3rd Nov 2005 07:01
Unilever PLC03 November 2005 THIRD QUARTER RESULTS 2005 AND INTERIM DIVIDENDS Continued progress towards improving competitiveness. FINANCIAL HIGHLIGHTS(unaudited) Third Quarter 2005 • million Nine Months 2005 Current Current Constant Current Current Constant rates rates rates rates rates rates Continuing operations:10 224 4% 2% Turnover 29 591 3% 2% 1 594 (4)% (6)% Operating profit 4 251 (6)% (6)% 1 453 (4)% (5)% Pre-tax profit 3 835 (7)% (7)% 1 025 (11)% (12)% Net profit from 2 776 (8)% (8)% continuing operations Total operations: 1.46 25% 24% EPS NV (Euros) 3.17 6% 6% 21.86 25% 24% EPS PLC (Euro cents) 47.49 6% 6% Interim dividend of €0.66 per NV ordinary share and 6.77p per PLC ordinaryshare. KEY FEATURES OF THE QUARTER •Underlying sales grew by 3.5%, entirely from volume. •Aggregate market shares are stable. •Cost saving programmes and an improved mix more than compensated for higher input costs. •The step-up in advertising and promotions continued in the quarter. Operating margin was 15.6%. •Total earnings per share grew by 25%, including a net profit of €448 million on the sale of UCI. CHIEF EXECUTIVE'S COMMENT This is now the fourth quarter of improved sales performance. I remainencouraged with the overall progress made in increasing competitiveness whiledriving cost efficiency. The higher and more consistent weight of market investment behind our prioritiesis showing through in continued volume growth and stable market shares, withsome gains in key battlegrounds. To date, there has been a pick-up in growth inPersonal Care, in Developing and Emerging markets and from Vitality inspiredinnovation. However Western Europe remains difficult and we have not yet madethe progress in restoring growth that we have elsewhere. Our savings programmes are delivering well and, together with an improved mix,they have enabled us to fully offset the impact of higher input costs. We are making good progress with the move to 'One Unilever' around the world,which will enable us to realise the potential of our scale in each country whilesimplifying the business. The new organisation is sharpening attention on both consumer relevantinnovation and our relationships with our customers. These changes will taketime to gain full traction and are key to supporting future growth. Patrick CescauGroup Chief Executive3 November 2005 Unilever has adopted International Financial Reporting Standards (IFRS). Theseapply to both the prior year comparators and the current year results. Inaddition, the condensed interim financial statements are now shown only atcurrent exchange rates, while percentage year-on-year changes are shown at bothcurrent and constant exchange rates to facilitate comparison. Furtherinformation on the impact of IFRS can be found on page 10 and on the Unileverwebsite at www.unilever.com/ourcompany/investorcentre/. In the following commentary sales growth is stated on an underlying basis atconstant exchange rates and excluding the effects of acquisitions and disposals.Turnover includes the impact of exchange rates and acquisitions and disposals. Unilever uses 'constant rate' and 'underlying' measures primarily for internalperformance analysis and targeting purposes. 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 and profit. THIRD QUARTER AND NINE MONTHS FINANCIAL RESULTS Underlying sales grew by 3.5% in the quarter, with volume increasing by 3.6%. Inthe first nine months, underlying sales grew by 4.2%, including close to 1.5%from the additional days in the first quarter. Turnover was 4.5% ahead in the quarter, benefiting by 2.4% from favourablecurrency movements and with a reduction of 1.5% from business disposals. Operating margin was 15.6% in the quarter. The margin in the quarter was 1.4percentage points lower than a year ago as a result of a higher level ofadvertising and promotional support for our brands. Savings programmes and animproved mix more than offset the impact of higher input costs. Netrestructuring costs were at a similar level to last year. For the first nine months, the operating margin was 14.4%, 1.3 percentage pointsbelow the same period last year. This was driven by a higher level of investmentin advertising and promotions, and an impairment charge for Slim•Fast in thesecond quarter, partly offset by lower net restructuring costs. Operating profit decreased by 4% in the quarter and by 6% for the year to date. Net financing costs excluding pensions were unchanged in the quarter as thebenefits of a lower level of net debt were offset by the effect of higherinterest rates. The tax rate was 29% in the quarter compared with a rate of 24% in the sameperiod last year, which included a significant benefit from a number ofnon-recurring items. Net profit from continuing operations decreased by 11% in the quarter and by 8%in the year to date with negligible impact from currency movements. Net profit from discontinued operations included a gain of €448 million aftertax on the disposal of Unilever Cosmetics International (UCI). Including this,total earnings per share increased by 25% in the quarter and is ahead by 6% inthe first nine months. CASH FLOW Cash and cash equivalents increased by €0.5 billion during the first nine monthsof 2005, an increase of €0.9 billion over the same period last year. Net cashflow from operating activities, which is net of tax payments, was €2.8 billionfor the nine months, a decrease of €0.6 billion on 2004. Of this decrease, €0.4billion comes from a higher outflow for working capital in 2005 following aparticularly low level achieved at the end of 2004. Operating profit excludingdisposal profits and non-cash items such as impairments and depreciation was€0.2 billion lower. Net cash flow from investing activities was €1.0 billion higher than last year,reflecting higher disposal receipts (including €0.6 billion from the sale ofPrestige fragrances) and net movements in investments with maturity greater thanthree months. Net cash flow used in financing activities fell by €0.5 billion,reflecting an additional €0.5 billion used on dividends and purchases oftreasury stock, offset by lower repayments of borrowings. BALANCE SHEET Goodwill and intangibles have increased by €1.1 billion since 1 January.Currency movements added €1.5 billion, offset by Slim•Fast impairment anddisposals. Inventories and trade receivables were €1.4 billion higher,reflecting currency movements and the low position achieved at the end of 2004. Net debt was €10.4 billion at the period end, a decrease of €0.8 billion fromthe start of the year. Purchases of treasury stock were €0.8 billion and theproceeds of business disposals (including UCI) €0.8 billion. The €1.4 billionreduction in net debt on conversion of the €0.05 preference shares was largelyoffset by adverse currency movements. Total equity has increased by €3.2 billion since 1 January. Net profit added€3.2 billion and currency retranslation added €0.6 billion. Treasury stock,which is deducted from equity, was used for the conversion of the €0.05preference shares. This reduced borrowings by €1.4 billion and increased equityby the same amount. Subsequent purchases of treasury stock and the 2004 dividendreduced equity by €0.8 billion and €1.2 billion respectively. THIRD QUARTER PERFORMANCE BY REGION EUROPE Market conditions overall remain difficult. We continue to perform well inCentral and Eastern Europe in growing markets. However in Western Europe ourmarkets are flat. Against this background, underlying sales for the region as a whole declined by2.0% in the quarter, with a significant impact from pricing actions to improvecompetitiveness. In Foods, savoury and dressings grew in the quarter, with importantcontributions from Vitality inspired innovations. However ice cream sales slowedin the latter part of the summer and declined markedly in the quarter.Nonetheless, over the full course of the ice cream season our market shares areslightly up both in impulse and take-home. In Personal Care there was growth across all our main categories, driven by astrong performance in Central and Eastern Europe. In Home Care, sales in laundrywere disappointing and we have lost market share, while household care grew inthe quarter. Across all our categories we are continuing to focus on ensuring that our brandsare competitively priced and consistently supported. At the same time we aredriving the organisational transformation to sharpen both innovation and the waywe partner with customers. Recent launches have included Knorr Vie shots, new products in the pro•activheart health range, soups fortified with vitamins and low fat soups. In PersonalCare we have introduced a Rexona sport variant in deodorants, Axe shower gel andSunsilk hair styling products. We have further improved our Home Care product range with launches that addressspecific consumer needs such as Domestos drain unblocker, Sun 4-in-1 dishwashand 'no-need-to-pre-treat' laundry detergents. The operating margin was 17.0%. This was 2.5 percentage points lower than lastyear, reflecting higher advertising and promotional spend and a higher level ofnet restructuring cost. For the first nine months the operating margin was 17.1%, compared with 16.9% inthe same period last year. THE AMERICAS Our markets show good growth across most categories and countries. Underlyingsales increased by 5% in the quarter, entirely coming from additional volume. In the US, aggregate market shares in Home and Personal Care have recovered tothe level of a year ago, and those in Foods are slightly ahead. Growth in Personal Care across the region has been driven by good consumerresponse to our market initiatives, including Vitality innovation and consistentsupport. Laundry sales were flat in the quarter, with growth in Latin Americaoffset by lower sales in the US. North American foods sales were well up, boosted by growth ahead of the marketin ice cream and continued good results from the extension of the Country Crockand Bertolli brands into new categories. Foods in Latin America had a slowerquarter. In the quarter the Dove 'cool moisture' range in the US was successfullyextended into hand and body creams. Axe in the US has broadened from deodorantsinto body wash. In Latin America our brands have also been very successful inconnecting with younger consumers through Rexona 'teens' and innovativecommunication for Axe. In the US we have just launched all 'small and mighty' laundry detergent,offering the convenience of the same cleaning power in a small bottle. We havere-launched our Radiant laundry brands in Latin America delivering outstandingwhiteness performance. In Foods, we have been strengthening the Vitality credentials of our brands inthe US with Promise heart health spread, Ragu organic and support for theanti-oxidant properties of Lipton teas. AdeS continues to build across LatinAmerica with the distinctive nutrition benefits of 'soy with fruit'. The operating margin in the quarter was 15.4%, 0.3 percentage points below lastyear's level. Increases in advertising and promotions and higher input costswere largely offset by cost savings and an improved mix. For the first nine months the operating margin was 11.7%, compared with 15.9% inthe same period last year, and including 3.7 percentage points from theimpairment of Slim•Fast in the second quarter. ASIA/AFRICA Consumer demand across most of the region continues to be buoyant. We have beenmaintaining our position in competitive markets, with stable shares inaggregate. The third quarter saw a further acceleration in underlying sales growth, to 11%,mostly from volume. Growth was broad based across Foods and Home and PersonalCare categories and across countries. A range of innovations have been introduced this year on both global and localplatforms. In skin in India, Lux has been strengthened with new soap bars from the globalrange, and an extensive promotional campaign celebrating 75 years of Lux inIndia. Innovations in Pond's included a new 'mud range' in China. This year's extensive programme behind our hair brands, such as Sunsilk, Dove,Clinic, Clear and Lux Super Rich, is producing good results. This includes thelaunch of Dove hair in Indonesia, a Sunsilk summer range across South East Asia,a new variant for Lux Super Rich in China and a strengthened Sunsilk rangeacross several key markets in Africa and the Middle East. New formulations for our laundry products include improved whiteness deliveryfor Surf in Indonesia and a 'baby friendly' variant for Omo in Turkey. In tea, we have substantially strengthened the Brooke Bond brand in India overthe past year and are gaining share in packaged tea. Meanwhile, Lipton isbenefiting from strong regional innovations, including Earl Grey and Green Teavariants in markets such as Turkey and Arabia. The operating margin was 13.7%, 0.6 percentage points lower than last year asincreased marketing investment and higher input costs were partly offset bysavings programmes, some price increases and a better mix. For the first nine months the operating margin was 13.4%, in line with the sameperiod last year. INTERIM DIVIDENDS In accordance with the interim dividend policy, the interim dividend is set at35% of last year's total dividend, based on the stronger of the two reportingcurrencies of our parent companies, Euro and Sterling, over the first ninemonths, which for this period was Euro. The interim dividend, to be paid on 2December 2005, is therefore fixed at €0.66 per €0.51* ordinary share of UnileverN.V. The interim dividend is set at 6.77p per 1.4p ordinary share of UnileverPLC. The Unilever N.V. shares** will go ex-dividend on 4 November 2005 and theUnilever PLC shares will go ex-dividend on 16 November 2005. \* This amount is a representation in euros on the basis of Article 67c Book 2 of the Dutch Civil Code, rounded to two decimal places, of underlying Dutch guilders, as these have not been converted into euros in Unilever N.V.'s Articles of Association. **Unilever N.V. ordinary shares and Unilever N.V. depositary receipts for ordinary shares. 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 and their negatives areintended to identify such forward-looking statements. These forward-lookingstatements are based upon current expectations and assumptions regardinganticipated developments and other factors affecting the Group. They are nothistorical facts, nor are they guarantees of future performance. Because theseforward-looking statements involve risks and uncertainties, there are importantfactors that could cause actual results to differ materially from thoseexpressed or implied by these forward-looking statements, including, amongothers, competitive pricing and activities, consumption levels, costs, theability to maintain and manage key customer relationships and supply chainsources, currency values, interest rates, the ability to integrate acquisitionsand complete planned divestitures, physical risks, environmental risks, theability to manage regulatory, tax and legal matters and resolve pending matterswithin current estimates, legislative, fiscal and regulatory developments,political, economic and social conditions in the geographic markets where theGroup operates and new or changed priorities of the Boards. Further details ofpotential risks and uncertainties affecting the Group are described in theGroup's filings with the London Stock Exchange, Euronext Amsterdam and the USSecurities and Exchange Commission, including the Annual Report and Accounts onForm 20-F. These forward-looking statements speak only as of the date of thisdocument. Except as required by any applicable law or regulation, the Groupexpressly disclaims any obligation or undertaking to release publicly anyupdates or revisions to any forward-looking statements contained herein toreflect any change in the Group's expectations with regard thereto or any changein events, conditions or circumstances on which any such statement is based. CONDENSED INTERIM FINANCIAL STATEMENTS INCOME STATEMENT(unaudited) Third Quarter • million Nine Months 2005 2004 Increase/ 2005 2004 Increase/ (Decrease) (Decrease) Current Constant Current Constant rates rates rates rates Continuing operations: 10 224 9 784 4% 2% Turnover 29 591 28 811 3% 2% 1 594 1 662 (4)% (6)% Operating profit 4 251 4 527 (6)% (6)% After charging: (6) - Impairment of Slim•Fast (359) - (160) (163) Net finance costs (466) (493) 21 39 Finance income 122 117 (167) (185) Finance costs (546) (552) (14) (17) Pensions and similar obligations (42) (58) 14 13 Share in net profit/(loss) of joint ventures 32 31 2 - Share in net profit/(loss) of associates (6) 2 3 3 Other income from non-current investments 24 35 1 453 1 515 (4)% (5)% Profit before taxation 3 835 4 102 (7)% (7)% (428) (365) Taxation (1 059) (1 084) 1 025 1 150 (11)% (12)% Net profit from continuing operations 2 776 3 018 (8)% (8)% 449 24 Net profit from discontinued operations 463 28 1 474 1 174 26% 25% Net profit for the period 3 239 3 046 6% 7% Attributable to: 57 45 Minority interests 157 147 1 417 1 129 26% 25% Shareholders' equity 3 082 2 899 6% 6% Combined earnings per share From total operations 1.46 1.17 25% 24% Per • 0.51 ordinary NV share (Euros) 3.17 2.99 6% 6% 21.86 17.49 25% 24% Per 1.4p ordinary PLC share (Euro cents) 47.49 44.79 6% 6% Per • 0.51 ordinary NV share - diluted 1.41 1.12 26% 26% (Euros) 3.07 2.87 7% 7% Per 1.4p ordinary PLC share - diluted 21.18 16.78 26% 26% (Euro cents) 46.03 42.98 7% 7% From continuing operations 1.00 1.14 (13)% (14)% Per • 0.51 ordinary NV share (Euros) 2.69 2.96 (9)% (9)% 14.93 17.13 (13)% (14)% Per 1.4p ordinary PLC share (Euro cents) 40.35 44.36 (9)% (9)% Per • 0.51 ordinary NV share - diluted 0.97 1.10 (12)% (13)% (Euros) 2.61 2.84 (8)% (8)% Per 1.4p ordinary PLC share - diluted 14.48 16.43 (12)% (13)% (Euro cents) 39.12 42.57 (8)% (8)% STATEMENT OF RECOGNISED INCOME AND EXPENSE(unaudited) • million Nine Months 2005 2004 Fair value gains/(losses) on financial instruments andcash flow hedges net of tax 21 n/aActuarial gains/(losses) on pension schemes net of tax 14 (99)Currency retranslation gains/(losses) net of tax 638 34 Net income/(expense) recognised directly in equity 673 (65) Net profit for the period 3 239 3 046 Total recognised income and expense for the period 3 912 2 981 Attributable to:Minority interests 200 147Shareholders' equity 3 712 2 834 BALANCE SHEET(unaudited) • million As at As at As at 1 October 31 December 25 September 2005 2004 2004 Non-current assetsGoodwill and intangible assets 17 959 17 007 18 806Property, plant and equipment 6 513 6 181 6 508Pension asset for fundedschemes in surplus 749 625 747Deferred tax assets 1 520 1 491 1 305Other non-current assets 1 207 1 064 1 098Total non-current assets 27 948 26 368 28 464 Assets held for sale 133 n/a n/a Current assetsInventories 4 319 3 756 4 180Trade and other receivables duewithin one year 5 082 4 131 4 818Financial assets 356 1 013 1 005Cash and cash equivalents 2 061 1 590 1 662Total current assets 11 818 10 490 11 665 Current liabilitiesBorrowings due within one year (6 101) (5 155) (5 677)Trade payables and othercurrent liabilities (8 400) (8 232) (8 497)Total current liabilities (14 501) (13 387) (14 174)Net current assets/ (liabilities) (2 683) (2 897) (2 509)Total assets less current liabilities 25 398 23 471 25 955 Non-current liabilitiesBorrowings due after one year 6 823 6 893 8 692Pension liability for fundedschemes in deficit 2 341 2 291 2 287Pension liability for unfundedschemes 4 048 3 788 3 630Deferred tax liabilities 807 789 1 125Restructuring and otherprovisions 1 364 1 364 814Other non-current liabilities 779 717 797Total non-current liabilities 16 162 15 842 17 345 Liabilities held for sale 14 n/a n/a EquityShareholders' equity 8 813 7 264 8 236Minority interests 409 365 374Total equity 9 222 7 629 8 610Total capital employed 25 398 23 471 25 955 MOVEMENTS IN EQUITY(unaudited)• million Nine Months 2005 2004 Equity at 31 December 2004 7 629 n/aIFRS transition adjustment for financial instruments(including preference shares) (1 564) n/aEquity at 1 January 6 065 7 175Total recognised income and expense for the period 3 912 2 981Dividends (1 229) (1 140)Conversion of preference shares 1 380 -(Purchase)/sale of treasury stock (800) (353)Share option credit 124 174Dividends paid to minority shareholders (166) (181)Currency retranslation gains/(losses) net of tax (64) (17)Other movements in equity - (29)Equity at the end of the period 9 222 8 610 CASH FLOW STATEMENT(unaudited) • million Nine Months 2005 2004 Operating activitiesCash flow from operating activities 4 009 4 493Income tax paid (1 205) (1 106)Net cash flow from operating activities 2 804 3 387 Investing activitiesInterest received 156 77Net capital expenditure (509) (591)Acquisitions and disposals 740 100Other investing activities 354 129Net cash flow from/(used in) investing activities 741 (285) Financing activitiesDividends paid on ordinary share capital (1 229) (1 120)Interest and preference dividends paid (472) (473)Change in borrowings and finance leases (333) (1 352)Purchase of own shares (800) (337)Other financing activities (165) (175)Net cash flow from/(used in) financing activities (2 999) (3 457) Net increase/(decrease) in cash and cash equivalents 546 (355) Cash and cash equivalents at the beginning of the year 1 406 1 428 Effect of foreign exchange rate changes (142) 388 Cash and cash equivalents at the end of period 1 810 1 461 ANALYSIS OF NET DEBT(unaudited) • million As at As at 1 October 1 January 2005 2005 Cash and cash equivalents as per cash flow statement 1 810 1 406Add: bank overdrafts deducted therein 252 184Less: cash and cash equivalents in assets/liabilities held for disposal (1) (8)Cash and cash equivalents as per balance sheet 2 061 1 582Financial assets 356 533Borrowings due within one year (6 101) (6 448)Borrowings due after one year (6 823) (7 221)Derivatives and finance leases included in otherreceivables and other liabilities 88 369Net debt at the end of the period (10 419) (11 185) GEOGRAPHICAL ANALYSIS(unaudited) Continuing operations - Third Quarter• million Europe Americas Asia/Africa Total Turnover2004 4 267 3 091 2 426 9 7842005 4 094 3 410 2 720 10 224Change (4.1)% 10.3% 12.1% 4.5%Impact of:Exchange rates 0.2% 5.5% 2.1% 2.4%Acquisitions 0.1% 0.0% 0.0% 0.1%Disposals (2.4)% (0.3)% (1.3)% (1.5)%Underlying sales growth (2.0)% 4.9% 11.2% 3.5%Price (1.4)% 0.0% 1.6% (0.1)%Volume (0.6)% 4.9% 9.5% 3.6% Operating profit/(loss)2004 830 486 346 1 6622005 696 527 371 1 594Change current rates (16.3)% 8.4% 7.4% (4.2)%Change constant rates (16.4)% 4.2% 5.3% (5.9)% Operating margin2004 19.5% 15.7% 14.3% 17.0%2005 17.0% 15.4% 13.7% 15.6% Continuing operations - Nine Months• million Europe Americas Asia/Africa Total Turnover2004 12 518 9 136 7 157 28 8112005 12 269 9 658 7 664 29 591Change (2.0)% 5.7% 7.1% 2.7%Impact of:Exchange rates 0.2% 1.1% (0.7)% 0.3%Acquisitions 0.2% 0.0% 0.0% 0.1%Disposals (2.5)% (0.8)% (1.8)% (1.8)%Underlying sales growth 0.1% 5.5% 9.8% 4.2%Price (1.1)% 0.3% 1.2% (0.1)%Volume 1.2% 5.2% 8.6% 4.3% Operating profit/(loss)2004 2 114 1 455 958 4 5272005 2 094 1 133 1 024 4 251Change current rates (1.0)% (22.2)% 6.8% (6.1)%Change constant rates (1.1)% (23.6)% 8.4% (6.3)% Operating margin2004 16.9% 15.9% 13.4% 15.7%2005 17.1% 11.7% 13.4% 14.4% Operating profit/(loss) of discontinued operations - Third Quarter• million Europe Americas Asia/Africa Total 2004 17 14 (1) 302005 (1) - 1 - Operating profit/(loss) of discontinued operations - Nine Months• million Europe Americas Asia/Africa Total 2004 4 38 1 432005 1 20 1 22 CATEGORY ANALYSIS(unaudited)Continuing operations - Third Quarter Savoury Spreads Ice cream Home Home and and and care and dressings cooking frozen Personal and Personal• million products Beverages foods Foods care other Care Total Turnover 2004 1 965 1 110 742 1 814 5 631 2 465 1 688 4 153 9 784 2005 2 051 1 079 764 1 799 5 693 2 760 1 771 4 531 10 224Change 4.3% (2.8)% 3.0% (0.8)% 1.1% 12.0% 4.9% 9.1% 4.5%Impact of:Exchange rates 2.5% 1.7% 2.6% 1.3% 2.0% 2.6% 3.5% 2.9% 2.4%Acquisitions 0.0% 0.0% 0.1% 0.3% 0.1% 0.0% 0.0% 0.0% 0.1%Disposals (2.6)% (3.8)% (1.5)% (0.9)% (2.1)% (0.3)% (0.9)% (0.6)% (1.5)%Underlyingsales growth 4.5% (0.7)% 1.8% (1.4)% 1.2% 9.5% 2.3% 6.6% 3.5% Operatingprofit/(loss) 2004 320 195 97 364 976 494 192 686 1 662 2005 297 200 111 325 933 496 165 661 1 594Change currentrates (7.3)% 2.3% 14.7% (10.9)% (4.6)% 0.4% (13.9)% (3.6)% (4.2)%Changeconstant rates (9.6)% 2.1% 18.0% (11.9)% (5.4)% (2.5)% (17.3)% (6.6)% (5.9)% Operating margin 2004 16.3% 17.6% 13.1% 20.1% 17.4% 20.0% 11.4% 16.5% 17.0% 2005 14.5% 18.5% 14.6% 18.0% 16.4% 17.9% 9.3% 14.6% 15.6% Continuing operations - Nine Months Savoury Spreads Ice cream Home Home and and and care and dressings cooking frozen Personal and Personal• million products Beverages foods Foods care other Care Total Turnover 2004 5 919 3 254 2 249 5 068 16 490 7 219 5 102 12 321 28 811 2005 6 064 3 173 2 254 5 152 16 643 7 733 5 215 12 948 29 591Change 2.4% (2.5)% 0.3% 1.7% 0.9% 7.1% 2.2% 5.1% 2.7%Impact of:Exchange rates 0.6% 0.6% (0.1)% (0.1)% 0.3% (0.2)% 0.8% 0.2% 0.3%Acquisitions 0.0% 0.0% 0.1% 0.4% 0.1% 0.0% 0.0% 0.0% 0.1%Disposals (2.3)% (5.3)% (1.3)% (1.3)% (2.4)% (0.5)% (1.4)% (0.9)% (1.8)%Underlyingsales growth 4.2% 2.3% 1.6% 2.7% 3.0% 7.9% 2.8% 5.8% 4.2% Operatingprofit/(loss) 2004 1 002 544 297 771 2 614 1 287 626 1 913 4 527 2005 1 009 590 (44) 797 2 352 1 353 546 1 899 4 251Change currentrates 0.7% 8.4% (114.7)% 3.3% (10.0)% 5.1% (12.9)% (0.8)% (6.1)%Changeconstant rates 0.4% 8.8% (117.5)% 3.3% (10.4)% 5.6% (13.5)% (0.7)% (6.3)% Operating margin 2004 16.9% 16.7% 13.2% 15.2% 15.9% 17.8% 12.3% 15.5% 15.7% 2005 16.6% 18.6% (1.9)% 15.5% 14.1% 17.5% 10.5% 14.7% 14.4% Discontinued operationsOperating profit of discontinued operations for the third quarter of 2005 was €0million (2004: €30 million), and operating profit for the nine months was €22million (2004: €43 million). These amounts relate wholly to the Personal Carecategory. NOTES(unaudited) Adoption of IFRSUnilever adopted International Financial Reporting Standards (IFRS) with effectfrom 1 January 2005. This includes the early adoption of IAS 19 (revised 2004)on employee benefits. Our transition date is 1 January 2004 as this is the startdate of the earliest period for which we will present full comparativeinformation under IFRS in our 2005 Annual Report and Accounts. These condensed interim financial statements have been prepared in accordancewith IAS 34. The financial information is prepared under the historical costconvention as modified by the revaluation of biological assets, financial assets'available-for-sale investments' and 'at fair value through profit or loss', andderivatives. IFRS 1 mandates that most IFRS are applied fully retrospectively, meaning thatthe opening balance sheet at 1 January 2004 is restated as if those accountingpolicies had always been applied. There are certain limited exemptions to thisrequirement. A reconciliation from old GAAP to IFRS of the balance sheet as at25 September 2004 and the income statements for the quarter and the nine monthsperiod then ended is given on page 12 to 14. A more detailed review of thechanges to our accounting policies and a reconciliation of financial statementsfrom old GAAP to IFRS is available on our website at www.unilever.com/ourcompany/investorcentre/. From 1 January 2005 Unilever implemented the following additional changes inaccounting policies. These changes are applied prospectively from1 January 2005. Financial instruments (including preference shares) From 1 January 2005 Unilever has applied IAS 32 and IAS 39. These standards havemany detailed consequences, however the key areas of impact for Unilever aredescribed below. Under IAS 32, Unilever must present the NV preference share capital as aliability rather than as part of equity. All of the dividends paid on thesepreference shares are recognised in the income statement as interest expense.The carrying value of the preferential share capital of NV as at 1 January 2005was €1 502 million. IAS 39 requires certain non-derivative financial assets to be held at fair valuewith unrealised movements in fair value recognised directly in equity.Non-derivative financial liabilities continue to be measured at amortised cost,unless they form part of a fair value hedge accounting relationship when theyare measured at amortised cost plus the fair value of the hedged risk.IAS 39 requires recognition of all derivative financial instruments on thebalance sheet and that they are measured at fair value. The standard also placessignificant restrictions on the use of hedge accounting and changes the hedgeaccounting methodology. As a result Unilever recognises all derivative financialinstruments on balance sheet at fair value and applies the new hedge accountingmethodology to all significant qualifying hedging relationships. Non-current assets and asset groups held for sale Application of IFRS 5 resulted in reclassifications of non-current assets andasset groups held for sale in the balance sheet as at 1 January 2005. It did notsignificantly affect the asset values themselves. Turnover definition From 1 January 2005 Unilever changed its treatment of promotional couponing andtrade communications. From 1 January 2005 these costs are deducted from turnovertogether with other trade promotion costs which are already deducted fromturnover. Comparatives have been restated to reflect this change, which has noimpact on operating profit or net profit. Issuances and repayments of debt On 11 July 2005 we repaid on maturity Swiss Franc denominated 3.375% bondsamounting to CHF 500 million, and on 29 September 2005 we issued Eurodenominated 3.375% bonds amounting to • 750 million with a maturity date of2015. Share buy-back On 3 October 2005 Unilever announced the commencement of a share buy-backprogramme of up to €500 million aggregate market value in shares in the capitalof Unilever N.V. and/or Unilever PLC. This is in addition to the replenishmentby Unilever NV of treasury shares used for the conversion of its €0.05 preferenceshares, announced in February 2005, under which 14.2 million shares had been bought back as at 30 September 2005. Discontinued operations Following the announcement of the disposal of UCI, results for this businesshave been presented in our income statement as discontinued operations, in linewith the requirements of IFRS 5. The amount reported for the year to daterepresents the profits and losses arising on these operations during the ninemonths of 2005 together with the profit of €448 million arising on disposal. Basic earnings per €0.51 NV ordinary share in respect of the discontinuedoperations were €0.46 for the quarter and €0.48 for the year to date (2004:€0.03 in both cases). Diluted earnings per €0.51 NV ordinary share in respect ofthe discontinued operations were €0.44 for the quarter and €0.46 for the year todate (2004: €0.02 and €0.03 respectively). Basic earnings per 1.4p PLC ordinary share in respect of the discontinuedoperations were 6.93 Euro cents for the quarter and 7.14 Euro cents for the yearto date (2004: 0.36 Euro cents and 0.43 Euro cents respectively). Dilutedearnings per 1.4p PLC ordinary share in respect of the discontinued operationswere 6.70 Euro cents for the quarter and 6.91 Euro cents for the year to date(2004: 0.35 Euro cents and 0.41 Euro cents respectively). The net cash flows attributable to the discontinued operations in respect ofoperating, investing and financing activities for the first nine months were•(79) million, €629 million and €0 million respectively (2004: •(4) million, •(1) million and €0 million). Exchange rate conventions The income statement on page 5, the statement of recognised income and expenseon page 6, the movements in equity and the cash flow statement on page 7 aretranslated at rates current in each period. The balance sheet on page 6 and the analysis of net debt on page 7 is translatedat 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 2004 have been 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. Reconciliation of profit for the nine months ended 25 September 2004(unaudited) Previously Goodwill and Software Biological Pensions and Deferred tax reported indefinite assets similar restatement under old lived obligations effect GAAP intangible assets • million • million • million • million • million • million Turnover 30 133 - - - - - Turnover of joint ventures (147) - - - - - Operating costs (26 238) 785 31 7 - - Share of operating profit of 35 - - - - -joint ventures Operating profit/(loss) 3 783 785 31 7 - - Share of operating profit of 34 5 - - - -associatesFinance costs (469) - - - - -Other finance income/(cost) - (61) - - - 2 -pensions and similarobligationsShare of net profit of joint - - - - - -venturesShare of net profit of - - - - - -associatesIncome from other non-current 26 - - - 9 -investments Profit/(loss) before taxation 3 313 790 31 7 11 - Taxation (1 040) (35) (8) (2) (3) (18) Profit/(loss) for the period 2 273 755 23 5 8 (18) Attributable to: Minority interests 142 2 1 2 - -Shareholders' equity 2 131 753 22 3 8 (18) Reconciliation of profit for the nine months ended 25 September 2004(unaudited) Cont/... Tax Joint Dividends Other Total Change Restated reclassifying ventures effect of relating to under effect and transition turnover IFRS associates to IFRS definition • million • million • million • million • million • million • million Turnover - (147) - - (147) (803) 29 183 Turnover of joint ventures - 147 - - 147 - - Operating costs - - - - 823 803 (24 612) Share of operating profit of - (35) - - (35) - -joint ventures Operating profit/(loss) - (35) - - 788 - 4 571 Share of operating profit of - (39) - - (34) - -associatesFinance costs - 35 - - 35 - (434)Other finance income/(cost)- - - - - 2 - (59)pensions and similarobligationsShare of net profit of joint - 31 - - 31 - 31venturesShare of net profit of - 2 - - 2 - 2associatesIncome from other - - - - 9 - 35non-current investments Profit/(loss) before - (6) - - 833 - 4 146taxation Taxation - 6 - - (60) - (1 100) Profit/(loss) for the period - - - - 773 - 3 046 Attributable to: Minority interests - - - - 5 - 147Shareholders' equity - - - - 768 - 2 899 Reconciliation of profit for the third quarter ended 25 September 2004(unaudited) Previously Goodwill and Software Biological Pensions and Deferred tax reported indefinite assets similar restatement under old lived obligations effect GAAP intangible assets • million • million • million • million • million • million Turnover 10 260 - - - - - Turnover of joint ventures (51) - - - - - Operating costs (8 787) 262 4 5 - - Share of operating profit of 15 - - - - -joint ventures Operating profit/(loss) 1 437 262 4 5 - - Share of operating profit of 14 1 - - - -associatesFinance costs (157) - - - - -Other finance income/(cost) - (18) - - - 1 -pensions and similarobligationsShare of net profit of joint - - - - - -venturesShare of net profit of - - - - - -associatesIncome from other non-current 5 - - - (2) -investments Profit/(loss) before taxation 1 281 263 4 5 (1) - Taxation (372) (10) (1) (1) 1 5 Profit/(loss) for the period 909 253 3 4 - 5 Attributable to: Minority interests 42 1 - 2 - -Shareholders' equity 867 252 3 2 - 5 Reconciliation of profit for the third quarter ended 25 September 2004(unaudited) Cont/... Tax Joint Dividends Other Total Change Restated reclassifying ventures effect of relating to under effect and transition turnover IFRS associates to IFRS definition • million • million • million • million • million • million • million Turnover - (51) - - (51) (271) 9 938 Turnover of joint ventures - 51 - - 51 - - Operating costs - - - - 271 271 (8 245) Share of operating profit of - (15) - - (15) - -joint ventures Operating profit/(loss) - (15) - - 256 - 1 693 Share of operating profit of - (15) - - (14) - -associatesFinance costs - 12 - - 12 - (145)Other finance income/(cost)- - - - - 1 - (17)pensions and similarobligationsShare of net profit of joint - 13 - - 13 - 13venturesShare of net profit of - - - - - - -associatesIncome from other - - - - (2) - 3non-current investments Profit/(loss) before - (5) - - 266 - 1 547taxation Taxation - 5 - - (1) - (373) Profit/(loss) for the period - - - - 265 - 1 174 Attributable to: Minority interests - - - - 3 - 45Shareholders' equity - - - - 262 - 1 129 Reconciliation of equity at 25 September 2004(unaudited) Previously Goodwill and Software Biological Pensions and Deferred tax reported indefinite assets similar restatement under old lived obligations effect GAAP intangible assets • million • million • million • million • million • million Non-current assets Goodwill 13 011 617 - - - -Intangible assets 4 116 927 135 - - -Property, plant and equipment 6 598 - - (39) - -Biological assets - - - 35 - -Joint ventures and associates 77 - - - - -Other non-current investments 152 - - - 185 -Pension asset for funded 543 - - - (52) -schemes in surplusTrade and other receivables 1 011 - - - - -due after more than one yearDeferred tax assets - - - - - -Total non-current assets 25 508 1 544 135 (4) 133 - Current assets Inventories 4 182 - - - - -Trade and other receivables 5 203 - - - - -due within one yearFinancial assets 951 - - - - -Cash and cash equivalents 1 716 - - - - -Total current assets 12 052 - - - - - Current liabilities Creditors due within one year (14 787) - - - - -Borrowings (5 677) - - - - -Trade and other payables (9 110) - - - - -Current tax liabilities - - - - - -Net current assets/ (2 735) - - - - -(liabilities)Total assets less current 22 773 1 544 135 (4) 133 -liabilities Non-current liabilities Creditors due after more than 9 489 - - - - -one yearBorrowings 8 692 - - - - -Trade and other payables 797 - - - - -Provisions for liabilities and 819 (5) - - - -charges (excluding pensionsand similar obligations)Restructuring and other 794 - - - - -provisionsInterest in associates 25 (5) - - - -Liabilities for pensions and 4 306 - - - 167 -similar obligationsPension liability for funded 1 629 - - - 13 -schemes in deficitPension liability for unfunded 2 677 - - - 154 -schemesDeferred tax liabilities 609 14 42 - (10) 1 153Total non-current liabilities 15 223 9 42 - 157 1 153 Equity Called up share capital 642 - - - - -Share premium account 1 534 - - - - -Other reserves (2 815) - - - - -Retained profit 7 818 1 533 92 (4) (24) (1 153)Total shareholders' equity 7 179 1 533 92 (4) (24) (1 153)Minority interests 371 2 1 - - -Total equity 7 550 1 535 93 (4) (24) (1 153)Total capital employed 22 773 1 544 135 (4) 133 - Reconciliation of equity at 25 September 2004(unaudited) Cont/... Tax Joint Dividends Other Total effect Restated reclassifying ventures and of under effect associates transition IFRS to IFRS • million • million • million • million • million • million Non-current assets Goodwill - - - - 617 13 628Intangible assets - - - - 1 062 5 178Property, plant and equipment - - - (51) (90) 6 508Biological assets - - - - 35 35Joint ventures and associates - - - - - 77Other non-current investments - - - 387 572 724Pension asset for funded 256 - - - 204 747schemes in surplusTrade and other receivables (800) - - 51 (749) 262due after more than one yearDeferred tax assets 1 305 - - - 1 305 1 305Total non-current assets 761 - - 387 2 956 28 464 Current assets Inventories - - - (2) (2) 4 180Trade and other receivables - - - (385) (385) 4 818due within one yearFinancial assets - - - 54 54 1 005Cash and cash equivalents - - - (54) (54) 1 662Total current assets - - - (387) (387) 11 665 Current liabilities Creditors due within one year 859 - 613 - 1 472 (13 315)Borrowings - - - - - (5 677)Trade and other payables 859 - 613 - 1 472 (7 638)Current tax liabilities (859) - - - (859) (859)Net current assets/ - - 613 (387) 226 (2 509)(liabilities)Total assets less current 761 - 613 - 3 182 25 955liabilities Non-current liabilities Creditors due after more than - - - - - 9 489one yearBorrowings - - - - - 8 692Trade and other payables - - - - - 797Provisions for liabilities and - - - - (5) 814charges (excluding pensionsand similar obligations)Restructuring and other - - - - - 794provisionsInterest in associates - - - - (5) 20Liabilities for pensions and 1 444 - - - 1 611 5 917similar obligationsPension liability for funded 645 - - - 658 2 287schemes in deficitPension liability for unfunded 799 - - - 953 3 630schemesDeferred tax liabilities (683) - - - 516 1 125Total non-current liabilities 761 - - - 2 122 17 345 Equity Called up share capital - - - - - 642Share premium account - - - - - 1 534Other reserves - - - - - (2 815)Retained profit - - 613 - 1 057 8 875Total shareholders' equity - - 613 - 1 057 8 236Minority interests - - - - 3 374Total equity - - 613 - 1 060 8 610Total capital employed 761 - 613 - 3 182 25 955 INTERIM DIVIDENDS The Boards have declared interim dividends in respect of 2005 on the ordinaryshares at the following rates which are equivalent in value at the rate ofexchange applied under the terms of the Equalisation Agreement between the twocompanies: Unilever N.V.Per ordinary share • 0.66 (2004: • 0.63) Unilever PLCPer ordinary share 6.77p (2004: 6.33p) The NV interim dividend will be payable as from2 December 2005, to shareholders registered at closeof business on the record date of 3 November 2005. The PLC interim dividend will be paid on2 December 2005, to shareholders registered at closeof business on the record date of 18 November 2005. Dividend on New York shares of NV The NV interim dividend, when converted at the Euro/Dollar European Central Bankrate of exchange on 2 November 2005, represents US $ 0.791472 per New York Share of • 0.51* (2004: US $ 0.805392) before deduction of Netherlands withholding tax.The New York shares of NV will go ex-dividend on 4 November 2005; US dollar checks for the interim dividend, after deduction of Netherlands withholdingtax at the appropriate rate, will be mailed on 1 December 2005, to holders ofrecord of New York shares at the close of business on 8 November 2005. Theinterim dividend will be payable on 2 December 2005. \* This amount is a representation in euros on the basis of Article 67c Book 2 ofthe Dutch Civil Code, rounded to two decimal places, of underlying Dutchguilders, as these have not been converted into euros in Unilever N.V.'sArticles of Association. Dividend on American Depositary Receipts of PLC Each American Depositary Receipt of PLC represents four 1.4p ordinary shares ofPLC. The PLC interim dividend will therefore be 27.08p per American DepositaryReceipt. When converted at the Bank of England sterling/dollar rate of exchangeon 2 November 2005, the interim dividend for holders resident in the US willtherefore be US $ 0.4779 per American Depositary Receipt (2004: US $ 0.4654). The American Depositary Receipts of PLC will go ex-dividend on 16 November 2005;US dollar checks for the interim dividend will be mailed on 1 December 2005 toholders of record of American Depositary Receipts at the close of business on18 November 2005. The interim dividend will be payable on 2 December 2005. EARNINGS PER SHARE(unaudited) 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. The number of combined share units is calculated from the underlying NV and PLCshares using the exchange rate of £1 = €5.445, in accordance with theEqualisation Agreement. The calculations of diluted earnings per share are based on (i) conversion intoPLC ordinary shares in the year 2038 of shares in a group company under thearrangements for the variation of the Leverhulme Trust; (ii) conversion of the• 0.05 NV preference shares; (iii) the exercise of share options by employees. Earnings per share from total operations for the nine months 2005 2004 Combined EPS Thousands of unitsAverage number of combined share units of • 0.51 973 408 963 943Average number of combined share units of 1.4p 6 489 387 6 426 284 • millionNet profit attributable to shareholders' equity 3 082 2 899Less: preference dividends n/a (21)Net profit attributable to shareholders' equityfor basic earnings per share calculation 3 082 2 878 Combined EPS per • 0.51 (Euros) 3.17 2.99Combined EPS per 1.4p (Euro cents) 47.49 44.79 Combined EPS - Diluted Thousands of unitsAdjusted average number of combined share unitsof €0.51 1 005 103 1 010 005Adjusted average number of combined share unitsof 1.4p 6 700 687 6 733 365 • millionAdjusted net profit attributable toshareholders' equity 3 085 2 893 Combined diluted EPS per • 0.51 (Euros) 3.07 2.87Combined diluted EPS per 1.4p (Euro cents) 46.03 42.98 Combined EPS - American sharesCombined EPS per • 0.51 NV New York Share $3.99 $3.66Combined EPS per 5.6p PLC American Depositary $2.39 $2.20Receipt Combined diluted EPS per • 0.51 NV New York $3.87 $3.51ShareCombined diluted EPS per 5.6p PLC AmericanDepositary Receipt $2.32 $2.11 DATESThe results for the fourth quarter and for the year 2005 and the proposed finaldividends will be published on Thursday 9 February 2006. ENQUIRIES: UNILEVER PRESS OFFICE+44 (0) 20 7822 6805/6010Internet: www.unilever.comE-mail: [email protected] November 2005 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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