7th Feb 2008 07:01
Unilever PLC07 February 2008 FOURTH QUARTER AND ANNUAL RESULTS 2007 KEY FINANCIALS (unaudited) Fourth Quarter 2007 • million Full Year 2007 Increase/(Decrease) Increase/(Decrease) Current Current Constant Current Current Constant rates rates rates rates rates rates Continuing operations: 9 890 2 % 5 % Turnover 40 187 1 % 5 % 1 097 3 % 11 % Operating profit 5 245 (3)% 1 % 1 070 3 % 10 % Pre-tax profit 5 184 7 % 11 % 782 (13)% (6)% Net profit from continuing operations 4 056 10 % 14 % 787 (63)% (59)% Net profit from total operations* 4 136 (18)% (15)% 0.25 (12)% (5)% EPS from continuing operations (Euros) 1.32 12 % 16 % 0.25 (64)% (61)% EPS from total operations* (Euros) 1.35 (18)% (15)% * Includes €1.2 billion profit on disposal of frozen foods businesses in Europein the fourth quarter of 2006, as discontinued operations. STRONG FINISH TO A GOOD YEAR Full Year Financials • Underlying sales growth of 5.5%. Operating margin of 13.1%, with an underlying improvement of 0.2 percentage points.• Earnings per share from continuing operations up 12%.• Proposed final dividend of €0.50 per NV ordinary share and 34.11p per PLC ordinary share, raising the total regular dividend for the year by 7% for both NV and PLC. Share buy-back of at least €1.5 billion planned for 2008. Fourth Quarter Financials • Underlying sales growth of 6.1%, including 3.0% from pricing.• Operating margin of 11.1%, with an underlying improvement of 0.2 percentage points, after an increase in advertising and promotions of 0.6 percentage points of sales. Operational Highlights of the Year • Widespread growth across regions and categories consistent with our strategy of concentrating resources on developing and emerging markets, personal care and Vitality focused innovation.• Marked improvement in Europe: growth of 2.8% in the year, and a strong fourth quarter.• Increasing contribution from price in response to rising commodity costs.• Strong cost savings programmes delivering €1 billion in the year. Accelerated restructuring plan progressing well.• Further steps to shape the portfolio including the announcements of the acquisition of the leading Russian ice cream company Inmarko, the extension of the Pepsi/Lipton partnership and the disposals of Lawry's and Boursin. GROUP CHIEF EXECUTIVE COMMENT "The fourth quarter was a strong finish to a good year. 2007 marks the thirdsuccessive year of accelerating sales growth and came with an underlyingimprovement in margin. This is clear evidence that our strategy of focusingresources on faster growing and profitable segments is succeeding. The re-shaping of the business and the acceleration of our change programme arebringing real benefits. They make Unilever a more flexible and resilientcompany, better placed to meet the challenges of operating in a tougher economicand cost environment. We therefore remain confident of achieving our 2010 goals - for an operatingmargin in excess of 15% while delivering consistent, competitive growth alongthe way. In 2008 we expect underlying sales growth to be towards the upper end of our3-5% target range and to see a further underlying improvement in operatingmargin." Patrick Cescau, Group Chief Executive 7 February 2008 ENQUIRIES Media: Media Relations Team Investors: Investor Relations TeamUK +44 20 7822 6805 [email protected] +44 20 7822 6830 [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 UNILEVER FOURTH QUARTER AND ANNUAL 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, 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 and are notintended to be a substitute for GAAP measures of turnover, profit and cash flow.Further information about these measures is available on our website atwww.unilever.com/ourcompany/investorcentre. 1. SUMMARY OF BUSINESS PERFORMANCE FOR THE YEAR Underlying sales growth has been consistently strong throughout the year,averaging 5.5% and with 6.1% in the fourth quarter. There has been anincreasing contribution from pricing, 1.8% for the year and rising to 3.0% inthe fourth quarter, in response to sharply higher commodity costs. The steady underlying improvement in Europe has continued, with 2.8% growth inthe year. The fourth quarter was particularly strong, at 5.5%, against a weakercomparator. The Americas were up by 4.1% in the year, with Brazil and Mexicoimproving through the year, while the US grew solidly at 3.2%. Asia Africa hasshown consistent, broad-based growth across countries and categories throughoutthe year, up by 11.1%. All categories grew well in 2007. Personal care, our fastest growing category,benefited from innovations rolled out faster across countries. Home care wasalso well ahead for the year, driven by a focus on our strongest brands and thelaunch of new products with added value benefits, notably in household cleaningand fabric conditioners. A more focused innovation programme is delivering good results in savoury,dressings and spreads, with an emphasis on products that offer Vitality benefitssuch as naturalness, authenticity, lower fat or cholesterol reduction. In icecream, there was strong growth in Developing and Emerging markets and we gainedmarket share in Europe but performance in the US was weaker. It was anothervery good year for Lipton. This was achieved both through sales of leaf tea,which are consolidated in turnover, and excellent growth in the ready-to-drinkpartnership with PepsiCo, which are not. Investment in advertising and promotions was increased in line with sales and isdeployed effectively behind priority initiatives. Commodity cost increases accelerated through the year, with an impact of 2.2percentage points of sales for the 12 months. However we were able to more thancounter this through savings programmes and pricing actions. Good progress has been made with the accelerated change programme announced inAugust. There was a step-up in the delivery of cost savings in the fourthquarter. We have announced a series of initiatives to support the re-shaping ofthe portfolio through acquisitions, disposals and joint ventures. 2. FINANCIAL COMMENTARY 2.1 Turnover Underlying sales growth was 5.5% for the year, and 6.1% in the fourth quarter.Turnover growth, including the effects of disposals and exchange rates was 1.4%for the year and 1.7% for the quarter. 2.2 Operating profit Full Year Operating profit for the year was 3% lower, and the operating margin at 13.1%was 0.5 percentage points lower than a year ago. The lower margin was entirelydue to a higher net charge for restructuring, disposals and one-off items.Before the impact of these items, the operating margin showed an underlyingincrease of 0.2 percentage points. Advertising and promotions as a percentageof sales was in line with last year. The net charge for restructuring, disposals and one-off items in 2007 was €569million. This was made up of restructuring charges of €875 million, partlyoffset by disposal profits of €306 million. The disposal profits include €214million arising from the reorganisation of our interests in South Africa, whichwas a fair value economic swap but resulted in an accounting profit. In comparison, the net charge for restructuring, disposals and one-off items in2006 was €242 million. Restructuring charges of €704 million were offset bydisposal profits of €196 million and by one-off gains from US health care and UKpension plans of €266 million. Fourth Quarter Operating profit was 3% higher than a year ago in the fourth quarter. Theoperating margin at 11.1% was up by 0.2 percentage points. The net level ofrestructuring, disposals and one-off gains in 2006 was at a similar level inboth years, so before these items the operating margin was also up by 0.2percentage points. Advertising and promotions as a percentage of sales was 0.6points higher than last year in the quarter. 2.3 Finance costs and tax Costs of financing net borrowings were 13% lower in the year with the impact ofmovements in the US dollar exchange rate more than offsetting higher rates. The credit on pensions financing increased to €158 million, reflecting animproved funding position of our schemes in 2007 compared with 2006. The tax rate was 22% for the year, compared with 24% in 2006, and againbenefited from the favourable settlement of prior year tax audits and a lowertax charge on disposals. For 2008 we expect a tax rate closer to our long-termguidance of 26%. 2.4 Joint ventures, associates and other income from non-current investments Our share in net profit from joint ventures increased by around 30% in the year,mainly driven by continuing strong growth in the partnerships between Lipton andPepsiCo for ready-to-drink tea. The combined share of net profit in associates and other income from non-currentinvestments was €89 million in the year, up from €66 million last year. These largely reflect gains from our venture capital funds in both years. 2.5 Net profit and earnings per share For the full year, net profit from continuing operations grew by 10%, while EPSon the same basis grew by 12%. Net profit, including discontinued operations, was 18% lower than last year,which included the profit on disposal of European frozen foods businesses in thefourth quarter. 2.6 Dividends The 2007 interim dividend was paid on 5 December 2007 at €0.25 per share for NVand 17.00p for PLC. The Boards will recommend to the Annual General Meetingsfinal dividends of €0.50 per ordinary share of Unilever N.V. and 34.11p perordinary share of Unilever PLC. This will bring the total dividend per share to€0.75 for NV and 51.11p for PLC, an increase of 7% in each case, excluding theadditional one-off payment made in 2006. 2.7 Share buy-backs The €1.5 billion share buy-back programme was announced in March 2007 and wascompleted by the end of the year. A further programme of at least €1.5 billionis planned for 2008. 2.8 Cash flow Cash flow from operating activities, at €5.2 billion, was €0.4 billion lowerthan in 2006 due to higher cash costs of restructuring and increasedcontributions to pension funding. There was a further small improvement inworking capital. Income tax paid was €0.2 billion higher than in 2006 because of the timing ofpayments. Taking the last two years together, cash tax paid was at similarlevel to the tax charges in the income statement. Net capital expenditure increased slightly to €1.0 billion. The increase wasentirely in Asia Africa, supporting the priority for growth in the region. The €1.1 billion movement in treasury stocks reflects the net effect of sharebuy-backs of €1.5 billion and the exercise of share options of €0.4 billion. Ungeared free cash flow was €3.8 billion, which was €0.4 billion lower than ayear earlier, including the effect of the higher cash restructuring costs andincreased capital expenditure. Net debt at the year end was €8.3 billion, compared with €7.5 billion at the endof 2006. 2.9 Return on invested capital Return on invested capital was 12.7% in 2007. This represented an improvementfrom 11.5% in 2006, adjusted for the profit on the disposal of frozen foods. 2.10 Balance sheet Balance sheet values have been affected by the appreciation of the euro againstmany of the currencies of the Group's operations. The funding position of pension funds has improved significantly over the past12 months. This is reflected in increases in the values of schemes in surplusand reductions in the liabilities for unfunded schemes and funded schemes indeficit. There are consequent movements in deferred tax. Goodwill and intangible assets includes goodwill created on the reorganisationof our interests in South Africa and Israel. The increase in other non-current assets includes a capital injection in thePepsi/Lipton partnership. 2.11 Pensions The funding position of the Group's main pension arrangements has improved sincethe end of 2006 due largely to accelerated funding contributions and reducedliabilities from higher discount rates, net of slightly increased inflation andlife expectancy assumptions. Changes have been reported throughout 2007 in eachquarter's balance sheet. The overall net liability for all arrangements was €1.1 billion at the end of2007, a reduction from €3.1 billion at the end of 2006. Funded schemes show an aggregate surplus of €1.2 billion, while unfunded arrangements show a liability of €2.3 billion. During 2007, some previously unfunded arrangements were partially funded with €0.3 billion reported as part of contributions paid. 3. OPERATIONAL REVIEW 3.1 Europe Fourth Quarter 2007 Full Year 2007 % % % Underlying % Underlying 2007 2006 Change sales growth 2007 2006 Change sales growth 3 740 3 615 3.4 5.5 Turnover (• million) 15 205 15 000 1.4 2.8 2.9 5.3 Operating Margin (%) 11.0 12.7 Includes (%): (8.1) (7.3) - RDIs* (4.0) (2.2) - 3.3 - Gain on UK Pensions - 0.8 * Restructuring, business disposals and impairments Growth The region sustained its improving trend in 2007 with underlying sales growth of2.8% for the year. The improvement has been driven by a relentless focus oninnovation, on improving the quality and value of our existing products and onbetter execution. Consumer demand has been steady throughout the year in ourcategories. Our business finished the year strongly with growth of 5.5% in the fourthquarter, albeit against a relatively weak prior year comparator. This includeda small boost of around 0.5% from sales ahead of a system implementation in theUK and January price increases, notably in Germany. In the quarter we saw goodvolumes and positive pricing of 1.3%. Overall we have seen improving trends almost everywhere. Russia was theoutstanding performer. All major countries grew in the year, including the UK,Germany, Italy and the Netherlands. In France sales were slightly up in achallenging market. Profitability The operating margin, at 11.0% for the year, reflects a higher net charge forrestructuring, disposals and one-off items compared with 2006. Before theseitems, the operating margin showed an underlying improvement of 0.9 percentagepoints driven by lower overheads as a result of the One Unilever programme andlower costs of advertising and promotions. Accelerating change There has been substantial progress with portfolio development andrestructuring. At the start of 2008 we: completed the expansion of the successful internationalpartnership for Lipton ready-to-drink tea with PepsiCo to include all countriesin Europe; completed the sale of Boursin, and announced the acquisition ofInmarko. We have formed four new multi-country organisations and have announced thestreamlining or closure of ten factories. The roll-out of a single SAP systemacross the region continues with two-thirds of turnover in the region now onstream and full implementation expected to be complete by the end of 2008. Innovation Innovations continued to be mainly targeted at Vitality opportunities. In icecream we introduced Frusi frozen yoghurt with wholegrain cereals and real fruitpieces, and low calorie Solero Smoothies. Lipton Linea slimming teas werelaunched in France, Switzerland and Portugal. Growth in Hellmann's has beenboosted by the new extra light mayonnaise with citrus fibre technology. The new Dove pro•age range of products is building well in Europe aswell as elsewhere, and Dove summer glow self-tanning and body lotions are nowavailable in most countries. Clear anti-dandruff shampoo has been launched inRussia, with good consumer response. 'Small and Mighty' concentrated liquidlaundry detergents were launched in six European countries. 3.2 The Americas Fourth Quarter 2007 Full Year 2007 % % % Underlying % Underlying 2007 2006 Change sales growth 2007 2006 Change sales growth 3 334 3 448 (3.3) 3.7 Turnover (• million) 13 442 13 779 (2.4) 4.1 14.5 16.7 Operating Margin (%) 14.7 15.8 Includes (%): (0.9) (3.4) - RDIs* (0.7) (1.0) - 4.2 - US Healthcare gain - 1.0 * Restructuring, business disposals and impairments Growth Underlying sales grew by 4.1% in the year, with an increasing contribution frompricing which was up 2.6% for the year, and 4.0% in the fourth quarter. In the US, overall consumer demand has held up well in our categories. Marketgrowth in home care and personal care slowed somewhat in the second half year,but this was compensated for by robust demand in foods. Our own sales in the USgrew solidly, up 3.2% for the year, despite lower sales of ice cream. Growth inthe fourth quarter was slightly lower at 2.1%, largely due to the timing ofinnovation and promotional activity. Our business in Mexico made good progress in the second half of the year andBrazil showed an improved performance in the fourth quarter. Argentina, Andinaand Central America performed well throughout. Profitability The operating margin, at 14.7% for the year, was 1.1 percentage points lowerthan a year ago. Before the impact of restructuring, disposals and one-offitems, the margin was 0.4 percentage points lower than last year. This was dueto an increase in advertising and promotions and the impact of substantial costincreases which have not yet been fully offset by price increases and savingsprogrammes. Accelerating change The One Unilever programme is simplifying operations throughout the region.Argentina, Mexico and Brazil all moved to single head offices in 2007, while theUS will follow in early 2008. Sales force integration is underway in a numberof countries. A single SAP system has been implemented in the US, with all ofLatin America already on one system. We have set up a joint venture with Perdigao to develop our heart healthmargarine Becel in Brazil and have disposed of our local Brazilian margarinebrands. We have also announced an agreement for the disposal of Lawry'sseasonings, and the sale process of the North American laundry business is underway. Innovation New varieties of Knorr bouillons and soups in Latin America have helped to buildfurther the brand's Vitality credentials. Hellmann's 'real' campaign highlightsits simple ingredients, naturally rich in Omega 3, in both the US and LatinAmerica. Cholesterol-lowering mini-drinks were introduced to the US as PromiseActiv SuperShots. Innovation in personal care reflected the more global approach. Clearanti-dandruff shampoo was successfully launched in Brazil, while the Dove pro•age range of skin care, deodorants and shampoos was introduced in theUS at the same time as in Europe. In laundry, the 'Dirt is Good' platformcontinued to build across Latin America, now including a variant with built-infabric softener. 3.3 Asia Africa Fourth Quarter 2007 Full Year 2007 % % % Underlying % Underlying 2007 2006 Change sales growth 2007 2006 Change sales growth 2 816 2 664 5.7 10.0 Turnover (• million) 11 540 10 863 6.2 11.1 17.9 11.1 Operating Margin (%) 13.8 12.2 Includes (%): 6.3 (1.6) - RDIs* 1.1 (0.3) * Restructuring, business disposals and impairments Growth The strong underlying growth of 11.1% for the year reflects both the vibrancy ofthese markets and the high priority we place on building our business in theregion. It includes a healthy balance of volume, up by over 7%, and price, upby over 3%. Growth has been consistent throughout the year and was broad-based acrosscategories and countries. This included established markets such as India,Indonesia, the Philippines, South Africa and Turkey, which all grew in doubledigits, and big categories such as laundry and personal wash. It also includesmore recent priorities for growth such as China, and emerging categories likeice cream and deodorants. We have been driving growth across all income levels, from highly affordablepacks to premium positions and we have introduced new brands and products thatcapitalise on our global platforms. Profitability The operating margin, at 13.8%, was 1.6 percentage points higher than last year.This included the €214 million accounting profit resulting from thereorganisation of our shareholdings in South Africa. Before the effects of thistransaction, disposals and restructuring charges, the operating margin showed anunderlying increase of 0.2 percentage points. The improvement was driven by thebenefits of volume growth, pricing actions and the delivery of savingsprogrammes which more than offset higher input costs and increased advertisingand promotions. Accelerating change We announced the acquisition of the Buavita brand of fruit-based vitality drinksin Indonesia, which was completed early in January 2008. As part of the One Unilever programme we now have a single SAP system in placein four countries as the basis for a common regional platform, while thereorganisation of our shareholdings in South Africa and Israel facilitates thenew organisation. Innovation The new, more global, approach to innovation was evident in the 2007 programme.Clear anti-dandruff shampoo was launched in China, Arabia, Egypt, Pakistan andthe Phillipines. In Japan, we launched Axe and Dove pro•age. Animproved range of Dove shower products was extended to North East Asia, whileLifebuoy soap was launched in South Africa and a new variant brought to India.In laundry, the new 'Dirt is Good' product, packaging and communication wereintroduced to Thailand. The 'Moo' range of ice creams containing super absorbent calcium for children'sdevelopment was extended throughout the region. Knorr seasonings have beenrejuvenated with premium ingredients, as in Europe, and in China we launched anew form of Knorr bouillions for preparing thick soups. At the same time new,more affordable, tubs and sachets are attracting new users of spreads in severalcountries. SAFE HARBOUR 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. OTHER INFORMATION Supplementary information in US Dollars and Sterling is available on our websiteat: www.unilever.com/ourcompany/investorcentre. The results for the first quarter 2008 will be published on 8 May 2008. CONDENSED FINANCIAL STATEMENTS INCOME STATEMENT(unaudited) Fourth Quarter • million Full Year 2007 2006 Increase/ 2007 2006 Increase/ (Decrease) (Decrease) Current Constant Current Constant rates rates rates rates Continuing operations: 9 890 9 727 2 % 5 % Turnover 40 187 39 642 1 % 5 % 1 097 1 062 3 % 11 % Operating profit 5 245 5 408 (3)% 1 % After (charging)/crediting: (400) (469) Restructuring (875) (704) 245 45 Business disposals and impairments 306 196 - 266 Gains on US healthcare and UK - 266 pensions (48) (83) Net finance costs (252) (721) 26 27 Finance income 147 128 (126) (117) Finance costs (550) (590) 3 - Preference shares provision (7) (300) 49 7 Pensions and similar obligations 158 41 20 27 Share in net profit/(loss) of joint 102 78 ventures - 32 Share in net profit/(loss) of 50 36 associates 1 4 Other income from non-current 39 30 investments 1 070 1 042 3 % 10 % Profit before taxation 5 184 4 831 7 % 11 % (288) (144) Taxation (1 128) (1 146) 782 898 (13)% (6)% Net profit from continuing operations 4 056 3 685 10 % 14 % 5 1 202 Net profit/(loss) from discontinued 80 1 330 operations 787 2 100 (63)% (59)% Net profit for the period 4 136 5 015 (18)% (15)% Attributable to: 66 68 Minority interests 248 270 721 2 032 (65)% (61)% Shareholders' equity 3 888 4 745 (18)% (15)% Combined earnings per share 0.25 0.29 (12)% (5)% Continuing operations (Euros) 1.32 1.19 12 % 16 % 0.24 0.28 (13)% (6)% Continuing operations - diluted 1.28 1.15 11 % 15 % (Euros) 0.00 0.42 Discontinued operations (Euros) 0.03 0.46 0.01 0.41 Discontinued operations - diluted 0.03 0.45 (Euros) 0.25 0.71 (64)% (61)% Total operations (Euros) 1.35 1.65 (18)% (15)% 0.25 0.69 (64)% (61)% Total operations - diluted (Euros) 1.31 1.60 (18)% (15)% STATEMENT OF RECOGNISED INCOME AND EXPENSE(unaudited) • million Full Year 2007 2006 Fair value gains/(losses) on financial instruments net of tax 86 21Actuarial gains/(losses) on pension schemes net of tax 542 853Currency retranslation gains/(losses) net of tax (413) (335) Net income/(expense) recognised directly in equity 215 539 Net profit for the period 4 136 5 015 Total recognised income and expense for the period 4 351 5 554 Attributable to: Minority interests 237 242 Shareholders' equity 4 114 5 312 CASH FLOW STATEMENT(unaudited) • million Full Year 2007 2006Operating activitiesCash flow from operating activities 5 188 5 574Income tax paid (1 312) (1 063)Net cash flow from operating activities 3 876 4 511 Investing activitiesInterest received 146 125Net capital expenditure (983) (934)Acquisitions and disposals (50) 1 777Other investing activities 264 187Net cash flow from/(used in) investing activities (623) 1 155 Financing activitiesDividends paid on ordinary share capital (2 182) (2 602)Interest and preference dividends paid (552) (605)Change in financial liabilities 1 338 (3 281)Share buy-back programme (1 500) -Other movements on treasury stock 442 98Other financing activities (555) (182)Net cash flow from/(used in) financing activities (3 009) (6 572) Net increase/(decrease) in cash and cash equivalents 244 (906) Cash and cash equivalents at the beginning of the year 710 1 265 Effect of foreign exchange rate changes (53) 351 Cash and cash equivalents at the end of period 901 710 BALANCE SHEET(unaudited) • million As at As at 31 December 31 December 2007 2006 Non-current assetsGoodwill and intangible assets 16 755 17 206Property, plant and equipment 6 284 6 276Pension asset for funded schemes in surplus 2 008 1 697Deferred tax assets 1 003 1 266Other non-current assets 1 324 1 126Total non-current assets 27 374 27 571 Current assetsInventories 3 894 3 796Trade and other current receivables 4 194 4 254Current tax assets 367 125Cash and cash equivalents 1 098 1 039Other financial assets 216 273Non-current assets held for sale 159 14Total current assets 9 928 9 501 Current liabilitiesFinancial liabilities (4 166) (4 458)Trade payables and other current liabilities (8 017) (7 838)Current tax liabilities (395) (579)Provisions (968) (1 009)Liabilities associated with non-current assets held for sale (13) -Total current liabilities (13 559) (13 884)Net current assets/(liabilities) (3 631) (4 383)Total assets less current liabilities 23 743 23 188 Non-current liabilitiesFinancial liabilities due after one year 5 483 4 377Pensions and post-retirement healthcare benefits liabilities: Funded schemes in deficit 827 1 379 Unfunded schemes 2 270 3 398Provisions 694 826Deferred tax liabilities 1 213 1 003Other non-current liabilities 437 533Total non-current liabilities 10 924 11 516 EquityShareholders' equity 12 387 11 230Minority interests 432 442Total equity 12 819 11 672Total capital employed 23 743 23 188 NOTES TO THE FINANCIAL STATEMENTS(unaudited) 1 SEGMENTAL ANALYSIS BY GEOGRAPHY Continuing operations - Fourth Quarter • million Europe Americas Asia Africa Total Turnover 2006 3 615 3 448 2 664 9 727 2007 3 740 3 334 2 816 9 890Change 3.4 % (3.3)% 5.7 % 1.7 %Impact of: Exchange rates (0.8)% (6.0)% (3.5)% (3.4)% Acquisitions 0.0 % 0.0 % 0.0 % 0.0 % Disposals (1.2)% (0.8)% (0.4)% (0.8)% Underlying sales growth 5.5 % 3.7 % 10.0 % 6.1 % Price 1.3 % 4.0 % 4.0 % 3.0 % Volume 4.2 % (0.3)% 5.8 % 3.0 % Operating profit 2006 191 575 296 1 062 2007 107 485 505 1 097Change current rates (44.0)% (15.6)% 70.4 % 3.3 %Change constant rates (42.4)% (8.8)% 82.9 % 11.3 % Operating margin 2006 5.3 % 16.7 % 11.1 % 10.9 % 2007 2.9 % 14.5 % 17.9 % 11.1 % Includes restructuring, business disposals andimpairments, and Q4 2006 gains on UK pensions andUS healthcare plans 2006 (4.0)% 0.8 % (1.6)% (1.6)% 2007 (8.1)% (0.9)% 6.3 % (1.6)% Continuing operations - Full Year• million Europe Americas Asia Africa Total Turnover 2006 15 000 13 779 10 863 39 642 2007 15 205 13 442 11 540 40 187Change 1.4 % (2.4)% 6.2 % 1.4 %Impact of: Exchange rates 0.0 % (5.8)% (4.0)% (3.1)% Acquisitions 0.0 % 0.1 % 0.1 % 0.1 % Disposals (1.5)% (0.6)% (0.4)% (0.9)% Underlying sales growth 2.8 % 4.1 % 11.1 % 5.5 % Price (0.1)% 2.6 % 3.4 % 1.8 % Volume 2.9 % 1.5 % 7.4 % 3.7 % Operating profit 2006 1 903 2 178 1 327 5 408 2007 1 678 1 971 1 596 5 245Change current rates (11.9)% (9.5)% 20.2% (3.0)%Change constant rates (11.7)% (3.4)% 27.6% 1.3 % Operating margin 2006 12.7 % 15.8 % 12.2 % 13.6 % 2007 11.0 % 14.7 % 13.8 % 13.1 % Includes restructuring, business disposals andimpairments, and Q4 2006 gains on UK pensions andUS healthcare plans 2006 (1.4)% 0.0 % (0.3)% (0.6)% 2007 (4.0)% (0.7)% 1.1 % (1.4)% 2 SEGMENTAL ANALYSIS BY PRODUCT AREA Continuing operations - Fourth Quarter • million Savoury, Ice cream Home care Home and dressings and Personal and personal and spreads beverages Foods care other care Total Turnover 2006 3 709 1 416 5 125 2 786 1 816 4 602 9 727 2007 3 772 1 449 5 221 2 831 1 838 4 669 9 890Change 1.7 % 2.3 % 1.9 % 1.6 % 1.2 % 1.4 % 1.7 %Impact of: Exchange rates (2.9)% (3.7)% (3.1)% (4.2)% (3.0)% (3.8)% (3.4)% Acquisitions 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % Disposals (1.0)% 0.5 % (0.6)% (1.0)% (1.2)% (1.1)% (0.8)%Underlying sales growth 5.8 % 5.7 % 5.7 % 7.2 % 5.6 % 6.6 % 6.1 % Operating profit 2006 499 (37) 462 471 129 600 1 062 2007 587 (49) 538 404 155 559 1 097Change current rates 17.7 % (32.6)% 16.5 % (14.2)% 19.4 % (6.9)% 3.3 %Change constant rates 27.0 % 0.2 % 28.9 % (9.2)% 22.7 % (2.3)% 11.3 % Operating margin 2006 13.5 % (2.6)% 9.0 % 16.9 % 7.0 % 13.0 % 10.9 % 2007 15.6 % (3.3)% 10.3 % 14.3 % 8.4 % 12.0 % 11.1 % Continuing operations - Full Year • million Savoury, Ice cream Home care Home and dressings and Personal and personal and spreads beverages Foods care other care Total Turnover 2006 13 767 7 578 21 345 11 122 7 175 18 297 39 642 2007 13 988 7 600 21 588 11 302 7 297 18 599 40 187Change 1.6 % 0.3 % 1.1 % 1.6 % 1.7 % 1.6 % 1.4 %Impact of: Exchange rates (2.7)% (3.0)% (2.8)% (3.8)% (3.0)% (3.5)% (3.1)% Acquisitions 0.1 % 0.1 % 0.1 % 0.1 % 0.0 % 0.0 % 0.1 % Disposals (0.7)% (0.8)% (0.7)% (1.0)% (1.2)% (1.1)% (0.9)%Underlying sales growth 5.0 % 4.2 % 4.7 % 6.7 % 6.1 % 6.5 % 5.5 % Operating profit 2006 1 993 900 2 893 1 913 602 2 515 5 408 2007 2 059 809 2 868 1 786 591 2 377 5 245Change current rates 3.3 % (10.2)% (0.9)% (6.6)% (1.8)% (5.5)% (3.0)%Change constant rates 8.1 % (6.2)% 3.6 % (2.6)% 2.4 % (1.4)% 1.3 % Operating margin 2006 14.5 % 11.9 % 13.6 % 17.2 % 8.4 % 13.7 % 13.6 % 2007 14.7 % 10.6 % 13.3 % 15.8 % 8.1 % 12.8 % 13.1 % 3 ACCOUNTING INFORMATION AND POLICIES The condensed interim financial statements are based on International FinancialReporting Standards (IFRS) as adopted by the EU and IFRS as issued by theInternational Accounting Standards Board, and have been prepared in accordancewith International Accounting Standard (IAS) 34 'Interim Financial Reporting'.The basis of preparation is consistent with the year ended 31 December 2006except that: • Finance lease creditors and funding-related derivatives have been reclassified in the balance sheet in order to facilitate the presentation of net debt. Comparatives for 31 December 2006 have been restated accordingly; and • Line items relating to borrowings in the balance sheet have been renamed to financial liabilities to align with the requirements of IFRS 7 'Financial Instruments - Disclosures' which Unilever has adopted as at 1 January 2007. The condensed financial statements are shown at current exchange rates, whilepercentage year-on-year changes are shown at both current and constant exchangerates to facilitate comparison. The income statement on page 10, the statement of recognised income and expenseand the cash flow statement on page 11 and the movements in equity on page 17are translated at rates current in each period. The balance sheet on page 12 and the analysis of net debt on page 18 aretranslated at period-end rates of exchange. 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 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. 4 TAXATION The tax rate for 2007 was 22% compared with 24% for 2006. The tax rate iscalculated by dividing the tax charge by pre-tax profit excluding thecontribution of joint ventures and associates. The tax charge for 2007 includes€165 million (2006: €177 million) relating to United Kingdom taxation. 5 DISCONTINUED OPERATIONS Operating profit of discontinued operations (excluding profit/loss on disposals)was as follows: Fourth Quarter• million Europe Americas Asia Africa Total 2006 7 - - 7 2007 - - - - Full Year• million Europe Americas Asia Africa Total 2006 170 - - 170 2007 - - - - The net cash flows attributable to the discontinued operations in respect ofoperating, investing and financing activities for the year were •(4) million,€80 million and •nil million respectively (2006: €79 million, €1 618 million and•(1) million). 6 COMBINED EARNINGS PER SHARE The earnings per share information given below, including the 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 full year were calculated asfollows: 2007 2006 Combined EPS Thousands of unitsAverage number of combined share units 2 874 620 2 883 258 • millionNet profit attributable to shareholders' equity 3 888 4 745 Combined EPS (Euros) 1.35 1.65 Combined EPS - Diluted Thousands of unitsAdjusted average number of combined share units 2 976 125 2 972 468 Combined EPS - diluted (Euros) 1.31 1.60 Earnings per share in US Dollars and SterlingCombined EPS (Dollars) 1.84 2.06Combined EPS - diluted (Dollars) 1.78 2.00 Combined EPS (Pounds) 0.92 1.12Combined EPS - diluted (Pounds) 0.89 1.09 The numbers of shares included in the calculation of earnings per share is anaverage for the period. During the period the following movements in shareshave taken place: MillionsNumber of shares at 31 December 2006 (net of treasury stock) 2 889.9Net movements in shares under incentive schemes 29.7Share buy-back (66.5)Number of shares at 31 December 2007 2 853.1 7 DIVIDENDS The Boards have resolved to recommend to the Annual General Meetings for PLC andNV, to be held on 14 May 2008 and 15 May 2008 respectively, the declaration offinal dividends in respect of 2007 on the Ordinary capitals at the followingrates which are equivalent in value at the rate of exchange applied in terms ofthe Equalisation Agreement between the two companies: Unilever N.V. €0.50 per ordinary share* (2006: €0.47). Together with the interim dividendalready paid, this brings the total of NV's interim and final dividends for 2007to €0.75 per ordinary share (2006: €0.70). * Unilever N.V. ordinary shares and Unilever N.V. depositary receipts forordinary shares. Unilever PLC 34.11p per ordinary share (2006: 32.04p). Together with the interim dividendalready paid, this brings the total of PLC's interim and final dividends for2007 to 51.11p per ordinary share (2006: 47.66p). The NV final dividend will be paid on 19 June 2008, to shareholders registeredat close of business on 21 May 2008 and will go ex-dividend on 19 May 2008. The PLC final dividend will be paid on 19 June 2008, to shareholders registeredat close of business on 23 May 2008 and will go ex-dividend on 21 May 2008. Dividend on New York shares of NV The New York shares of NV will go ex-dividend on 19 May 2008; US dollar checksfor the final dividend on the New York shares of €0.16 nominal amount afterdeduction of Netherlands withholding tax at the appropriate rate, converted atthe euro/dollar European Central Bank rate of exchange on 15 May 2008 will bemailed on 18 June 2008, to holders of record at the close of business on 21 May2008. If converted at the euro/dollar rate of exchange on 6 February 2008, theNV final dividend would be US $0.7311 per New York share (2006 final dividend:US $0.6363 actual payment) before deduction of Netherlands withholding tax.With the interim dividend in respect of 2007 of US $0.3612 at the actual euro/dollar conversion rate, already paid, this would result in a total for regularinterim and final dividends in respect of 2007 of US $1.0923 per New York Share(2006: US $0.9297 actual payment). Dividend on American Depositary Receipts of PLC The American Depositary Receipts will go ex-dividend on 21 May 2008; US Dollarchecks for the final dividend on the American Depositary Receipts in PLCconverted at the sterling/dollar rate of exchange current in London on 14 May2008 will be mailed on 18 June 2008, to holders of record at the close ofbusiness on 23 May 2008. If converted at the sterling/dollar rate of exchangeon 6 February 2008, the PLC final dividend would be US $0.6684 per AmericanDepositary Receipt in PLC (2006 final dividend: US $0.6357 actual payment).With the interim dividend in respect of 2007 of US $0.3525 at the actualsterling/dollar conversion rate, already paid, this would result in a total forregular interim and final dividends in respect of 2007 of US $1.0209 perAmerican Depositary Receipt in PLC (2006: US $0.9340 actual payment). 8 MOVEMENTS IN EQUITY • million Full Year 2007 2006 Equity at 1 January 11 672 8 765Total recognised income and expense for the period 4 351 5 554Dividends (2 070) (2 684)Movement in treasury stock (1 054) 118Share-based payment credit 140 111Dividends paid to minority shareholders (251) (184)Currency retranslation gains/(losses) net of tax (18) (6)Other movements in equity 49 (2)Equity at the end of the period 12 819 11 672 During the quarter we completed the purchase of shares to the value of €1.5billion under the share buy-back programme announced in March 2007. 9 RECONCILIATION OF NET PROFIT TO CASH FLOW FROM OPERATING ACTIVITIES • million Full Year 2007 2006 Net profit 4 136 5 015Taxation 1 137 1 332Share of net profit of joint ventures/associates and other income from non-current (191) (144)investmentsNet finance costs 252 725Operating profit (continuing and discontinued operations) 5 334 6 928Depreciation, amortisation and impairment 943 982Changes in working capital 27 87Pensions and similar provisions less payments (910) (1 038)Restructuring and other provisions less payments 145 107Elimination of (profits)/losses on disposals (459) (1 620)Non-cash charge for share-based compensation 118 120Other adjustments (10) 8Cash flow from operating activities 5 188 5 574 10 NET DEBT • million As at As at 31 December 31 December 2007 2006 Total financial liabilities (9 649) (8 835)Financial liabilities due within one year (4 166) (4 458)Financial liabilities due after one year (5 483) (4 377)Cash and cash equivalents as per balance sheet 1 098 1 039Cash and cash equivalents as per cash flow statement 901 710Add bank overdrafts deducted therein 197 329Financial assets 216 273Net debt (8 335) (7 523) There was a repayment of 5.000% bonds of US $650 million and an issuance of4.625% bonds of €750 million during the quarter. 11 ACQUISITIONS AND DISPOSALS On 5 November 2007, Unilever announced that it had reached an agreement to sellBoursin to Le Groupe Bel for €400 million. This transaction was completed on3 January 2008. On 14 November 2007, Unilever signed a definitive agreement with McCormick &Company, Incorporated to sell its Lawry's and Adolph's branded seasoning blendsand marinades business in the US and Canada for US $605 million. Thistransaction is expected to be completed subject to regulatory approval, in 2008. On 4 February 2008, Unilever announced that it had signed an agreement topurchase Inmarko, a leading Russian ice cream company, for an undisclosed sum. This business had a turnover of approximately €115 million in 2007. The deal is subject to regulatory approval and is expected to be completed in the first half of 2008. 12 RESTRUCTURING Restructuring costs of €875 million in the year included €541 million undervarious organisation changes within the One Unilever programme, and €174 millionin connection with restructuring of the supply chain in Europe. 7 February 2008 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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