% (0.6)% (0.6)% (1.2)% Underlying sales growth 3.6 % 3.2 % 11.8 % 5.7 % Price (0.7)% 0.8 % 2.9 % 0.8 % Volume 4.3 % 2.3 % 8.6 % 4.8 % Operating profit 2006 582 500 328 1 410 2007 510 465 327 1 302Change current rates (12.5)% (6.9)% (0.3)% (7.7)%Change constant rates (12.8)% 1.3 % 7.4 % (3.3)% Operating margin 2006 16.8 % 14.6 % 12.4 % 14.8 % 2007 14.4 % 14.4 % 11.9 % 13.7 % Includes restructuring, business disposals andimpairments 2006 1.0 % (0.5)% 1.5 % 0.6 % 2007 (1.3)% (0.6)% (0.7)% (0.9)% Operating profit of discontinued operations (excluding profit/loss on disposals) - First Quarter • million Europe Americas Asia Africa Total 2006 68 - - 68 2007 - - - - PRODUCT AREA ANALYSIS(unaudited) Continuing operations - First Quarter Savoury, Ice cream Home care Home and dressings and Personal and Personal• million and spreads beverages Foods care other Care Total Turnover 2006 3 399 1 630 5 029 2 702 1 804 4 506 9 535 2007 3 375 1 614 4 989 2 749 1 790 4 539 9 528Change (0.7)% (1.0)% (0.8)% 1.7 % (0.8)% 0.7 % (0.1)% Impact of: Exchange rates (3.7)% (4.6)% (4.0)% (5.3)% (4.9)% (5.1)% (4.5)% Acquisitions 0.0 % 0.3 % 0.1 % 0.2 % 0.2 % 0.2 % 0.2 % Disposals (0.8)% (1.4)% (1.0)% (1.2)% (1.6)% (1.3)% (1.2)% Underlying sales growth 3.8 % 4.9 % 4.2 % 8.4 % 5.8 % 7.4 % 5.7 % Operating profit 2006 574 161 735 498 177 675 1 410 2007 457 114 571 542 189 731 1 302Change current rates (20.3)% (29.4)% (22.3)% 8.7 % 7.0 % 8.3 % (7.7)%Change constant rates (17.5)% (24.6)% (19.1)% 14.3 % 13.3 % 14.1 % (3.3)% Operating margin 2006 16.9 % 9.9 % 14.6 % 18.4 % 9.8 % 15.0 % 14.8 % 2007 13.5 % 7.1 % 11.4 % 19.7 % 10.6 % 16.1 % 13.7 % NOTES(unaudited) Basis of Preparation The condensed interim financial statements have been prepared in accordance withInternational Financial Reporting Standards (IFRS) as adopted by the EU. Thebasis of preparation is consistent with the year ended 31 December 2006 exceptthat: • Finance lease creditors and funding-related derivatives have beenreclassified in the balance sheet in order to facilitate the presentation of netdebt. Comparatives for 31 December 2006 and 1 April 2006 have been restatedaccordingly; and • Line items relating to borrowings in the balance sheet have beenrenamed to financial liabilities to align with the requirements of IFRS 7'Financial Instruments - Disclosures' which Unilever has adopted as at 1 January2007. The condensed interim financial statements, which comply with IAS 34, are shownat current exchange rates, while percentage year-on-year changes are shown atboth current and constant exchange rates to facilitate comparison. Acquisitions and disposals On 1 January 2007, Unilever completed the restructuring of its Portuguesebusinesses into a single entity in which Unilever now holds 55% and JeronimoMartins owns 45%. The combined business includes the foods and home andpersonal care businesses. The structure of the agreement is such that there isjoint control of the newly formed entity and so it is accounted for by Unileveras a joint venture. Discontinued operations The net cash flows attributable to the discontinued operations in respect ofoperating, investing and financing activities for the first quarter were •(2)million, €24 million and €0 million respectively (2006: •(9) million, €5 millionand •(1) million). Taxation The tax rate in the quarter was 22% compared with 24% in the first quarter oflast year. The tax rate is calculated by dividing the tax charge by pre-taxprofit excluding the contribution of joint ventures and associates. The taxcharge for the quarter includes €61 million (2006: €17 million) relating toUnited Kingdom taxation. Exchange rate conventions The income statement on page 9, the statement of recognised income and expenseand the movements in equity on page 10 and the cash flow statement on page 12are translated at rates current in each period. The balance sheet on page 11 and the analysis of net debt on page 12 aretranslated at period-end rates of exchange. Supplementary information in US dollars and sterling is available on our websiteat www.unilever.com/ourcompany/investorcentre. The financial statements attached do not constitute the full financialstatements within the meaning of Section 240 of the UK Companies Act 1985. Fullaccounts for Unilever for the year ended 31 December 2006 will be delivered tothe Registrar of Companies. The auditors' report on these accounts wasunqualified and did not contain a statement under Section 237(2) or Section 237(3) of the UK Companies Act 1985. EARNINGS PER SHARE(unaudited) Combined earnings per share The earnings per share information given below, including the comparativeamounts for 2006, is expressed in terms of the nominal share values which haveapplied since 22 May 2006 following the split of NV shares and the consolidationof PLC shares which were approved at the 2006 AGMs. The combined earnings per share calculations are based on the average number ofshare units representing the combined ordinary shares of NV and PLC in issueduring the period, less the average number of shares held as treasury stock. In calculating diluted earnings per share, a number of adjustments are made tothe number of shares, principally the following: (i) conversion into PLCordinary shares in the year 2038 of shares in a group company under thearrangements for the variation of the Leverhulme Trust and (ii) the exercise ofshare options by employees. Earnings per share for total operations for the first quarter 2007 2006Combined EPS Thousands of unitsAverage number of combined share units 2 890 542 2 880 783 • millionNet profit attributable to shareholders' equity 1 013 990 Combined EPS (Euros) 0.35 0.34 Combined EPS - Diluted Thousands of unitsAdjusted average number of combined share units 2 984 902 2 996 271 Combined EPS - diluted (Euros) 0.34 0.33 Earnings per share in US Dollars and SterlingCombined EPS (Dollars) 0.46 0.41Combined EPS - diluted (Dollars) 0.44 0.40 Combined EPS (Pounds) 0.23 0.24Combined EPS - diluted (Pounds) 0.23 0.23 ANNUAL GENERAL MEETING MATTERS The Annual General Meetings (AGM's) for Unilever N.V. and PLC will be held on 15May and 16 May respectively. Appointment of new Chief Financial Officer The process of appointing a new Chief Financial Officer is well under way.However, we do not anticipate having a successor to Rudy Markham in place untilafter the forthcoming AGM's. In these circumstances, Rudy will step down, asplanned, from the Boards at the 2007 AGM's, but has agreed to continue to act asUnilever's Chief Financial Officer until such time as his successor is in place. The Unilever Global Share Incentive Plan 2007 One of the resolutions being put to the AGM's is the adoption of The UnileverGlobal Share Incentive Plan 2007 (the Plan). The Boards of Unilever have nowagreed the performance conditions for 2007-9, with target ranges for the threecomponents as follows: • Average Underlying Sales Growth: 3.5% to 5.5% p.a.• Ungeared Free Cash Flow: €12.2 billion to €13.6 billion• Total Shareholder Return (relative to peer group): from the mid-point (position 11 out of 21) to top three (position 1 to 3 out of 21) Further details can be found in the appendices to the AGM Notices. There hasbeen no change to Unilever's long-term financial targets. SECOND QUARTER RESULTS The results for the second quarter and for the first half year 2007 will bepublished on 2 August 2007. 3 May 2007 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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