Notes to the company accounts – Unilever PLC
Basis of preparation
The accounts have been prepared in accordance with applicable United Kingdom accounting standards and the United Kingdom Companies Act 1985.
The accounts are prepared under the historical cost convention as modified by the revaluation of financial assets classified as 'available-for- sale investments', 'financial assets at fair value through profit or loss', and 'derivative financial instruments' in accordance with the accounting policies set out below which have been consistently applied.
Accounting policies
The principal accounting policies are as follows:
Intangible assets
comprise trademarks purchased after 1 January 1998 and are amortised in the profit and loss account over their expected useful lives of up to a maximum of 20 years. They are subject to review for impairment in accordance with United Kingdom Financial Reporting Standard 11 'Impairment of Fixed Assets and Goodwill' (FRS 11). Any impairment is charged to the profit and loss account as it arises.
Fixed asset investment
Shares in group companies are stated at cost less any amounts written off to reflect a permanent impairment. Any impairment is charged to the profit and loss account as it arises.
Financial instruments
The company's accounting policies under United Kingdom generally accepted accounting principles (UK GAAP) namely FRS 25 'Financial Instruments: Presentation', FRS 26 'Financial Instruments: Measurement' and FRS 29 'Financial Instruments: Disclosures' are the same as the Unilever Group's accounting policies under International Financial Reporting Standards (IFRS) namely IAS 32 'Financial Instruments: Presentation', IAS 39 'Financial Instruments: Recognition and Measurement' and IFRS 7 'Financial Instruments: Disclosures'. The policies are set out under the heading 'Financial instruments' in note 1 to the consolidated accounts. PLC is taking the exemption for not providing all the financial instruments disclosures, because IFRS 7 disclosures are given in note 17 to the consolidated accounts.
Defered taxation
Full provision is made for deferred taxation on all significant timing differences arising from the recognition of items for taxation purposes in different periods from those in which they are included in the company's accounts. Full provision is made at the rates of tax prevailing at the year end unless future rates have been enacted or substantively enacted. Deferred tax assets and liabilities have not been discounted.
Shares held by employee share trusts
Shares held to satisfy options are accounted for in accordance with UK GAAP, namely FRS 25 'Financial Instruments: Presentation' and Urgent Issues Task Force abstract 38 'Accounting for ESOP Trusts'(UITF 38). All differences between the purchase price of the shares held to satisfy options granted and the proceeds received for the shares, whether on exercise or lapse, are charged to other reserves.
Dividends
Under Financial Reporting Standard 21 'Events after the Balance Sheet Date' (FRS 21), proposed dividends do not meet the definition of a liability until such time as they have been approved by shareholders at the Annual General Meeting. Therefore, we do not recognise a liability in any period for dividends that have been proposed but will not be approved until after the balance sheet date. This holds for external dividends as well as intra-group dividends paid to the parent company.
| Fixed asset investments | £ million 2007 |
£ million 2006 |
|---|---|---|
| Shares in group companies (a) | 2 294 | 2 237 |
(a) The only movement in the year is an additional investment in a group company.
| Debtors | £ million 2007 |
£ million 2006 |
|---|---|---|
| Due within one year: | ||
| Amounts owed by group companies | 1 562 | 80 |
| Amounts owed by undertakings in which | ||
| the company has a participating interest | 1 | 28 |
| Other | 2 | 26 |
| 1 565 | 134 | |
| Due after more than one year: | ||
| Amounts owed by group companies | 3 | 44 |
| Other | – | 1 |
| 3 | 45 | |
| Creditors | £ million 2007 |
£ million 2006 |
|---|---|---|
| Due within one year: | ||
| Amounts owed to group companies | 2 162 | 914 |
| Taxation and social security | 123 | 151 |
| Other | 1 | 26 |
| 2 286 | 1 091 |
Provisions for liabilities and charges (excluding pensions and similar obligations)
| £ million 2007 |
£ million 2006 |
|
|---|---|---|
| Deferred taxation | 10 | 7 |
Ordinary share capital
Information on the consolidation of ordinary shares is given in note 22 to the consolidated accounts.
| Other reserves | £ million 2007 |
£ million 2006 |
|---|---|---|
| 1 January | (353) | (385) |
| Change in book value of shares | 72 | 32 |
| 31 December | (281) | (353) |
| Profit retained | £ million 2007 |
£ million 2006 |
|---|---|---|
| 1 January | 1 548 | 1 466 |
| Profit for the year | 803 | 893 |
| Final dividend 2005 on ordinary and | ||
| deferred shares | – | (385) |
| Interim dividend 2006 on ordinary and | ||
| deferred shares | – | (200) |
| One-off dividend 2006 | – | (226) |
| Final dividend 2006 on ordinary and | ||
| deferred shares | (412) | – |
| Interim dividend 2007 on ordinary and | ||
| deferred shares | (218) | – |
| 31 December | 1 721 | 1 548 |
Contingent liabilities
Contingent liabilities are not expected to give rise to any material loss and include guarantees given for group companies. The estimated total of such liabilities at 31 December 2007 was some £4 372 million (2006: £3 656 million) of which £2 720 million (2006: £2 150 million) was also guaranteed by NV. The fair value of such guarantees is not significant in either 2006 or 2007. The guarantees issued to other companies were immaterial.
Remuneration of auditors
The parent company accounts of Unilever PLC are required to comply with The Companies (Disclosure of Auditor Remuneration) Regulations 2005. Auditors' remuneration in respect of Unilever PLC is included within the disclosures in note 32.
| Profit appropriation | £ million 2007 |
£ million 2006 |
|---|---|---|
| Profit for the year (available for distribution) | 803 | 893 |
| Interim dividend already paid | (218) | (200) |
| One-off dividend 2006 | – | (226) |
| To profit retained | 585 | 467 |
Post balance sheet event
The directors propose a final dividend of 34.11p per share (totalling £430 million) out of the profits retained for the year ended 31 December 2007. The dividend will be submitted for formal approval at the Annual General Meeting to be held on 14 May 2008. In accordance with FRS 21, these financial statements do not reflect this dividend payable, which will be accounted for in shareholders' equity as an appropriation of retained earnings in the year ending 31 December 2008. During 2007, a final dividend of 32.04p per share (totalling £412 million) was paid in respect of the dividend declared for the year ended 31 December 2006.
