Form 20-F
Table of Contents

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 20-F

 

 

(Mark one)

¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

 

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED 31 DECEMBER 2012

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

 

¨ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from                      to                     

Commission file number 001-04547

 

 

UNILEVER N.V.

(Exact name of Registrant as specified in its charter)

 

 

The Netherlands

(Jurisdiction of incorporation or organization)

Weena 455, 3013 AL, Rotterdam, The Netherlands

(Address of principal executive offices)

T.E. Lovell, Group Secretary

Tel: +44(0)2078225252, Fax: +44(0)2078226108

Unilever House, 100 Victoria Embankment, London EC4Y 0DY UK

(Name, telephone number, facsimile number and address of Company Contact)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Name of each exchange on which registered

N.V. New York registry shares each representing one ordinary share of nominal amount of €0.16 each   New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

 

 

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

The total number of outstanding shares of the issuer’s capital stock at the close of the period covered by the annual report was: 1,714,727,700 ordinary shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:

Yes  x        No  ¨

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934:

Yes  ¨        No  x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x        No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  ¨        No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large Accelerated filer  x        Accelerated filer  ¨        Non-accelerated filer  ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

 

U.S. GAAP  ¨   International Financial Reporting Standards
as issued by the International Accounting
Standards Board  x
  Other  ¨

If ‘Other’ has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17  ¨        Item 18  ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes  ¨        No  x

 

 

 


Table of Contents

Cautionary statement

This document may contain forward-looking statements, Including ‘forward-looking statements’ within the meaning of the United States Private Securities Litigation Reform Act of 1995. Words such as ‘will’, ‘aim’, ‘expects’, ‘anticipates’, ‘intends’, ‘looks’, ‘believes’, ‘vision’, or the negative of these terms and other similar expressions of future performance or results, and their negatives, are intended to identify such forward-looking statements. These forward-looking statements are based upon current expectations and assumptions regarding anticipated developments and other factors affecting the Group. They are not historical facts, nor are they guarantees of future performance.

Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Among other risks and uncertainties, the material, or principal factors which cause actual results to differ materially are: Unilever’s global brands not meeting consumer preferences; increasing competitive pressures; Unilever’s investment choices in its portfolio management; inability to find sustainable solutions to support long-term growth; customer relationships; the recruitment and retention of talented employees; disruptions in our supply chain; the cost of raw materials and commodities; secure and reliable IT infrastructure; successful execution of acquisitions, divestitures and business transformation projects; economic and political risks and natural disasters; the debt crisis in Europe; financial risks; failure to meet high product safety and ethical standards; and managing regulatory, tax and legal matters. Further details of potential risks and uncertainties affecting the Group are described in the Group’s filings with the London Stock Exchange, Euronext Amsterdam and the US Securities and Exchange Commission, including the Group’s Annual Report on Form 20-F for the year ended 31 December 2012 and the Annual Report and Accounts 2012, These forward-looking statements speak only as of the date of this announcement. Except as required by any applicable law or regulation, the Group expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Group’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.


Table of Contents

LOGO

 

ANNUAL REPORT ON

FORM 20-F 2012

 

UNILEVER N.V. AND UNILEVER PLC

 

 

 

MAKING

SUSTAINABLE LIVING

COMMONPLACE

  

 

LOGO


Table of Contents

 

LOGO

Item 1   Identity of Directors, Senior Management
and Advisers
     1   
Item 2   Offer Statistics and Expected Timetable      2   
Item 3   Key Information      2   
Item 4   Information on the Company      8   
Item 4A   Unresolved Staff Comments      8   
Item 5   Operating and Financial Review and Prospects      8   
Item 6   Directors, Senior Management and Employees      13   
Item 7   Major Shareholders and Related Party Transactions      14   
Item 8   Financial Information      14   
Item 9   The Offer and Listing      15   
Item 10   Additional Information      17   
Item 11   Quantitative and Qualitative Disclosures
About Market Risk
     19   
Item 12   Description of Securities Other than
Equity Securities
     19   
Item 13   Defaults, Dividend Arrearages and Delinquencies      21   
Item 14   Material Modifications to the Rights of Security
Holders and Use of Proceeds
     21   
Item 15   Controls and Procedures      21   
Item 16   Reserved      22   
Item 17   Financial Statements      22   
Item 18   Financial Statements      23   
Item 19   Exhibits      29   

 


Table of Contents

References in this Report on Form 20-F are to certain references in the Group’s Annual Report and Accounts 2012 that include pages incorporated therein, including any page references incorporated in the incorporated material, unless specifically noted otherwise.

The following pages and sections of the Group’s Annual Report and Accounts 2012 and specified information referenced therein, regardless of their inclusion in any cross-reference below, are hereby specifically excluded and are not incorporated by reference into this report on Form 20-F:

 

  pages 2 to 5;
  ‘Operational highlights’ on page 6;
  ‘Five-year historical Total Shareholder Return (TSR) Performance’ on page 75;
  pages 84 and 85;
  pages 132 to 143; and
  information on our website or any other website or social media site, including our Facebook, Twitter and LinkedIn pages.

This report on Form 20-F and the Group’s Annual Report and Accounts 2012 (furnished separately on 8 March 2013 under Form 6-K) contain certain measures that are not defined by generally accepted accounting principles (GAAP) such as IFRS. We believe this information, along with comparable GAAP measurements, is useful to investors because it provides a basis for measuring our operating performance, ability to retire debt and invest in new business opportunities. Our management uses these financial measures, along with the most directly comparable GAAP financial measures, in evaluating our operating performance and value creation. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP. Non-GAAP financial measures as reported by us may not be comparable with similarly titled amounts reported by other companies. In addition, there are limitations on the usefulness of our reported non-GAAP financial measures.

We report on the following non-GAAP measures:

 

  underlying sales growth;
  underlying volume growth;
  core operating profit and core operating margin (including acquisition and disposal related costs, gain/(loss) on disposal of group companies, impairments and other one-off costs (non-core items));
  core earnings per share (core EPS);
  free cash flow; and
  net debt.

The information set forth under the heading ‘Non-GAAP measures’ on pages 34 to 35 of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference. Within these pages further information about the above measures can be found.

The Unilever Group

Unilever N.V. (NV) is a public limited company registered in the Netherlands, which has listings of shares and depositary receipts for shares on Euronext Amsterdam and of New York Registry Shares on the New York Stock Exchange. Unilever PLC (PLC) is a public limited company registered in England and Wales which has shares listed on the London Stock Exchange and, as American Depositary Receipts, on the New York Stock Exchange.

The two parent companies, NV and PLC, together with their group companies, operate as a single economic entity (the Unilever Group, also referred to as ‘Unilever’ or ‘the Group’). NV and PLC and their group companies constitute a single reporting entity for the purposes of presenting consolidated accounts. Accordingly, the accounts of the Unilever Group are presented by both NV and PLC as their respective consolidated accounts.

This document contains references to our website. Information on our website or any other website referenced in this document is not incorporated into this document and should not be considered part of this document. We have included any website as an inactive textual reference only.

 

LOGO

Not applicable.

 

 

 

Unilever Annual Report on Form 20-F 2012      Form 20-F                1   


Table of Contents

 

LOGO

Not applicable.

 

LOGO

A. Selected financial data

The schedules below provide the Group’s selected financial data for the five most recent financial years.

 

Consolidated income statement   

 million

2012

    

million

2011

    

million

2010

    

million

2009

    

million

2008

 

Turnover

     51,324         46,467         44,262         39,823         40,523   

Operating profit

     6,989         6,433         6,339         5,020         7,167   

Net finance costs

     (397      (377      (394      (593      (257

Income from non-current investments

     91         189         187         489         219   

Profit before taxation

     6,683         6,245         6,132         4,916         7,129   

Taxation

     (1,735      (1,622      (1,534      (1,257      (1,844

Net profit

     4,948         4,623         4,598         3,659         5,285   

Attributable to:

              

Non-controlling interests

     468         371         354         289         258   

Shareholders’ equity

     4,480         4,252         4,244         3,370         5,027   
Combined earnings per share(a)   

2012

    

2011

    

2010

    

2009

    

2008

 

Basic earnings per share

     1.58         1.51         1.51         1.21         1.79   

Diluted earnings per share

     1.54         1.46         1.46         1.17         1.73   

(a)    For the basis of the calculations of combined earnings per share see Note 7 on page 105 of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K and incorporated here by reference.

       

Consolidated balance sheet   

 million

2012

    

 million

2011

    

 million

2010

    

 million

2009

    

 million

2008

 

Non-current assets

     34,019         33,221         28,683         26,205         24,967   

Current assets

     12,147         14,291         12,484         10,811         11,175   

Total assets

     46,166         47,512         41,167         37,016         36,142   

Current liabilities

     15,815         17,929         13,606         11,599         13,800   

Non-current liabilities

     14,635         14,662         12,483         12,881         11,970   

Total liabilities

     30,450         32,591         26,089         24,480         25,770   

Shareholders’ equity

     15,159         14,293         14,485         12,065         9,948   

Non-controlling interests

     557         628         593         471         424   

Total equity

     15,716         14,921         15,078         12,536         10,372   

Total liabilities and equity

     46,166         47,512         41,167         37,016         36,142   

 

 

2                Form 20-F   Unilever Annual Report on Form 20-F 2012


Table of Contents

Item 3. Key Information continued

 

Consolidated cash flow statement     million
2012
      million
2011
      million
2010
      million
2009
      million 
2008 

Net cash flow from operating activities

     6,836         5,452         5,490         5,774       3,871 

Net cash flow from/(used in) investing activities

     (755      (4,467      (1,164      (1,263    1,415 

Net cash flow from/(used in) financing activities

     (6,622      411         (4,609      (4,301    (3,130)
Net increase/(decrease) in cash and cash equivalents      (541      1,396         (283      210       2,156 

Cash and cash equivalents at the beginning of the year

     2,978         1,966         2,397         2,360       901 

Effect of foreign exchange rates

     (220      (384      (148      (173    (697)
Cash and cash equivalents at the end of the year      2,217         2,978         1,966         2,397       2,360 
Key performance indicators    2012      2011      2010      2009      2008 

Underlying sales growth (%)(b)

     6.9         6.5         4.1         3.5       7.4 

Underlying volume growth (%)(b)

     3.4         1.6         5.8         2.3       0.1 

Core operating margin (%)(b)

     13.8         13.5         13.6         12.6       12.4 

Free cash flow ( million)(b)

     4,333         3,075         3,365         4,072       2,390 
Ratios and other metrics    2012      2011      2010      2009      2008 

Operating margin (%)

     13.6         13.8         14.3         12.6       17.7 

Net profit margin (%)(c)

     8.7         9.2         9.6         8.5       12.4 

Net debt ( million)(b)

     7,355         8,781         6,668         6,357       8,012 

Ratio of earnings to fixed charges (times)(d)

     10.4         10.0         10.7         8.8       11.7 

 

(b)     Non-GAAP measures are defined and described on pages 34 and 35 of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013
 under Form 6-K and incorporated here by reference.

(c)    Net profit margin is expressed as net profit attributable to shareholders’ equity as a percentage of turnover.

(d)    In the ratio of earnings to fixed charges, earnings consist of net profit excluding net profit or loss of joint ventures and associates increased by fixed charges,
 income taxes and dividends received from joint ventures and associates. Fixed charges consist of interest payable on debt and a portion of lease costs determined
 to be representative of interest. This ratio takes no account of interest receivable although Unilever’s treasury operations involve both borrowing and depositing
 funds.

 

Dividend record

The following tables show the dividends declared and dividends paid by NV and PLC for the last five years, expressed in terms of the revised share denominations which became effective from 22 May 2006. Differences between the amounts ultimately received by US holders of NV and PLC shares are the result of changes in exchange rates between the equalisation of the dividends and the date of payment.

 

Following agreement at the 2009 AGMs and separate meetings of ordinary shareholders, the Equalisation Agreement was modified to facilitate the payment of quarterly dividends from 2010 onwards.

 

      2012      2011      2010      2009      2008

Dividends declared for the year

              
NV dividends               

Dividend per 0.16

     0.97         0.90         0.83         0.46       0.77

Dividend per 0.16 (US Registry)

     US $1.25         US $1.25         US $1.13         US $0.67       US $1.02
PLC dividends               

Dividend per 31/9p

     £0.79         £0.78         £0.71         £0.41       £0.61

Dividend per 31/9p (US Registry)

     US $1.25         US $1.25         US $1.13         US $0.67       US $0.94

Dividends paid during the year

              
NV dividends               

Dividend per 0.16

     0.95         0.88         0.82         0.78       0.76

Dividend per 0.16 (US Registry)

     US $1.23         US $1.24         US $1.11         US $1.09       US $1.11
PLC dividends               

Dividend per 31/9p

     £0.77         £0.77         £0.71         £0.64       £0.55

Dividend per 31/9p (US Registry)

     US $1.23         US $1.24         US $1.11         US $1.00       US $0.99

 

 

Unilever Annual Report on Form 20-F 2012      Form 20-F                3   


Table of Contents

Item 3. Key Information continued

 

Exchange rates

Unilever reports its financial results and balance sheet position in euros. Other currencies which may significantly impact our financial statements are sterling and US dollars. Average and year-end exchange rates for these two currencies for the last five years are given below.

 

      2012      2011      2010      2009      2008  

Year end

              

1 = US $

     1.318         1.294         1.337         1.433         1.417   

1 = £

     0.816         0.839         0.862         0.888         0.977   

Average

              

1 = US $

     1.283         1.396         1.326         1.388         1.468   

1 = £

     0.811         0.869         0.858         0.891         0.788   

On 4 March 2013 the exchange rates between euros and US dollars and between euros and sterling as published in the Financial Times in London were as follows: 1 = US $1.298 and 1 = £0.865.

Noon Buying Rates in New York for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York were as follows:

 

      2012      2011      2010      2009      2008  

Year end

              

1 = US $

     1.319         1.297         1.327         1.433         1.392   

Average

              

1 = US $

     1.286         1.393         1.326         1.394         1.473   

High

              

1 = US $

     1.346         1.488         1.454         1.510         1.601   

Low

              

1 = US $

     1.206         1.293         1.196         1.255         1.245   

High and low exchange rate values for each of the last six months:

 

      September
2012
     October
2012
     November
2012
     December
2012
     January
2013
     February
2013
 

High

                 

1 = US $

     1.314         1.313         1.301         1.326         1.358         1.369   

Low

                 

1 = US $

     1.257         1.288         1.272         1.293         1.305         1.305   

Share capital

The information set forth under the heading ‘Note 15A Share Capital’ on page 113 of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference.

B. Capitalisation and indebtedness

Not applicable.

C. Reasons for the offer and use of proceeds

Not applicable.

D. Risk factors

Our principal risks, as described on pages 36 to 41 of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K are incorporated by reference. The information set forth under the heading ‘Note 16 Treasury risk management’ on pages 116 to 120 of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference.

Risk factors

Our business is subject to risks and uncertainties. The risks that we regard as the most relevant to our business are set out below. We have undertaken certain mitigating actions that we believe help us to manage the risks identified below. However, we may not be successful in deploying some or all of these mitigating actions. If the circumstances in these risk factors occur or are not successfully mitigated, our cashflow, operating results, financial position, business and reputation could be materially adversely affected. In addition, risks and uncertainties could cause actual results to vary from those described in this document, or could impact on our ability to meet our targets or be detrimental to our profitability or reputation. This list is not intended to be exhaustive and there may be other risks and uncertainties that are not mentioned below that could impact our future performance or our ability to meet published targets. The risks and uncertainties discussed below should be read in conjunction with the Group’s consolidated financial statements and related notes and the portions of the Report of the Directors that are incorporated by reference from the Group’s Annual Report and Accounts 2012 (furnished separately on 8 March 2013 on Form 6-K) and other information included in or incorporated by reference in this Report on Form 20-F.

 

 

4                Form 20-F   Unilever Annual Report on Form 20-F 2012


Table of Contents

Item 3. Key Information continued

 

   

 

Principal risk

    

 

Description of risk

 

   
   

 

Consumer Preference

        
    As a branded goods business, Unilever’s success depends on the value and relevance of our brands and products to consumers across the world and on our ability to innovate.     

Consumer tastes, preferences and behaviours are constantly changing and Unilever’s ability to respond to these changes and to continue to differentiate our brands and products is vital to our business.

 

We are dependent on creating innovative products that continue to meet the needs of our consumers. If we are unable to innovate effectively, Unilever’s sales or margins could be materially adversely affected.

 

   
   

 

   
   

 

Competition

        
    The activities of our competitors may adversely impact our business.     

Unilever operates globally in competitive markets where other local, regional and global companies are targeting the same consumer base.

 

Our retail customers frequently compete with us through private label offerings.

 

Industry consolidation amongst our direct competitors and in the retail trade can bring about significant shifts in the competitive landscape. Increased competition and actions by competitors or customers could lead to downward pressure on prices and/or a decline in Unilever’s market share in the affected category, which could adversely affect Unilever’s results and hinder its growth potential.

 

   
   

 

   
   

 

Portfolio Management

        
    Unilever’s strategic investment choices will determine the long-term growth and profits of our business.     

Unilever’s growth and profitability are determined by our portfolio of categories, geographies and channels and how these evolve over time. If Unilever does not make optimal strategic investment decisions then opportunities for growth and improved margin could be missed.

 

   
   

 

   
   

 

Sustainability

        
    The success of our business depends on finding sustainable solutions to support long-term growth.     

Unilever’s vision to double the size of our business while reducing our environmental footprint and increasing our positive social impact will require more sustainable ways of doing business. This means reducing our environmental footprint while increasing the positive social benefits of Unilever’s activities. We are dependent on the efforts of partners and various certification bodies to achieve our sustainability goals. There can be no assurance that sustainable business solutions will be developed and failure to do so could limit Unilever’s growth and profit potential and damage our corporate reputation.

 

   
   

 

   
   

 

Customer Relationships

        
    Successful customer relationships are vital to our business and continued growth.     

Maintaining strong relationships with our customers is necessary for our brands to be well presented to our consumers and available for purchase at all times.

 

The strength of our customer relationships also affects our ability to obtain pricing and secure favourable trade terms. Unilever may not be able to maintain strong relationships with customers and failure to do so could negatively impact the terms of business with the affected customers and reduce the availability of our products to consumers.

 

   
   

 

   
   

 

People

        
    A skilled workforce is essential for the continued success of our business.     

Our ability to attract, develop and retain the right number of appropriately qualified people is critical if we are to compete and grow effectively.

 

This is especially true in our key emerging markets where there can be a high level of competition for a limited talent pool. The loss of management or other key personnel or the inability to identify, attract and retain qualified personnel could make it difficult to manage the business and could adversely affect operations and financial results.

 

   

 

 

Unilever Annual Report on Form 20-F 2012      Form 20-F                5   


Table of Contents

Item 3. Key Information continued

 

   

 

Principal risk

    

 

Description of risk

 

   
   

 

Supply Chain

        
    Our business depends on securing high quality materials, efficient manufacturing and the timely distribution of products to our customers.     

Our supply chain network is exposed to potentially adverse events such as physical disruptions, environmental and industrial accidents or bankruptcy of a key supplier which could impact our ability to deliver orders to our customers.

 

The quality and safety of our products are of paramount importance for our brands and our reputation. Nevertheless, the risk that raw materials are accidentally or maliciously contaminated throughout the supply chain or that other product defects occur due to human error or equipment failure cannot be fully excluded. Such incidents can impact on both results and the reputation of our business.

 

The cost of our products can be significantly affected by the cost of the underlying commodities and materials from which they are made. Fluctuations in these costs cannot always be passed on to the consumer through pricing.

 

   
   

 

   
   

 

Systems and Information

        
    Unilever’s operations are increasingly dependent on IT systems and the management of information.     

We interact electronically with customers, suppliers and consumers in ways which place ever greater emphasis on the need for secure and reliable IT systems and infrastructure and careful management of the information that is in our possession.

 

Disruption of our IT systems could inhibit our business operations in a number of ways, including disruption to sales, production and cash flows, ultimately impacting our results.

 

There is also a threat from unauthorised access and misuse of sensitive information. Unilever’s information systems could be subject to unauthorised access which disrupts Unilever’s business and/or leads to loss of assets.

 

   
   

 

   
   

 

Business Transformation

        
    Successful execution of business transformation projects is key to delivering their intended business benefits and avoiding disruption to other business activities.     

Unilever is continually engaged in major change projects, including acquisitions and disposals and outsourcing, to drive continuous improvement in our business and to strengthen our portfolio and capabilities.

 

Failure to execute such transactions or change projects successfully, or performance issues with third party outsourced providers on which we are dependent, could result in under-delivery of the expected benefits. Furthermore, disruption may be caused in other parts of the business.

 

   
   

 

   
   

 

External economic and political risks, and natural disasters

        
    Unilever operates across the globe and is exposed to a range of external economic and political risks and natural disasters that may affect the execution of our strategy or the running of our operations.     

Adverse economic conditions may result in reduced consumer demand for our products, and may affect one or more countries within a region, or may extend globally.

 

Government actions such as fiscal stimulus, changes to taxation and price controls can impact on the growth and profitability of our local operations.

 

Social and political upheavals and natural disasters can disrupt sales and operations.

 

In 2012, more than half of Unilever’s turnover came from emerging markets including Brazil, India, Indonesia, Turkey, South Africa, China, Mexico and Russia. These markets offer greater growth opportunities but also expose Unilever to economic, political and social volatility in these markets.

   
   
   

 

Eurozone risk

        
    Issues arising out of the debt crisis in Europe could have a material adverse effect on Unilever’s business in a number of ways.     

Uncertainty, lack of confidence and any further deterioration in the situation could lead to lower growth and further recession in Europe and elsewhere.

 

Our operations would be affected if Eurozone countries were to leave the euro. In particular:

 

•   our European supply chain would face economic and operational challenges;

•   our customers and suppliers may be adversely affected, leading to heightened counterparty credit risk; and

•   our investment in the country concerned could be impaired and may be subject to exchange controls and translation risks going forward.

 

   

 

 

6                Form 20-F   Unilever Annual Report on Form 20-F 2012


Table of Contents

Item 3. Key Information continued

 

   

 

Principal risk

    

 

Description of risk

 

   
   

 

Financial

        
    Unilever is exposed to a variety of external financial risks.     

Changes to the relative value of currencies can fluctuate widely and could have a significant impact on business results. Further, because Unilever consolidates its financial statements in euros it is subject to exchange risks associated with the translation of the underlying net assets and earnings of its foreign subsidiaries.

 

We are also subject to the imposition of exchange controls by individual countries which could limit our ability to import materials paid in foreign currency or to remit dividends to the parent company.

 

Currency rates, along with demand cycles, can also result in significant swings in the prices of the raw materials needed to produce our goods.

 

Unilever may face liquidity risk, i.e. difficulty in meeting its obligations, associated with its financial liabilities. A material and sustained shortfall in our cash flow could undermine Unilever’s credit rating, impair investor confidence and also restrict Unilever’s ability to raise funds.

 

We are exposed to market interest rate fluctuations on our floating rate debt. Increases in benchmark interest rates could increase the interest cost of our floating rate debt and increase the cost of future borrowings.

 

In times of financial market volatility, we are also potentially exposed to counterparty risks with banks, suppliers and customers.

 

Certain businesses have defined benefit pension plans, most now closed to new employees, which are exposed to movements in interest rates, fluctuating values of underlying investments and increased life expectancy. Changes in any or all of these inputs could potentially increase the cost to Unilever of funding the schemes and therefore have an adverse impact on profitability and cash flow.

 

   
   

 

   
   

 

Ethical

        
    Acting in an ethical manner, consistent with the expectations of customers, consumers and other stakeholders is essential for the protection of the reputation of Unilever and its brands.     

Unilever’s brands and reputation are valuable assets and the way in which we operate, contribute to society and engage with the world around us is always under scrutiny both internally and externally. Despite the commitment of Unilever to ethical business and the steps we take to adhere to this commitment, there remains a risk that activities or events cause us to fall short of our desired standard, resulting in damage to Unilever’s corporate reputation and business results.

 

   
   

 

   
   

 

Legal, Regulatory and Other

        
    Compliance with laws and regulations is an essential part of Unilever’s business operations.     

Unilever is subject to local, regional and global laws and regulations in such diverse areas as product safety, product claims, trademarks, copyright, patents, competition, employee health and safety, the environment, corporate governance, listing and disclosure, employment and taxes.

 

Failure to comply with laws and regulations could expose Unilever to civil and/or criminal actions leading to damages, fines and criminal sanctions against us and/or our employees with possible consequences for our corporate reputation.

 

Changes to laws and regulations could have a material impact on the cost of doing business.

 

Unilever is also exposed to varying degrees of risk and uncertainty related to other factors including environmental, political, social and fiscal risks. All these risks could materially affect Unilever’s business. There may be other risks which are unknown to Unilever or which are currently believed to be immaterial.

 

   

 

 

Unilever Annual Report on Form 20-F 2012      Form 20-F                7   


Table of Contents

LOGO

A. History and development of the Company

The information set forth under the following headings of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference:

 

  ‘About Unilever’ on page 46;
  ‘Financial Review 2012’ on pages 28 to 35;
  ‘Our requirements and compliance’ on pages 52 to 54;
  ‘Note 21 Acquisitions and disposals’ on pages 126 to 127;
  ‘Share Capital’ on pages 54 to 55;
  ‘Analysis of shareholding’ on page 55; and
  ‘Shareholder information’ on pages 144 to 145 (other than ‘Website’).

Please refer also to ‘Financial Review 2011’ within Item 5A of this report and ‘The Unilever Group’ on page 1 of this report.

B. Business overview

The information set forth under the following headings of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference:

 

  ‘Note 2 Segment information’ on pages 92 to 93;
  ‘Reaching more consumers’ on page 22;
  ‘Financial Review 2012’ on pages 28 to 35; and
  ‘Legal, Regulatory and Other’ on page 40.

Please refer also to ‘Financial Review 2011’ within Item 5A of this report.

Please also refer to ‘The Unilever Group’ on page 1 of this report.

Marketing channels

Unilever’s products are generally sold through our own sales force as well as through independent brokers, agents and distributors to chain, wholesale, co-operative and independent grocery accounts, food service distributors and institutions. Products are physically distributed through a network of distribution centres, satellite warehouses, company-operated and public storage facilities, depots and other facilities.

Raw materials

Our products use a wide variety of raw and packaging materials which we source internationally, and which may be subject to price volatility. Although we have seen rather more stable conditions in key commodity markets in 2012 we remain watchful for further periods of volatility in 2013.

Seasonality

Certain of our businesses, such as ice cream, are subject to significant seasonal fluctuations in sales. However, Unilever operates globally in many different markets and product categories, and no individual element of seasonality is likely to be material to the results of the Group as a whole.

Intellectual property

We have a large portfolio of patents and trademarks, and we conduct some of our operations under licences that are based on patents or trademarks owned or controlled by others. We are not dependent on any one patent or group of patents. We use all appropriate efforts to protect our brands and technology.

Competition

As a FMCG (fast moving consumer goods) company, we are competing with a diverse set of competitors. Some of these operate on an international scale like ourselves, while others have a more regional or local focus. Our business model centres on building brands which consumers know, trust, like and buy in conscious preference to competitors’. Our brands command loyalty and affinity and deliver superior performance.

Iran-related required disclosure

Unilever operates in Iran through a non-US subsidiary. In 2012 sales were not material and we did not sell any products directly to the Government of Iran or any parties affiliated with the Government of Iran. Accordingly to the best of our knowledge we did not generate any revenues or net profits from transactions with the Government of Iran or affiliated entities. Income, payroll and other taxes, duties and fees (including for utilities) were payable to the Government of Iran and affiliated entities in connection with our operations. Our activities in Iran comply in all material respects with applicable laws and regulations, including US trade sanctions, and we plan to continue these activities.

C. Organisational structure

The information set forth under the heading ‘Note 26 Principal group companies and non-current investments’ on pages 130 and 131 of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference.

Please also refer to ‘The Unilever Group’ on page 1 of this report.

D. Property, plant and equipment

We have interests in properties in most of the countries where there are Unilever operations. However, none is material in the context of the Group as a whole. The properties are used predominantly to house production and distribution activities and as offices. There is a mixture of leased and owned property throughout the Group. We are not aware of any environmental issues affecting the properties which would have a material impact upon the Group, and there are no material encumbrances on our properties. Any difference between the market value of properties held by the Group and the amount at which they are included in the balance sheet is not significant. We believe our existing facilities are satisfactory for our current business and we currently have no plans to construct new facilities or expand or improve our current facilities in a manner that is material to the Group.

The information set forth under the following headings of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference:

 

  ‘Note 10 Property, plant and equipment’ on pages 107 and 108; and
  ‘Note 26 Principal group companies and non-current investments’ on pages 130 and 131.

 

LOGO

Not applicable.

 

LOGO

A. Operating results

The information set forth under the following headings of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference:

 

  ‘Outlook’ on page 36;
  ‘Financial review 2012’ on pages 28 to 35;
  ‘Currency risk’ on pages 118 to 119; and
  ‘Legal, Regulatory and Other’ on page 40.
 

 

 

8                Form 20-F   Unilever Annual Report on Form 20-F 2012


Table of Contents

Item 5. Operating and Financial Review and

Prospects continued

 

Financial Review 2011

Basis of reporting

The information set forth under the heading ‘Basis of reporting and critical accounting policies’ on page 33 of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference.

Group results and earnings per share

The following discussion summarises the results of the Group during the years 2011 and 2010. The figures quoted are in euros, at current rates of exchange, being the average rates applying in each period as applicable, unless otherwise stated. Information about exchange rates between the euro, pound sterling and US dollar is given on page 4 of this report.

In 2011 and 2010, no disposals qualified to be disclosed as discontinued operations for purposes of reporting.

 

      2011      2010      % change  

Turnover ( million)

     46,467         44,262         5.0

Operating profit ( million)

     6,433         6,339         1

Core operating profit ( million)

     6,289         6,031         4

Profit before tax ( million)

     6,245         6,132         2

Net profit ( million)

     4,623         4,598         1

Diluted earnings per share ()

     1.46         1.46         0

Core earnings per share ()

     1.41         1.36         4

Turnover at 46.5 billion increased 5.0%, despite a negative impact of 2.5% due to currency. Underlying sales growth increased to 6.5%, driven by emerging markets. Underlying volume growth was 1.6% and the price effect was 4.8%.

Operating profit was 6.4 billion, compared with 6.3 billion in 2010. The increase reflects a decline in gross margin driven by commodity costs, more than offset by savings programmes. Core operating profit was 6.3 billion, up 4% from 6.0 billion in 2010, reflecting the additional impact of lower net credit for acquisition and disposal related costs, gains on disposal of group companies and other one-off items.

The cost of financing net borrowings was 448 million, 34 million higher than 2010. The average level of net debt increased, in part due to the acquisition of Alberto Culver. The average interest rate was 3.7% on borrowings and 2.3% on cash deposits. The net pensions financing credit was 71 million compared with 20 million in 2010.

The effective tax rate was 26.5% compared with 25.5% in 2010, reflecting the geographic mix of pre-tax profits and the impact of the Italian frozen foods disposal in the 2010 rate.

Net profit from joint ventures and associates, together with other income from non-current investments, contributed 189 million compared to 187 million in the prior year.

Fully diluted earnings per share were flat at 1.46. Higher operating profit was offset by lower profits from business disposals. In addition, the tax charge increased. Core earnings per share were 1.41, up 4% from 1.36 in 2010, reflecting the additional impact of a lower net credit for acquisition and disposal related costs, gains on disposal of group companies and other one-off items.

 

 

 

Unilever Annual Report on Form 20-F 2012      Form 20-F                9   


Table of Contents

Item 5. Operating and Financial Review and

Prospects continued

 

LOGO

 

Personal Care

 

     

 million

2011

    

 million

2010

   

%

Change

 

Turnover

     15,471         13,767        12.4   

Operating profit

     2,536         2,296        10.5   

Core operating margin (%)

     17.6         17.0        0.6   

Underlying sales growth (%)

     8.2         6.4     

Underlying volume growth (%)

     4.2         7.9     

Effect of price changes (%)

     3.8         (1.4        

Key developments

  Personal Care grew strongly in 2011 to become Unilever’s largest category, with underlying sales growth of 8.2%. The acquisitions of Alberto Culver and the Sara Lee brands started to contribute positively.
  Growth was well balanced between volume and price, and reflected strong performance across the portfolio, particularly in deodorants, haircare and skin cleansing.
  Value market shares were up overall, with strong gains in North America where haircare and deodorants performed well, and in China where skin cleansing and hair care saw strong gains.
  Core operating margin improved by 0.6% to 17.6% as higher input costs were offset by savings, cost containment and price increases.

Refreshment

 

     

 million

2011

    

 million

2010

    

%

Change

 

Turnover

     8,804         8,605         2.3   

Operating profit

     723         724         (0.1

Core operating margin (%)

     7.7         8.4         (0.7

Underlying sales growth (%)

     4.9         6.1      

Underlying volume growth (%)

     1.4         5.9      

Effect of price changes (%)

     3.4         0.1            

Key developments

  Refreshment saw mixed performance resulting in underlying sales growth of 4.9%. Ice cream progressed well driven by innovation and new market launches, particularly with the Magnum brand.
  Price growth was strong at 3.4%. Volume growth of 1.4% was driven by ice cream.
  Value market shares were stable overall. Ice cream saw strong gains, especially in Latin America and South East Asia, but tea shares were down overall and particularly in the US and Russia.
  Core operating margin was down 0.7%, primarily reflecting higher input costs.

Foods

 

     

 million

2011

   

 million

2010

   

%

Change

 

Turnover

     13,986        14,164        (1.3

Operating profit

     2,693        2,846        (5.4

Core operating margin (%)

     17.5        16.8        0.7   

Underlying sales growth (%)

     4.9        1.4     

Underlying volume growth (%)

     (1.2     2.5     

Effect of price changes (%)

     6.2        (1.0        

Key developments

  Underlying sales growth in Foods was 4.9%. Turnover fell slightly as a result of the disposal of the Brazilian tomato business.
  With commodity cost inflation at high levels, particularly in edible oils, underlying price growth was very strong at 6.2%. Volumes were down 1.2%, mainly in spreads where pricing was highest.
  Value market share performance was mixed, with gains in bouillons, meals and side dishes but declines in soups and spreads.
  Core operating margin improved by 0.7% to 17.5%, supported by savings and cost control.

 

Home Care

 

     

 million

2011

    

 million

2010

    %
Change
 

Turnover

     8,206         7,726        6.2   

Operating profit

     481         473        1.7   

Core operating margin (%)

     5.4         7.5        (2.1

Underlying sales growth (%)

     8.1         3.0     

Underlying volume growth (%)

     2.2         8.2     

Effect of price changes (%)

     5.8         (4.8        

Key developments

  Home Care delivered underlying sales growth of 8.1% in the year, despite the pressure of high commodity cost inflation and intense competition.
  Underlying price growth of 5.8% reflected increases taken in most major markets as input costs were higher. Volume growth slowed as a result, but was ahead of the relevant market at 2.2%.
  Value market shares were higher, particularly in the laundry business where strong performance was seen in China, India, South Africa and Western Europe.
  Core operating margin was down by 2.1% as higher input costs were not fully mitigated by pricing and savings.
 

 

 

10                Form 20-F   Unilever Annual Report on Form 20-F 2012


Table of Contents

Item 5. Operating and Financial Review and

Prospects continued

 

Non-GAAP measures

The information set forth under the heading ‘Non-GAAP measures’ on pages 34 and 35 of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference.

Underlying sales growth (USG)

The reconciliation of USG to changes in the GAAP measure turnover is as follows:

Total Group

     

2011

vs 2010

   

2010

vs 2009

 

Underlying sales growth (%)

     6.5        4.1   

Effect of acquisitions (%)

     2.7        0.3   

Effect of disposals (%)

     (1.5     (0.8

Effect of exchange rates (%)

     (2.5     7.3   

Turnover growth (%)

     5.0        11.1   

Personal Care

      2011
vs 2010
    2010
vs 2009
 

Underlying sales growth (%)

     8.2        6.4   

Effect of acquisitions (%)

     7.3        0.6   

Effect of disposals (%)

     (0.2       

Effect of exchange rates (%)

     (2.9     8.5   

Turnover growth (%)

     12.4        16.2   

Foods

      2011
vs 2010
    2010
vs 2009
 

Underlying sales growth (%)

     4.9        1.4   

Effect of acquisitions (%)

     0.2        0.2   

Effect of disposals (%)

     (4.3     (0.7

Effect of exchange rates (%)

     (1.9     5.8   

Turnover growth (%)

     (1.3     6.8   

Refreshment

      2011
vs 2010
    2010
vs 2009
 

Underlying sales growth (%)

     4.9        6.1   

Effect of acquisitions (%)

     0.3          

Effect of disposals (%)

     (0.3     (2.0

Effect of exchange rates (%)

     (2.5     6.8   

Turnover growth (%)

     2.3        11.0   

Home Care

      2011
vs 2010
    2010
vs 2009
 

Underlying sales growth (%)

     8.1        3.0   

Effect of acquisitions (%)

     1.3        0.1   

Effect of disposals (%)

     0.1        (0.7

Effect of exchange rates (%)

     (3.1     8.3   

Turnover growth (%)

     6.2        10.9   

Underlying volume growth (UVG)

Underlying volume growth is underlying sales growth after eliminating the impact of price changes. The relationship between the two measures is set out below:

 

      2011
vs 2010
     2010
vs 2009
 

Underlying volume growth (%)

     1.6         5.8   

Effect of price changes (%)

     4.8         (1.6

Underlying sales growth (%)

     6.5         4.1   

Free cash flow (FCF)

FCF represents the cash generation from the operation and financing of the business. The movement in FCF measures our progress against the commitment to deliver strong cash flows. FCF is not used as a liquidity measure within Unilever. FCF includes the cash flow from Group operating activities, less income tax paid, net capital expenditure, net interest and preference dividends paid.

The reconciliation of FCF to net profit is as follows:

 

    

 million

2011

    

 million

2010

 

Net profit

    4,623         4,598   

Taxation

    1,622         1,534   

Share of net profit of joint ventures/associates and other income from non-current investments

    (189      (187

Net finance cost

    377         394   

Depreciation, amortisation and impairment

    1,029         993   

Changes in working capital

    (177      169   

Pensions and similar obligations less payments

    (553      (472

Provisions less payments

    9         72   

Elimination of (profits)/losses on disposals

    (215      (476

Non-cash charge for share-based compensation

    105         144   

Other adjustments

    8         49   

Cash flow from operating activities

    6,639         6,818   

Income tax paid

    (1,187      (1,328

Net capital expenditure

    (1,974      (1,701

Net interest and preference dividends paid

    (403      (424

Free cash flow

    3,075         3,365   

 

Core operating margin and core operating profit

The reconciliation of core operating profit to operating profit is as follows:

 

  

   

    

 million

2011

    

 million

2010

 

Operating profit

    6,433         6,339   

Acquisition and disposal related costs

    234         50   

(Gain)/loss on disposal of group companies

    (221      (468

Impairments and other one-off items

    (157      110   

Core operating profit

    6,289         6,031   

Turnover

    46,467         44,262   

Operating margin (%)

    13.8         14.3   

Core operating margin (%)

    13.5         13.6   

 

Net debt

The reconciliation of net debt to the GAAP measure total financial liabilities is as follows:

 

  

   

      million
2011
      million
2010
 

Total financial liabilities

    (13,718      (9,534
    

Financial liabilities due within one year

    (5,840      (2,276

Financial liabilities due after one year

    (7,878      (7,258

Cash and cash equivalents as per
balance sheet

    3,484         2,316   
    

Cash and cash equivalents as per cash
flow statement

    2,978         1,966   

Bank overdrafts deducted therein

    506         350   

Financial assets

    1,453         550   

Net debt

    (8,781      (6,668
 

 

 

Unilever Annual Report on Form 20-F 2012      Form 20-F                11   


Table of Contents

Item 5. Operating and Financial Review and

Prospects continued

 

Acquisitions and disposals – 2010

The disposal of our frozen foods business in Italy for 805 million to Birds Eye Iglo was completed on 1 October 2010.

B. Liquidity and capital resources

(i) Information regarding the Group’s liquidity

The information set forth under the following headings of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference:

 

  ‘Finance and liquidity’ and ‘Treasury’ on pages 32 to 33;
  ‘Management of market risk’ on pages 118 to 120;
  ‘Management of liquidity risk’ on page 116 to 118;
  ‘Capital and funding’ on pages 112 to 113;
  ‘Going concern’ on page 83;
  ‘Cash flow’ on page 33;
  ‘Consolidated cash flow statement’ on page 89;
  ‘Financial liabilities’ on page 115;
  ‘Financial assets’ on page 122; and
  ‘Note 17 Investment and return’ on pages 121 to 122.

(ii) Information regarding the type of financial instruments used, the maturity profile of debt, currency and interest rate structure

The information set forth under the following headings of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference:

 

  ‘Note 15 Capital and funding’ on pages 112 to 113;
  ‘Financial liabilities’ on page 115;
  ‘Financial assets’ on page 122;
  ‘Note 16 Treasury risk management’ on pages 116 to 120;
  ‘Note 17 Investment and return’ on pages 121 to 122;
  ‘Note 18 Financial instruments fair value risk’ on pages 123 to 124;
  ‘Treasury’ on page 33; and
  ‘Our risk appetite and approach to risk management’ on page 41.

(iii) Information regarding the Group’s material commitments for capital expenditure

The information set forth under the following headings of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference:

 

  ‘Note 20 Commitments and contingent liabilities’ on pages 125 to 126; and
  ‘Note 10 Property, plant and equipment’ on pages 107 and 108.

C. Research and development, patents and licences, etc.

The information set forth under the heading ‘Innovating with ambition’ on pages 14 to 15 and ‘Note 3 Gross profit and operating costs’ on page 94 of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference.

D. Trend information

Please refer also to Item 3D ‘Risk factors’ on pages 4 to 7 of this report.

The information set forth under the following headings of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference:

 

  ‘Financial review 2012’ on pages 28 to 35; and
  ‘Outlook’ on page 36.

Please refer also to ‘Financial review 2011’ within Item 5A of this report on pages 9 to 12.

E. Off-balance sheet arrangements

The information set forth under the following headings of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference:

 

  ‘Off-balance sheet arrangements’ on page 32;
  ‘Note 16 Treasury risk management’ on pages 116 to 120;
  ‘Note 18 Financial instruments fair value risk’ on pages 123 to 124; and
  ‘Note 20 Commitments and contingent liabilities’ on pages 125 to 126.

F. Tabular disclosure of contractual obligations

The information set forth under the heading ‘Contractual obligations at 31 December 2012’ on page 32 of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference.

G. Safe harbour

This document may contain forward-looking statements, including ‘forward-looking statements’ within the meaning of the United States Private Securities Litigation Reform Act of 1995. Words such as ‘will’, ‘aim’, ‘expects’, ‘anticipates’, ‘intends’, ‘looks’, ‘believes’, ‘vision’, or the negative of these terms and other similar expressions of future performance or results, and their negatives, are intended to identify such forward-looking statements. These forward-looking statements are based upon current expectations and assumptions regarding anticipated developments and other factors affecting the Group. They are not historical facts, nor are they guarantees of future performance.

Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Among other risks and uncertainties, the material or principal factors which could cause actual results to differ materially are: Unilever’s global brands not meeting consumer preferences; increasing competitive pressures; Unilever’s investment choices in its portfolio management; inability to find sustainable solutions to support long-term growth; customer relationships; the recruitment and retention of talented employees; disruptions in our supply chain; the cost of raw materials and commodities; secure and reliable IT infrastructure; successful execution of acquisitions, divestitures and business transformation projects; economic and political risks and natural disasters; the debt crisis in Europe; financial risks; failure to meet high product safety and ethical standards; and managing regulatory, tax and legal matters.

 

 

 

12                Form 20-F   Unilever Annual Report on Form 20-F 2012


Table of Contents

Item 5. Operating and Financial Review and

Prospects continued

 

Further details of potential risks and uncertainties affecting the Group are described in the Group’s filings with the London Stock Exchange, Euronext Amsterdam and the US Securities and Exchange Commission, including elsewhere in the Group’s Annual Report on Form 20-F for the year ended 31 December 2012. These forward-looking statements speak only as of the date of this Annual Report on Form 20-F. Except as required by any applicable law or regulation, the Group expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Group’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

 

LOGO

A. Directors and senior management

(i) Name, experience and functions

The information set forth under the following headings of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference:

 

  ‘Unilever Leadership Executive (ULE)’ on page 43;
  ‘Board of Directors’ on pages 42; and
  ‘Our Directors’ and ‘Our Committees’ on pages 49 and 50.

(ii) Activities outside the issuing company

The information set forth under the headings ‘Board of Directors’ and ‘Unilever Leadership Executive (ULE)’ on pages 42 and 43 of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference.

(iii) Age

The information set forth under the headings ‘Board of Directors’ and ‘Unilever Leadership Executive (ULE)’ on pages 42 and 43 of the Group’s Annual Report and Accounts 2011 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference.

(iv) Family relationship

The information set forth under the heading ‘Executive Directors’ (final paragraph) on page 49 of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference.

(v) Other arrangements

The information set forth under the following headings of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference:

 

  ‘Executive Directors’ (final paragraph) on page 49; and
  ‘Non-Executive Directors – Independence’ on page 49.

B. Compensation

The information set forth under the following headings of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference:

 

  ‘Remuneration policy for new hires’ and ‘Executive Directors’ on page 68 ;
  Remuneration policy description on pages 64 to 67;
  ‘Remuneration policy – supplementary information’ on pages 69 and 70;
  ‘Elements of remuneration’ on pages 71 to 74;
  ‘Executive Directors’ remuneration in 2012’ on pages 77 to 80;
  ‘Non-Executive Directors’ remuneration in 2012’ on page 80 and 81;
  ‘Note 4C Share-based compensation plans’ on pages 101 and 102;
  ‘Note 4A Staff and management costs – Key management compensation’ on page 95; and
  ‘Note 4B Pensions and similar obligations’ on pages 95 to 100.

C. Board practices

The information set forth under the following headings of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference:

 

  ‘Board of Directors’ and ‘Unilever Leadership Executive (ULE)’ on pages 42 and 43;
  ‘Appointment of Directors’ on page 47;
  ‘Executive Directors’ on page 49 and 50;
  ‘Non-Executive Directors’ on page 49;
  ‘Our Committees’ on page 50;
  ‘Report of the Audit Committee’ on pages 56 and 57; and
  ‘Directors’ Remuneration Report’ on pages 62 to 81.

D. Employees

The information set forth under the following headings of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference:

 

  ‘Note 4A Staff and management costs’ – Average number of employees during the year on page 95; and
  ‘Employee number’ on page 7.

The average number of employees during 2012 included 10,907 seasonal and 26,033 plantation workers. We believe our relationship with our employees and any labour unions of which they may be part is satisfactory in all material respects.

E. Share ownership

The information set forth under the following headings of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference:

 

  ‘Our remuneration practices’ on pages 71 to 77;
  ‘Executive Directors’ remuneration in 2012’ on pages 77 to 80;
  ‘Non-Executive Directors’ on page 80 to 81; and
  ‘Note 4C Share-based compensation plans’ on pages 101 and 102.
 

 

 

Unilever Annual Report on Form 20-F 2012      Form 20-F                13   


Table of Contents

LOGO

A. Major shareholders

The information set forth under the following headings of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference:

 

  ‘Margarine Union (1930) Limited: Conversion Rights’ and ‘Foundation Unilever NV Trust office’ on pages 51 and 52; and
  ‘Analysis of shareholding’ on page 55.

The principal trading markets upon which Unilever shares are listed are Euronext Amsterdam for NV ordinary and preference shares and the depositary receipts of these NV ordinary and preference shares, and the London Stock Exchange for PLC ordinary shares. NV ordinary shares mainly trade in the form of depositary receipts for shares.

In the United States, NV New York Registry Shares and PLC American Depositary Receipts are traded on the New York Stock Exchange. Citibank, N.A. acts for NV and PLC as issuer, transfer agent and, in respect of the PLC American Depositary Receipts, depositary.

There have not been any significant trading suspensions in the past three years.

At 4 March 2013 there were 5,385 registered holders of NV New York Registry Shares and 976 registered holders of PLC American Depositary Receipts in the United States. We estimate that approximately 13% of NV’s ordinary shares were held in the United States (approximately 17% in 2011), while most holders of PLC ordinary shares are registered in the United Kingdom – approximately 98% in 2012 and in 2011.

NV and PLC are separate companies with separate stock exchange listings and different shareholders. Shareholders cannot convert or exchange the shares of one for shares of the other and the relative share prices on the various markets can, and do, fluctuate. Each NV ordinary share represents the same underlying economic interest in the Unilever Group as each PLC ordinary share (save for exchange rate fluctuations).

If you are a shareholder of NV, you have an interest in a Dutch legal entity, your dividends will be paid in euros (converted into US dollars if you have shares registered in the United States) and you may be subject to tax in the Netherlands. If you are a shareholder of PLC, your interest is in a UK legal entity, your dividends will be paid in sterling (converted into US dollars if you have American Depositary Receipts) and you may be subject to UK tax. Nevertheless, the Equalisation Agreement means that as a shareholder of either company you effectively have an interest in the whole of Unilever. You have largely equal rights over our combined net profit and capital reserves as shown in the consolidated accounts.

The information set forth under the heading ‘Equalisation Agreement’ on page 52 of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference.

B. Related party transactions

The information set forth under the heading ‘Note 23 – Related party transactions’ on page 128 of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference.

Transactions with related parties are conducted in accordance with agreed transfer pricing policies and include sales to joint ventures and associates. Other than those disclosed in the Group’s Annual Report and Accounts (and incorporated herein as above), there were no related party transactions that were material to the Group or to the related parties concerned that are required to be reported in 2012 or the two preceding years.

C. Interest of experts and counsel

Not applicable.

 

LOGO

A. Consolidated statements and other financial information

Please refer also to Item 18 ‘Financial Statements’ on page 23 to 29 of this report.

The information set forth under the following headings of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference:

 

  ‘Financial statements’ on page 83 and pages 86 to 131;
  ‘Legal proceedings’ on page 126; and
  ‘Financial calendar’ on page 144.

Also see ‘Dividend record’ on page 3 of this report.

B. Significant changes

The information set forth in ‘Note 25 Events after the balance sheet date’ on page 129 of the Group’s Annual Report and Accounts furnished separately on 8 March 2013 under Form 6-K is incorporated by reference.

 

 

 

14                Form 20-F   Unilever Annual Report on Form 20-F 2012


Table of Contents

 

LOGO

A. Offer and listing details

Please refer to information given on page 14 under Item 7A ‘Major shareholders’.

Share prices at 31 December 2012

The share prices of the ordinary shares at the end of the year were as follows:

 

NV per 0.16 ordinary share in Amsterdam

 

    

 

28.84

 

  

 

NV per 0.16 ordinary share in New York

 

    

 

US $38.30

 

  

 

PLC per 31/9p ordinary share in London

 

    

 

£23.66

 

  

 

PLC per 31/9p ordinary share in New York

 

    

 

US $38.72

 

  

 

Monthly high and low prices for the most recent six months

 

                                                                                                                                           
            

September

2012

   

October

2012

   

November

2012

   

December

2012

   

January

2013

   

February   

2013   

 

NV per 0.16 ordinary share in Amsterdam (in )

     High          28.32        28.51        29.38        29.50        30.02        29.96      
       Low          27.23        27.53        27.87        28.78        28.58        29.05      

NV per 0.16 ordinary share in New York (in US $)

     High          36.35        37.35        38.01        38.75        40.48        40.73      
       Low          34.91        35.67        35.58        37.83        37.95        38.44      

PLC per 31/9p ordinary share in London (in £)

     High          23.11        23.46        24.21        24.29        25.67        26.52      
       Low          22.35        22.62        22.90        23.66        23.78        25.12      

PLC per 31/9p ordinary share in New York (in US $)

     High          37.29        38.01        38.79        39.37        40.69        40.95      
       Low          35.83        36.11        36.51        38.30        38.38        39.07      

Quarterly high and low prices for 2012 and 2011

 

                                                                                                   
             

1st

Quarter

2012

    

2nd

Quarter

2012

    

3rd

Quarter

2012

    

4th

Quarter

2012

 

NV per 0.16 ordinary share in Amsterdam (in )

     High           27.11         26.39         28.79         29.50   
       Low           24.78         24.56         26.42         27.53   

NV per 0.16 ordinary share in New York (in US $)

     High           34.92         35.00         36.35         38.75   
       Low           32.09         30.79         32.11         35.58   

PLC per 31/9p ordinary share in London (in £)

     High           21.89         21.44         23.34         24.29   
       Low           19.94         20.05         21.27         22.62   

PLC per 31/9p ordinary share in New York (in US $)

     High           34.02         34.74         37.29         39.37   
       Low           31.50         31.04         32.88         36.11   
             

1st

Quarter

2011

    

2nd

Quarter

2011

    

3rd

Quarter

2011

    

4th

Quarter

2011

 

NV per 0.16 ordinary share in Amsterdam (in )

     High           23.77         23.10         23.90         26.58   
       Low           21.00         22.05         21.65         23.32   

NV per 0.16 ordinary share in New York (in US $)

     High           31.72         33.50         34.24         35.06   
       Low           29.07         31.35         30.39         30.82   

PLC per 31/9p ordinary share in London (in £)

     High           19.72         20.06         20.81         21.73   
       Low           17.93         18.85         18.92         19.77   

PLC per 31/9p ordinary share in New York (in US $)

     High           31.03         32.96         34.30         34.16   
       Low           28.65         30.59         30.27         30.56   

 

 

Unilever Annual Report on Form 20-F 2012      Form 20-F                15   


Table of Contents

Item 9. The Offer and Listing continued

 

Annual high and low prices

 

                                                                                         
              2012      2011      2010      2009      2008  

NV per 0.16 ordinary share in Amsterdam (in )

     High           29.50         26.58         24.11         22.88         25.61   
       Low           24.56         21.00         20.68         13.59         16.20   

NV per 0.16 ordinary share in New York (in US $)

     High           38.75         35.06         33.10         32.80         37.18   
       Low           30.79         29.07         26.02         17.04         21.27   

PLC per 31/9p ordinary share in London (in £)

     High           24.29         21.73         20.09         20.15         19.47   
       Low           19.94         17.93         16.62         12.30         12.49   

PLC per 31/9p ordinary share in New York (in US $)

     High           39.37         34.30         32.41         32.19         38.02   
       Low           31.04         28.65         25.74         17.04         20.22   

B. Plan of distribution

Not applicable.

C. Markets

This information is set forth under the heading ‘The Unilever Group’ on page 1 of this report.

D. Selling shareholders

Not applicable.

E. Dilution

Not applicable.

F. Expenses of the issue

Not applicable.

 

 

16                Form 20-F   Unilever Annual Report on Form 20-F 2012


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LOGO

A. Share capital

Not applicable.

B. Memorandum and articles of association

The information set forth under the following headings of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference.

 

  ‘Corporate governance’ on pages 44 to 55; and
  ‘Note 15A. Share Capital’ on page 113; and
  ‘Minimum shareholding requirement’ on page 74.

Please also refer to ‘The Unilever Group’ on page 1 of this report.

C. Material contracts

The information set forth under the following headings of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference:

 

  ‘Financial review 2012 – Acquisitions and disposals’ on page 29;
  ‘Note 21 Acquisition and disposals – 2012 and 2011’ on pages 126 to 127; and
  ‘Our Foundation agreements’ on page 52.

D. Exchange controls

Under the Dutch External Financial Relations Act of 25 March 1994 the Minister of Finance is authorised to issue regulations relating to financial transactions concerning the movement of capital to or from other countries with respect to direct investments, establishment, the performing of financial services, the admission of negotiable instruments or goods with respect to which regulations have been issued under the Import and Export Act in the interest of the international legal system or an arrangement relevant thereto. These regulations may contain a prohibition to perform any of the actions indicated in those regulations without a licence. To date no regulations of this type have been issued which are applicable to Unilever N.V.

Other than certain economic sanctions which may be in place from time to time, there are currently no UK laws, decrees or regulations restricting the import or export of capital or affecting the remittance of dividends or other payments to holders of the company’s shares who are non-residents of the UK. Similarly, other than certain economic sanctions which may be in force from time to time, there are no limitations relating only to non-residents of the UK under English law or the company’s Articles of Association on the right to be a holder of, and to vote in respect of, the company’s shares.

E. Taxation

Taxation for US persons holding shares in NV

The following notes are provided for guidance. US persons should consult their local tax advisers, particularly in connection with potential liability to pay US taxes on disposal, lifetime gift or bequest of their shares. A US person is a US individual citizen or resident, a corporation organised under the laws of the United States, or any other legal person subject to United States Federal Income Tax on its worldwide income.

Taxation on dividends in the Netherlands

As of 1 January 2007 dividends paid by companies in the Netherlands are in principle subject to dividend withholding tax of 15%. Where a shareholder is entitled to the benefits of the current Income Tax Convention (‘the Convention’) concluded on 18 December 1992 between the United States and the Netherlands, when dividends are paid by NV to:

  a corporation organised under the laws of the United States (or any territory of it) having no permanent establishment in the Netherlands of which such shares form a part of the business property; or
  any other legal person subject to United States Federal income tax with respect to its worldwide income, having no permanent establishment in the Netherlands of which such shares form a part of the business property, these dividends qualify for a reduction of withholding tax on dividends in the Netherlands from 15% to 5% if the beneficial owner is a company which directly holds at least 10% of the voting power of NV shares.

Where a United States person has a permanent establishment in the Netherlands, which has shares in NV forming part of its business property, dividends it receives on those shares are included in that establishment’s profit. They are subject to income tax or corporation tax in the Netherlands, as appropriate, and tax on dividends in the Netherlands will generally be applied at the full rate of 15% with, as appropriate, the possibility to claim a credit for that tax on dividends in the Netherlands against the income tax or corporation tax in the Netherlands. The net tax suffered may be treated as foreign income tax eligible for credit against shareholder’s United States income taxes.

The Convention provides, subject to certain conditions, for a complete exemption from, or refund of, Dutch dividend withholding tax if the beneficial owner is a qualified ‘Exempt Pension Trust’ as defined in Article 35 of the Convention or a qualified ‘Exempt Organisation’ as defined in Article 36 of the Convention. It is noted that, subject to certain conditions, foreign (non-Dutch) tax exempt entities may also be entitled to a full refund of any Dutch dividend withholding tax suffered based on specific provisions in the Dividend Tax Act in the Netherlands. This tax refund opportunity under Dutch domestic tax law already applied to European Union and European Economic Area entities as of 1 January 2007 and has been extended as of 1 January 2012 to all foreign tax exempt entities including, if appropriate, United States tax exempt entities.

Under the Convention, qualifying United States organisations that are generally exempt from United States taxes and that are constituted and operated exclusively to administer or provide pension, retirement or other employee benefits may be exempt at source from withholding tax on dividends received from a Dutch corporation. A Competent Authority Agreement between the US and Dutch Tax Authorities on 6 August 2007, published in the US as Announcement 2007-75, 2007-2 Cumulative Bulletin 540 as amended by a Competent Authority Agreement published in the United States as Announcement 2010-26, 2010-1 Cumulative Bulletin 604, describes the eligibility of these US organisations for benefits under the Convention and procedures for claiming these benefits.

Under the Convention, a United States trust, company or organisation that is operated exclusively for religious, charitable, scientific, educational or public purposes is subject to an initial 15% withholding tax rate. Such an exempt organisation may be entitled to reclaim from tax authorities in the Netherlands a refund of the Dutch dividend tax, if and to the extent that it is exempt from United States Federal Income Tax and it would be exempt from tax in the Netherlands if it were organised and carried on all its activities there.

If you are an NV shareholder resident in any country other than the United States or the Netherlands, any exemption from, or reduction or refund of, dividend withholding tax in the Netherlands may be governed by specific provisions in Dutch tax law, the ‘Tax Regulation for the Kingdom of the Netherlands’, or by the tax convention or any other agreement for the avoidance of double taxation, if any, between the Netherlands and your country of residence.

United States taxation on dividends

If you are a United States person, the dividend (including the withheld amount) up to the amount of NV earnings and profits

 

 

 

Unilever Annual Report on Form 20-F 2012      Form 20-F                17   


Table of Contents

Item 10. Additional Information continued

 

for United States Federal Income Tax purposes will be ordinary dividend income. Dividends received by an individual during taxable years 2013 and later will be taxed at a maximum rate of 15% or 20%, depending on the income level of the individual, provided the individual has held the shares for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date, that NV is a qualified foreign corporation and that certain other conditions are satisfied. NV is a qualified foreign corporation for this purpose. In addition, beginning in 2013, an additional tax of 3.8% will apply to dividends and other investment income received by individuals with incomes exceeding certain thresholds. The dividends are not eligible for the dividends received deduction allowed to corporations.

For US foreign tax credit purposes, the dividend is foreign source income, and withholding tax in the Netherlands is a foreign income tax that is eligible for credit against the shareholder’s United States income taxes. However, the rules governing the US foreign tax credit are complex, and additional limitations on the credit apply to individuals receiving dividends eligible for the maximum tax rate on dividends described above.

Any portion of the dividend that exceeds NV’s United States earnings and profits is subject to different rules. This portion is a tax free return of capital to the extent of your basis in NV’s shares, and thereafter is treated as a gain on a disposition of the shares.

Under a provision of the Dividend Tax Act in the Netherlands and provided certain conditions are satisfied, NV is entitled to a credit (up to a maximum of 3% of the gross dividend from which dividend tax is withheld) against the amount of dividend tax withheld before remittance to tax authorities in the Netherlands. The United States tax authority may take the position that withholding tax in the Netherlands eligible for credit should be limited accordingly.

Disclosure requirements for US individual holders

US individuals that hold certain specified foreign financial assets, including stock in a foreign corporation, with values in excess of certain thresholds are required to file Form 8938 with their United States Federal Income Tax return. Such Form requires disclosure of information concerning such foreign assets, including the value of the assets. Failure to file the form when required is subject to penalties. An exemption from reporting applies to foreign assets held through a US financial institution, generally including a non-US branch or subsidiary of a US institution and a US branch of a non-US institution. Investors are encouraged to consult with their own tax advisors regarding the possible application of this disclosure requirement to their investment in the shares.

Taxation on capital gains in the Netherlands

Under the Convention, if you are a United States person and you have capital gains on the sale of shares of a Dutch company, these are generally not subject to taxation by the Netherlands. An exception to this rule generally applies if you have a permanent establishment in the Netherlands and the capital gain is derived from the sale of shares which form part of that permanent establishment’s business property.

Succession duty and gift taxes in the Netherlands

Under the Estate and Inheritance Tax Convention between the United States and the Netherlands of 15 July 1969, individual US persons who are not Dutch citizens who have shares will generally not be subject to succession duty in the Netherlands on the individual’s death, unless the shares are part of the business property of a permanent establishment situated in the Netherlands.

A gift of shares of a Dutch company by a person who is not a resident or a deemed resident of the Netherlands is generally not subject to gift tax in the Netherlands. A non-resident Netherlands citizen, however,

is still treated as a resident of the Netherlands for gift tax purposes for ten years and any other non-resident person for one year after leaving the Netherlands.

Taxation for US persons holding shares in PLC

The following notes are provided for guidance. US persons should consult their local tax advisers, particularly in connection with potential liability to pay US taxes on disposal, lifetime gift or bequest of their shares. A US person is a US individual citizen or resident, a corporation organised under the laws of the United States, or any other legal person subject to United States Federal Income Tax on its worldwide income.

United Kingdom taxation on dividends

Under United Kingdom law, income tax is not withheld from dividends paid by United Kingdom companies. Shareholders, whether resident in the United Kingdom or not, receive the full amount of the dividend actually declared.

United States taxation on dividends

If you are a US person, the dividend up to the amount of PLC’s earnings and profits for United States Federal Income Tax purposes will be ordinary dividend income. Dividends received by an individual during taxable years 2013 and later will be taxed at a maximum rate of 15% or 20%, depending on the income level of the individual, provided the individual has held the shares for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date, that PLC is a qualified foreign corporation and certain other conditions are satisfied. PLC is a qualified foreign corporation for this purpose. In addition, beginning in 2013, an additional tax of 3.8% will apply to dividends and other investment income received by individuals with incomes exceeding certain thresholds. The dividend is not eligible for the dividends received deduction allowable to corporations. The dividend is foreign source income for US foreign tax credit purposes.

Any portion of the dividend that exceeds PLC’s United States earnings and profits is subject to different rules. This portion is a tax free return of capital to the extent of your basis in PLC’s shares, and thereafter is treated as a gain on a disposition of the shares.

Disclosure Requirements for US individual holders

US individuals that hold certain specified foreign financial assets, including stock in a foreign corporation, with values in excess of certain thresholds are required to file Form 8938 with their United States Federal Income Tax return. Such Form requires disclosure of information concerning such foreign assets, including the value of the assets. Failure to file the form when required is subject to penalties. An exemption from reporting applies to foreign assets held through a US financial institution, generally including a non-US branch or subsidiary of a US institution and a US branch of a non-US institution. Investors are encouraged to consult with their own tax advisors regarding the possible application of this disclosure requirement to their investment in the shares.

UK taxation on capital gains

Under United Kingdom law, when you sell shares you may be liable to pay capital gains tax. However, if you are either:

 

  an individual who is neither resident nor ordinarily resident in the United Kingdom; or
  a company which is not resident in the United Kingdom

you will generally not be liable to United Kingdom tax on any capital gains made on disposal of your shares.

Two exceptions are: if the shares are held in connection with a trade or business which is conducted in the United Kingdom through a branch or an agency; and if the shares are held by an individual who has left the UK for a period of non-residence of less than five tax years having been resident for at least four of the seven tax years prior to leaving the UK.

 

 

 

18                Form 20-F   Unilever Annual Report on Form 20-F 2012


Table of Contents

Item 10. Additional Information continued

 

UK inheritance tax

Under the current estate and gift tax convention between the United States and the United Kingdom, ordinary shares held by an individual shareholder who is:

 

  domiciled for the purposes of the convention in the United States; and
  is not for the purposes of the convention a national of the United Kingdom

will not be subject to United Kingdom inheritance tax:

 

  on the individual’s death; or
  on a gift of the shares during the individual’s lifetime.

The exception is if the shares are part of the business property of a permanent establishment of the individual in the United Kingdom or, in the case of a shareholder who performs independent personal services, pertain to a fixed base situated in the United Kingdom.

F. Dividends and paying agents

Not applicable.

G. Statement by experts

Not applicable.

H. Documents on display

The information set forth under the headings ‘Contact details‘ and ‘Publications’ on pages 144 to 145 of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference.

Unilever Annual Report on Form 20-F 2012

Filed with the SEC on the SEC’s website. Printed copies are available, free of charge, upon request to Unilever PLC, Investor Relations Department, Unilever House, 100 Victoria Embankment, London EC4Y0DY, United Kingdom.

Documents on display in the United States

Unilever files and furnishes reports and information with the United States SEC. Such reports and information can be inspected and copied at the SEC’s public reference facilities in Washington DC, Chicago and New York. Certain of our reports and other information that we file or furnish to the SEC are also available to the public over the internet on the SEC’s website.

I. Subsidiary information

Not applicable.

 

LOGO

Please refer also to Item 3D ‘Risk Factors’ of this report.

The information set forth under the following headings of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference:

 

  ‘Outlook’ on page 36;
  ‘Note 13 Trade and other current receivables’ on pages 110 to 111;
  ‘Note 14 Trade payables and other liabilities’ on page 111;
  ‘Note 15 Capital and funding’ on pages 112 to 115;
  ‘Note 16 Treasury risk management’ on pages 116 to 120;
  ‘Note 17 Investment and return’ on pages 121 to 122; and
  ‘Note 18 Financial instruments fair value risk’ on pages 123 to 124.

LOGO

The Unilever Group has appointed Citibank, N.A. (‘Citibank’) as both its transfer agent and registrar pursuant to the New York Registered Share program for Unilever N.V. and as its depositary pursuant to its American Depositary Receipt program for Unilever PLC. Any fee arrangement with Citibank will therefore cover both programs.

D.3 Transfer Agent Fees and Charges for Unilever N.V.

Although items 12.D.3 and 12.D.4 are not applicable to Unilever N.V. the following fees, charges and transfer agent payments are listed, as any fee arrangement with Citibank will cover both programs.

Under the terms of the Transfer Agent Agreement for the Unilever N.V. New York Registered Share program, a New York Share (NYS) holder may have to pay the following service fees to the transfer agent:

 

  Issuance of NYSs: Up to US 5¢ per NYS issued.
  Cancellation of NYSs: Up to US 5¢ per NYS cancelled.

An NYS holder will also be responsible to pay certain fees and expenses incurred by the transfer agent and certain taxes and governmental charges such as:

 

  Fees for the transfer and registration of Shares charged by the registrar and transfer agent for the Shares in the Netherlands (i.e. upon deposit and withdrawal of Shares);
  Expenses incurred for converting foreign currency into US dollars;
  Expenses for cable, telex and fax transmissions and for delivery of securities;
  Taxes and duties upon the transfer of securities (i.e. when shares are deposited or withdrawn from deposit); and
  Fees and expenses incurred in connection with the delivery or servicing of shares on deposit.

Transfer agent fees payable upon the issuance and cancellation of NYSs are typically paid to the transfer agent by the brokers (on behalf of their clients) receiving the newly-issued NYSs from the transfer agent and by the brokers (on behalf of their clients) delivering the NYSs to the transfer agent for cancellation. The brokers in turn charge these transaction fees to their clients.

Note that the fees and charges an investor may be required to pay may vary over time and may be changed by us and by the Transfer Agent. Notice of any changes will be given to investors.

D.3 Depositary Fees and Charges for Unilever PLC

Under the terms of the Deposit Agreement for the Unilever PLC American Depositary Shares (ADSs), an ADS holder may have to pay the following service fees to the depositary bank:

 

  Issuance of ADSs: Up to US 5¢ per ADS issued.
  Cancellation of ADSs: Up to US 5¢ per ADS cancelled.
 

 

 

Unilever Annual Report on Form 20-F 2012      Form 20-F                19   


Table of Contents

Item 12. Description of Securities Other than Equity Securities continued

 

An ADS holder will also be responsible to pay certain fees and expenses incurred by the depositary bank and certain taxes and governmental charges such as:

 

  Fees for the transfer and registration of Shares charged by the registrar and transfer agent for the Shares in the United Kingdom (i.e., upon deposit and withdrawal of Shares);
  Expenses incurred for converting foreign currency into US dollars;
  Expenses for cable, telex and fax transmissions and for delivery of securities;
  Taxes and duties upon the transfer of securities (i.e. when shares are deposited or withdrawn from deposit); and
  Fees and expenses incurred in connection with the delivery or servicing of shares on deposit.

Depositary fees payable upon the issuance and cancellation of ADSs are typically paid to the depositary bank by the brokers (on behalf of their clients) receiving the newly-issued ADSs from the depositary bank and by the brokers (on behalf of their clients) delivering the ADSs to the depositary bank for cancellation. The brokers in turn charge these transaction fees to their clients.

Note that the fees and charges an investor may be required to pay may vary over time and may be changed by us and by the depositary bank. Notice of any changes will be given to investors.

D.4 Transfer Agent Payments – Fiscal Year 2012 for Unilever N.V.

In 2012, we received the following payments from Citibank, N.A., the Transfer Agent and Registrar for our New York Registered Share program:

 

      US $  

Reimbursement of listing fees (INYSE/NASDAQ)

 

    

 

263,755.00

 

  

 

Reimbursement of settlement infrastructure fees (including DTC feeds)

 

    

 

25,484.80

 

  

 

Reimbursement of proxy process expenses (printing, postage and distribution)

 

    

 

281,032.71

 

  

 

Tax reclaim services

 

    

 

40,000.00

 

  

 

Program-related expenses (that include expenses incurred from the requirements of the Sarbanes-Oxley Act of 2002)

 

    

 

739,727.49

 

  

 

Indirect payments

As part of its service to the Company, Citibank, N.A. has agreed to waive fees for the standard costs associated with the administration of the ADR Program, associated operating expenses and investor relations advice estimated to total US $150,000.

D.4 Depositary Payments – Fiscal Year 2012 for Unilever PLC

In 2012, we received the following payments from Citibank, N.A., the Depositary Bank for our American Depositary Receipt Program:

 

      US $  

Reimbursement of listing fees (NYSE/NASDAQ)

 

    

 

135,116.00

 

  

 

Reimbursement of settlement infrastructure fees (including DTC feeds)

 

    

 

25,509.80

 

  

 

Reimbursement of proxy process expenses (printing, postage and distribution)

 

    

 

244,266.57

 

  

 

Program-related expenses (that include expenses incurred from the requirements of the Sarbanes-Oxley Act of 2002)

 

    

 

945,107.63

 

  

 

Indirect payments

As part of its service to the Company, Citibank, N.A. has agreed to waive fees for the standard costs associated with the administration of the ADR Program, associated operating expenses and investor relations advice estimated to total US $150,000.

 

 

20                Form 20-F   Unilever Annual Report on Form 20-F 2012


Table of Contents

 

LOGO

A. Defaults

There has been no material default in the payment of principal, interest, a sinking or purchase fund instalments or any other material default relating to indebtedness of the Group.

B. Dividend arrearages and delinquencies

There have been no arrears in payment of dividends on, and material delinquency with respect to, any class of preferred stock of any significant subsidiary of the Group.

 

LOGO

Not applicable.

 

LOGO

The information set forth under the headings ‘Report of Independent Registered Public Accounting Firm’ in Item 18 on page 23 of this report, and ‘Our Risk Appetite and Approach to Risk Management’ on page 41, ‘Requirements – The United States’ on page 54 and ‘Risk management and internal control arrangements’ on pages 56 to 57 of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference.

Management’s report on internal control over financial reporting

In accordance with the requirements of Section 404 of the US Sarbanes-Oxley Act of 2002, the following report is provided by management in respect of the Group’s internal control over financial reporting (as defined in rule 13a–15(f) or rule 15d–15(f) under the US Securities Exchange Act of 1934):

 

  Unilever’s management is responsible for establishing and maintaining adequate internal control over financial reporting for the Group;
  Unilever’s management has used the Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework to evaluate the effectiveness of our internal control over financial reporting. Management believes that the COSO framework is a suitable framework for its evaluation of our internal control over financial reporting because it is free from bias, permits reasonably consistent qualitative and quantitative measurements of internal controls, is sufficiently complete so that those relevant factors that would alter a conclusion about the effectiveness of internal controls are not omitted and is relevant to an evaluation of internal control over financial reporting;
  Management has assessed the effectiveness of internal control over financial reporting as of 31 December 2012, and has concluded that such internal control over financial reporting is effective; and
  PricewaterhouseCoopers LLP and PricewaterhouseCoopers Accountants N.V., who have audited the consolidated financial statements of the Group for the year ended 31 December 2012, have also audited the effectiveness of internal control over financial reporting as at 31 December 2012 and have issued an attestation report on internal control over financial reporting. For the Auditors’ report please refer to Item 18 on page 23 of this report.

 

 

Unilever Annual Report on Form 20-F 2012      Form 20-F                21   


Table of Contents

 

LOGO

A. Audit Committee financial expert

The information set forth under the heading ‘Report of the Audit Committee’ on pages 56 and 57 of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference.

B. Code of Ethics

The information set forth under the following headings of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference:

 

  ‘Foundation and principles’ on page 41; and
  ‘Requirements – The United States’ on page 54.

C. Principal accountant fees and services

The information set forth under the heading Report of the Audit Committee on pages 56 and 57 of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference.

 

       million
2012
      million
2011
      million
2010
 

Audit fees(a)

     18         18         18   

Audit-related fees(b)

     2         2         1   

Tax fees

     1         1         1   

All other fees

             1         3   

 

(a)  Excludes 1 million fees paid in respect of services supplied for associated pension schemes.
(b)  Includes other audit services which comprise audit and similar work that regulations or agreements with third parties require the auditors to undertake.

D. Exemptions from the Listing Standards for Audit Committees

Not applicable.

E. Purchases of equity securities by the issuer and affiliated purchasers

Share purchases during 2012

All shares purchased relate to Unilever N.V.

 

                          million  
      Total number of
shares purchased
     Average price
paid per share ()
    

Of which, numbers of
shares purchased

as part of publicly
announced plans

     Maximum value that
may yet be purchased
as part of publicly
announced plans
 

January (6% preference shares)(b)

     10         806.00                   

January (7% preference shares)(b)

     10         940.00                   

February

                               

March (ordinary shares)(a)

     37,894         26.05                   

April

                               

May

                               

June

                               

July (7% preference shares)(b)

     6         940.00                   

August

                               

September

                               

October

                               

November

                               

December

                               
Total      37,920         26.64                   

 

(a)  Shares were purchased to satisfy commitments to deliver shares under our share-based plans as described in note 4C on pages 101 and 102 of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K and incorporated by reference.
(b) The repurchase was undertaken under the public cash offer for all outstanding 6% and 7% cumulative preference shares as announced on 19 October 2011.

During February 2013 Unilever N.V. purchased 160,400 American Depositary Shares of Unilever PLC on the NYSE with an average price of euro 30.21 per American Depositary Share to facilitate grants in connection with its employee compensation programs.

F. Change in Registrant’s Certifying Accountant

Not applicable.

G. Corporate governance

The information set forth under the heading ‘Corporate governance’ on pages 44 to 55 of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference.

 

LOGO

The Company has responded to Item 18 in lieu of this item.

 

 

22                Form 20-F   Unilever Annual Report on Form 20-F 2012


Table of Contents

 

LOGO

The information set forth under the heading ‘Financial statements’ on page 83 and pages 86 to 131 of the Group’s Annual Report and Accounts 2012 furnished separately on 8 March 2013 under Form 6-K is incorporated by reference.

To the Directors and shareholders

Report of Independent Registered Public Accounting Firm

In our opinion, the consolidated income statements and the related consolidated balance sheets, consolidated cash flow statements, consolidated statements of comprehensive income and consolidated statements of changes in equity set forth under the heading ‘Financial Statements’ on pages 86 to 131 (excluding Note 24 on page 129) of Unilever Group’s Annual Report and Accounts 2012 and the Guarantor financial information included in Item 18 of this Form 20-F present fairly, in all material respects, the financial position of the Unilever Group at 31 December 2012 and 31 December 2011 and the results of its operations and its cash flows for each of the three years in the period ended 31 December 2012, in conformity with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and in conformity with IFRS as adopted by the European Union. Also in our opinion, the Group maintained, in all material respects, effective internal control over financial reporting as of 31 December 2012, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Group’s Directors and management are responsible for these consolidated financial statements.

The Group’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying ‘Management’s report on internal control over financial reporting’ included in Item 15 of this Form 20-F. Our responsibility is to express opinions on these consolidated financial statements and on the Group’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall consolidated financial statements presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and Directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

PricewaterhouseCoopers LLP

London, United Kingdom

As auditors of Unilever PLC

 

Amsterdam, The Netherlands, 5 March 2013

PricewaterhouseCoopers Accountants N.V.

As auditors of Unilever N.V.

 
       
5 March 2013     R A J Swaak RA    

 

 

Unilever Annual Report on Form 20-F 2012      Form 20-F                23   


Table of Contents

Item 18. Financial Statements continued

 

Guarantor statements (audited)

On 1 November 2011, NV and Unilever Capital Corporation (UCC) filed a US Shelf registration, which is unconditionally and fully guaranteed, jointly and severally, by NV, PLC and Unilever United States, Inc. (UNUS). This superseded the previous NV and UCC US Shelf registration filed on 18 November 2008, which is unconditionally and fully guaranteed, jointly and severally, by NV, PLC and UNUS. Of the US Shelf registration, US $5.0 billion of Notes were outstanding at 31 December 2012 (2011: US $4.0 billion, 2010: US $2.5 billion) with coupons ranging from 0.45% to 5.9%. These Notes are repayable between 15 February 2014 and 15 November 2032.

Provided below are the income statements, cash flow statements and balance sheets of each of the companies discussed above, together with the income statement, cash flow statement and balance sheet of non-guarantor subsidiaries. These have been prepared under the historical cost convention and, aside from the basis of accounting for investments at net asset value (equity accounting), comply in all material respects with International Financial Reporting Standards. The financial information in respect of NV, PLC and UNUS has been prepared with all subsidiaries accounted for on an equity basis. Information on NV and PLC is shown collectively as Unilever parent entities. The financial information in respect of the non-guarantor subsidiaries has been prepared on a consolidated basis.

 

     million         million        million        million        million         million   

Income statement

for the year ended 31 December 2012

    

 

 

 

 

Unilever

Capital

Corporation

subsidiary

issuer

  

  

  

  

  

   

 

 

Unilever

parent

entities

(a) 

  

  

   

 

 

 

 

Unilever

United

States Inc.

subsidiary

guarantor

  

  

  

  

  

   

 

 

Non-

guarantor

subsidiaries

  

  

  

    Eliminations       

 

Unilever

Group

  

  

Turnover

                          51,324               51,324   

Operating profit

            334        7        6,648               6,989   

Finance income

                          136               136   

Finance costs

     (153     (169            (204            (526

Pensions and similar obligations

            (5     (18     16               (7

Inter-company finance income/(costs)

     153        (6     (110     (37              

Dividends

            2,851        676        (3,527              

Share of net profit/(loss) of joint ventures and associates    

                          105               105   

Other income from non-current investments

                          (14            (14

Profit before taxation

            3,005        555        3,123               6,683   

Taxation

            (29     (197     (1,509            (1,735

Net profit

            2,976        358        1,614               4,948   

Equity earnings of subsidiaries

            1,972        728               (2,700       

Net profit

            4,948        1,086        1,614        (2,700     4,948   

Attributable to:

            

Non-controlling interests

                          468               468   

Shareholders’ equity

            4,948        1,086        1,146        (2,700     4,480   
(a)  The term ‘Unilever parent entities’ includes Unilever N.V. and Unilever PLC. Though Unilever N.V. and Unilever PLC are separate legal entities, with different shareholder constituencies and separate stock exchange listings, they operate as nearly as practicable as a single economic entity. Debt securities issued by entities in the Unilever Group are fully and unconditionally guaranteed by both Unilever N.V. and Unilever PLC.

 

 

24                Form 20-F   Unilever Annual Report on Form 20-F 2012


Table of Contents

Item 18. Financial Statements continued

 

     million     million     million     million     million     million  

Income statement

for the year ended 31 December 2011

    

 

 

 

 

Unilever

Capital

Corporation

subsidiary

issuer

  

  

  

  

  

   

 

 

Unilever

parent

entities

(a) 

  

  

   

 

 

 

 

Unilever

United

States Inc.

subsidiary

guarantor

  

  

  

  

  

   

 

 

Non-

guarantor

subsidiaries

  

  

  

    Eliminations       

 

Unilever

Group

  

  

Turnover                           46,467               46,467   
Operating profit      _        155        (12     6,290        _        6,433   

Finance income

                          92               92   

Finance costs

     (127     (203            (210            (540

Pensions and similar obligations

            (51     (15     91               71   

Inter-company finance income/(costs)

     128        61        (11     (178              

Dividends

            2,631               (2,631              

Share of net profit/(loss) of joint ventures and associates

                          113               113   

Other income from non-current investments

                          76               76   
Profit before taxation      1        2,639        (38     3,643               6,245   

Taxation

            50        (237     (1,435            (1,622
Net profit      1        2,689        (275     2,208        _        4,623   

Equity earnings of subsidiaries

            1,934        898               (2,832       
Net profit      1        4,623        623        2,208        (2,832     4,623   

Attributable to:

            

Non-controlling interests

                          371               371   

Shareholders’ equity

     1        4,623        623        1,837        (2,832     4,252   

 

     million     million     million     million     million     million  

Income statement

for the year ended 31 December 2010

    

 

 

 

 

Unilever

Capital

Corporation

subsidiary

issuer

  

  

  

  

  

   

 

 

Unilever

parent

entities

(a) 

  

  

   

 

 

 

 

Unilever

United

States Inc.

subsidiary

guarantor

  

  

  

  

  

   

 

 

Non-

guarantor

subsidiaries

  

  

  

    Eliminations       

 

Unilever

Group

  

  

Turnover                           44,262               44,262   
Operating profit      _        280        (21     6,080        _        6,339   

Finance income

                          77               77   

Finance costs

     (182     (183            (126            (491

Pensions and similar obligations

            (5     (24     49               20   

Inter-company finance income/(costs)

     184        71        (10     (245              

Dividends

            2,285          (2,285              

Share of net profit/(loss) of joint ventures and associates

                          111               111   

Other income from non-current investments

                          76               76   
Profit before taxation      2        2,448        (55     3,737               6,132   

Taxation

     (1     (83     434        (1,884            (1,534
Net profit      1        2,365        379        1,853               4,598   

Equity earnings of subsidiaries

            2,233        96               (2,329       
Net profit      1        4,598        475        1,853        (2,329     4,598   

Attributable to:

            

Non-controlling interests

                          354               354   

Shareholders’ equity

     1        4,598        475        1,499        (2,329     4,244   
(a)  The term ‘Unilever parent entities’ includes Unilever N.V. and Unilever PLC. Though Unilever N.V. and Unilever PLC are separate legal entities, with different shareholder constituencies and separate stock exchange listings, they operate as nearly as practicable as a single economic entity. Debt securities issued by entities in the Unilever Group are fully and unconditionally guaranteed by both Unilever N.V. and Unilever PLC.

 

 

Unilever Annual Report on Form 20-F 2012      Form 20-F                25   


Table of Contents

Item 18. Financial Statements continued

 

     million       million     million     million     million      million  
Balance sheet at 31 December 2012     

 

 

 

 

Unilever

Capital

Corporation

subsidiary

issuer

  

  

  

  

  

    

 

 

Unilever

parent

entities

(a) 

  

  

   

 

 

 

 

Unilever

United

States Inc.

subsidiary

guarantor

  

  

  

  

  

   

 

 

Non-

guarantor

subsidiaries

  

  

  

    Eliminations       

 

Unilever

Group

  

  

Assets

             

Non-current assets

             

Goodwill and intangible assets

             1,330               20,388               21,718   

Property, plant and equipment

                           9,445               9,445   

Pension asset for funded schemes in surplus

                           672               672   

Deferred tax assets

             103        263        747               1,113   

Financial assets

                    1        534               535   

Other non-current assets

                    7        529               536   

Amounts due from group companies

     6,642                       (26     (6,616       

Net assets of subsidiaries (equity accounted)

             40,394        15,710        (17,981     (38,123       
     6,642         41,827        15,981        14,308        (44,739     34,019   

Current assets

             

Inventories

                           4,436               4,436   

Amounts due from group companies

             5,050        2,087        (7,137              

Trade and other current receivables

             80        12        4,344               4,436   

Current tax assets

             287        98        (168            217   

Cash and cash equivalents

             3               2,462               2,465   

Other financial assets

                           401               401   

Non-current assets held for sale

                           192               192   
             5,420        2,197        4,530               12,147   
Total assets      6,642         47,247        18,178        18,838        (44,739     46,166   

Liabilities

             

Current liabilities

             

Financial liabilities

     691         1,250        3        712               2,656   

Amounts due to group companies

     1,859         28,132               (29,991              

Trade payables and other current liabilities

     46         181        33        11,408               11,668   

Current tax liabilities

             304               825               1,129   

Provisions

             34               327               361   

Liabilities associated with assets held for sale

                           1               1   
     2,596         29,901        36        (16,718            15,815   

Non-current liabilities

             

Financial liabilities

     3,766         2,058               1,741               7,565   

Amounts due to group companies

                    6,701        (85     (6,616       

Pensions and post-retirement healthcare liabilities

             

Funded schemes in deficit

             2        204        2,085               2,291   

Unfunded schemes

             110        580        1,350               2,040   

Provisions

             12        1        833               846   

Deferred tax liabilities

                           1,393               1,393   

Other non-current liabilities

             5        81        414               500   
     3,766         2,187        7,567        7,731        (6,616     14,635   
Total liabilities      6,362         32,088        7,603        (8,987     (6,616     30,450   

Equity

             

Shareholders’ equity

             

Called up share capital

             484                             484   

Share premium account

             140        942        (942            140   

Other reserves

     5         (6,196     (612     (1,695     2,302        (6,196

Retained profit

     275         20,731        10,245        29,905        (40,425     20,731   
     280         15,159        10,575        27,268        (38,123     15,159   

Non-controlling interests

                           557               557   

Total equity

     280         15,159        10,575        27,825        (38,123     15,716   
Total liabilities and equity      6,642         47,247        18,178        18,838        (44,739     46,166   

 

(a)  The term ‘Unilever parent entities’ includes Unilever N.V. and Unilever PLC. Though Unilever N.V. and Unilever PLC are separate legal entities, with different shareholder constituencies and separate stock exchange listings, they operate as nearly as practicable as a single economic entity. Debt securities issued by entities in the Unilever Group are fully and unconditionally guaranteed by both Unilever N.V. and Unilever PLC.

 

 

26                Form 20-F   Unilever Annual Report on Form 20-F 2012


Table of Contents

Item 18. Financial Statements continued

 

     million      million     million     million     million     million  
Balance sheet at 31 December 2011     

 

 

 

 

Unilever

Capital

Corporation

subsidiary

issuer

  

  

  

  

  

    

 

 

Unilever

parent

entities

(a) 

  

  

   

 

 

 

 

Unilever

United

States Inc.

subsidiary

guarantor

  

  

  

  

  

   

 

 

Non-

guarantor

subsidiaries

  

  

  

    Eliminations       

 

Unilever

Group

  

  

Assets              

Non-current assets

             

Goodwill and intangible assets

             162               21,751               21,913   

Property, plant and equipment

                           8,774               8,774   

Pension asset for funded schemes in surplus

             5               998               1,003   

Deferred tax assets

                    373        48               421   

Financial assets

                           478               478   

Other non-current assets

                           632               632   

Amounts due from group companies

     5,498                              (5,498       

Net assets of subsidiaries (equity accounted)

             39,816        14,213        (17,992     (36,037       
     5,498         39,983        14,586        14,689        (41,535     33,221   

Current assets

             

Inventories

                           4,601               4,601   

Amounts due from group companies

             8,562        2,042        (10,604              

Trade and other current receivables

             70        3        4,440               4,513   

Current tax assets

             256        109        (146            219   

Cash and cash equivalents

             1               3,483               3,484   

Other financial assets

             1               1,452               1,453   

Non-current assets held for sale

                           21               21   
             8,890        2,154        3,247               14,291   
Total assets      5,498         48,873        16,740        17,936        (41,535     47,512   
Liabilities              

Current liabilities

             

Financial liabilities

     1,526         2,087        3        2,224               5,840   

Amounts due to group companies

     573         25,638        14        (26,225              

Trade payables and other current liabilities

     42         170        11        10,748               10,971   

Current tax liabilities

             187               538               725   

Provisions

             13               380               393   

Liabilities associated with assets held for sale

                                           
     2,141         28,095        28        (12,335            17,929   

Non-current liabilities

             

Financial liabilities

     3,068         3,207               1,603               7,878   

Amounts due to group companies

             3,091        5,498        (3,091     (5,498       

Pensions and post-retirement healthcare liabilities

             

Funded schemes in deficit

                    187        2,108               2,295   

Unfunded schemes

             96        608        1,207               1,911   

Provisions

             33        1        874               908   

Deferred tax liabilities

             53               1,072               1,125   

Other non-current liabilities

             5        138        402               545   
     3,068         6,485        6,432        4,175        (5,498     14,662   
Total liabilities      5,209         34,580        6,460        (8,160     (5,498     32,591   
Equity              

Shareholders’ equity

             

Called up share capital

             484                             484   

Share premium account

             137        942        (942            137   

Other reserves

     14         (6,004     (791     (1,428     2,205        (6,004

Retained profit

     275         19,676        10,129        27,838        (38,242     19,676   
     289         14,293        10,280        25,468        (36,037     14,293   

Non-controlling interests

                           628               628   
Total equity      289         14,293        10,280        26,096        (36,037     14,921   
Total liabilities and equity      5,498         48,873        16,740        17,936        (41,535     47,512   

 

(a)  The term ‘Unilever parent entities’ includes Unilever N.V. and Unilever PLC. Though Unilever N.V. and Unilever PLC are separate legal entities, with different shareholder constituencies and separate stock exchange listings, they operate as nearly as practicable as a single economic entity. Debt securities issued by entities in the Unilever Group are fully and unconditionally guaranteed by both Unilever N.V. and Unilever PLC.

 

 

Unilever Annual Report on Form 20-F 2012      Form 20-F                27   


Table of Contents

Item 18. Financial Statements continued

 

              million          million            million              million                   million        million  

Cash flow statement

for the year ended 31 December 2012

    

 

 

 

 

Unilever

Capital

Corporation

subsidiary

issuer

  

  

  

  

  

   

 

 

Unilever

parent

entities

(a) 

  

  

   

 

 

 

 

Unilever

United

States Inc.

subsidiary

guarantor

  

  

  

  

  

   

 

 

Non-

guarantor

subsidiaries

  

  

  

    Eliminations       

 

Unilever

Group

  

  

Cash flow from operating activities

            478        3        8,035               8,516   

Income tax

            (89     (135     (1,456            (1,680
Net cash flow from operating activities             389        (132     6,579               6,836   

Interest received

                          146               146   

Net capital expenditure

            (1,176            (967            (2,143

Acquisitions and disposals

                          113               113   

Other investing activities

     (1,181     5,838        (98     (4,575     1,145        1,129   
Net cash flow from/(used in) investing activities      (1,181     4,662        (98     (5,283     1,145        (755

Dividends paid on ordinary share capital

            (1,368     (917     (414            (2,699

Interest and preference dividends paid

     (147     (177            (182            (506

Change in borrowing and finance leases

     (93     (1,866            (1,050            (3,009

Other movement in treasury stocks

            187        (64     (75            48   

Other finance activities

     1,421        (1,814     1,210        (128     (1,145     (456
Net cash flow from/(used in) financing activities      1,181        (5,038     229        (1,849     (1,145     (6,622

Net increase/(decrease) in cash and cash equivalents

            13        (1     (553            (541
Cash and cash equivalents at the beginning of the year             1        (2     2,979               2,978   

Effect of foreign exchange rate changes

            (11            (209            (220
Cash and cash equivalents at the end of the year                  3        (3     2,217               2,217   

 

                million          million            million                million                  million        million  

Cash flow statement

for the year ended 31 December 2011

    

 

 

 

 

Unilever

Capital

Corporation

subsidiary

issuer

  

  

  

  

  

   

 

 

Unilever

parent

entities

(a) 

  

  

   

 

 

 

 

Unilever

United

States Inc.

subsidiary

guarantor

  

  

  

  

  

   

 

 

Non-

guarantor

subsidiaries

  

  

  

    Eliminations       

 

Unilever

Group

  

  

Cash flow from operating activities

     (1     61        (56     6,635        _        6,639   

Income tax

            (71     (84     (1,032            (1,187
Net cash flow from operating activities      (1     (10     (140     5,603               5,452   

Interest received

     128        56        108        (77     (122     93   

Net capital expenditure

            (27            (1,947            (1,974

Acquisitions and disposals

            (37            (1,683            (1,720

Other investing activities

     (2,362     (1,134     (927     726        2,831        (866
Net cash flow from/(used in) investing activities      (2,234     (1,142     (819     (2,981     2,709        (4,467

Dividends paid on ordinary share capital

            137               (2,622            (2,485

Interest and preference dividends paid

     (112     (217     (119     (170     122        (496

Change in borrowing and finance leases

     2,345        648        281        764        (281     3,757   

Other movement in treasury stocks

            151        (37     (84            30   

Other finance activities

            475        836        844        (2,550     (395
Net cash flow from/(used in) financing activities      2,233        1,194        961        (1,268     (2,709     411   

Net increase/(decrease) in cash and cash equivalents

     (2     42        2        1,354               1,396   
Cash and cash equivalents at the beginning of the year      _        _        (3     1,969        _        1,966   

Effect of foreign exchange rate changes

     2        (41     (2     (343            (384
Cash and cash equivalents at the end of the year             1        (3     2,980               2,978   
(a)  The term ‘Unilever parent entities’ includes Unilever N.V. and Unilever PLC. Though Unilever N.V. and Unilever PLC are separate legal entities, with different shareholder constituencies and separate stock exchange listings, they operate as nearly as practicable as a single economic entity. Debt securities issued by entities in the Unilever Group are fully and unconditionally guaranteed by both Unilever N.V. and Unilever PLC.

 

 

28                Form 20–F   Unilever Annual Report on Form 20–F 2012


Table of Contents

Item 18. Financial Statements continued

 

              million            million            million                million                  million          million  

Cash flow statement

for the year ended 31 December 2010

    

 

 

 

 

Unilever

Capital

Corporation

subsidiary

issuer

  

  

  

  

  

   

 

 

Unilever

parent

entities

(a) 

  

  

   

 

 

 

 

Unilever

United

States Inc.

subsidiary

guarantor

  

  

  

  

  

   

 

 

Non-

guarantor

subsidiaries

  

  

  

    Eliminations       

 

Unilever

Group

  

  

Cash flow from operating activities

            447        (81     6,452               6,818   

Income tax

            (82     (148     (1,098            (1,328
Net cash flow from operating activities             365        (229     5,354               5,490   

Interest received

     184        82               (385     189        70   

Net capital expenditure

            (10            (1,691            (1,701

Acquisitions and disposals

            (54            (307            (361

Other investing activities

     1,073        (9     2,564        (1,059     (1,741     828   
Net cash flow from/(used in) investing activities      1,257        9        2,564        (3,442     (1,552     (1,164

Dividends paid on ordinary share capital

            (55     (2,276     8               (2,323

Interest and preference dividends paid

     (198     (104     (10     7        (189     (494

Change in borrowing and finance leases

     (1,062     (147     (52     (1,853     1,741        (1,373

Other movement in treasury stocks

            (130            6               (124

Other finance activities

                          (295            (295
Net cash flow from/(used in) financing activities      (1,260     (436     (2,338     (2,127     1,552        (4,609

Net increase/(decrease) in cash and cash equivalents

     (3     (62     (3     (215            (283
Cash and cash equivalents at the beginning of the year             14        (3     2,386               2,397   

Effect of foreign exchange rate changes

     3        48        3        (202            (148
Cash and cash equivalents at the end of the year                    (3     1,969               1,966   

 

(a)  The term ‘Unilever parent entities’ includes Unilever N.V. and Unilever PLC. Though Unilever N.V. and Unilever PLC are separate legal entities, with different shareholder constituencies and separate stock exchange listings, they operate as nearly as practicable as a single economic entity. Debt securities issued by entities in the Unilever Group are fully and unconditionally guaranteed by both Unilever N.V. and Unilever PLC.

 

LOGO

Please refer to the exhibit list located immediately following the signature page for this Form 20-F as filed with the SEC.

 

 

Unilever Annual Report on Form 20-F 2012      Form 20-F                29   


Table of Contents

 

 

30                Form 20-F   Unilever Annual Report on Form 20-F 2012


Table of Contents

 

 

Unilever Annual Report on Form 20-F 2012      Form 20-F                31   


Table of Contents

 

 

32                Form 20-F   Unilever Annual Report on Form 20-F 2012


Table of Contents

 

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The paper contains 100% recycled content, of which 100% is de-inked post-consumer waste. All of the pulp is bleached using an elemental chlorine free process (ECF). Printed in the UK by Pureprint using its alcofree® and pureprint® environmental printing technology, and vegetable inks were used throughout. Pureprint is a CarbonNeutral® company. Both manufacturing mill and the printer are registered to the Environmental Management System ISO 14001 and are Forest Stewardship Council® (FSC) chain-of-custody certified.

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LOGO


Table of Contents
    

 

 

UNILEVER N.V.

     Weena 455, PO Box 760
     3000 DK Rotterdam
     The Netherlands
     T +31 (0)10 217 4000
     F +31 (0)10 217 4798
     Commercial Register Rotterdam
     Number: 24051830
     UNILEVER PLC
     Unilever House
     100 Victoria Embankment
     London EC4Y 0DY
     United Kingdom
     T +44 (0)20 7822 5252
     F +44 (0)20 7822 5951
     UNILEVER PLC REGISTERED OFFICE
     Unilever PLC
     Port Sunlight
     Wirral
     Merseyside CH62 4ZD
     United Kingdom
For further information on our social, economic and environmental    Registered in England and Wales
performance, please visit our website    Company Number: 41424

 

  

 

     WWW.UNILEVER.COM

 

LOGO


Table of Contents

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorised the undersigned to sign this Annual Report on its behalf.

 

Unilever N.V.

(Registrant)

/s/ T. E. Lovell

T. E. LOVELL,

Group Secretary

Date: 8 March, 2013


Table of Contents

UNILEVER NV — 20-F EXHIBIT LIST

 

Exhibit Number

 

Description of Exhibit

1.1   Articles of Association of Unilever N.V.
2.1   Indenture dated as of August 1, 2000, among Unilever Capital Corporation, Unilever N.V., Unilever PLC, Unilever United States, Inc. and The Bank of New York, as Trustee, relating to Guaranteed Debt Securities 1
2.2   Trust Deed dated as of July 22, 1994, among Unilever N.V., Unilever PLC, Unilever Capital Corporation, Unilever United States, Inc. and The Law Debenture Trust Corporation p.l.c., relating to Guaranteed Debt Securities 2
4.1   Equalisation Agreement between Unilever N.V. and Unilever PLC 3
4.2   Service Contracts of the Executive Directors of Unilever NV 4
4.3   Letters regarding compensation of Executive Directors of Unilever N.V.
4.4   Unilever North America 2002 Omnibus Equity Compensation Plan 5
4.5   The Unilever NV International 1997 Executive Share Option Scheme 6
4.6   The Unilever Long Term Incentive Plan 7
4.7   Global Share Incentive Plan 2007 8
4.8   The Management Co-Investment Plan 9
8.1   List of Subsidiaries 10
12.1   Certifications of the Chief Executive Officer and Financial Director/Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
13.1   Certifications of the Chief Executive Officer and Financial Director/Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.1   Annual Report and Accounts sections incorporated by reference
15.2   Consent of PricewaterhouseCoopers Accountants N.V. and PricewaterhouseCoopers LLP

Certain instruments which define rights of holders of long-term debt of the Company and its subsidiaries are not being filed because the total amount of securities authorized under each such instrument does not exceed 10% of the total consolidated assets of the Company and its subsidiaries. The Company and its subsidiaries hereby agree to furnish a copy of each such instrument to the Securities and Exchange Commission upon request.

 

 

1 Incorporated by reference to Exhibit 2.2 of Form 20-F filed with the SEC on March 28,2002

 

2 Incorporated by reference to Exhibit 99.1 of Form S-8 filed with the SEC on February 27, 2003.


Table of Contents
3 Incorporated by reference to Exhibit 4.1 of Form 20-F filed with the SEC on March 5, 2010.

 

4 Incorporated by reference to Exhibit 4.8 of Form 20-F filed with the SEC on March 4, 2010

 

5 Incorporated by reference to Exhibit 99.1 of Form S-8 filed with the SEC on February 27, 2003.

 

6 Incorporated by reference to Exhibit 4.5 of Form 20-F filed with the SEC on March 28, 2002.

 

7 Incorporated by reference to Exhibit 4.6 of Form 20-F filed with the SEC on March 28, 2002.

 

8 Incorporated by reference to Exhibit 4.7 of Form 20-F filed with the SEC on March 26, 2008.

 

9 Incorporated by reference to Exhibit 4.8 of Form 20-F filed with the SEC on March 4, 2010.

 

10 The required information is set forth on pages 130 and 131 of the 2012 Annual Report and Accounts.