8th May 2008 07:01
Unilever PLC08 May 2008 FIRST QUARTER RESULTS 2008 KEY FINANCIALS (unaudited) • million First Quarter 2008 Increase/(Decrease) Current Current Constant rates rates rates Turnover 9 571 0 % 6 %Operating profit 1 815 39 % 46 %Pre-tax profit 1 782 34 % 39 %Net profit 1 407 34 % 39 % EPS (Euros) 0.47 35 % 39 % A STRONG START TO THE YEAR Financial Highlights • Underlying sales growth of 7.2%. • Operating margin of 19.0%, including €517 million disposal profits. Underlying improvement in operating margin of 0.3 percentage points before restructuring and disposals. • Earnings per share up 35%, boosted by the disposal profits. Operational Highlights • Broad-based growth across regions and categories, with Developing and Emerging markets particularly strong. • Increasing contribution from pricing, up 4.8%, in response to rising commodity costs. • Further progress with accelerated restructuring plan including the start-up of three multi-country organisations in Europe and steps to increase supply chain productivity. • Sale of Boursin and extension of the Pepsi/Lipton JV completed in the first quarter. Acquisition of Inmarko, the leading Russian ice cream company, completed in April. GROUP CHIEF EXECUTIVE COMMENT "We have had a good start to the year, with strong organic growth across ourcategories and an underlying improvement in operating margin. We continue to invest behind our brands, while taking the necessary pricingaction to recover a sharp increase in commodity costs. We have a stronginnovation programme for 2008, with many important initiatives already in themarket. We expect our productivity and value improvement initiatives to continueto deliver excellent results. The disciplined execution of our strategy, together with the combined advantageof strong brands, a product range serving consumer's everyday needs and ourbroad geographical footprint, leave us well placed to deliver competitive growthwith an underlying improvement in operating margin in 2008, despite challengingconditions. While it is early in the year, we now expect underlying sales growth in 2008 toexceed our 3-5% target range." Patrick Cescau, Group Chief Executive 8 May 2008 UNILEVER FIRST QUARTER RESULTS 2008 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, acquisitions and disposals. Unileveruses 'constant rate' and 'underlying' measures primarily for internalperformance analysis and targeting purposes. We also comment on trends inoperating margins before RDIs (restructuring, disposals, impairments and otheritems), and use the movements in Ungeared Free Cash Flow and Return On InvestedCapital to measure progress against our longer-term value creation goals.Unilever believes that such measures provide additional information forshareholders on underlying business performance trends. Such measures are notdefined under IFRS and are not intended to be a substitute for GAAP measures ofturnover, operating margin, profit, EPS and cash flow. Further informationabout these measures is available on our website at www.unilever.com/ourcompany/investorcentre 1. SUMMARY OF BUSINESS PERFORMANCE FOR THE FIRST QUARTER Underlying sales grew by 7.2%, with 2.3% from volume and a 4.8% increase inprice. Europe grew by 2.3% against a relatively strong comparator. There was continuedexcellent growth in Russia and solid performances across most of Western Europe,notably the UK, but a weaker quarter in Germany. The Americas grew 6.4% withsales up 4.3% in North America and 9.6% in Latin America, helped by furtherpositive developments in Mexico and Brazil and robust sales elsewhere. AsiaAfrica grew 14.2% with double-digit increases in almost every country in theregion. Growth was broad-based, with all categories up by more than 5%. This came froma combination of price growth, new product innovation and increasing consumptionin Developing and Emerging markets. Tea, ice cream, spreads and laundry wereparticularly strong. Growth in personal care of 5.8% was lower than in a strongfirst quarter of 2007, reflecting a more even phasing of innovation. Advertising and promotions increased broadly in line with sales, with almost allof the additional investment going to advertising in priority markets. Commodity cost increases accelerated further in the quarter. We have continuedto manage through this with a combination of innovation-led growth, savingsprogrammes and price increases, to deliver an underlying improvement inoperating margin. 2. FINANCIAL COMMENTARY 2.1 Turnover Underlying sales growth was 7.2%. Turnover growth, including the effects ofdisposals and the strengthening of the Euro against other currencies, was 0.5%. 2.2 Operating profit Operating profit was 39% higher, and operating margin, at 19.0%, was 5.3percentage points higher than a year ago. This included €517 million profits ondisposals, mainly from the sale of the Boursin cheese business and the extensionof the Pepsi/Lipton joint venture for ready-to-drink tea. Before the impact ofrestructuring and disposals the operating margin showed an underlying increaseof 0.3 percentage points. Commodity costs increased by €400 million, or 4.2 percentage points of sales, inthe quarter. Advertising and promotions increased in absolute terms, and was 0.1 percentagepoints lower as a percentage of sales. 2.3 Finance costs and tax Costs of financing net borrowings were 16% higher than last year reflecting acombination of higher average net debt and higher interest rates. The tax rate in the quarter was 22%, in line with last year. The rate benefitedfrom low tax on disposal profits and favourable settlement of outstanding taxissues. The underlying tax rate for the year is expected to be closer to ourlong-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 to €44 million. Thislargely reflects the extension of the Pepsi/Lipton joint venture forready-to-drink tea, including a one-time gain in Portugal. Share of net profit of associates and other income from non-current investments,at €9 million, was €64 million lower than last year, entirely due to lowerprofits on disposals. 2.5 Net profit and earnings per share Net profit increased by 31% and EPS by 35%. EPS growth, before the impact ofrestructuring, disposals and other items, was 2% at current rates, or 6% atconstant rates. 2.6 Share buy-backs As part of the planned 2008 share buy-back of at least €1.5 billion, we boughtback 29.2 million shares at a value of €604 million in the first quarter. 2.7 Cash flow Net cash flow from operating activities was €0.1 billion lower than last year.In addition to the normal seasonal increase in working capital, there was anadditional outflow of €0.3 billion largely as a result of highercommodity-driven prices and the planned build up of stocks during the changeprogramme. The higher working capital outflow was partly offset by lower cashcontributions to pension funds and favourable tax rebates. 2.8 Balance sheet Working capital shows the normal seasonal increase during the first quarter. Inaddition, increases in raw materials costs have flowed through into workingcapital balances. Trade payables and other current liabilities include theamount outstanding for the buy-back of shares under an irrevocable contract. The overall funding position of the Group's pension arrangements improved duringthe first quarter as the impact of higher discount rates outweighed falls inasset values. The overall net liability for all arrangements was €0.8 billionat the end of the quarter, down from €1.1 billion at the start of the year. The euro has strengthened against the currencies of many of the group'soperations, reducing the translated values of assets and liabilities. 3. OPERATIONAL REVIEW 3.1 Europe First Quarter 2008 % Underlying % sales 2008 2007 Change growthTurnover (• million) 3 494 3 544 (1.4) 2.3 Operating Margin (%) 28.3 14.4Impact of RDIs (%)* 11.9 (1.3) * Restructuring, business disposals and other items Growth Underlying sales grew 2.3%, all from pricing. The overall growth rate wasslightly lower than the average of the last twelve months, reflecting a strongcomparator in the first quarter of 2007. Central and Eastern Europe (see also note 4 on page 12) grew 10.5%, mostly fromvolume. Another excellent quarter of growth in Russia was supported by robustsales in Poland and Hungary. Western Europe grew 1.2%. The Netherlands, UK and Italy all saw a combinationof volume and price growth, while France was slightly ahead in challengingconditions. Sales in Germany were lower, after a strong finish to last year.This reflects the timing of promotions and price increases, and a competitivemarket. There were again some extra sales in the quarter ahead of price increases andsystems implementations, similar to the effect in the last quarter of 2007, withno net impact in the quarter. Profitability The operating margin of 28.3% includes the profits on the disposal of Boursinand extension of the Pepsi/Lipton joint venture for ready-to-drink tea. Beforethese items, and restructuring charges, there was an improvement in margin of0.7 percentage points. This improvement has been driven by lower overhead costsas we benefit from the ongoing restructuring programme. Pricing action andmaterials savings programmes have helped to mitigate the effect of commoditycost increases. Accelerating change Further progress was made on the portfolio shaping and restructuring programmes.We completed the sale of Boursin cheese and the expansion of the ready-to-drink tea joint venture with Lipton to include all countries in Europe. In April we completed the acquisition of Inmarko ice cream in Russia. Three new multi-country organisations started up in January. Supply chain improvements are well under way, and now include the announcement of centralisation of transport management in Poland. Innovation Vitality is the key theme of our innovation programme in Europe. At the sametime a number of initiatives are being pursued which drive margin improvementthrough cost reduction and value enhancement. We are strengthening the nutritional credentials of our brands through the newKnorr 'eat colour' soups range and the Rama 'healthy oils' campaign. Ourpartnership with the Rainforest Alliance has seen the certification of LiptonYellow Label teas across the region and PG Tips in the UK. In ice cream we haveextended the Frusi range of fruit, yoghurt and cereal snacks, and launched newMagnum 'minis'. Lower fat spreads and dressings, such as Hellmann's new 'freerange egg' extra light mayonnaise, offer a healthy option while at the same timereducing our dependence on costly vegetable oils. A global initiative for the 'Dirt is Good' laundry brand has seen theintroduction of new 'Active Clean' products which offer improved cleaningperformance as well as longer-lasting freshness through encapsulated fragrancetechnology. The latest Axe fragrance, 'Chocolate' has been launched across theregion, and Clear shampoo continues to build its presence in Russia with newvariants. The amount of packaging in our products is being reduced through themoves to concentrated liquid laundry products, upside-down roll-on deodorantsthat also provide superior performance, and a new design for Dove bodywash. 3.2 The Americas First Quarter 2008 % Underlying % sales 2008 2007 Change growthTurnover (• million) 3 139 3 231 (2.8) 6.4 Operating Margin (%) 13.9 14.4Impact of RDIs (%)* (0.8) (0.6) * Restructuring, business disposals and other items Growth Underlying sales grew 6.4%, including price increases of 5.9%. In the US, the aggregate market growth of our categories has remained steady.Within this, foods categories are higher, due to pricing, while personal caremarkets are weaker. Our own sales in the US grew 4.9%, slightly ahead of themarket. Our business in Latin America returned to strong growth, up by 9.6%. Thisincluded a further improvement in Mexico and a solid performance in Brazil, aswell as good performances in Argentina, Chile and Colombia. Profitability The operating margin, at 13.9%, was 0.5 percentage points lower than a year ago.On an underlying basis the margin was 0.3 percentage points lower, reflectingincreased investment in advertising and promotions as a percentage of sales, allbehind priority initiatives in Latin America. Pricing action and savingsprogrammes fully offset the impact of higher commodity costs. Accelerating change We are progressing with the disposal process for our North American laundrybusiness and have had interest from a number of parties. Meanwhile, thebusiness continues to perform satisfactorily and we have a healthy programme ofinnovations. The move to a single head office location for the US business is well under wayand will be complete by the middle of this year. The integration of the US icecream business is progressing and the Canadian ice cream integration iscomplete. At the beginning of May we transferred our financial shared servicesin Latin America to CapGemini. Innovation We launched Wishbone 'Bountifuls' dressings, full of flavour and less than onegram of fat per serving, and a new Hellmann's light mayonnaise with an evenbetter taste. These initiatives are helping to stimulate increased consumptionof lower fat products. Hellmann's has also introduced an olive oil basedmayonnaise and we have launched Ragu and Bertolli sauces in convenientmicrowaveable pouches. In the US, the move to concentrated liquids is proceeding to plan, and in thefirst quarter we introduced Snuggle 'FRESH Release' fabric softeners. The new 'Dirt is Good' laundry mix with improved cleaning and longer-lasting freshnesshas been introduced in Brazil, Argentina and Chile. The new Dove 'Go Fresh' range includes skin cleansing bars, body washes,deodorants, mists and shampoos. Axe 'Bullet' in a new pocket size and 'proximity' body sprays with more subtle fragrances broaden the brand's appeal. 3.3 Asia Africa First Quarter 2008 % Underlying % sales 2008 2007 Change growthTurnover (• million) 2 938 2 753 6.7 14.2 Operating Margin (%) 13.2 11.9Impact of RDIs (%)* - (0.7) * Restructuring, business disposals and other items Growth Underlying sales growth accelerated to 14.2%. This included continued volumegain of 7.5% and price increases of 6.3%. The good performance remains very broad-based, with most countries, and mostcategories, growing more than 10%. India, China and Turkey have beenparticularly strong in terms of both sales and market share gain. Australia,Japan and Thailand were weaker against relatively tough comparators in the firstquarter of last year. Profitability The operating margin, at 13.2%, was 1.3 percentage points higher than last year.The underlying improvement was 0.6 percentage points, driven by overheadssavings programmes and the benefit of higher sales on fixed costs and marketinginvestment. Higher commodity costs were largely offset by pricing action andmaterials savings programmes. Accelerating change Plans to move to a single SAP system for the region are progressing, with SouthAfrica going live in January and joining Turkey, Arabia and Israel where theimplementation is already complete. Further roll-outs are planned through 2008and 2009. We have announced the formation of a regional supply chain organisation, to bebased in Singapore. Innovation Clear shampoo continues to strengthen its position in the countries where it waslaunched last year. An updated Sunsilk range with new variants and advertisingcampaign oriented to younger consumers has been introduced in India, Indonesiaand the Philippines. The Pond's range has been revitalised in most of thelarger countries with the launch of 'Age Miracle' and 'Flawless White' and thecore moisturing range is now being renovated. In laundry, we have introduced multi-chamber sachets under the Surf Excel brandin India. In Turkey a series of initiatives include the new global 'Dirt isGood' mix, and more 'natural' propositions for Surf and Rinso. The new Knorr bouillon jellies for preparing thick soups are buildingdistribution in China. Lipton green teas have been launched in Turkey, andgained Rainforest Alliance certification in Japan. Amaze nutritional snacks,launched last year in Turkey, have been introduced in India. CAUTIONARY STATEMENT This announcement may contain forward-looking statements, including 'forward-looking statements' within the meaning of the United States PrivateSecurities Litigation Reform Act of 1995. Words such as 'expects', 'anticipates', 'intends' or the negative of these terms and other similarexpressions of future performance or results, including financial objectives to2010, and their negatives are intended to identify such forward-lookingstatements. These forward-looking statements are based upon currentexpectations and assumptions regarding anticipated developments and otherfactors 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 Increase/ 2008 2007 (Decrease) Current Constant rates ratesContinuing operations: Turnover 9 571 9 528 - % 6 % Operating profit 1 815 1 302 39 % 46 % After (charging)/crediting: Restructuring, business disposals and other items (see note 3) 393 (86) Net finance costs (86) (70) Finance income 24 27 Finance costs (145) (131) Pensions and similar obligations 35 34 Share in net profit/(loss) of joint ventures 44 27Share in net profit/(loss) of associates 9 48Other income from non-current investments - 25 Profit before taxation 1 782 1 332 34 % 39 % Taxation (375) (280) Net profit from continuing operations 1 407 1 052 34 % 39 % Net profit/(loss) from discontinued operations - 22 Net profit for the period 1 407 1 074 31 % 36 % Attributable to: Minority interests 68 61 Shareholders' equity 1 339 1 013 32 % 37 % Combined earnings per share Continuing operations (Euros) 0.47 0.34 37 % 42 % Continuing operations - diluted (Euros) 0.46 0.33 37 % 42 % Discontinued operations (Euros) - 0.01 Discontinued operations - diluted (Euros) - 0.01 Total operations (Euros) 0.47 0.35 35 % 39 % Total operations - diluted (Euros) 0.46 0.34 34 % 39 % STATEMENT OF RECOGNISED INCOME AND EXPENSE(unaudited) • million First Quarter 2008 2007 Fair value gains/(losses) on financial instruments net of tax (76) 1Actuarial gains/(losses) on pension schemes net of tax 77 450Currency retranslation gains/(losses) net of tax (671) (13) Net income/(expense) recognised directly in equity (670) 438 Net profit for the period 1 407 1 074 Total recognised income and expense for the period 737 1 512 Attributable to: Minority interests 37 61 Shareholders' equity 700 1 451 CASH FLOW STATEMENT(unaudited) • million First Quarter 2008 2007 Operating activitiesCash flow from operating activities 268 451Income tax paid (160) (249)Net cash flow from operating activities 108 202 Investing activitiesInterest received 38 11Net capital expenditure (217) (194)Acquisitions and disposals 497 14Other investing activities 71 64Net cash flow from/(used in) investing activities 389 (105) Financing activitiesDividends paid on ordinary share capital (39) (157)Interest and preference dividends paid (61) (85)Change in financial liabilities 265 647Share buy-back programmes (604) (92)Other movements on treasury stock 4 13Other financing activities (2) (36)Net cash flow from/(used in) financing activities (437) 290 Net increase/(decrease) in cash and cash equivalents 60 387 Cash and cash equivalents at the beginning of the year 901 710 Effect of foreign exchange rate changes (27) 63 Cash and cash equivalents at the end of period 934 1 160 BALANCE SHEET(unaudited) • million As at As at As at 31 March 31 December 31 March 2008 2007 2007 Non-current assetsGoodwill 11 804 12 244 12 393Intangible assets 4 353 4 511 4 744Property, plant and equipment 5 942 6 284 6 165Pension asset for funded schemes in surplus 2 155 2 008 1 779Deferred tax assets 935 1 003 1 164Other non-current assets 1 229 1 324 1 240Total non-current assets 26 418 27 374 27 485 Current assetsInventories 4 305 3 894 4 140Trade and other current receivables 4 790 4 194 4 833Current tax assets 239 367 160Cash and cash equivalents 1 254 1 098 1 535Other financial assets 167 216 266Non-current assets held for sale 142 159 17Total current assets 10 897 9 928 10 951 Current liabilitiesFinancial liabilities (4 121) (4 166) (5 102)Trade payables and other current liabilities (8 372) (8 017) (8 096)Current tax liabilities (430) (395) (664)Provisions (868) (968) (874)Liabilities associated with non-current assets held for sale - (13) -Total current liabilities (13 791) (13 559) (14 736)Net current assets/(liabilities) (2 894) (3 631) (3 785)Total assets less current liabilities 23 524 23 743 23 700 Non-current liabilitiesFinancial liabilities due after one year 5 678 5 483 4 353Non-current tax liabilities 218 233 211Pensions and post-retirement healthcare benefits liabilities: Funded schemes in deficit 853 827 785 Unfunded schemes 2 077 2 270 3 305Provisions 741 694 881Deferred tax liabilities 1 294 1 213 1 108Other non-current liabilities 226 204 252Total non-current liabilities 11 087 10 924 10 895 EquityShareholders' equity 11 977 12 387 12 234Minority interests 460 432 571Total equity 12 437 12 819 12 805Total capital employed 23 524 23 743 23 700 NOTES TO THE FINANCIAL STATEMENTS(unaudited) 1 ACCOUNTING INFORMATION AND POLICIES The condensed interim financial statements are based on International FinancialReporting 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 that applied for the year ended 31 December 2007. The condensed financial statements are shown at current exchange rates, whilepercentage year-on-year changes are shown at both current and constant exchangerates to facilitate comparison. The income statement on page 8 and the statement of recognised income andexpense and the cash flow statement on page 9 are translated at rates current ineach period. The balance sheet on page 10 is translated at period-end rates ofexchange. 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 2007 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. 2 NON-GAAP MEASURES In our financial reporting we use certain measures that are not recognised underIFRS or other generally accepted accounting principles (GAAP). We do this because we believe that these measures are useful to investors and other users of our financial statements in helping them to understand underlying business performance. Wherever we use such measures, we make clear that these are not intended as a substitute for recognised GAAP measures. Wherever appropriate and practical, we provide reconciliations to relevant GAAP measures. The principal non-GAAP measure which we apply in our quarterly reporting isunderlying sales growth, which we reconcile to changes in the GAAP measureturnover in note 4. We also report annually against two further non-GAAPmeasures: Ungeared Free Cash Flow and Return on Invested Capital. Furtherinformation about these measures and their reconciliation to GAAP measures isgiven on on our website at www.unilever.com/ourcompany/investorcentre 3 SIGNIFICANT ITEMS WITHIN THE INCOME STATEMENT In our income statement reporting we recognise restructuring costs, profits andlosses on business disposals and certain other one-off items, which wecollectively term RDIs. We disclose on the face of our income statement thetotal value of such items that arise within operating profit. In our operatingreview by geographic segment and in note 4 we highlight the impact of theseitems on our operating margin. The impact of these items, and of similar itemsarising within other elements of our income statement, on our reported netprofit for the first quarter was as follows: • million First Quarter 2008 2007RDIs within operating profit: Restructuring (124) (121) Business disposals 517 30 Other one-off items - 5 393 (86)Tax effect of RDIs within operating profit: (61) 35RDIs arising below operating profit: 24 80Total impact of RDIs on net profit 356 29 The impact of RDIs on reported Earnings Per Share is given in note 9. 4 SEGMENTAL ANALYSIS (Continuing operations) On 28 February 2008 Unilever announced a number of organisational changes. Aspart of these changes, our operations in Central and Eastern Europe will infuture be managed within an enlarged region together with thosein Asia and Africa, with Western Europe becoming a standalone region. Sincethese changes are taking place progressively during the remainder of 2008, weare continuing to report quarterly against our structure as it appliedin 2007. In our fourth quarter reporting for 2008 we will provide additionalanalysis of our regional results against the new structure, including restatedamounts for each of the quarters of 2008, and will report on the new basisthereafter. By geography - First Quarter • million Europe Americas Asia Africa Total Turnover 2007 3 544 3 231 2 753 9 528 2008 3 494 3 139 2 938 9 571Change (1.4)% (2.8)% 6.7 % 0.5 %Impact of: Exchange rates (2.0)% (7.7)% (6.3)% (5.3)% Acquisitions 0.0 % 0.0 % 0.1 % 0.0 % Disposals (1.6)% (1.1)% (0.4)% (1.1)% Underlying sales growth 2.3 % 6.4 % 14.2 % 7.2 % Price 2.5 % 5.9 % 6.3 % 4.8 % Volume (0.2)% 0.5 % 7.5 % 2.3 % Operating profit 2007 510 465 327 1 302 2008 991 437 387 1 815Change current rates 94.4 % (6.2)% 18.4 % 39.4 %Change constant rates 96.4 % 2.5 % 29.2 % 46.2 % Operating margin 2007 14.4 % 14.4 % 11.9 % 13.7 % 2008 28.3 % 13.9 % 13.2 % 19.0 % Includes restructuring, business disposals and other items 2007 (1.3)% (0.6)% (0.7)% (0.9)% 2008 11.9 % (0.8)% 0.0 % 4.1 % By operation - First Quarter Savoury, Ice cream Home care dressings and Personal and• million and spreads beverages care other Total Turnover 2007 3 375 1 614 2 749 1 790 9 528 2008 3 426 1 622 2 720 1 803 9 571Change 1.6 % 0.5 % (1.1)% 0.7 % 0.5 %Impact of: Exchange rates (4.3)% (5.5)% (6.2)% (5.5)% (5.3)% Acquisitions 0.0 % 0.2 % 0.0 % 0.0 % 0.0 % Disposals (1.6)% (1.1)% (0.4)% (1.2)% (1.1)%Underlying sales growth 7.9 % 7.3 % 5.8 % 7.8 % 7.2 % Operating profit 2007 457 114 542 189 1 302 2008 915 216 515 169 1 815Change current rates 100.1 % 89.5 % (5.0)% (10.7)% 39.4 %Change constant rates 107.6 % 97.8 % 1.3 % (4.8)% 46.2 % Operating margin 2007 13.5 % 7.1 % 19.7 % 10.6 % 13.7 % 2008 26.7 % 13.3 % 18.9 % 9.4 % 19.0 % 5 TAXATION The tax rate for the first quarter was 22%, in line with the first quarter lastyear. The tax rate is calculated by dividing the tax charge by pre-tax profitexcluding the contribution of joint ventures and associates. The tax charge forthe first quarter includes €18 million (2007: €61 million) relating to UnitedKingdom taxation. 6 RECONCILIATION OF NET PROFIT TO CASH FLOW FROM OPERATING ACTIVITIES • million First Quarter 2008 2007 Net profit 1 407 1 074Taxation 375 282Share of net profit of joint ventures/associates and other income from non-current investments (53) (100)Net finance costs 86 70Operating profit (continuing and discontinued operations) 1 815 1 326Depreciation, amortisation and impairment 233 242Changes in working capital (1 222) (956)Pensions and similar provisions less payments (31) (78)Restructuring and other provisions less payments (9) (63)Elimination of (profits)/losses on disposals (540) (55)Non-cash charge for share-based compensation 22 37Other adjustments - (2)Cash flow from operating activities 268 451 7 NET DEBT As at As at 31 March 31 December• million 2008 2007 Total financial liabilities (9 799) (9 649)Financial liabilities due within one year (4 121) (4 166)Financial liabilities due after one year (5 678) (5 483)Cash and cash equivalents as per balance sheet 1 254 1 098Cash and cash equivalents as per cash flow statement 934 901Add bank overdrafts deducted therein 320 197Financial assets 167 216Net debt (8 378) (8 335) On 21 February 2008 Unilever issued Swiss franc notes to the value of CHF 600million (€360 million) in two tranches: CHF 250 million with an interest rate of3.125% and maturing in January 2012, and CHF 350 million at 3.5% maturing inMarch 2015. 8 MOVEMENTS IN EQUITY • million First Quarter 2008 2007 Equity at 1 January 12 819 11 672Total recognised income and expense for the period 737 1 512Movement in treasury stock (1 110) (494)Share-based payment credit 22 30Dividends paid to minority shareholders (6) (6)Currency retranslation gains/(losses) net of tax (16) (3)Other movements in equity (9) 94Equity at the end of the period 12 437 12 805 During the quarter we completed the purchase of shares to the value of €604million under the share buy-back programme announced in February 2008. 9 COMBINED EARNINGS PER SHARE 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 PLC ordinary shares in the year 2038 of shares in a groupcompany 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 first quarter were calculated asfollows: 2008 2007 Combined EPS - Basic Millions of unitsAverage number of combined share units 2 839.9 2 890.5 • millionNet profit attributable to shareholders' equity 1 339 1 013 Combined EPS (Euros) 0.47 0.35 Combined EPS - Diluted Millions of unitsAdjusted average number of combined share units 2 936.6 2 984.9 Combined EPS - diluted (Euros) 0.46 0.34 Impact of RDIs on Earnings Per Share • millionTotal impact of RDIs on reported net profit (see note 3) 356 29 Impact of RDIs on basic earnings per share (Euros) 0.12 0.01 Earnings per share in US Dollars and SterlingCombined EPS (Dollars) 0.71 0.46Combined EPS - diluted (Dollars) 0.68 0.44 Combined EPS (Pounds) 0.36 0.23Combined EPS - diluted (Pounds) 0.35 0.23 The numbers of shares included in the calculation of earnings per share is anaverage for the period. During the period the following movements took place inthe numbers of shares included in the basic earnings per share calculation: MillionsNumber of shares at 31 December 2007 (net of treasury stock) 2 853.1Net movements in shares under incentive schemes 3.0Share buy-back (29.2)Number of shares at 31 March 2008 2 826.9 10 OTHER INFORMATION On 4 February 2008 Unilever announced that it had signed an agreement to acquireInmarko, the leading Russian ice cream company, for an undisclosed amount. Thetransaction was completed on 2 April 2008. The company had a turnover in 2007of approximately €115 million. On 10 April 2008, Unilever entered into a settlement with Mars to bring an endto all claims made by Mars concerning Unilever's distribution arrangements forthe sale of impulse ice cream. Prior to the settlement, Mars had initiatedproceedings against Unilever in a number of European jurisdictions. Thesettlement does not imply any admission of liability on Unilever's part. Thepayment to be made by Unilever to Mars under the terms of the settlement hasbeen fully provided for and is not material to Unilever's results. Supplementary information in US Dollars and Sterling is available on our websiteat: www.unilever.com/ourcompany/investorcentre The results for the second quarter and for the first half year 2008 will bepublished on 31 July 2008. The Annual General Meetings (AGM's) for Unilever PLCand Unilever N.V. will be held on 14 May and 15 May 2008 respectively. ENQUIRIESMedia: Media Relations Team Investors: Investor Relations TeamUK +44 20 7822 6805 [email protected] +44 20 7822 6830 [email protected] +44 20 7822 6010 [email protected] +31 10 217 [email protected] There will be a web cast of the results presentation available at:www.unilever.com/ourcompany/investorcentre/results/quarterlyresults/default.asp 8 May 2008 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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