Notes to the consolidated accounts
16 Financial liabilities
| € million | € million | ||||||
|---|---|---|---|---|---|---|---|
| Financial liabilities | 2007 | 2006 | |||||
| Preference shares | 124 | 124 | |||||
| Bank loans and overdrafts | 1 212 | 1 307 | |||||
| Bonds and other loans | |||||||
| At amortised cost | 7 907 | 6 561 | |||||
| Subject to fair value hedge accounting | – | 609 | |||||
| Finance lease creditors | 311 | 187 | |||||
| Derivatives | 95 | 47 | |||||
| 9 649 | 8 835 |
All the preference shares and the bank loans and overdrafts are valued at amortised cost.
| Financial liabilities – additional details | € million 2007 |
€ million 2006 |
|||||
|---|---|---|---|---|---|---|---|
| The repayments fall due as follows | |||||||
| Within one year: | |||||||
| Bank loans and overdrafts | 785 | 743 | |||||
| Bonds and other loans | 3 239 | 3 619 | |||||
| Finance lease creditors | 65 | 61 | |||||
| Derivatives | 77 | 35 | |||||
| Total due within one year | 4 166 | 4 458 | |||||
| After one year but within two years | 1 087 | 448 | |||||
| After two years but within three years | 1 325 | 330 | |||||
| After three years but within four years | 34 | 1 358 | |||||
| After four years but within five years | 797 | 10 | |||||
| After five years | 2 240 | 2 231 | |||||
| Total due after more than one year | 5 483 | 4 377 | |||||
| Secured financial liabilities | 5 | – | |||||
| Of which secured against property, plant and equipment | – | – | |||||
| € million | € million | € million | € million | ||||
|---|---|---|---|---|---|---|---|
| Number of shares authorised | Authorised | Nominal value per share | Number of shares issued | Issued, called up and fully paid | Statutory Reserve | Total | |
| Preference shares NV as at 31 December 2007 | |||||||
| 7% Cumulative Preference | 75 000 | 32 | €428.57 | 29 000 | 12 | 1 | 13 |
| 6% Cumulative Preference(a) | 200 000 | 86 | €428.57 | 161 060 | 69 | 4 | 73 |
| 4% Cumulative Preference | 750 000 | 32 | €42.86 | 750 000 | 32 | 2 | 34 |
| Share premium | 4 | 4 | |||||
| 150 | 117 | 7 | 124 | ||||
| Preference shares NV as at 31 December 2006 | |||||||
| 7% Cumulative Preference | 75 000 | 32 | €428.57 | 29 000 | 12 | 1 | 13 |
| 6% Cumulative Preference(a) | 200 000 | 86 | €428.57 | 161 060 | 69 | 4 | 73 |
| 4% Cumulative Preference | 750 000 | 32 | €42.86 | 750 000 | 32 | 2 | 34 |
| Share premium | 4 | 4 | |||||
| 150 | 117 | 7 | 124 | ||||
(a) The 6% cumulative preference shares are traded in the market in units of one tenth of their nominal value.
The 7%, 6% and 4% cumulative preference shares of NV are entitled to dividends at the rates indicated. The 4% preference capital of NV is redeemable at par at the company's option either wholly or in part. The other classes of preferential share capital of NV are not unilaterally redeemable by the company.
At the Annual General Meeting of NV held on 8 May 2006 it was agreed to convert the nominal value of all classes of shares from guilders into euros. The 7% and 6% preference shares with a nominal value of Fl.1 000 each, were converted into shares with a nominal value of €428.57 each, and the 4% preference shares with a nominal value of Fl.100 each, were converted into shares with a nominal value of €42.86 each. The effect of this was to adjust their reported value, with the difference being held as a statutory reserve.
In order to maintain the same economic rights for the preference shares as before the euro conversion, it was decided that their entitlement to dividend and liquidation proceeds remains linked, using the official euro conversion rate, to the amount in Dutch guilders originally paid up on these shares. The euro conversion did not alter the dividend entitlements of the cumulative preference shares.
Additional details
Details of specific bonds and other loans are given below:
| € million Amortised cost 2007 |
€ million Fair value 2007(a) |
€ million Amortised cost 2006 |
€ million Fair value 2006(a) |
|
|---|---|---|---|---|
| Unilever N.V. | ||||
| 4.250% Bonds 2007 (€) | – | – | 505 | 500 |
| 5.000% Bonds 2007 (US $) | – | – | 490 | – |
| Floating rate note 2009 (€) | 750 | – | – | – |
| 4.625% Bonds 2012 (€) | 747 | – | - | – |
| 3.375% Bonds 2015 (€) | 747 | – | 747 | – |
| Other | – | – | 7 | – |
| Total Unilever N.V. | 2 244 | – | 1 749 | 500 |
| Other group companies | ||||
| Netherlands | ||||
| Commercial paper (€) | 1 526 | – | 770 | – |
| Commercial paper (£) | 45 | – | 532 | – |
| Commercial paper (US $) | 487 | – | 236 | – |
| Commercial paper (Swiss francs) | 29 | – | 63 | – |
| Commercial paper (Canadian $) | 12 | – | – | – |
| United States | ||||
| Floating rate extendible note 2009 (US $)(b) | 340 | – | – | – |
| 7.125% Bonds 2010 (US $) | 1 184 | – | 1 321 | – |
| 7.000% Bonds 2017 (US $) | 99 | – | 110 | – |
| 7.250% Bonds 2026 (US $) | 195 | – | 217 | – |
| 6.625% Bonds 2028 (US $) | 149 | – | 166 | – |
| 5.900% Bonds 2032 (US $) | 668 | – | 746 | – |
| 5.600% Bonds 2097 (US $) | 62 | – | 69 | – |
| Commercial paper (US $) | 732 | - | 259 | – |
| Other | 8 | – | 8 | – |
| Thailand | ||||
| 3.300% Bonds 2007 (Thai baht) | – | – | 139 | – |
| South Africa | ||||
| 10.200% Bonds 2008 (South African rand) | 100 | – | – | 109 |
| Commercial paper (South African rand) | – | – | 27 | – |
| Other countries | 27 | – | 149 | – |
| Total other group companies | 5 663 | – | 4 812 | 109 |
| Total bonds and other loans | 7 907 | – | 6 561 | 609 |
(a) Values are based on fair value hedge accounting and do not include a valuation of the credit risk.
(b) Of which €292 million will be repaid in 2008.
Reclassifications
During 2007, Unilever discontinued fair value hedge accounting for 10.200% Bonds 2008 (South African Rand). On the date the hedge accounting discontinued, the fair value became the new value at amortised cost.
Interest rate
The average interest rate on short-term borrowings in 2007 was 4.5% (2006: 3.6%).
Interest rate profile and currency analysis of financial liabilities
The table set out below takes into account the various interest rate swaps and forward foreign currency contracts entered into by the Group, details of which are set out in note 17. The interest rate profiles of the Group’s financial liabilities analysed by principal currency are set out in the table below:
| € million | € million | € million | ||||
|---|---|---|---|---|---|---|
| Fixed rate |
Fixed rate |
Fixed rate |
Floating rate |
Floating rate |
Total | |
| Amount of fixing for following year |
Average interest rate for following year |
Weighted average fixing period |
Interest rate for following year |
|||
| Liabilities – 2007 | ||||||
| Euro(c) | 2 073 | 4.3% | 5.0 years | 980 | 4.5% | 3 053 |
| Sterling | 168 | 6.4% | 19.8 years | 98 | 5.3% | 266 |
| US dollar | 3 259 | 6.2% | 10.9 years | 1 853 | 3.4% | 5 112 |
| Swedish krona | – | 741 | 4.9% | 741 | ||
| Swiss francs | – | 699 | 3.1% | 699 | ||
| Japanese yen | 240 | 1.0% | 1.5 years | 99 | 1.1% | 339 |
| Thai baht | 139 | 3.5% | 0.9 years | 43 | 4.2% | 182 |
| Australian dollar | 3 | 5.3% | 12.0 years | 192 | 7.7% | 195 |
| Other | 90 | 11.8% | 2.5 years | 756 | 6.7% | 846 |
| 5 972 | 5 461 | 11 433 | ||||
| Euro leg of currency derivatives mainly relating to intra-group loans(d) | (1 784) | |||||
| Total | 9 649(e) | |||||
| Liabilities – 2006 | ||||||
| Euro(c) | 1 771 | 3.4% | 4.5 years | 383 | 4.1% | 2 154 |
| Sterling | 140 | 7.8% | 20.8 years | 143 | 5.6% | 283 |
| US dollar | 3 444 | 6.6% | 12.2 years | 2 687 | 5.4% | 6 131 |
| Swedish krona | – | 830 | 3.8% | 830 | ||
| Swiss francs | – | 519 | 2.4% | 519 | ||
| Japanese yen | 1 | 4.0% | 0.5 years | 377 | 0.8% | 378 |
| Thai baht | 139 | 3.2% | 0.9 years | 85 | 5.2% | 224 |
| Australian dollar | 3 | 5.3% | 12.0 years | 387 | 6.7% | 390 |
| Other | 99 | 11.9% | 3.6 years | 550 | 8.3% | 649 |
| 5 597 | 5 961 | 11 558 | ||||
| Euro leg of currency derivatives mainly relating to intra-group loans(d) | (2 723) | |||||
| Total | 8 835(e) | |||||
(c) Euro financial liabilities include €124 million preference shares that provide for a fixed preference dividend.
(d) Includes the euro leg of the currency derivatives mainly relating to intra-group loans, amounting to €1 784 million for 2007 (2006: €2 723 million). These derivatives create an interest rate exposure in euros. However, to reconcile the liability with the balance sheet, the total value is eliminated again. The other leg of the currency derivatives is shown in note 15 as an asset.
(e) Includes finance lease creditors amounting to €311 million (2006: €187 million) and fair value of financial liability-related derivatives amounting to €95 million (2006: €47 million).
