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DisclaimerNotes to the Annual Report and Accounts This PDF version of the Unilever Annual Reportand Accounts 2008 is an exact copy of the document provided to Unilever’s shareholders.Certain sections of the Unilever Annual Report and Accounts 2008 have been audited.Sections that have been audited are set out on pages 81 to 136, 140 to 141, 143 to 145and 148 to 150. The auditable part of the report of the Remuneration Committee as setout on page 60 has also been audited.The maintenance and integrity of the Unilever website is the responsibility of the Directors;the work carried out by the auditors does not involve consideration of these matters.Accordingly, the auditors accept no responsibility for any changes that may have occurredto the financial statements since they were initially placed on the website.Legislation in the United Kingdom and the Netherlands governing the preparation anddissemination of financial statements may differ from legislation in other jurisdictions.Disclaimer Except where you are a shareholder, this material is provided for informationpurposes only and is not, in particular, intended to confer any legal rights on you.This Annual Report and Accounts does not constitute an invitation to invest in Unilever shares.Any decisions you make in reliance on this information are solely your responsibility.The information is given as of the dates specified, is not updated, and any forward-lookingstatements are made subject to the reservations specified on the final page of the Report.Unilever accepts no responsibility for any information on other websites that may beaccessed from this site by hyperlinks.
UnileverAnnual Report and Accounts 2008Unilever N.V.Weena 455, PO Box 7603000 DK RotterdamThe NetherlandsT 31 (0)10 217 4000F 31 (0)10 217 4798Commercial Register RotterdamNumber: 24051830Unilever PLCUnilever House100 Victoria EmbankmentLondon EC4Y 0DYUnited KingdomT 44 (0)20 7822 5252F 44 (0)20 7822 5951Unilever PLC registered officeUnilever PLCPort SunlightWirralMerseyside CH62 4ZDUnited KingdomRegistered in England and WalesCompany Number: 41424www.unilever.comAnnual Report and Accounts 2008Adding Vitality to Life
ContentsReport of the Directors1 Our highlights2 Our brands and operations4 Chairman’s statement6 Chief Executive Officer’s review8 Unilever Executive9 Vitality18 Board of Directors20 About Unilever20 Our business and our strategy20 Key indicators21 Organisation22 Operating environment22 Resources24 Laws and regulation25 Outlook and risks29 Performance review35 Financial Review44 Corporate governance59 Report of the Nomination Committee60 Report of the Remuneration Committee74 Report of the Audit Committee75 Report of the Corporate Responsibilityand Reputation CommitteeFinancial statements78 Statement of Directors’ responsibilities79 Auditors’ reports81 Consolidated income statement81 Consolidated statement of recognisedincome and expense82 Consolidated balance sheet83 Consolidated cash flow statement84 Notes to the consolidated accounts137 Financial record140 Principal group companies andnon-current investments142 Company accountsShareholder information153 Analysis of shareholding154 Exchange controls affectingsecurity holders155 Nature of the trading market157 Dividend record158 Financial calendar158 Contact details159 Website159 Publications159 Share registration160 IndexAdding Vitality to LifeUnilever’s mission is to add Vitality to Life.We meet everyday needs for nutrition,hygiene and personal care with brandsthat help people feel good, look good andget more out of life.The Unilever GroupUnilever N.V. (NV) is a public limited company registered in theNetherlands, which has listings of shares and depositary receiptsfor shares on Euronext Amsterdam and of New York RegistryShares on the New York Stock Exchange.Unilever PLC (PLC) is a public limited company registered inEngland and Wales which has shares listed on the London StockExchange and, as American Depositary Receipts, on the NewYork Stock Exchange.The two parent companies, NV and PLC, together with theirgroup companies, operate as a single economic entity (theUnilever Group, also referred to as Unilever or the Group).NV and PLC and their group companies constitute a singlereporting entity for the purposes of presenting consolidatedaccounts. Accordingly, the accounts of the Unilever Groupare presented by both NV and PLC as their respectiveconsolidated accounts.Basis of reportingOur accounting policies are based on International FinancialReporting Standards (IFRS) as adopted by the European Union(EU), and on United Kingdom and Dutch law. They are also inaccordance with IFRS as issued by the International AccountingStandards Board (IASB). Certain measures used in our reportingare not defined under IFRS or other generally acceptedaccounting principles. For further information about thesemeasures, and the reasons why we believe they are importantfor an understanding of the performance of the business,please refer to the Performance Review on page 29 and theFinancial Review on page 35.The brand names shown in this report are trademarks ownedby or licensed to companies within the Unilever Group.Exchange ratesDetails of key exchange rates used in preparation of theseaccounts are given on page 139, together with Noon BuyingRates in New York for the equivalent dates.Forward-looking statementsThis document contains certain statements that are neitherreported financial results nor other historical information. Thesestatements are forward-looking statements, including withinthe meaning of the United States Private Securities LitigationReform Act of 1995. For a description of factors that couldaffect future results, reference should be made to the full‘Cautionary statement’ on the inside back cover.
Our highlightsFinancial7.4%underlying sales growthOperating margin (%)Turnover ( million)200840 5232008200740 187200717.713.1 Ungeared free cash flow of 3.2 billion Profits on disposals of 2.2 billion pre-tax Return on invested capital of 15.7% Total shareholder return ranking 9th out of 21 Earnings per share of 1.79, including 0.36 net benefit from disposals and restructuring T otal dividend increased to 0.77 per Ordinary 0.16 share of NV and 60.74p perOrdinary 31/9p share of PLCSocial22 000products have had their nutritional profile assessedTotal recordable accident frequencyrate per 100 000 hours*20080.2120070.26 19% reductionin total recordableaccident frequency rate in 2008** 2008 data are preliminary data. They will beindependentlyassuredofandreportedthe Three quartersthefoodinproductsonline Sustainable Development Report 2008at www.unilever.com/sustainabilityin our R&D pipeline bring specific nutritional or health benefits 16 million school meals delivered to 76 000 children in 2008 through our partnership with theWorld Food Programme Four million children reached by Signal / Pepsodent / Close Up toothpaste brands throughschool-based oral health programmes in 2008 120 million people reached by Lifebuoy brand’s handwashing programme in India since 2002Environmental10 yearsas sector leader of the Dow Jones Sustainability IndexesWater per tonne ofproduction (m3)*CO2 from energy per tonneof production (kg)*20082007Total waste per tonneof production (kg)*146.7720082.962008149.1820073.052007* Preliminaryfiguresforreported2008: these* 2008 data are preliminary data. They will be independentlyassuredandinwill be audited in April 2009the online Sustainable Development Report 2008 atfigureswww.unilever.com/sustainability7.897.56* Preliminary figures for 2008: thesefigures will be audited in April 2009 2015: the year by which we are committed to sourcing all palm oil from certifiedsustainable sources c. 50% of the tea we sell in Western Europe is grown on Rainforest Alliance Certified farms 39% reduction in CO2 emissions per tonne of production over the period 1995-2008** 2008 data is preliminary. It will be independently assured and reported in our onlineSustainable Development Report 2008 at www.unilever.com/sustainabilityUnilever Annual Report and Accounts 2008 1
Report of the DirectorsOur brands and operationsOur strong portfolio of foods, homeand personal care brands is trusted byconsumers the world over. 13 of ourbrands achieve annual sales of 1 billionor more. Our top 25 brands account forover 70% of our sales.Operational achievementsRegional highlights S trong broad-based underlying sales growth of 7.4%across categoriesTurnover by region million (contribution to Group %) M ore competitive cost base: 1.1 billion savings from supplychain and organisational efficiencies Increased investment behind our brands1.312 853(32%)14 471(36%)6.5 P ortfolio reshaped through disposals, including NorthAmerican laundry, Boursin, Lawry’s and Bertolli olive oil P ortfolio strengthened through the acquisition of Inmarko icecream in Russia and the planned acquisition of the TIGI hairsalon brands N amed International Supplier of the Year by Tesco for thethird year running13 199(32%)Western EuropeThe AmericasAsia, Africa and Central & Eastern Europe2 Unilever Annual Report and Accounts 2008Underlying sales growth%14.2
Our 1 billionbrands* Axe/Lynx Blue Band Dove Flora/Becel Heartbrandice creams Hellmann’s Knorr Lipton Lux Omo Rexona Sunsilk Surf* S ome of our brands may be marketedunder alternative names in certain countries.Key factsCategory highlightsSavoury, dressingsand spreads Turnover of 14 232 million Underlying sales growthof 7.6%Personal care Turnover of 11 383 million Underlying sales growthof 6.6%Ice cream and beverages Turnover of 7 694 million Underlying sales growthof 5.9%Home care Turnover of 7 214 million Underlying sales growthof 9.8%174 000 employees at the end of 200820 nationalities among our top tiermanagersAround 100 countries in which we operate 91m invested in communityprogrammes worldwide 927m spent on R&D worldwideAround 270 manufacturing sites worldwideUnilever Annual Report and Accounts 2008 3
Report of the DirectorsChairman’s statementOur strategy, in an unpredictableeconomic environment, is tomaintain our growth momentumand deliver competitive levelsof profitability.2008 was a difficult and turbulent year generally for businessall around the world. It was dominated by a banking crisis whichstarted in the US sub-prime property market and which quicklyspread to other asset classes and countries. These problems wereexacerbated by the volatile price of mineral oil and, for companieslike Unilever, record rises in the cost of vegetable oils like palm,soy and rapeseed.Despite these unprecedented circumstances I am pleased to reportthat Unilever performed well in 2008 and emerged as a stronger,more competitive company. It delivered good results on both topand bottom line and its strong cash flows allowed it to producesubstantial returns to shareholders in the form of both sharebuy-backs and dividends.Part of this was due to the inherent strength and stability of thecompany. Partly it was the result of a robust strategy, effectivelyimplemented. But partly, too, it was due to the leadership ofPatrick Cescau who retired from the business on 31 December(see panel opposite).As a Board team, one of our most important tasks in 2008 was tomanage Patrick’s succession once he had signalled his intentionto retire. The process, initiated and led by our NominationCommittee, was wide-ranging and thorough. It was as a resultof this search that we were lucky enough to find Paul Polman.We are delighted that Paul accepted our offer to becomeChief Executive Officer. He has immense experience of the marketsin which we operate, having spent 26 years in our industry. Paulbrings with him a deep understanding of brands, consumers andcustomers. He also has an enthusiasm for consumer goods whichis palpable and will bring new energy and ideas to Unilever.The other change in personnel since our 2008 AGMs has beenthe transition of Geneviève Berger from Non-Executive Directorto Chief R&D Officer on the Executive team. In this capacityshe will be able to bring her great knowledge of science andtechnology to the service of the business. In an industry whereinnovation is such a critical success factor I believe that this is animportant and far-sighted appointment.At our 2008 AGMs Kees van der Graaf and Ralph Kuglerstepped down from the Boards. They are currently composedof 12 members of whom two are Executives.David Simon will be retiring as a Non-Executive Director atthe end of our 2009 AGMs after three terms of three years.During that time he has served as our Vice Chairman, SeniorIndependent Director and Chairman of our Nomination andRemuneration Committees. On behalf of our Boards, I take thisopportunity to thank him for his contribution, wise counsel andservice since 2000. It is intended that David will be succeededin those roles by Jeroen van der Veer, with effect from the2009 AGMs.
As part of the time that the Boards spent with the businessduring the year, we visited our laboratories in Bangalore andour customer innovation centre in New Jersey. The Boardsreviewed the strategy at a two-day meeting in October.One of the striking things to emerge from our strategy sessionwas the consistency of Unilever’s approach. While the strategyhas evolved to take account of the changing external environment,its essential elements remain unchanged. The Group is stillcommitted to growing competitively and will do so by developingits core assets of brands, technology, geographic spread andmarketing excellence. Just as importantly its principles remainunchanged. The Group will deliver its results in a sustainablefashion – seeking to manage its social and environmentalimpacts in a manner which meets the needs of all its stakeholders.We are proposing to change to a simpler and more transparentdividend practice for the Unilever group from 2010 onwards.These chang
Notes to the Annual Report and Accounts This PDF version of the Unilever Annual Report and Accounts 2008 is an exact copy of the document provided to Unilever’s shareholders. Certain sections of the Unilever Annual Report and Accounts 2008 have been audited. Sections that have been audited are set out on pages 81 to 136, 140 to 141, 143 to 145
