Report & accounts 2002 in full - Unilever

Disclaimer 

Notes to the Annual Report & Accounts and Form 

20-F 2002 

This PDF version of the Unilever Annual Report & Accounts 

and Form 20-F 2002 is an exact copy of the document 

provided to Unilever’s shareholders. 

Certain sections of the Unilever Annual Report & Accounts 

and Form 20-F 2002 have been audited. Sections that have 

been audited are set out on pages 66 to 112, 118 to 133 

and 135 to 136. The auditable part of the directors’ 

remuneration report as set out 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 occurred to the financial statements 

since they were initially placed on the website. 

Legislation in the United Kingdom and the Netherlands 

governing the preparation and dissemination of financial 

statements may differ from legislation in other jurisdictions. 

Disclaimer 

Except where you are a shareholder, this material is provided 

for information purposes only and is not, in particular, 

intended to confer any legal rights on you. 

This Annual Report & Accounts and Form 20-F 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-looking statements are 

made subject to the reservations specified on page 2 of 

the Report. 

Unilever accepts no responsibility for any information 

on other websites that may be accessed from this site 

by hyperlinks.

Meeting everyday needs 

of people everywhere 

Unilever Annual Report & Accounts 2002 

and Form 20-F

A truly multi-local multinational 

Unilever is dedicated to meeting the everyday needs 

of people everywhere. Around the world our Foods and 

Home & Personal Care brands are chosen by many 

millions of individual consumers each day. Earning their 

trust, anticipating their aspirations and meeting their daily 

needs are the tasks of our local companies. They bring 

to the service of their consumers the best in brands and 

both our international and local expertise. 

Unilever’s Corporate Purpose 

Our purpose in Unilever is to meet the everyday needs of people everywhere – 

to anticipate the aspirations of our consumers and customers and to respond 

creatively and competitively with branded products and services which raise the 

quality of life. 

Our deep roots in local cultures and markets around the world are our unparalleled 

inheritance and the foundation for our future growth. We will bring our wealth of 

knowledge and international expertise to the service of local consumers – a truly 

multi-local multinational. 

Our long-term success requires a total commitment to exceptional standards of 

performance and productivity, to working together effectively and to a willingness 

to embrace new ideas and learn continuously. 

We believe that to succeed requires the highest standards of corporate behaviour 

towards our employees, consumers and the societies and world in which we live. 

This is Unilever’s road to sustainable, profitable growth for our business and longterm 

value creation for our shareholders and employees.

Contents 

Report of the Directors 

General information 2 

Financial highlights 3 

Chairmen’s statement 5 

Our code of business principles 7 

About Unilever 9 

Description of business 9 

Business structure 9 

Foods 9 

Savoury and dressings 9 

Spreads and cooking products 9 

Health & wellness 9 

Beverages 9 

Ice cream and frozen foods 9 

Home & Personal Care 10 

Home care and professional cleaning 10 

Personal care 10 

Other operations 10 

Corporate venture activities 10 

Technology and innovation 10 

Information technology 11 

Environmental responsibility 11 

Responsible corporate behaviour 12 

Competition 12 

Exports 12 

Seasonality 13 

People 13 

Related party transactions 13 

Intellectual property 13 

Description of our properties 14 

Legal and arbitration proceedings and regulatory 

matters 14 

Government regulation 14 

Operating review – highlights 15 

Operating review by region 18 

Europe 18 

North America 19 

Africa, Middle East and Turkey 20 

Asia and Pacific 21 

Latin America 22 

Operating review by category – Foods 24 

Savoury and dressings 24 

Spreads and cooking products 26 

Health & wellness and beverages 27 

Ice cream and frozen foods 28 

Operating review by category – Home & Personal Care 31 

Home care and professional cleaning 31 

Personal care 33 

Financial review 35 

Critical accounting policies 35 

Results – 2002 compared with 2001 35 

Results – 2001 compared with 2000 36 

Dividends and market capitalisation 37 

Balance sheet 37 

Cash flow 37 

Finance and liquidity 37 

Treasury and hedging policies 38 

Risk management 39 

Total Shareholder Return (TSR) 40 

Unilever’s position relative to the TSR reference group 41 

Significant changes 41 

Corporate governance 42 

Organisational structure of Unilever 42 

Legal structure of the Group 42 

Directors 42 

Advisory Directors 43 

Unilever Annual Report & Accounts and Form 20-F 2002 

Report of the Directors (continued) 

Corporate governance (continued) 

Board Committees 43 

Requirements in the Netherlands and the UK 44 

Auditors 45 

Relations with shareholders and other investors 45 

Reporting to shareholders 45 

Biographical details: 

Directors 46 


Business Presidents 47 

Corporate Officers 48 

Board changes 48 

Advisory Directors’ changes 48 

Remuneration report 49 

Report to shareholders 49 

The Remuneration Committee 49 

Directors’ remuneration policy 49 

Remuneration package 50 

Unilever’s position relative to broad based 

equity indices 52 

Directors’ pensions 52 

Directors’ service contracts 54 

Directors’ shareholding requirements 55 

Directors’ interests: share capital 55 

Remuneration of directors and executive officers 56 

Directors’ emoluments 56 

Directors’ share options 57 

Directors’ conditional share awards under 

the TSR Long-Term Incentive Plan 59 


Auditable part of remuneration report 60 

Report of the Audit Committee 61 

Financial Statements 

Contents listing for financial statements 62 

Shareholder information 

1 

Control of Unilever 138 

Share capital 138 

Unity of management 138 

Equalisation Agreement 138 

More information about our constitutional 

documents 139 

General Meetings and voting rights 139 

Directors 140 

Mutual guarantee of borrowings 140 

Combined earnings per share 140 

Leverhulme Trust 141 

N.V. Nederlandsch Administratie- en 

Trustkantoor (Nedamtrust) 141 

Material modifications to the rights 

of security holders 141 

Analysis of shareholding 142 

Information about exchange controls 

affecting security holders 143 

Nature of the trading market 143 

Taxation for US residents 145 

Dividends 147 

Cross reference to Form 20-F 148 

Glossary 149 

Financial calendar and addresses 150 

Website 151 

Publications 151 

Share registration 151

2 General information 

The Unilever Group 

Unilever N.V. (NV) is a public limited company registered in 

the Netherlands, which has listings of shares or certificates 

(depositary receipts) of NV on the stock exchanges in 

Amsterdam, London and New York and in France, Germany 

and Switzerland. 

Unilever PLC (PLC) is a public limited company registered 

in England 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 nearly as is practicable 

as a single entity (the Unilever Group, also referred to as 

Unilever or the Group). NV and PLC and their group 

companies constitute a single group under Netherlands 

and United Kingdom legislation 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. 

Publications 

This publication is produced in both Dutch and English and 

comprises the full Annual Report and Accounts for 2002 of 

NV and PLC. This document complies with the Netherlands 

and the United Kingdom regulations. It also forms the NV 

and PLC Annual Reports on Form 20-F to the Securities and 

Exchange Commission in the United States for the year 

ended 31 December 2002, and cross references to Form 

20-F are set out on page 148. It is made available to all 

shareholders who request or elect to receive it, and on the 

website at www.unilever.com. 

The separate publication, ‘Unilever Annual Review 2002’, 

containing a Summary Financial Statement with figures 

expressed in euros, with translations into pounds sterling 

and US dollars, is also published in Dutch and English. It is 

ashort form document that is prepared in accordance with 

the United Kingdom regulations for Summary Financial 

Statements. The Unilever Annual Review 2002 is mailed to 

all registered shareholders and to other shareholders who 

are either entitled or have asked to receive it, and is also 

made available on the website at www.unilever.com. 

Reporting currency and exchange rates 

Details of key exchange rates used in preparation of these 

accounts are given on page 117, together with Noon Buying 

Rates in New York for the equivalent dates. 


Abbreviations 

Wherever used in this report, the abbreviation BEIA refers to 

profit measures before exceptional items and amortisation 

of goodwill and intangibles. Unilever believes that reporting 

profit measures before exceptional items and amortisation 

of goodwill and intangibles (BEIA) provides additional 

information on underlying earnings trends to shareholders. 

Unilever uses BEIA measures primarily for internal 

performance analysis, performance targeting and incentive 

awards. The term BEIA is not a defined term under 

Netherlands, UK, or US Generally Accepted Accounting 

Principles (GAAP), and may not therefore be comparable 

with similarly titled profit measurements reported by other 

companies. It is not intended to be a substitute for or 

superior to GAAP measurements of profit. 

€ is used in this report to denote amounts in euros. 

£ and p are used in this report to denote amounts in 

pounds and pence sterling respectively. 

Fl. is used in this report to denote amounts in Dutch 

guilders. 

$ is used in this report to denote amounts in United States 

dollars, except where specifically stated otherwise. 

The brand names shown in italics in this report are trade 

marks owned by or licensed to companies within the 

Unilever Group. 

Cautionary Statement 

This Annual Report & Accounts and Form 20-F 2002 contains 

forward-looking statements (within the meaning of the US 

Private Securities Litigation Reform Act 1995) based on our 

best current information and what we believe to be 

reasonable assumptions about anticipated developments. 

Words such as ‘expects’, ‘anticipates’, ‘intends’ and other 

similar expressions are intended to identify such forwardlooking 

statements. Because of the risks and uncertainties 

that always exist in any operating environment or business, 

we cannot give any assurance that the expectations reflected 

in these statements will prove correct. Actual results and 

developments may differ materially depending upon, 

among other factors, currency values, competitive pricing, 

consumption levels, costs, environmental risks, physical risks, 

risks related to the integration of acquisitions, legislative, 

fiscal and regulatory developments and political and social 

conditions in the economies and environments where Unilever 

operates. You are cautioned not to place undue reliance on 

these forward-looking statements. 

Risks and uncertainties that could cause actual results to vary 

from those described in our forward-looking statements 

include those given under the sections entitled ‘About 

Unilever‘ on pages 9 to 14, ‘Operating review‘ on pages 15 

to 34, ‘Financial review‘ on pages 35 to 41, and ‘Risk 

management‘ on pages 39 and 40, to which you should refer.


Financial highlights 3 

Global highlights Progress against targets 

Turnover € million Underlying sales growth (1) % 

60 000 

55 000 

50 000 

45 000 

40 000 

2000 2001 

48 066 52 206 

Operating profit € million 

10 000 

8 000 

6 000 

4 000 

2 000 

2000 2001 

3 238 5 258 

Operating profit BEIA € million 

10 000 

8 000 

6 000 

4 000 

2 000 

2000 2001 

5 794 7 269 

2002 

48 760 


5 125 


7 260 

5 

4 

3 

2 

1 

Leading brands 

% turnover 

2000 2001 

1.5 

78 

4.0 

84 

Target is 5-6% by 2004 


(1) Turnover growth per annum excluding the year-on-year impact 

of acquisitions and disposals in all years. 

Operating margin BEIA % 

20 

15 

10 

5 

0 

2000 2001 

12.0 13.9 

Earnings per share (BEIA) growth % 

25 

20 

15 

10 

5 

0 

4.2 

89 

Target is operating margin BEIA >16% by 2004 

2000 2001 


14.9 

Target is low double digit growth (BEIA) per year 

10.5 12.2 

The figures shown in the Global highlights above are at current rates of exchange. The figures shown in the Progress 

against targets are at constant rates of exchange, i.e. translated at the average rates of exchange for the earlier year. 


20.9 

Financial highlights

4 Financial highlights 

at current rates of exchange 

Combined earnings per share and dividends 


Ordinary €0.51 shares of NV (a) 

Ordinary 1.4p shares of PLC 

2000 2001 2002 2000 2001 2002 

Basic earnings per share €1.07 €1.82 €2.14 €0.16 €0.27 €0.32 

9.79p 16.96p 20.13p 

Basic earnings per share (BEIA) €3.21 €3.55 €4.06 €0.48 €0.53 €0.61 

29.34p 33.15p 38.22p 

Diluted earnings per share €1.05 €1.77 €2.07 €0.16 €0.27 €0.31 

9.55p 16.51p 19.53p 

Dividend per share €1.43 €1.56 €1.70 13.07p 14.54p 16.04p 

Combined earnings per share and dividends for shares traded on the New York Stock Exchange 

(on a UK GAAP basis) in US dollars 

New York €0.51 shares of NV (a) 

5.6p American Depositary Receipts of PLC 

2000 2001 2002 2000 2001 2002 

Basic earnings per share $0.99 $1.63 $2.01 $0.59 $0.98 $1.21 

Basic earnings per share (BEIA) $2.96 $3.18 $3.81 $1.77 $1.91 $2.29 

Diluted earnings per share $0.96 $1.58 $1.95 $0.58 $0.95 $1.17 

Dividend per share (b)(c) $1.25 $1.42 $1.77 $0.76 $0.85 $1.03 

(a) For NV share capital, the euro amounts shown above and elsewhere in this document are representations in euros on the basis of 

Article 67c of Book 2 of the Civil Code in the Netherlands, rounded to two decimal places, of underlying share capital in Dutch 

guilders, which have not been converted into euros in NV’s Articles of Association. Until conversion formally takes place by amendment 

of the Articles of Association the entitlements to dividends and voting rights are based on the underlying Dutch guilder amounts. 

(b) Rounded to two decimal places. 

(c) Actual dividends payable for 2002 on NV New York shares and American Depositary Receipts of PLC may differ from those shown 

above, which include final dividend values calculated using the rates of exchange ruling on 12 February 2003 (€1.00 = $1.0735, 

£1.00 = $1.6173).

Continued growth 

• Leading brands grow by 5.4% 

• Operating margin BEIA of 14.9% is a new record 

• Cash flow from operations increases to €7.9 billion 

• Earnings per share (BEIA) grows 21% 

Sustaining the momentum 

We are delighted to report a further year of sustained 

growth towards the targets set in our Path to Growth 

strategy. Leading brands grew by 5.4% and, with the build 

up of our innovation programmes and marketplace activity, 

we have gained momentum through the year and have 

finished strongly. 

Operating margin BEIA rose to 14.9%, a gain of 1% 

over 2001. Another record high. The impact of devaluing 

currencies this year means that whilst turnover is at the 

same level as 2001 at constant rates of exchange, it has 

declined by 7% at current rates. Similarly operating profit 

BEIA increased by €0.5 billion at constant rates but was flat 

at current rates of exchange. Figures in this statement are 

at constant exchange rates. 

In 2002 the global economy grew slowly and it was a 

tougher environment in which to operate. Slower growth 

and the uncertain economic and political context caused 

turbulence in financial markets. Once again, our business 

showed its resilience in tough times. Our people used their 

skill, experience and total determination to deliver a robust 

business performance. 

Earnings per share (BEIA) grew by 21% and for the second 

year running our Total Shareholder Return (TSR) over one 

year was in the top third of our peer group. Our challenge 

is to sustain this over a three-year period and beyond. 

We continued to generate a healthy cash flow from 

operations. In addition, net proceeds from divestment 

of non-core activities included €1.0 billion cash from 

DiverseyLever, our institutional and industrial cleaning 

business, with a minority interest retained in the merged 

business of JohnsonDiversey. Other divestments included 

Mazola in North America and Loders Croklaan, our industrial 

speciality oils and fats business. In total, our cash flow 

enabled us to reduce net indebtedness and, with the benefit 

of lower interest rates, interest costs were 22% lower than 

in 2001. 

Meeting Path to Growth targets 

We continued on track towards our Path to Growth targets 

of 5-6% sustained top-line growth and operating margin 

BEIA of 16% by 2004. Leading brands grew by over 5% 

for the second year running. Innovation was key to this 

success. Advertising was entirely focused on our leading 

brands which constituted 89% of total turnover at the 

end of the year. 


Chairmen’s statement 5 

A further healthy increase in operating margin has been 

achieved whilst progressively increasing investment behind 

our brands. Our restructuring programmes continue to 

deliver on plan and the target of €1.6 billion procurement 

savings was passed ahead of schedule. Furthermore, 

by the end of the year we had reached the full Bestfoods 

integration savings target of €0.8 billion, again ahead 

of plan. 

Energising our people 

We can only meet and sustain the objectives of our Path to 

Growth strategy if our people have a passion for winning 

and a culture that encourages and rewards enterprise. 

The development of Leaders into Action programmes and 

the days we spend with our young leaders of tomorrow are 

part of an overall programme to drive change. The results 

are evident in the enthusiasm to win we see throughout the 

business and the examples of innovation that are driving 

faster growth and improved results. To recognise their 

efforts we extended our long-term reward schemes and 

variable pay to more employees. 

The energy with which our colleagues throughout the 

business have responded to the Enterprise agenda is 

exceptional. They have risen to the challenge with great 

determination as is clear from the results. 

Brands and regions 

In Home & Personal Care we have sustained the leading 

brand growth in excess of 6%. In particular our personal 

care brands continue to perform well and home care 

margins increased sharply. 

The extension of Dove from skin care to hair care 

contributed to the spectacular performance of this brand, 

which grew by over 25% for the fourth year running and 

is now achieving sales of over €2 billion. Dove shampoo 

and conditioners were rolled out across 31 more countries. 

In deodorants Rexona, and particularly Rexona for Men, 

grew strongly. 

In Foods, the focus in the first half of the year was on 

completing the Bestfoods integration, providing the firm 

platform on which to leverage innovation and marketplace 

activity in the second half. This has delivered accelerating 

leading brand growth and for the full year it was 4.4%. 

Knorr is proving a powerhouse of ideas for savoury products 

and is being extended well beyond its original concept of 

bouillon cubes. Bertolli is being extended to support 

products which have an Italian heritage. Consumers 

Report of the Directors

6 Chairmen’s statement 

responded strongly to our health & wellness brands, 

including the soy-based health drink AdeS in Brazil 

and Mexico. 

Overall we now have 14 global brands with a turnover of 

€1 billion or more. Ten years ago we had one. 

In Europe, underlying sales grew 3% with a continuing 

significant contribution from Central and Eastern Europe. 

Foods sales in Western Europe grew at 3% including 

an increasing contribution from UBF Foodsolutions, our 

food service business. There has been sustained progress 

in branded spreads and cooking products, especially in 

Flora/Becel which grew by over 10%. In Home & Personal 

Care in Western Europe, there were strong performances 

through innovation and range extension in Dove, Rexona 

and Axe. 

Underlying sales in North America grew 1% with a stronger 

performance in the second half as marketplace activity built 

through the year. In Foods, underlying sales grew 2% and 

our market shares remained firm. Slim •Fast continued to 

expand, passing the €1 billion sales mark globally. Ice cream 

again grew at well over 5% and Wishbone, Becel and Knorr 

also moved ahead. In Home & Personal Care, after a slow 

start, the successful launches of Axe deodorant and all 

fabric conditioner and the relaunch of Dove body wash 

contributed to a strong finish to the year. 

In Africa, Middle East and Turkey, underlying sales grew by 

7%. Including the increase in our holding in the Bestfoods 

Robertsons business, turnover was ahead by 9%. Growth 

was broad based across categories. 

Underlying sales in Asia and Pacific grew by 5%. Home & 

Personal Care grew across both categories and countries. 

Indonesia, Philippines and Vietnam performed particularly 

well and skin, hair and deodorants all grew at over 10% 

across the region. In Foods, there was good growth in 

South East Asia as the Bestfoods brands benefited from 

the Unilever distribution system. 

In Latin America, underlying sales grew by 12% driven by 

pricing action to recover devaluation-led cost increases. In 

laundry, market shares have held firm against our nearest 

competitor and personal care continued to perform strongly. 

Sedal shampoo grew exceptionally well across the region. 

Dove shampoo has been launched in Brazil, Chile, Mexico 

and Peru and is making good progress. In Foods, ice cream 

grew by over 10%, mostly volume. 

A responsible enterprise 

Clear values and committed social responsibility are essential 

to how Unilever conducts itself. At a time when the way 

businesses behave is coming under greater scrutiny, 

Unilever’s corporate reputation has become an even more 

important asset. 

In 2001, we revised our Code of Business Principles and, 

during 2002, we rolled it out across the business, engaging 


our people in a dialogue to ensure that everyone in Unilever 

understands what is expected of them. We also published 

our second Social Review, which gives an insight into our 

day-to-day practices and our relationships with the societies 

in which we live. We continue to look at all aspects of our 

corporate governance to ensure that we stay at the 

forefront of best practice. 

Unilever is deeply rooted in the communities in which it 

operates and in 2002 we supported many community 

projects around the world, mainly by sharing our skills 

and expertise. 

During 2002, we continued to reduce our impact on the 

environment. We bought more than a third of our fish 

from sustainable sources and completed protocols for the 

sustainable management of five key crops. Our efforts to 

improve the quality of water in rivers and lakes and the 

sustainability of agriculture and fishing were recognised 

externally. For the fourth year running we have led our 

sector in the Dow Jones Sustainability Indexes. 

Looking forward 

We are confident that the strength of our brands, the 

dedication of our people and the geographical spread of 

our business will enable Unilever to continue to progress 

and prosper in 2003. We have sound and clearly understood 

strategies, brands that serve people’s basic needs and 

aspirations and generate dependable cash flow. These are 

the essential elements, together with a proud corporate 

reputation, which will enable us to maintain the momentum 

of our Path to Growth, even in the difficult times that may 

lie ahead. We thank all our employees for their commitment 

and exceptional teamwork throughout the year. 

Antony Burgmans Niall FitzGerald 

Chairmen of Unilever

Chairmen’s introduction 

Unilever has earned a reputation for conducting its business 

with integrity and with respect for the interests of those our 

activities can affect. This reputation is an asset, just as real 

as our people and brands. 

Our first priority is to be a successful business and that 

means investing for growth and balancing short-term and 

long-term interests. It also means caring about our 

consumers, employees and shareholders, our business 

partners and the world in which we live. 

To succeed requires the highest standards of behaviour from 

all of us. The general principles contained in this Code set out 

those standards. More detailed guidance tailored to the needs 

of different countries and companies will build on these 

principles as appropriate, but will not include any standards 

less rigorous than those contained in this Code. 

We want this Code to be more than a collection of highsounding 

statements. It must have practical value in our 

day-to-day business and each one of us must follow these 

principles in the spirit as well as the letter. 

Antony Burgmans Niall FitzGerald 

In this Code the expressions ’Unilever’ and ‘Unilever 

companies’ are used for convenience and mean the 

Unilever Group of companies comprising Unilever N.V., 

Unilever PLC and their respective subsidiary companies. 

The Board of Unilever means the Directors of Unilever N.V. 

and Unilever PLC. 


Our code of business principles 7 

Standard of conduct 

We conduct our operations with honesty, integrity and 

openness, and with respect for the human rights and interests 

of our employees. We shall similarly respect the legitimate 

interests of those with whom we have relationships. 

Obeying the law 

Unilever companies and our employees are required to 

comply with the laws and regulations of the countries in 

which we operate. 

Employees 

Unilever is committed to diversity in a working environment 

where there is mutual trust and respect and where everyone 

feels responsible for the performance and reputation of 

our company. 

We will recruit, employ and promote employees on the sole 

basis of the qualifications and abilities needed for the work 

to be performed. We are committed to safe and healthy 

working conditions for all employees. We will not use 

any form of forced, compulsory or child labour. We are 

committed to working with employees to develop and 

enhance each individual’s skills and capabilities. We respect 

the dignity of the individual and the right of employees 

to freedom of association. We will maintain good 

communications with employees through company-based 

information and consultation procedures. 

Consumers 

Unilever is committed to providing branded products and 

services which consistently offer value in terms of price and 

quality, and which are safe for their intended use. Products 

and services will be accurately and properly labelled, 

advertised and communicated. 

Shareholders 

Unilever will conduct its operations in accordance with 

internationally accepted principles of good corporate 

governance. We will provide timely, regular and reliable 

information on our activities, structure, financial situation 

and performance to all shareholders. 

Business partners 

Unilever is committed to establishing mutually beneficial 

relations with our suppliers, customers and business partners. 

In our business dealings we expect our partners to adhere 

to business principles consistent with our own. 


8 Our code of business principles 

Community involvement 

Unilever strives to be a trusted corporate citizen and, as an 

integral part of society, to fulfil our responsibilities to the 

societies and communities in which we operate. 

Public activities 

Unilever companies are encouraged to promote and defend 

their legitimate business interests. Unilever will co-operate 

with governments and other organisations, both directly and 

through bodies such as trade associations, in the development 

of proposed legislation and other regulations which may 

affect legitimate business interests. Unilever neither supports 

political parties nor contributes to the funds of groups 

whose activities are calculated to promote party interests. 

The environment 

Unilever is committed to making continuous improvements 

in the management of our environmental impact and to the 

longer-term goal of developing a sustainable business. 

Unilever will work in partnership with others to promote 

environmental care, increase understanding of 

environmental issues and disseminate good practice. 

Innovation 

In our scientific innovation to meet consumer needs we 

will respect the concerns of our consumers and of society. 

We will work on the basis of sound science, applying 

rigorous standards of product safety. 

Competition 

Unilever believes in vigorous yet fair competition and 

supports the development of appropriate competition laws. 

Unilever companies and employees will conduct their 

operations in accordance with the principles of fair 

competition and all applicable regulations. 

Business integrity 

Unilever does not give or receive, whether directly or 

indirectly, bribes or other improper advantages for business 

or financial gain. No employee may offer, give or receive any 

gift or payment which is, or may be construed as being, a 

bribe. Any demand for, or offer of, a bribe must be rejected 

immediately and reported to management. 

Unilever accounting records and supporting documents must 

accurately describe and reflect the nature of the underlying 

transactions. No undisclosed or unrecorded account, fund 

or asset will be established or maintained. 


Conflicts of interests 

All Unilever employees are expected to avoid personal 

activities and financial interests which could conflict with 

their responsibilities to the company. Unilever employees 

must not seek gain for themselves or others through 

misuse of their positions. 

Compliance – monitoring – reporting 

Compliance with these principles is an essential element 

in our business success. The Unilever Board is responsible 

for ensuring these principles are communicated to, and 

understood and observed by, all employees. 

Day-to-day responsibility is delegated to the senior 

management of the regions and operating companies. 

They are responsible for implementing these principles, 

if necessary through more detailed guidance tailored to 

local needs. 

Assurance of compliance is given and monitored each year. 

Compliance with the Code is subject to review by the Board 

supported by the Audit Committee of the Board and the 

Corporate Risk Committee. 

Any breaches of the Code must be reported in accordance 

with the procedures specified by the Joint Secretaries. 

The Board of Unilever will not criticise management for any 

loss of business resulting from adherence to these principles 

and other mandatory policies and instructions. 

The Board of Unilever expects employees to bring to their 

attention, or to that of senior management, any breach or 

suspected breach of these principles. 

Provision has been made for employees to be able to report 

in confidence and no employee will suffer as a consequence 

of doing so.

Description of business 

Unilever is one of the world’s leading suppliers of fast 

moving consumer goods in foods, household care and 

personal product categories. 

Business structure 

Our operations are organised into two global divisions – 

Foods and Home & Personal Care (HPC) – headed by 

Division Directors. This structure allows the requisite focus 

on foods and home & personal care activities at both the 

regional and global levels. 

These divisions’ operations are organised into businesses on 

a regional basis, with the exception of the global businesses 

of Prestige, our fragrance business within HPC and, within 

Foods, ice cream and frozen foods, Slim•Fast Worldwide and 

Foodsolutions, which provides solutions for professional 

chefs and caterers. The regional and global businesses are 

headed by Business Presidents who are responsible for their 

profitability. These businesses remain the driving force 

behind Unilever, comprising the operating companies which 

provide the key interface with customers and consumers, 

allowing quick response to the needs of local markets. 

Full details of significant acquisitions and disposals can be 

found on pages 16 and 17. Only those with particular 

relevance to our business structure are reported below. 

Foods 

For an explanation of the new category structure within 

Foods see page 24. 

Savoury and dressings 

We are the global leader in savoury and dressings. 

Our leading savoury brand, Knorr, is Unilever’s biggest 

brand, with over €3.3 billion of sales in over 100 markets. 

Its product range includes soups, bouillons, sauces, snacks, 

noodles, frozen food and meal solutions. Our wider savoury 

product range is currently marketed around the world under 

a variety of brand names. 

Hellmann’s is the world’s number one mayonnaise brand. 

With other major brands in the portfolio including Amora, 

Calvé and Wishbone, we have the biggest dressings business 

in the world. We continue to extend our dressings product 

range rapidly to appeal to consumers’ growing appetite 

for new tastes, flavours and textures, healthier options 

and snacks. 

With Bertolli, which began as a leading Italian olive oil 

brand, we are building on the qualities associated with 

Italian food to extend the brand into spreads, dressings and 

pasta sauces. Bertolli is now sold in more than 30 countries. 

Spreads and cooking products 

We are the market leader in spreads in Europe and North 

America. Our combined spreads and cooking products 

have a turnover of more than €6 billion in more than 

100 countries. 



Spreads marketed under Becel and Flora contain ingredients 

that are proven to reduce cholesterol. New cooking aids 

including Rama/Blue Band’s Culinesse, a liquid margarine, 

provide healthier alternatives to traditional oils and fats. 

Health & wellness 

Consumers are increasingly demanding healthier options 

in their food and drinks. We respond to their needs with 

products and brands across our portfolio including Slim •Fast, 

which answers consumers’ need to manage their weight 

with healthy food that fits in to contemporary lifestyles. 

From its origins in North America, Slim •Fast is expanding 

across Europe, Asia and Latin America with a range 

including meal replacement drinks, soups and breakfast 

bars and now has sales of more than €1 billion. 

In Asia and Africa we meet consumers’ needs for 

nutritionally-enhanced staples in affordable formats with 

Annapurna and, under AdeS in Latin America, we market 

a range of tasty, nutritional, soy-based drinks. 

Beverages 

We are the largest seller of branded packet tea in the 

world through our Lipton and Brooke Bond brands. 

Lipton is the world’s leading brand in tea and ice tea. 

We recently launched a successful soft drinks innovation 

with Lipton Brisk in North America. Our joint venture with 

PepsiCo Inc. helps us to extend the reach of our brands 

through a distribution network complementary to our own 

supply chain. 

Ice cream and frozen foods 

We are the world’s leading producer of ice cream, with sales 

in more than 40 countries worldwide. Ice cream products 

under the ‘Heart logo’, including Cornetto, Magnum, Carte 

d’Or and Solero, are sold internationally. Breyers, Ben & 

Jerry’s, Klondike and Popsicle are leading North Americanbased 

brands. Ben & Jerry’s is also sold in Europe. 

We are the leading producer of frozen foods in 

Europe, under the Findus brand in Italy, Birds Eye brand 

in the United Kingdom and Iglo brand in most other 

European countries. 


10 About Unilever 

Home & Personal Care 

Home care and professional cleaning 

We are one of the global leaders in the domestic home care 

market. Our products have been developed to meet the 

diverse requirements of consumers to clean and care for 

their homes and clothes. In laundry, they include tablets for 

convenience, traditional powders and liquids for soaking, 

washing by hand and by machine. In developing and 

emerging markets, tailored products, including soap bars, 

are available for lower income consumers. In household 

care our products are designed to tackle most cleaning 

and hygiene needs around the home. 

Our home care brands are available in over 100 countries, 

many of them holding leading market positions. These 

brands include Omo, Surf, Looks Great, Snuggle, Comfort, 

Cif and Domestos. 

In May 2002, we sold DiverseyLever, our institutional 

and industrial cleaning business, to Johnson Professional. 

Unilever retains a one-third equity stake in the combined 

JohnsonDiversey business, with an option to exit the 

business from 2007. 

Personal care 

We are one of the world leaders in skin and hair care, 

deodorants and anti-perspirants. In skin care our global 

brands include Lux, Dove and Pond’s. Rexona, Axe and 

Dove are the key brands in deodorants and anti-perspirants. 

Hair products are available under the Sunsilk, Dove and 

Suave brands. 

We also have an important market share in oral care, with 

products sold widely, predominantly under the Signal brand. 

Our Prestige fragrance business is one of the world’s largest. 

We sell a number of fragrances under the Calvin Klein 

name, including Obsession, Eternity and Truth. In addition, 

in recent years cK one and Crave have been introduced to 

appeal to the youth market. The designer fragrance brands 

Cerruti, Lagerfeld, Chloé and Valentino, together with 

Nautica, Vera Wang and BCBG fragrance, complete our 

extensive portfolio. 

Other operations 

To support our consumer brands, we own both tea 

plantations in India, Kenya and Tanzania and palm oil 

plantations in the Democratic Republic of Congo, Côte 

d’Ivoire and Ghana. 

Corporate venture activities 

As announced on 30 September 2002, we are to invest 

€170 million in building business opportunities that fit our 

core business interests in Foods and Home & Personal Care. 

Of this, as sponsor and lead investor, we have committed 

€100 million to the newly created Langholm Capital 

Partners Fund. This fund will focus on acquiring majority 

or influential minority stakes in private UK and continental 

European companies valued between €20 million and 

€200 million and demonstrating above-average mediumterm 

growth prospects. In addition, up to €70 million will 


be invested over three years in two newly developed 

venture funds of our own, Unilever Ventures and Unilever 

Technology Ventures. The former will act as an early stage 

business development fund; the latter, based in California, 

will invest in technology-based funds and start-up 

companies. 

Technology and innovation 

To support our Path to Growth strategy we continued to 

focus research and development on fewer, global projects 

to reinforce our leading brands. We established a network 

of Global Innovation Centres to develop the brands and to 

accelerate their growth across sectors and regions. 

In 2002, we spent €1 166 million (2001: €1 178 million; 

2000: €1 187 million) on research and development – 2.4% 

of our turnover. We introduced new ways of working to 

further align research and development with business needs 

and improve the quality and speed of innovation. For 

example, we linked our R&D strategy more closely with 

divisional strategic plans and R&D was represented on new 

global brand teams. 

These changes led to some significant developments as we 

focused on fewer global projects. In Home & Personal Care, 

these included a single fabric conditioner ingredient for 

Comfort and Snuggle, giving us greater purchasing power 

for raw materials and reducing manufacturing costs. We 

also developed the Dove ultra moisturising bar and rolled 

out Dove Moisturising Shampoo and Conditioner in Europe, 

Asia and Latin America. The division also launched a new 

Axe formulation, providing superior odour protection and, 

in the anti-ageing market, we launched the clinically 

superior Pond’s Dramatic Results. 

Foods also delivered a series of new innovations. A Knorr 

snack range was introduced in Latin America, providing 

affordable, nutritious products for low-income consumers. 

In the UK, a Knorr healthy eating range was brought to the 

consumer under the name Knorr Vie. Lipton launched a 

new, refreshing lemonade in the US and a new tea drink, 

called Sparkle, in Japan. Slim •Fast introduced cereal bars in 

the US, while under the Bertolli brand new liquid margarines 

and pasta sauces were launched in Europe. 

In total, Unilever filed 450 new patent applications. While 

some innovations made a significant contribution in 2002 

the benefits of others will be felt during 2003.

Information technology 

In 2002, we continued to direct our IT towards achieving 

Unilever’s strategic objectives. 

We further simplified business processes and core 

transaction systems, building on our global partnership with 

SAP. Through common information, processes and systems, 

we are accelerating the move to regional businesses and 

fully exploiting Unilever’s scale. With a light but disciplined 

touch to what is made common at a global level, we are 

making global synergies, while sharpening our focus on 

customers and consumers both locally and regionally. The 

simplification of our IT infrastructure enabled these changes 

while reaping further benefits in cost savings, including the 

signing of our largest ever telecommunications deal, with 

BT. This telecommunications services contract sees us 

reducing the number of suppliers around the world from 

400 to one. 

Our global data warehouse, successfully established this 

year, is key to achieving common information across 

Unilever and supporting our regional businesses. On this 

foundation, we have built information systems to track 

and manage Path to Growth achievement, with strategic 

applications for the supply chain and brand and customer 

development. In the financial arena, our financial, 

management and brand reporting are being consolidated 

into the same data warehouse, for completion in 2003. 

These systems are providing Unilever with more 

comprehensive, consistent and immediate information 

than ever before. 

We successfully piloted our global e-business gateway, the 

Unilever Private Exchange. The gateway, which becomes 

fully operational in 2003, strengthens our e-business 

capability by providing secure links between our operating 

companies and our suppliers’ and customers’ systems and 

to external electronic marketplaces. The success of these 

marketplaces and gateways is, of course, dependent on 

industry standards for electronic information exchange. 

Unilever demonstrated its commitment to industry standards 

by co-chairing the Global Commerce Initiative, the world’s 

largest advisory group for voluntary data standards. We are 

working on an electronic catalogue of our products, based 

on these standards, which will simplify ordering for retailers. 

Some good examples of our exploitation of e-business 

technology, building on the foundations established, include: 

• branded websites and direct e-mail formed a fundamental 

part of new relationship marketing programmes targeting 

our most valuable consumers and supporting our global 

brands; 

• our Ariba online buying system enables purchases of nonproduction 

items to be made at volume-negotiated prices 

from selected suppliers. Almost 2 000 Unilever people are 

now using Ariba in 24 countries; 



• in our European Foods business, we linked our factory 

systems with our strategic suppliers. This enables suppliers 

to manage Unilever stock by looking into our systems to 

check current stock levels; 

• in India, we connected more than 1 000 stockists to our 

systems, providing them with better stock control and 

easier replenishment. This led to higher sales growth and 

inventory savings for customers. 

Environmental responsibility 

Productive farmland, thriving fish stocks and clean water are 

essential to our success. Our desire to protect them goes 

hand in hand with a growing determination in society to 

conserve the planet’s resources. 

In 2002, we continued to work on reducing our 

environmental impact while increasing production, and 

measuring our performance against targets. The latest 

data (for 2001) is available at www.unilever.com/ 

environmentsociety. We also reviewed and updated our 

environmental strategy to achieve continued long-term 

improvement in our environmental impact. 

Around the world more and more people enjoy our foods. 

We need to make our agricultural supply chain more 

sustainable. Our sustainable agriculture programme achieved 

its first target by completing the protocols for sustainable 

management of all five key crops – palm oil, tea, peas, 

spinach and tomatoes. All the protocols were agreed in 

2002 with the Sustainable Agriculture Advisory Board. They 

will shortly be published on www.growingforthefuture.com. 

For the benefit of the environment, we are sharing this 

knowledge of good agricultural practice and we have jointly 

established an industry Sustainable Agriculture Initiative. 

Our progress in agriculture is matched by our commitment 

to sustainable fisheries. We bought more than a third of our 

fish from sustainable sources, of which 6% was certified to 

Marine Stewardship Council standards, including New 

Zealand hoki. This represents good progress towards our 

target of buying all fish from sustainable sources by 2005. 

In Europe we continued to support the need for a more 

sustainable fisheries policy. 

Consumers need water to use our products, agriculture 

needs it for irrigation and it is used by our factories. As part 

of our global sustainability initiative, we extended our 

partnership with Rhodes University in South Africa. The 

Unilever Centre for Environmental Water Quality will 

focus on improving water management and ensuring 

the availability of clean, freshwater resources. 



We reduced the impact of many of our key performance 

indicators, such as energy and water use. However, we did 

not meet all of the stretching targets that we set ourselves. 

For the fourth year running we have led our sector in the 

Dow Jones Sustainability Indexes. We also won the best 

overall Environmental Reporting Award, in the Association 

of Chartered Certified Accountants (ACCA) UK Awards for 

Sustainable Reporting. 

Responsible corporate behaviour 

Corporate social responsibility is integral to the way we run 

our business and has been part of our operating tradition 

from our earliest days. Our corporate purpose and Code of 

Business Principles commit us to the highest standards of 

corporate behaviour as we seek to meet the everyday needs 

of people everywhere. 

The Code of Business Principles sets a framework for 

operational standards of behaviour, such as ensuring the 

safety of products or reducing the environmental impact of 

our manufacturing operations. Following revision in 2001, 

the Code was rolled out around our business in 2002 to 

help all our employees understand its implications. The rollout 

included global and regional workshops, supported by 

an intranet site and an online learning tool. The Code has 

been translated into more than 35 languages. 

Our director for corporate development leads our work 

on corporate social responsibility. Over recent years this 

programme has focused on increasing our understanding 

and explaining the impact of our business on society. 

We regard the very business of doing business in a 

responsible and sustainable way as the core of our 

corporate social responsibility: selling products that 

meet local consumers’ needs, investing in productive 

capacity, spreading our technical know-how, working 

in partnerships through the value chain and in local 

communities, and making environmental responsibility 

a central business practice. 

In late 2002 we published a second Social Review (available 

online at www.unilever.com/environmentsociety). The 

Review explores what it means for us to be a responsible 

corporate citizen. It gives an insight into the day-to-day 

practice of our business around the world and our 

relationships with consumers, customers and those who 

work in our companies, as well as with our wider 

community of stakeholders. 

In 2002, our companies spent approximately €69 million 

on community projects. These ranged from commercial 

marketing initiatives that contributed to communities such 

as Signal toothpaste’s dental care programme in Saudi 

Arabia and Bushells tea road safety campaign in Australia, 

to social investments such as our uniquely ME! self-esteem 

programme for underpriviledged children run with the Girl 

Scouts in the USA. 


Often it is in our direct involvement, in the sharing of our 

skills and expertise, that we can make the most difference. 

For example, in China, Mexico and South Africa, Unilever 

actively participates in local schools, not only through 

donations but also through employees giving their time to 

teach and to renovate buildings. At the end of 2001, our 

company in Brazil handed over to the local community a 

redundant ice cream factory it had helped to renovate. The 

factory is now used as a technical school for 21 000 lowincome 

students on courses as diverse as computing, hotel 

management and tourism. 

Our brands are active too. Building on its long-standing 

promotion of heart health in Canada, Becel supported 

Stroke Month and World Heart Day by donating 25 cents 

from each Becel spread or oil sold in several provinces. 

This raised Canadian $200 000 (€136 000) for heart health 

research and hospital programmes. In Europe and Chile our 

Domestos brand has been working in a five-year alliance 

with the Red Cross movement to promote initiatives on 

health and hygiene, a relationship now evolving to include 

other Home & Personal Care brands. It is by focusing on the 

areas in which we have particular business expertise that we 

can make the most effective contribution to society. 

Competition 

We have a wide and diverse set of competitors in our 

consumer goods businesses. Many of our competitors 

also operate on an international scale, but others have 

a narrower regional or local focus. 

Competition is intense and challenging. We aim to 

compete and give value to our consumers and customers 

in three ways: 

• by continually developing new and improved products; 

• by sharing our innovations and concepts with our 

businesses all around the world; 

• by striving to lower the cost of our sourcing, 

manufacturing and distribution processes whilst still 

maintaining, and improving, the quality of our products. 

We support efforts to create a more open competitive 

environment through the liberalisation of international 

trade. We also support the fuller implementation of the 

Single European Market and inclusion of other European 

countries in the European Union. 

Exports 

We sell our products in nearly all countries throughout 

the world and manufacture in many of them. Inside the 

European Union we make many of our products in only 

a few member countries, for sale in all of them. 

We also export a wide range of products to countries 

where we do not make them. We often use this export 

trade to develop new markets, usually through our facilities 

in neighbouring countries, before building local 

manufacturing facilities.

Seasonality 

Certain of our businesses, such as ice creams and prestige 

fragrances, are subject to significant seasonal fluctuations in 

sales. However, Unilever operates globally in many different 

markets and product categories. No individual element of 

seasonality is likely to be material to the results of the 

Group as a whole. 

People 

Year end in thousands 2002 2001 2000 1999 1998 

Europe 60 71 80 74 80 

North America 21 22 39 22 23 

Africa, Middle East 

and Turkey 52 49 48 50 59 

Asia and Pacific 82 85 84 71 72 

Latin America 32 38 44 29 31 

Total 247 265 295 246 265 

Establishing an Enterprise Culture, to inspire a passion for 

winning among our people is an essential ingredient of our 

Path to Growth strategy. In 2002, we made further progress 

in making this culture into an integral part of Unilever. 

One example of Enterprise Culture in action was the 

turnaround achieved at our previously slow-growing 

operation in Australia and New Zealand. This followed the 

creation of a single Australasian business that challenged 

employees to do things differently and to connect more 

closely with consumers. Their energy and drive are indicative 

of similar initiatives around the world. 

To further motivate our people towards sustained business 

growth, we surveyed over 100 000 Unilever people from 

110 countries, giving us invaluable insights into our Path to 

Growth progress. The results will help further develop our 

human resources strategy. 

Career development at Unilever, as befitting our Enterprise 

Culture, is a shared responsibility between leaders and 

their teams. 

In 2002, we pursued several diverse development initiatives. 

We became more exacting in measuring performance, 

through more rigourous application of Leadership for 

Growth Profiles – a move which also allows managers 

to become better coaches. Originally designed for top 

management, profiles have now been expanded for use 

across all levels. 

Unilever’s future depends on developing its up and coming 

managers. In July, some 80 managers from 35 countries 

spent five days together as part of the young leaders of 

tomorrow programme, which is part of our comprehensive 

management development strategy. This event, which was 

attended by both Unilever Chairmen, helped participants to 

consider how their personal goals complement Unilever’s 

strategic objectives. 



We continued to adopt new ways to foster team spirit and 

encourage commitment to Unilever values. For example, we 

brought together 120 Latin American Home & Personal Care 

managers in a team project to refurbish a number of 

community facilities in São Paulo, Brazil. 

Our new divisional structure empowers our people to take 

decisions quickly and seize opportunities. Amongst others, 

we built on the momentum of early Dove hair successes in 

Asia by rolling out the range in 31 more countries in 2002, 

in a vastly accelerated timeframe. 

To conclude the reorganisation that accompanies Path to 

Growth we are streamlining the corporate centre, making 

services more responsive to Unilever’s changing needs. 

As part of our strategy to encourage managers to take more 

control of their careers, we rolled out open job posting in 

2002. Under the initiative most Unilever vacancies are 

advertised internally on a new intranet site. This helps us to 

identify existing employees who could fill these positions 

and to retain talented people. 

Externally, the roll-out of our new Employer Brand across 

55 countries has made our approach to potential employees 

more attractive and effective. 

Unilever is one of the most diverse organisations in the 

world: our top 200 leaders are drawn from 33 nationalities. 

Over a quarter of our managers are women. In 2002, as a 

step towards developing our diversity vision and strategy, we 

conducted a global diversity assessment. Future initiatives 

include steps to improve our top leaders’ understanding of 

the barriers faced by people from diverse backgrounds. 

We are keen to recognise and reward success. We extended 

our long-term incentive programme to a further 4 000 

employees and variable pay to 15 000 more employees. 

Related party transactions 

Transactions with related parties are conducted in 

accordance with the transfer pricing policies described 

on page 68 and consist primarily of sales to joint ventures 

and associates. Other than those disclosed in this report, 

there were no related party transactions that were material 

to the Group or to the related parties concerned that require 

to be reported in 2002 or the preceding two years. 

In approximately 40 countries, our associated company, 

JohnsonDiversey Inc., acts as Unilever’s sole and exclusive 

sales agent for professional channels, in return for which it 

receives an agency fee. Information concerning guarantees 

given by the Group is stated in note 24 on page 99 and 

under ’Mutual guarantee of borrowings’ on page 140. 

Guarantees are also given within the Group by the parent 

companies, as described on pages 133 and 136. 

Intellectual property 

We have a large portfolio of patents and trademarks, 

and we conduct some of our operations under licences 

which 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 our best efforts to 

protect our brands and technology. 



Description of our properties 

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. 

There are no environmental issues affecting the properties 

which would have a material impact upon the Group. 

The directors take the view that 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. See the schedule of principal group 

companies and fixed investments on page 128 and details 

of tangible fixed assets in note 10 on page 81. 

Legal and arbitration proceedings and regulatory 

matters 

We are not involved in any legal or arbitration proceedings 

and do not have any obligations under environmental 

legislation which we expect to lead to a material loss in 

the context of the Group results. None of our directors or 

officers are involved in any such material legal proceedings. 

Unilever has businesses in many countries and, from time to 

time, these are subject to investigation by competition and 

other regulatory authorities. The most significant of these 

in recent years concerns ice cream distribution in Europe, 

notably the issues of outlet and cabinet exclusivity. The 

decision of the European Court of First Instance in the 

matter of our appeal against the European Commission’s 

negative decision on cabinet exclusivity in Ireland is expected 

in the first half of 2003. In the event that our appeal fails, 

among the consequences will be the need to institute 

changes to the manner in which we offer impulse ice cream 

at the point of sale, initially in the Republic of Ireland and 

subsequently elsewhere in Europe. 

Government regulation 

Unilever businesses are governed, in particular, by national 

laws designed to ensure that their products may be safely 

used for their intended purpose and that their labelling and 

advertising complies in all respects with relevant regulations. 

The introduction of new products and ingredients and 

processes is, specifically, subject to rigorous controls. 

Unilever businesses are further regulated by data protection 

and anti-trust legislation. Important regulatory bodies 

include the European Commission and the US Food and 

Drug Administration. 

Unilever Annual Report & Accounts and Form 20-F 2002

Basis of reporting and discussion 

Our accounting policies are based on United Kingdom 

generally accepted accounting principles (GAAP) and UK and 

Netherlands law which differ in certain respects from United 

States GAAP. The principal differences are described on 

page 119. We have shown reconciliations to net income and 

capital and reserves under US GAAP on pages 118 and 119. 

The commentary throughout this operating review is, 

unless otherwise indicated, based on the results of the 

Group including acquisitions made each year, at constant 

rates of exchange (see below) and before exceptional 

items and amortisation of goodwill and intangibles (BEIA). 

In our reporting, turnover means Group turnover plus our 

share of turnover of joint ventures, net of our share of any 

sales to the joint ventures already included in the Group 

figures. Operating profit means Group operating profit plus 

our share of operating profit of joint ventures. These 

measures do not include our share of the turnover or 

operating profit of associates. References to sales growth 

are made on an underlying basis, excluding the effects of 

acquisitions and disposals. References to turnover growth 

include the effects of acquisitions and disposals. 

Reporting currency and exchange rates 

Foreign currency amounts for results and cash flows are 

translated from underlying local currencies into euros 

using annual average exchange rates; balance sheet 

amounts are translated at year-end rates except for the 

ordinary capital of the two parent companies. These are 

translated at the rate prescribed by the Equalisation 

Agreement of £1 = Fl. 12, and thence to euros at the 

official rate of €1.00 = Fl. 2.20371 (see Control of 

Unilever on page 138). 

The discussion of performance included in this operating 

review is based on constant rates of exchange. This removes 

the distorting impact of currency movements and more 

clearly portrays the underlying progress of the operations 

themselves. The rate used is the annual average rate for the 

prior year. For each two-year period, the year-on-year trends 

in euros are the same as those which would arise if the 

results were shown in sterling or US dollars at constant 

exchange rates. 

For the reporting of 2000 at current exchange rates, the 

results of the Bestfoods business acquired on 4 October of 

that year were translated at the average rates of exchange 

for the last quarter of 2000. In the constant rate comparisons 

for 2001 included in the Operating review on pages 18 

to 34, the results for all parts of the Group have been 

translated at average rates of exchange for the full year to 

31 December 2000. This means that the 2000 results in 

these comparative tables will differ in some cases from the 

values translated at current rates of exchange. 

Details of exchange rates used in preparation of these 

accounts and of the Noon Buying Rates against the 

US dollar are given on page 117. 



2002 results compared with 2001 

Including the impact of acquisitions and disposals, turnover 

for the year of €52 020 million was in line with 2001 levels. 

Excluding the effect of acquisitions and disposals, underlying 

growth was 4.2%. The net effect of acquisition and disposal 

activity was a reduction of 4.4%. 

Operating profit BEIA increased by 6.5% to €7 739 million 

and operating margin BEIA moved ahead to 14.9% from 

13.9% in 2001. The improvement in margin is primarily due 

to business restructuring and procurement savings under the 

Path to Growth strategy combined with continued success 

in the integration of Bestfoods, partially offset by higher 

advertising and promotions expenditure. 

Operating profit increased by 3.4% to €5 436 million. 

This includes a higher net charge for exceptional items 

than the prior year, which included higher profits on the 

sale of brands. 

Exceptional items 

Operating profit for the year includes net exceptional 

charges of €939 million, an increase of 59.7% on 2001. 

Restructuring investment was €1 298 million, which was 

offset by the release of provisions following settlement of 

certain legal claims in our favour and profits on disposals 

totalling €359 million. 

The exceptional items incurred in the year primarily 

relate to the Path to Growth strategy we announced 

on 22 February 2000 to accelerate growth and expand 

margins, and to restructuring arising from the integration 

of Bestfoods. The aggregate cost of these programmes over 

5 years is estimated to be €6.2 billion, the majority of 

which is expected to be exceptional. An €828 million 

profit recognised in 2001 on the sale of brands to secure 

regulatory approval for the acquisition of Bestfoods is not 

included in this estimate. 

Details of movements in restructuring and other provisions 

are given in note 19 on page 95. 

Under US GAAP, some of the restructuring charges in each 

year would not have been recognised until certain additional 

criteria had been met, and would then have been included 

as a charge in subsequent years. Details of the US GAAP 

adjustments relating to the restructuring charges are given 

on pages 118 to 120. 

Amortisation of goodwill and intangibles 

The amortisation charge for the year was €1 364 million, 

a decrease of 4.1% on 2001. 2002 includes €1 110 million 

(2001: €1 170 million) in respect of goodwill recognised on 

the acquisition of Bestfoods. 

Under US GAAP, there is no amortisation charge with effect 

from 1 January 2002 for goodwill or for intangible assets 

having indefinite lives. Further details are given on pages 

118 to 120. 


16 Operating review – highlights 

2001 results compared with 2000 

Turnover increased by 11% to €53 400 million. This increase 

was the result of an acquisition impact of 12%, a disposal 

impact of (5)% and underlying growth of 4%. 

Operating profit BEIA increased by 28% to €7 416 million, 

and operating margin BEIA rose to an historic high of 

13.9% from 12.0% in 2000. The improvement in margin 

primarily reflects the ongoing contribution from Path to 

Growth restructuring and procurement savings and the 

successful integration of Bestfoods. 

Operating profit increased by 66% to €5 360 million, being 

primarily the net impact of acquisitions and disposals offset 

by an increase in the amortisation charge. 

Exceptional items 

Exceptional items for 2001 were €620 million, which 

included €1 564 million of restructuring investment and 

profits on disposals of €944 million. Of the latter, 

€828 million related to the profit on the sale of the 

brands to secure regulatory approval for our acquisition 

of Bestfoods and €114 million related to profit on the sale 

of Unipath. Associated costs included in operating profit 

were €393 million. 

Amortisation of goodwill and intangibles 

The amortisation charge in 2001 was €1 436 million. 

This included €1 186 million for Bestfoods. 

Acquisitions and disposals 

In 2002, we increased our holding in the Robertson’s 

business in South Africa and Israel to 59%, and took a 

one-third equity share in JohnsonDiversey Holdings Inc. 

(see below). 

No significant acquisitions were made during 2001. 

On 18 February 2003, Unilever announced an agreement 

to acquire the remaining unheld shares in CPC/Aji Asia, a 

joint venture with activities in six countries, from Ajinomoto 

Co. Inc, Japan. The acquisition will be in two parts with 

approximately one half of Ajinomoto’s holding being 

transferred on 25 March 2003 and the balance scheduled 

for transfer in March 2004. Unilever will pay US $381 million 

(approximately €360 million) for Ajinomoto’s equity holding. 

Unilever will have full management control of the entire 

business from 25 March 2003. The deal is subject to 

approval by regulatory authorities. 

In 2002 we disposed of 35 businesses for a total 

consideration of approximately €1 993 million. 

Significant disposals in 2002 were as follows: 

On 8 January 2002, we completed the sale of our Unimills 

refinery business at Zwijndrecht, the Netherlands, to Golden 

Hope Plantations Berhad of Malaysia, for approximately 

€60 million in cash. This business had annual sales to third 

parties of approximately €130 million in 2001. 


In January and February 2002, we completed the sale of the 

Mafer snacks business to Sabritas and the Clemente Jacques 

culinary business to La Costeña, both in Mexico. Together, 

these businesses had sales in 2001 of approximately 

€40 million. 

On 3 May 2002, we completed the sale of our DiverseyLever 

institutional and industrial cleaning business to Johnson 

Professional for some US $0.9 billion (€1.0 billion) in cash 

and a loan note of US $241 million (€270 million). We also 

took a one-third equity share in the combined business 

(JohnsonDiversey), with an option to exit the business from 

2007. A valuation of around US $300 million (€330 million) 

for this one-third equity share brought the total worth of 

the transaction to Unilever to approximately US $1.5 billion 

(€1.6 billion). Turnover of DiverseyLever for the 12 months 

to December 2001, excluding sales of the consumer brands 

which JohnsonDiversey distribute for Unilever under a 

separate sales agency agreement, was approximately US 

$1.5 billion (€1.7 billion). 

On 11 June 2002, we completed the sale of the Nocilla 

chocolate spreads business in Spain to Nutrexpa. The 

business had sales in 2001 of approximately €36 million. 

On 2 July 2002, the sale of 19 food brands to ACH Food 

Companies, Inc., a subsidiary of Associated British Foods plc, 

was completed for a total of approximately US $360 million 

(€383 million) in cash. These brands and related assets, 

acquired by Unilever in connection with the October 2000 

acquisition of Bestfoods, had combined sales of 

US $310 million (€350 million) in 2001. 

On 16 July 2002, we completed the sale of Atkinsons, 

a fragrance business based in Italy, to Wella AG for 

€44 million. The business had sales in 2001 of 

approximately €35 million. 

On 30 November 2002, we completed the sale of Loders 

Croklaan Group, an international speciality oils and fats 

business, to IOI Corporation Berhad of Malaysia for 

€217 million in cash. This business had sales of 

€267 million in 2001. 

On 31 December 2002, we completed the sale of our Iberia 

Foods business to an affiliate of the Brooklyn Bottling Group 

of Brooklyn, New York. In 2002 the business had sales of 

approximately US $43 million (€48 million). 

On 2 December 2002, we announced an agreement to sell 

our holdings in Unipamol Malaysia Sdn. Bhd. and Pamol 

Plantations Sdn. Bhd. to Palmco of Malaysia, a subsidiary 

of IOI Corporation. The sale was completed on 17 January 

2003, for a cash consideration of €138 million. In 2002 

these businesses had combined sales of approximately 

€51 million. 

In 2001 we disposed of 34 businesses for a total 

consideration of approximately €3 621 million. Disposals 

included Unipath; the Elizabeth Arden business; the

Bestfoods Baking Company; European dry soups and sauces 

businesses; North American seafood business; and various 

other smaller businesses and brands. 

Public takeover offers made by Unilever during 2002 related 

to the following: 

On 14 August 2002, Unilever Overseas Holdings Limited and 

other members of the Unilever Group were obliged to make 

an agreed public tender offer on the Cairo and Alexandria 

Stock Exchange in Egypt for 2 938 000 shares (49%) of 

El Rashidi El Mizan Confectionery SAE at a price of 31.22 

Egyptian pounds per share. All the shares were acquired. 

The purchase and price had been agreed by Bestfoods in 

2000 at the time of their acquisition of the other 51% of 

the company. 

Subsequently on 22 December 2002, Middle East Food and 

Trade Company SAE made an agreed public tender offer on 

the Cairo and Alexandria Stock Exchange in Egypt for the 

6 000 000 shares (100%) of the company held by members 

of the Unilever Group at a price of 15.33 Egyptian pounds 

per share. The transaction was completed on 6 January 

2003 and all the shares were sold. Since control was 

considered to have passed at 31 December 2002, the 

disposal is reflected in these accounts. 

Public takeover offers made by Unilever during 2001 related 

to the following: 

On 23 January 2001, following an offer, made in November 

2000, through its subsidiary, Hindustan Lever Limited (HLL), 

for the 24.62% of the shares in International Bestfoods 

Limited India not already owned by Bestfoods, Unilever 

acquired 7.99% of the shares for a consideration of 

€2 million. 

On 31 January 2001, following an offer made in 

October 2000 by Unilever through its Tunisian subsidiary, 

Société de Cosmetiques Détergent et Parfumerie, for the 

9.21% of the shares in Société de Produits Chimiques 

Détergents not already owned by Unilever, 8.1% of the 

shares were acquired for a consideration of €4 million. 

On 4 December 2001, following a joint offer by Unilever 

and its subsidiary, Hindustan Lever Limited, for the 

remaining 10.38% of the shares in Rossell Industries 

Limited, India, not acquired in March 2000, Lipton India 

Exports Limited, a wholly owned subsidiary of HLL acquired 

a further 6.27% of the shares for a consideration of 

€1.8 million, which brings the Group’s aggregate holding 

in Rossell Industries to 95.89%. 

For further information on the impact of acquisitions and 

disposals please refer also to the Cash flow section of the 

Financial review on page 37 and note 25 to the 

consolidated accounts on page 99. 




18 Operating review by region 

Europe 

19 075 

00 

20 220 

01 

19 657 

02 

Turnover 

€ million 

At current exchange rates 

2 420 

00 

Operating profit 

BEIA € million 

2002 results compared with 2001 at 

current exchange rates 

€ million € million % 

2002 2001 Change 

Turnover 19 657 20 220 (3)% 

Operating profit 1 772 2 710 (35)% 

Group turnover 19 573 20 119 (3)% 

Group operating profit 1 750 2 689 (35)% 


constant 2001 exchange rates € million € million % 


Turnover 19 700 20 220 (3)% 

Operating profit BEIA 3 006 2 967 1% 

Exceptional items (741) 254 

Amortisation of goodwill 

and intangibles (511) (511) 


Operating margin 8.9% 13.4% 

Operating margin BEIA 15.3% 14.7% 

Underlying sales grew 3% with a continuing significant 

contribution from Central and Eastern Europe. Turnover was 

3% lower than last year through the impact of disposals. 

Operating margin BEIA increased by 0.6% to 15.3%. 

This reflected the benefits from our savings programmes 

including the integration of Bestfoods and strong growth in 

ice cream profitability driven by mix improvements and cost 

reductions. These gains were partly reinvested in additional 

support for the leading brands. 

Western Europe 

In Foods, underlying sales grew by 3% including an 

increasing contribution from UBF Foodsolutions, our food 

service business. There has been sustained progress in 

branded spreads and cooking products which grew 5% 

due to the continuing impact of innovations, especially in 


2 967 

01 

3 006 

02 

1 711 

00 

2 710 

01 

1 772 

02 


€ million 

Flora/Becel which grew by over 10%. Savoury and dressings 

grew 4% with marketplace activity behind Amora, 

Hellmann’s, Bertolli, Knorr and Pot Noodle and the launches 

of soup makers, chilled soups and Bertolli pasta sauces 

towards the end of the year. Slim •Fast also grew well as we 

continued its roll-out. Ice cream showed great resilience with 

innovations such as Cornetto Soft and snack-size ice creams 

helping to offset the impact of poorer weather than the 

prior year to give growth of 1%. 

In Home & Personal Care in Western Europe, good growth 

in skin, deodorants and hair included particularly strong 

performances through innovation and range extension 

in Dove, Rexona and Axe. Laundry volumes grew by 

4%, which was partly offset by pricing in a competitive 

environment to give an underlying sales growth of 1%, 

with market share being maintained. 

Central and Eastern Europe 

Underlying sales grew by 9% with particular strength in 

dressings, tea, household care and personal care. We made 

further good progress in Russia. 

2001 results compared with 2000 at 



2001 2000 Change 

Turnover 20 220 19 075 6% 

Operating profit 2 710 1 711 58% 

Group turnover 20 119 18 967 6% 

Group operating profit 2 689 1 693 59% 


constant 2000 exchange rates 


2001 2000 Change 

Turnover 20 233 19 071 6% 


Exceptional items 270 (565) 






Turnover was ahead in 2001 by 6% with an underlying 

sales growth of 4%. Growth was broad based and included 

a strong contribution from Central and Eastern Europe.

Operating margin BEIA increased to 14.7% in Europe due to 

restructuring, buying and marketing-support efficiencies, and 

portfolio improvement. 

Western Europe 

The success of pro •activ, Culinesse and Bertolli in spreads 

and cooking products, the 4 Salti in Padella range of highquality 

frozen ready meals and the expansion of Slim •Fast, 

led to a step-up in the growth rate for Foods. Cornetto and 

Carte d’Or both grew strongly through innovation, whilst 

in savoury and dressings there was continued momentum 

in Amora Maille and we started to see the strength of the 

Knorr brand. 

In personal care, the leading brands maintained their good 

rate of growth, led by range extensions in Dove and Signal 

and by Rexona. Dove shampoo was launched in eight 

countries by the end of the year and the initial response was 

very positive. The success of the Vaporesse ironing aid in 

fabric conditioners together with a solid response to a more 

competitive environment in fabric wash helped laundry to 

grow. We continued to enjoy good rates of growth in 

Domestos and Cif through the success of easy-to-use 

wipes and the launch of Domestos Bi-Actif and Domestos 

WC Active Mousse. 

Central and Eastern Europe 

We saw strong growth, most notably leaf tea and Delmy 

mayonnaise in Russia, the launch of instant soups and broad 

based progress in Home & Personal Care. 



North America 

11 708 

00 

13 880 

01 

12 568 

02 

Turnover 

€ million 


1 500 

00 







Turnover 12 568 13 880 (9)% 



Group operating profit 1 435 1 092 31% 





Turnover 13 205 13 880 (5)% 


Exceptional items (70) (285) 






1 973 

01 


€ million 

Underlying sales grew 1% with a stronger performance in 

the second half as marketplace activity built through the 

year. Turnover declined 5% through the impact of disposals, 

notably DiverseyLever and Mazola. 

In Foods, underlying sales grew 2% and our market shares 

remained firm. Slim•Fast continued to expand, passing the 

€1 billion sales mark globally. Ice cream again grew at over 

5% and Wishbone, Becel and Knorr also moved ahead well. 

In addition to an active programme behind these brands, 

innovations including Lipton Brisk lemonade and Ragú Rich 

and Meaty sauces led growth in the second half of the year. 

Overall, sales growth in the year was held back by 

promotional price competition in mayonnaise, the exit from 

Hellmann’s pourable dressings and the impact of lower 

butter prices on the margarine market. 

2 027 

02 

72 

00 

1 124 

01 

1 467 

02 



In Home & Personal Care, underlying sales were flat for the 

full year with an improved performance in the latter part 

offsetting a slow start to the year. This reflects both the 

timing of the overall innovation plan and the steps taken to 

improve profitability in laundry to give the base for a more 

active programme from the fourth quarter. The successful 

launches of Axe deodorant and all fabric conditioner and 

the re-launch of Dove body wash contributed to a strong 

finish to the year. 

Operating margin BEIA increased by 1.9% to 16.1%. 

This was driven particularly by improvements in laundry 

profitability but also widespread benefits from savings 

programmes partly reinvested in additional advertising 

and promotion. 




2001 2000 Change 

Turnover 13 880 11 708 19% 

Operating profit 1 124 72 


Group operating profit 1 092 48 




2001 2000 Change 

Turnover 13 543 11 679 16% 


Exceptional items (281) (1 249) 



Operating profit 1 093 66 



Turnover was ahead by 16% with an underlying growth 

of 2%. In our Home & Personal Care mass business 

underlying sales growth was 2.5%, skewed towards the 

first half of the year, due to the phasing of innovation. 

There were good performances by our brands across the 

skin, hair and deodorant categories, notably Dove and Suave. 

In Prestige fragrance our sales declined, reflecting both the 

sale of Elizabeth Arden and weaknesses in department 

stores and travel retail following the tragic events of 

11 September. The decline in underlying sales reduced 

the overall North American growth rate by nearly 1%. 

Our Foods business recorded an underlying sales growth of 

just over 3% for the year. 


The integration of Ben & Jerry’s proceeded well and sales 

grew 8% in the year. This, together with strong sales of 

Breyers, Popsicle, Klondike and Good Humor, further 

strengthened our market leadership. Slim •Fast continued to 

expand and approached €1 billion sales globally. Spreads 

grew with the introduction of calcium variants of the 

Shedd’s and I Can’t Believe It’s Not Butter! ranges. In 

culinary products, sales were flat due to competitive activity 

and our focus on integration. In tea, sales declined as we 

focused on brand convergence and transition to our 

common global positioning. 

Operating margin BEIA of 14.2% in North America reflected 

the benefits of portfolio change, restructuring, global 

procurement and marketing-support efficiencies. 

Africa, Middle East and Turkey 

3 512 

00 

3 455 

01 

3 225 

02 

Turnover 

€ million 


351 

00 







Turnover 3 225 3 455 (7)% 

Operating profit 295 215 37% 


Group operating profit 286 203 41% 




Turnover 3 754 3 455 9% 

Operating profit BEIA 426 380 12% 







380 

01 


€ million 

Underlying sales grew by 7% with turnover ahead by 9% as 

we now consolidate all of the Bestfoods Robertsons business 

following the increase in our holding. 

353 

02 

329 

00 

215 

01 

295 

02

Growth was broad based across categories with the major 

contributions from marketing activities behind Knorr, Lipton, 

Lux, Dove and laundry brands. South Africa performed 

particularly well with good sales growth especially in Omo, 

Sunsilk, Rama, Axe and Lux in Home & Personal Care and 

Knorr, Lipton and Flora pro •activ in Foods. In Turkey, the 

weak economy has led to consumer downtrading and 

market contraction and our sales have declined as a result. 

Elsewhere in the region we have strengthened our market 

position, particularly in Algeria, Arabia, Egypt, Morocco and 

West Africa. 

Operating margin BEIA increased to 11.3% after an increase 

in investment behind the leading brands. 




2001 2000 Change 

Turnover 3 455 3 512 (2)% 

Operating profit 215 329 (35)% 


Group operating profit 203 321 (37)% 




2001 2000 Change 

Turnover 3 843 3 499 10% 








Turnover grew by 10% with an underlying sales growth 

of 7%. Price increases had priority to protect margins in 

countries where there had been devaluation, in particular 

South Africa and Turkey. Growth was broad based across 

our brands, with the strongest country contributions coming 

from South Africa, Nigeria, Ghana and Morocco. There were 

good performances by Omo, relaunched with an improved 

formulation, Close-up in West Africa, where we continued 

to strengthen our position in oral care, and by Dove. 

Operating margin BEIA at 11.0% in Africa, Middle East and 

Turkey was ahead of 2000, reflecting focused management 

in challenging economic conditions. 



Asia and Pacific 

8 091 

00 

8 046 

01 

7 865 

02 

Turnover 

€ million 


909 

00 







Turnover 7 865 8 046 (2)% 

Operating profit 1 098 880 25% 


Group operating profit 1 077 862 25% 




Turnover 8 242 8 046 2% 









€ million 

Underlying sales grew by 5%. Including the impact of 

disposals, turnover grew by 2%. 

1 077 

01 

Home & Personal Care grew well across both categories and 

countries. Indonesia, Philippines and Vietnam performed 

particularly well and skin, hair and deodorants all grew at 

over 10% across the region through innovations and 

support behind Dove, Lifebuoy and Pond’s. Underlying 

sales growth in India accelerated through the year to reach 

3% for the full year despite the planned harvesting of 

non-leading brands. The stronger second half in India has 

been led by Fair and Lovely with the launch of a herbal 

variant, Pond’s with new small packs, the launch of a new 

Vaseline variant for treating damaged skin and good 

growth in laundry. 

In Foods, good growth in South East Asia reflects the 

Bestfoods brands benefiting from the Unilever distribution 

system, innovation in Knorr, and a strengthening of the 

1 115 

02 

781 

00 

880 

01 

1 098 

02 



Bango soy sauce and Sariwangi tea brands in Indonesia. 

This performance was partly offset by declines in tea in 

Central Asia as prices are adjusted to reflect lower 

commodity prices and a focus on improving profitability as 

we exit from low-value, low-growth commoditised teas. In 

Japan the successful alliance with Suntory in ready-to-drink 

tea has doubled the market share of Lipton to over 25%. 

Operating margin BEIA increased to 14.1% with gains from 

our savings programmes partly reinvested in increased 

advertising and promotions. 




2001 2000 Change 

Turnover 8 046 8 091 (1)% 







2001 2000 Change 

Turnover 8 558 8 091 6% 

Operating profit BEIA 1 154 908 27% 







Turnover grew by 6% with underlying sales ahead by the 

same amount. 

In South East Asia and Japan, sales growth exceeded 10%. 

Notable were: a strong performance in Japan with the 

successful launch of Dove shampoo; Lipton ready-to-drink 

tea through the alliance with Suntory; and our skin business 

through Dove. In South East Asia our personal care brands 

powered ahead in all countries led by new variants of 

Sunsilk, and in Indonesia there was increased market 

penetration for Rexona and excellent performances from 

Citra and Pepsodent following its relaunch. 

In India, the more focused brand portfolio delivered 

improved growth and profitability. There were particularly 

strong performances by Sunsilk and Clinic in hair, Rin and 

Wheel in laundry, and Fair and Lovely range extensions in 

skin care. In Foods, sales were flat as we aggressively 

improved margins and eliminated poor-performing brands. 

In China, there was substantial progress towards profitability. 

Operating margin BEIA for 2001 advanced to 13.5% in Asia 

and Pacific reflecting the benefits of global procurement, 

improved Foods profitability and a stronger mix through the 

growth in personal care. 


Latin America 

5 680 

00 

6 605 

01 

5 445 

02 

Turnover 

€ million 


614 

00 







Turnover 5 445 6 605 (18)% 







Turnover 7 119 6 605 8% 








872 

01 


€ million 

Underlying sales grew by 12% driven by pricing action 

to recover devaluation-led cost increases, particularly in 

Argentina. Outside Argentina, volumes grew by 2% with 

price ahead by 9%. Including the impact of disposals, 

turnover in the region grew by 8%. At current exchange 

rates turnover fell by 18%. Weaker currencies in Argentina 

and Brazil contributed 9.5% and 4.7% respectively to this 

decline. Excluding the impact of acquisitions and disposals, 

sales were 14% below 2001 levels. Operating profit BEIA 

fell by 13% at current exchange rates. 

Personal care continued to perform very strongly. Sedal 

shampoo grew well across the region. Dove shampoo has 

been launched in Brazil, Chile, Mexico and Peru and is 

making very good progress. In deodorants, Rexona has been 

successfully launched in Venezuela and relaunched in 

Colombia and we have taken clear market leadership in 

Mexico. In laundry, market shares have held firm against our 

759 

02 

345 

00 

329 

01 

493 

02

nearest competitor and we have responded to changed 

economic conditions with packs which specifically address 

the reduced spending power of consumers. 

In Foods, ice cream grew by over 10%, mostly volume, 

with the main contributions from Brazil and Mexico. Good 

performances were led by the launch of Knorr noodle cups 

in Mexico, an energised Hellmann’s campaign in Chile and 

significant growth in Arisco in Brazil. In spreads, Becel de 

Capullo was launched in Mexico, introducing the Becel 

brand to that country. Lipton ready-to-drink tea continued 

to grow well in Brazil and the soy-based beverage AdeS 

made very good progress in both Brazil and Mexico. 

In Argentina consumer demand is considerably down 

and volumes have been affected as a result. We continue 

to hold strong market shares and our experienced local 

management are managing the business in a way which 

preserves its long-term health. Gross margins are being 

protected and new products have been launched in both 

Foods and Home & Personal Care to respond to reduced 

disposable incomes. 

Operating margin BEIA increased by 1% to 14.2%, after an 

increase in investment behind the leading brands. 




2001 2000 Change 

Turnover 6 605 5 680 16% 







2001 2000 Change 

Turnover 7 223 5 667 27% 








Turnover moved ahead by 27% with an underlying sales 

growth of 5%. 

A key feature of the year was our determination to move 

prices to recover devaluation-driven cost increases and so 

protect our margin structure. 

Mexico sustained strong growth throughout the year. 

The key drivers were: Sedal, which reached an 8% share 



in the hair care market in its first year since launch; further 

progress in spreads, deodorants and skin care; and 

a successful expansion of Holanda ice cream. 

In Argentina, markets declined as consumer income 

reduced, however, our market shares remained strong. In 

Brazil, overall volumes were impacted by energy restrictions 

and devaluation-related price increases but continuing 

innovation in hair and deodorant delivered volume growth. 

Operating margin BEIA for the year at 13.0% in Latin 

America was ahead of 2000 reflecting the benefits of 

portfolio change, global procurement, savings from 

Bestfoods’ integration and improved ice cream profitability. 


24 Operating review by category – Foods 

Financial overview 

€ billion € billion € billion % 

2002 at 2002 at 2001 at Change at 

2002 2001 2001 2001 

rates rates rates rates* 

Turnover 27.4 28.7 28.8 0% 

Operating profit 2.3 2.3 2.4 (2)% 

Operating profit BEIA 4.0 4.2 4.1 2% 

Operating margin* 8.3% 8.1% 8.3% 

Operating margin BEIA* 14.8% 14.8% 14.4% 

*Calculated using unrounded numbers 

Foods categories have changed with effect from 1 January 

2002 to: 

• Savoury and dressings 

• Spreads and cooking products 

• Health & wellness and beverages 

• Ice cream and frozen foods 

This reflects the evolution in the organisation of our Foods 

division. Prior year results have been reclassified under the 

new categories. 

Pages 24 to 30 present a review of performance in each 

major product category. Included in the figures for each 

category are the results of our food service business, which 

we profile briefly below: 

Foodsolutions 

UBF Foodsolutions is one of the world’s largest food service 

businesses. It operates in more than 60 countries around 

the world. 

The business is focused on delivering innovative, relevant 

solutions to the professional chef and caterer, leveraging 

our consumer brands – already 85% of product sales – 

and our technology. In 2002, UBF Foodsolutions delivered 

5% underlying sales growth, with momentum growing 

throughout the year. 

Foods 

Our Foods portfolio focuses increasingly on brands with the 

potential to grow across borders and categories, in markets 

that are growing rapidly as consumers demand more choice, 

great taste, convenience, vitality, fun and indulgence. 

Since the creation of Unilever Bestfoods in 2000, we have 

accelerated growth and increased profits, while successfully 

integrating several businesses and undertaking an ambitious 

programme of disposals. 

During 2002, our brands were enjoyed by millions of 

people around the world, as we increased the momentum 

of profitable growth. Our leading brands grew by 4.4% 

and we delivered underlying sales growth of 3.4%. Due 

to disposals, turnover remained in line with prior year. 

Overall, operating profit BEIA rose by 2% with margins 

reaching 14.8%. 


Savoury and dressings 

6 074 

00 

9 999 

01 

9 503 

02 

Turnover 

€ million 


813 

00 







Turnover 9 503 9 999 (5)% 








Turnover 10 138 9 999 1% 

Operating profit BEIA 1 658 1 685 (2)% 

Exceptional items (37) 347 


and intangibles (1 155) (1 218) 





€ million 

We are world leaders in both the savoury and dressings 

foods categories. Knorr, Unilever’s biggest brand, grew 

by 7.3% across 100 markets with products as diverse 

as seasonings and meal kits, snacks and frozen food. 

There was a clear acceleration in the pace of growth 

as the year progressed. 

1 685 

01 

Innovation met the needs of consumers with a love of good 

food but little time to cook: for example, we introduced 

Knorr soupy snacks, Knax noodle cups, a snack launched 

in Latin America, and Knorr Vie, a healthy eating range in 

Europe. Bertolli’s growing international appeal delivered 

sales growth for the brand of 8.5%. Once solely an Italian 

olive oil, the Bertolli portfolio now ranges from pasta sauces 

and meal solutions to spreads and snacks. 

1 539 

02 

309 

00 

814 

01 

450 

02

The enduring popularity of mayonnaise drove good growth 

in Hellmann’s in Europe and Latin America, but competitive 

pressure in North America and our withdrawal from liquid 

salad dressings affected the brand’s overall performance, 

leaving sales flat year on year. Australia was welcomed 

to the world of Hellmann’s with the launch of dressings 

and mayonnaise. 

Calvé and Wishbone also delivered strong results. Growth 

was fuelled by innovations that took our key dressings 

brands beyond mayonnaise into new tastes and flavours, 

dips and sauces, many inspired by Amora and Maille. 

Underlying sales growth was 4% and, allowing for 

disposals, turnover increased 1% in 2002. Operating margin 

BEIA was slightly below 2001 at 16.4%, after an increase in 

advertising and promotions. 




2001 2000 Change 

Turnover 9 999 6 074 65% 







2001 2000 Change 

Turnover 10 154 6 034 68% 




and intangibles (1 233) (326) 




Following the acquisition of Bestfoods, Knorr became our 

biggest brand and, during its first full year under Unilever 

stewardship, grew by over 4% worldwide. We drove its 

strong performance with innovations such as Knorr Exotic 

Meal Kits, which we continued to extend in Europe; Knorr 

Cup Pasta, which we launched in Taiwan; Knorr Quick Soups 

in Switzerland and Knorr Sazonisimo, which we introduced 

in Mexico. 

The Hellmann’s brand also did well considering difficult 

market conditions in Latin America and fierce competition 

in the US. It enjoyed sales growth of over 10% in some 

national markets, including Greece, Ireland, the Philippines 

and Thailand. As part of the integration, we withdrew 

Hellmann’s pourable sauces in the US to concentrate 

on the larger Wishbone brand. 



Our Amora brand also had a successful year with increased 

sales and profits. Innovations, such as Amora Clip-Sauce 

in France and extensions into the chilled cabinet, helped 

drive growth. 

Turnover in olive oil declined mainly due to the disposal of 

the unprofitable La Masia business in Spain but profitability 

increased significantly. This was mainly driven by the 

continued success of Bertolli, which again enjoyed good 

volume growth, especially in Western Europe. Recognising 

the consumer appeal of healthy Mediterranean-style food, 

we introduced Bertolli dressings in the Netherlands and 

brought Five Brothers pasta sauce in the UK and US, and 

Olivio spreads in the UK, under the Bertolli umbrella. 

We disposed of several European dry soups and sauces 

businesses, following undertakings given to the European 

Commission in connection with the Bestfoods acquisition. 

These disposals included Batchelors and Oxo in the UK, 

Royco and the Lesieur range in France, Heisse Tasse in 

Germany and Blå Band in Denmark, Sweden and Finland. 



Spreads and cooking products 

6 749 

00 

6 771 

01 

6 216 

02 

Turnover 

€ million 


925 

00 





Turnover 6 216 6 771 (8)% 







Turnover 6 474 6 771 (4)% 

Operating profit BEIA 1 029 1 086 (5)% 








1 086 

01 

In 2002, we built on our position as the market leader in 

branded margarine and spreads. In this sector, as elsewhere, 

the strength of our local roots and understanding of regional 

tastes and cultures helped deliver growth. 

Innovation was key to our strong performance. The sustained 

success of pro•activ, an innovation that is proven to reduce 

cholesterol, continued to drive rapid growth in our leading 

spreads brands, Flora/Becel, which grew by 11.6%. Healthier, 

more convenient cooking products, including Rama and 

Culinesse and family oriented spreads, such as Blue Band, 

all contributed towards our good performance. 

1 006 

02 



839 

00 

817 

01 

812 

02 


€ million 

An important driver of success has been increasing support 

from key opinion formers, such as health care professionals. 

During the year, we complemented our alliances with national 

heart associations with the worldwide sponsorship of the 

World Heart Federation’s World Heart Day. 

Including the impact of disposing of several oil businesses, 

turnover fell 4% compared with 2001, whilst underlying sales 

grew by over 2%. Operating margin BEIA was slightly lower 

than in 2001 at 15.9%, after increased advertising and 

promotions investment. 




2001 2000 Change 

Turnover 6 771 6 749 0% 







2001 2000 Change 

Turnover 6 917 6 732 3% 








In 2001, consumer focused innovations made our spreads 

turnover grow again and our total market share improved 

by about 1%. Operating profit BEIA increased by 19%. 

Our ability to satisfy consumer demand for healthy foods 

was key to our success. Pro •activ, which includes ingredients 

that can help to reduce levels of ‘bad’ cholesterol, showed 

very impressive growth across Europe. Culinesse, a highperformance, 

easy-to-use, liquid cooking product, was 

successfully launched in 11 European countries. 

In the US, an enterprising, cross-functional initiative that 

looked at all aspects of margarine marketing captured the 

imagination of consumers and boosted sales. I Can’t Believe 

It’s Not Butter! grew particularly strongly. 

Our European dairy spreads, marketed under Brunch, 

Boursin and Crème Bonjour, continued to grow. Spreads in 

most Eastern European countries recovered well, although 

the Russian market remained difficult.

Health & wellness and beverages 

3 625 

00 

4 299 

01 

4 215 

02 

Turnover 

€ million 


440 

00 





Turnover 4 215 4 299 (2)% 







Turnover 4 467 4 299 4% 








Turnover increased by 4% and operating margin BEIA 

improved by 1.4% to 14.7%, through the benefits of our 

savings programmes and the exit from less profitable tea 

businesses in India. 


In 2002, we continued to meet the growing consumer 

demand for healthy food products, in both industrialised 

and developing markets. 


572 

01 

New additions to the Slim•Fast range helped consumers to 

manage their weight healthily with food that fits into their 

daily lives. Slim •Fast sales grew 10.8%, with a range 

extending from meal replacement drinks and bars to soups. 

It continued to expand beyond its US heartland, in the UK, 

Germany and the Netherlands. Slim •Fast continues to focus 


615 

02 



419 

00 

308 

01 

390 

02 


€ million 

on the health & wellness consumer hotspot and is well 

positioned in relation to emerging concerns about obesity. 

AdeS, our nutritious, healthy drink continued to grow 

strongly in Brazil, while we expanded Telma, a cereal brand 

from Israel, into snacking with the launch of children’s 

cereal bars. 

Beverages 

Lipton grew by 3.8% with sales in more than 100 countries. 

The Lipton product range is inspired by the healthy, 

refreshing qualities of tea and includes ready-to-drink Lipton 

Ice Tea, new concepts such as Lipton Brisk lemonade and a 

wide range of leaf tea offerings. 

Ready-to-drink beverages continue to perform strongly. 

In leaf tea, an area which is critical for the overall health of 

our beverage business, we continued to focus on improving 

profitability and innovation. We continued to drive growth 

around the world through our Lipton ‘Paint the World 

Yellow’ campaign. This enabled us to position Lipton as a 

contemporary brand and to perform strongly in the growing 

out-of-home sector. As around a third of beverages are 

consumed outside the home, this sector is important for 

continued growth. 

We maintained leadership positions in key traditional tea 

markets such as the UK and India. 




2001 2000 Change 

Turnover 4 299 3 625 19% 







2001 2000 Change 

Turnover 4 367 3 626 20% 









Consumers are increasingly demanding healthy food 

products. In 2001, our brands grew by meeting such 

needs, in both industrialised and developing markets. 



The US-based Slim •Fast range, which we market as a 

nutritionally responsible way to achieve and maintain a 

healthy weight, delivered excellent growth. We successfully 

extended the brand beyond its US heartland, with launches 

in Australia and the Netherlands and relaunches in Canada 

and the UK. We also extended the range into soups. 

A profitable year for Annapurna in India and a successful 

African roll-out from Ghana to Cote d’Ivoire showed 

how we can meet a very different consumer need: for 

nutritionally-enhanced staples at an affordable price. 

Sales of AdeS soy-based beverages in Latin America were 

hit, however, by the economic difficulties in the region. 

Beverages 

Our Lipton global core brand grew by 6%, led by doubledigit 

growth in ready-to-drink tea delivering a ‘system sales’ 

growth of 10% worldwide. This growth was again boosted 

by our innovative ‘Paint the World Yellow’ programme. 

In Japan, underlying sales of Lipton ready-to-drink tea 

grew strongly due to our partnership with drinks 

manufacturer Suntory. Our recent innovation, Lipton Cold 

Brew cold infusion teabags, grew well and was rolled out 

across most of the US. However, turnover and profits 

declined in that country. 

The traditional tea market in Central Asia declined in 

value. Fierce competition from loose-leaf tea competitors 

in India made our beverage sales decline, but a major cost 

effectiveness drive resulted in higher profits. In Poland and 

Russia, underlying sales showed double-digit growth as we 

continued to drive the consumer migration from loose-leaf 

to tea bags. 

Turnover grew by 20%. Operating profit BEIA and operating 

margin BEIA increased due to significant savings in supply 

chain costs. 


Ice cream and frozen foods 

7 869 

00 

7 727 

01 

7 456 

02 

Turnover 

€ million 


638 

00 







Turnover 7 456 7 727 (4)% 







Turnover 7 646 7 727 (1)% 








797 

01 


€ million 

Underlying sales growth for the year was 3%, but after 

the impact of disposals, turnover fell 1%. Operating margin 

BEIA improved 1.4% to 11.7% after restructuring gains and 

higher brand investment. 

Ice cream 

Unilever is the world’s leading producer of ice cream. 

In 2002, innovations under the Heart brand, including 

Cornetto Soft, Magnum 7 Sins, and others under Paddle Pop 

and Carte d’Or, delivered strong growth as they gave a new 

twist to a traditional favourite. North American ice cream 

brands Breyers and Ben & Jerry’s also delivered good results. 

880 

02 

227 

00 

446 

01 

616 

02

We are determined to remain the world’s number one ice 

cream company. We have transformed the cost structure of 

the business and focused on profitable countries and are 

now able to concentrate on innovation and growth. For 

example, we took brands like Cornetto out of the static 

freezer box and into the growing soft-serve out-of-home 

sector, while continuing to target the in-home sector with 

innovations such as mini multi-packs and Cornetto snacksize 

ice cream, both of which made good progress. 

We continued to widen the appeal of our ice creams to 

consumers who want fun, novelty and freshness. For 

example, we targeted consumers’ desire for indulgence 

(Magnum), refreshment (Solero) and kids fun (Paddle Pop). 

We made good progress in Latin America and North 

America and, in the context of a poor summer, performed 

well in Europe. 

In October 2002, the European Court of First Instance heard 

our appeal against the European Commission’s negative 

decision in the matter of cabinet exclusivity in Ireland. That 

decision remains suspended, while we await the ruling of 

the Court. 

Frozen foods 

Convenience combined with fresh-tasting, high quality 

ingredients drove the success of our Iglo, Bird’s Eye and 

Findus frozen ready meal solutions, which grew by 11%. 

Our overall frozen foods turnover fell by 8%, primarily 

due to disposals. A strong fourth quarter driven by quality 

innovations and brand support resulted in an underlying 

sales growth of 1% for the year. 

Sales growth in ready meals was offset by the implications 

of the end of the BSE crisis, which last year drove stronger 

demand for fish, especially in the UK. Our frozen foods 

capability is a valuable asset across the portfolio, which 

we are now starting to test with other brands. 






2001 2000 Change 

Turnover 7 727 7 869 (2)% 







2001 2000 Change 

Turnover 7 748 7 866 (2)% 








Ice cream 

Our major ice cream brands performed well during 2001 and 

underlying sales grew by almost 3%. Progress was driven by 

innovations, such as Magnum snack-sizes, Cornetto miniature 

and multi-packs and Cornetto-branded soft ice cream. 

A positive overall picture was affected by declining wrapped 

impulse sales in Germany and the UK. In North America our 

Canadian and US businesses delivered excellent underlying 

sales growth and much improved profits. The strength of our 

portfolio was demonstrated by the success of Ben & Jerry’s in 

the US super-premium market during its first full year as a 

Unilever business. 

In line with our commitment to a world-class supply chain, 

we closed eight factories that were of limited long-term value 

and introduced more efficient ways of buying raw materials 

and packaging. We also eliminated certain poorly performing 

products and withdrew from nine countries where our ice 

cream business was unprofitable, including Colombia, Russia 

and Saudi Arabia. 



Frozen foods 

Our ongoing businesses in frozen foods achieved good 

profitable growth due to innovation and tight business focus. 

The key growth drivers were products that met the demand 

for healthy and convenient foods. We successfully rolled out 

frozen high-quality meal ranges based on the Italian concept 

4 Salti in Padella, including Birds Eye enjoy! in the UK. Our 

frozen snacks also performed well. 

In 2001, we began successfully extending frozen food 

brands and products into our Foodsolutions business. 

We disposed of our Gorton’s frozen seafood business in 

North America and the Frudesa business in Spain, but 

retained limited rights to use the Frudesa brand name. 

We also withdrew from frozen foods in Argentina. 



Financial overview 

€ billion € billion € billion % 

2002 at 2002 at 2001 at Change at 

2002 2001 2001 2001 

rates rates rates rates* 

Turnover 20.8 22.7 22.8 0% 

Operating profit 2.8 3.1 2.8 8% 

Operating profit BEIA 3.2 3.5 3.1 11% 

Operating margin* 13.5% 13.5% 12.4% 

Operating margin BEIA* 15.3% 15.2% 13.6% 

*Calculated using unrounded numbers 

Home & Personal Care 

In 2002, we continued to focus resources behind the 

leading brands that are driving growth in our Home & 

Personal Care (HPC) division. They grew rapidly by meeting 

the differing everyday needs of people around the world. 

In line with our Path to Growth strategy, these leading 

brands surged ahead with sales growth of 6.7%, while 

underlying sales increased by 5.2%. Turnover was flat, 

including the disposal of DiverseyLever. Operating profit BEIA 

rose by 11% and operating margin BEIA reached 15.2%. 

Our global brand teams, who are responsible for major 

innovations, ensured focus and delivery in every region, 

with support from our new network of Global Technology 

Centres. Critical to this success was our continued research 

and development focus on fewer, global projects. For 

example, new innovations helped Dove achieve over 25% 

growth for the fourth successive year, led by the roll-out of 

the Dove hair range. 

We continued to dispose of our non-core businesses, 

including the completion of the sale of DiverseyLever, our 

institutional and industrial cleaning business, and Atkinson’s, 

our Italian fragrance and personal care business. 


Home care and professional cleaning 

10 284 

00 

10 467 

01 

8 579 

02 

Turnover 

€ million 


917 

00 







Turnover 8 579 10 467 (18)% 







Turnover 9 436 10 467 (10)% 








886 

01 


€ million 

Unilever is among the world leaders in domestic home care, 

which includes hygiene and cleaning products. In 2002, 

underlying sales grew by 1% and operating margin BEIA 

improved by 2.4%, through the benefit of our savings 

programmes. Growth was driven by Looks Great, Snuggle 

and Comfort. 

Although people wash their fabrics in many different ways 

they all want to achieve cleaner, stain-free, fresh feeling 

clothes and linen, with less effort. 

Around the world, we repositioned Omo, our top 

performance washing detergent, as a brand for mothers and 

their families. This strategy was driven by the message that 

getting dirty is all part of the experience children need to 

learn and develop. It helped to consolidate Omo’s leading 

954 

02 

578 

00 

667 

01 

754 

02 


32 Operating review by category – Home & Personal Care 

position in Brazil and South Africa and to achieve market 

share gains in such countries as Morocco and Thailand. 

In Morocco, Omo overtook its rivals to become the market 

leader. In Thailand, new innovations helped the brand to 

extend its leadership, while in South Africa it maintained its 

strong leadership position in a growing market. 

Consumers increasingly demand detergents that don’t just 

clean their clothes but are also gentle on their skin. In the 

UK, we lead this growing ‘kind to skin’ market with Persil 

Non-Bio. To reinforce our position in the sector we launched 

Persil Aloe Vera. This successfully introduced new customers 

to the brand. During 2002, Persil achieved its highest market 

share for 10 years. 

On 3 May 2002 we completed the sale of our DiverseyLever 

business to Johnson Professional Holdings Inc., leading to a 

10% reduction in turnover, despite underlying sales growth 

of 1%. 




2001 2000 Change 

Turnover 10 467 10 284 2% 







2001 2000 Change 

Turnover 10 884 10 284 6% 








In 2001, turnover rose by 6%, however, operating margin 

BEIA was slightly down. 

Laundry products generated nearly a third of the division’s 

income. In 2001, we retained our clear leadership in tablets in 

Europe, however, in Canada and the US, tablets showed slow 

consumer uptake. 

Building on the success of tablets in Europe, we launched 

liquid capsules. These provide the convenience and efficiency 

of laundry tablets for those consumers who prefer to use 

liquid detergents. 

We demonstrated the enduring appeal of our laundry brands 

in South Latin America, emerging after two years of intense 

competition with significantly improved profitability. 


We made significant progress in aligning all laundry detergent 

and fabric conditioners behind a limited number of our 

leading brands, such as Omo, Skip, Surf, Comfort and 

Snuggle. We rolled out standardised Omo packaging and 

advertising in Latin America, Asia and Pacific, Africa, Middle 

East and Turkey. In India, as part of this alignment, we 

relaunched the popular Surf brand, investing in an improved 

formulation and doubling marketing support. 

We extended the Comfort fabric conditioner brand with the 

successful launch of Comfort Vaporesse in Europe. Comfort 

Vaporesse liquid is poured into the water wells of steam irons, 

making fabrics smell fresher and preventing limescale. 

We extended the Domestos brand, launching Domestos 

Bi-Actif and Domestos WC Active Mousse in Europe and, 

in Asia, reaching new consumers with products tailored for 

low-income families. Other successes in household cleaning 

included further innovations in Cif wipes. 

In professional cleaning, DiverseyLever enjoyed a strong year 

with growth in both turnover and operating profit.


Personal care 

12 589 

00 

12 310 

01 

12 245 

02 

Turnover 

€ million 


2 034 

00 







Turnover 12 245 12 310 (1)% 



Group operating profit 2 059 2 157 (5)% 




Turnover 13 273 12 310 8% 








In the personal care sector, Unilever is one of the world 

leaders in deodorants, anti-perspirants and hair care products. 

Our leading brands, which include Axe, Dove, Lux, Pond’s, 

Rexona, Signal and Sunsilk saw underlying sales growth of 

10%. Turnover rose by 8%, with operating margin BEIA 

increasing to 18.3%. 

From New York to New Delhi, image and beauty are 

important to millions of people. To meet their desire for 

attractive, healthy hair we continued to focus on Dove 

and Sunsilk. 

The Dove hair range reached the number one position in its 

initial launch market of Korea and Taiwan and number two in 

Japan, where it was launched in 2001. During the year, we 

rolled out Dove shampoo and conditioners across more than 

31 countries in Europe, Latin America and South East Asia. 


2 219 

01 

2 224 

02 

837 

00 

2 159 

01 

2 062 

02 


€ million 

In 2002, the underlying sales growth of Sunsilk was strong 

with good performances in Brazil and Mexico and new 

market entries in Algeria and Central America. In Ghana 

and South Africa we launched our new Afro Hair range. 

We further drove Sunsilk’s growth with the launch of new 

products, such as permanent colourant Pro-Color in Brazil 

and Argentina. 

In Canada, we are migrating Pears to the highly successful 

North American brand Suave. 

Washing away the everyday grime that builds up on skin is 

a daily ritual for countless people. In Brazil, although around 

70 million consumers have black or mulatto skin, there had 

never been a mass-market soap specially designed for them. 

To meet their aspirations we launched a Lux variant 

specifically for this skin type. 

Consumers want to feel clean and fresh all day, however 

hectic their lifestyles. This desire helped to drive growth in 

our deodorant business. 

In 2002, the underlying sales growth of Axe was 17%, 

driven by powerful innovation in the core body spray 

range, including the launch of a new longer lasting 24-hour 

formulation. We launched Axe in North America with a 

campaign targeting young men between 14 and 24 – a 

group that spends around $8 billion a year on personal 

grooming products. 

Rexona enjoyed strong growth with the best performance 

coming from our anti-perspirant deodorant for men. Rexona 

for Men grew by 30% in the core regions of Europe and 

Latin America. 

A clean, bright smile can say more than words, whatever 

language you speak. In 2002, we sought to reinforce the 

strength of our Signal brand through a strong competitive 

position in the electric toothbrush market. We launched the 

first electric toothbrush to offer the choice of two heads – 

for cleaning and whitening. 

Across the Home & Personal Care business our strong focus 

on leading brands and global innovations has left us well 

placed for further growth. 


34 Operating review by category – Home & Personal Care 




2001 2000 Change 

Turnover 12 310 12 589 (2)% 



Group operating profit 2 157 837 158% 




2001 2000 Change 

Turnover 12 685 12 589 1% 


Exceptional items (50) (1 190) 






Personal care 

Turnover increased by 1%, while operating margin BEIA 

improved. Our leading brands achieved sales growth of 7%, 

reflecting the strong performance of our global core brands, 

such as Axe, Dove, Rexona, Suave and Sunsilk. 

Dove again surged ahead. It recorded its third consecutive 

year of over 25% growth with strong contributions from 

the new Nutrium bar in the US and shower and body care 

products in Europe. Another notable success was the brand’s 

move into hair care in Asia, where it reached number three 

in the Japanese shampoo and conditioner market within 

two months and contributed towards a 12% worldwide 

growth in our hair care business. The launch projected 

Unilever into a clear number one position in Japan, the 

second largest hair care market, with Lux, mod’s hair 

and Dove. 

Sunsilk, our leading hair care brand, also performed strongly, 

growing in excess of 20%. It was launched in Mexico, 

marketed as Sedal, and rapidly became the fourth biggest 

hair care brand in the country. In the US, Suave captured an 

11% value share of the shampoo market for the first time. 

Our deodorant category grew by 8%, driven by the success 

of Dove, Axe and Rexona. Dove consolidated its position in 

deodorants with a particularly strong performance in the US 

and an encouraging launch in Mexico. 

We refreshed the Axe male deodorant range, marketed 

as Lynx in the UK, with two new fragrances, Fusion and 

Gravity. In Europe, as part of our strategy of extending 

our brands beyond their core categories, we introduced 

an upgraded Axe shower gel range. 


Rexona also made significant progress in the male antiperspirant 

market, with Rexona for Men accounting for 

agrowing proportion of the brand’s sales. 

We introduced harmonised packaging for our roll-on 

deodorants across all brands, achieving significant 

efficiencies in our supply chain. 

In face care, Pond’s Perfect was launched in Japan and 

achieved a leading position in the mass sector of the antiageing 

market, while the launch of Pond’s RenAscent 

achieved outstanding success in Mexico. 

In Central Asia, Fair and Lovely continued to perform 

strongly, responding to renewed advertising focus and 

range extensions. 

In oral care, we again saw good growth from Signal in 

Europe and Close-up in Asia and Pacific. Our position 

was strengthened by innovations in toothbrushes and 

confectionery, where we built on the success of our dental 

chewing gum with the launch of dental sweets. However, 

in China, Zhonghua toothpaste had a disappointing year. 

Our Prestige fragrance business faced difficult economic 

conditions, and turnover declined. Following the disposal 

of Elizabeth Arden, we integrated the designer fragrance 

portfolio into Unilever Cosmetics International. We 

expanded the Nautica fragrance range into Europe and 

launched fragrances under the BCBG banner in the US.

The figures quoted in this review are in euros, at current 

rates of exchange, unless otherwise stated. The profit and 

loss and cash flow information is translated at average rates 

of exchange for the relevant year and the balance sheet 

information at year-end rates of exchange. 

For definitions of key ratios referred to in this review please 

refer to page 115. 

Critical accounting policies 

The accounts comply in all material respects with UK 

generally accepted accounting principles and Netherlands 

law. To prepare the accounts, we are required to make 

estimates and assumptions, using judgement based on 

available information, including historical experience. 

These estimates and assumptions are reasonable and are 

re-evaluated on an ongoing basis. However, actual amounts 

and results could differ. Critical accounting policies are those 

which are most important to the portrayal of Unilever’s 

financial position and results of operations, and are 

described on pages 66 to 68. Unilever complies with UK 

Financial Reporting Standard 18, which requires that the 

most appropriate accounting policies are selected in all 

circumstances. Some of these policies require difficult, 

subjective or complex judgements from management, 

the most important being: 

Retirement benefits: 

Determining Unilever’s pension assets, obligations and 

expenses depends on certain assumptions used by actuaries 

in calculating such amounts. Those assumptions are 

described in note 17 on page 88. Although the assumptions 

are thought to be appropriate, significant differences in 

actual experience or significant changes in assumptions may 

materially affect pension assets and obligations and future 

expenses. 

Provisions: 

Provision is made, amongst other reasons, for environmental 

and legal matters where a legal or constructive obligation 

exists at the balance sheet date and a reasonable estimate 

can be made of the likely outcome. 

Market support costs: 

Expenditure on market support costs, such as consumer 

promotions and trade advertising, is charged against profit 

in the year in which it is incurred. At each balance sheet 

date, we estimate the degree of expenditure incurred 

based on our knowledge of customer, consumer and 

promotional activity. 

Goodwill, intangible and tangible fixed assets: 

Following UK Financial Reporting Standard 11, United States 

SFAS 142 and SFAS 144, goodwill, intangible and tangible 

fixed assets are subject to review for impairment. Such 

reviews are performed by comparing the carrying value of 

the asset concerned to a valuation derived from discounted 

future cash flows. Significant assumptions are made in 

preparing these forecast cash flows; although these are 

believed to be appropriate, changes in these assumptions 

could change the outcomes of the impairment reviews. 



The most significant goodwill is that arising from the 

purchase of Bestfoods. We have reviewed the goodwill 

related to the Bestfoods acquisition, by considering actual 

and planned growth rates of Bestfoods brands and the 

actual and planned synergy savings arising from 

its integration. No impairment loss has been identified. 

Deferred tax: 

Full provision is made for deferred taxation, as required 

under UK Financial Reporting Standard 19, at the rates of 

tax prevailing at the year-end unless future rates have been 

enacted, as detailed on page 68. Deferred tax assets are 

regularly reviewed for recoverability, and a valuation 

allowance is established to the extent recoverability is not 

considered likely. 

Results – 2002 compared with 2001 

48 066 

00 

52 206 

01 

48 760 

02 

Turnover 

€ million 


5 794 

00 




€ million 

The 7% strengthening of the average exchange rate for the 

euro against the basket of Unilever currencies impacted 

turnover, which fell by 7% to €48 760 million. Underlying 

sales growth of 4% was offset by the net impacts of 

acquisitions and disposals which reduced sales by 4%. The 

most significant disposal impact came from DiverseyLever 

and Mazola, offset by the increase in our holding in the 

Unilever Bestfoods Robertsons business in Africa and the 

Middle East. 

Group turnover, excluding our share of the turnover of 

joint ventures, fell by 6% to €48 270 million. Our share 

of turnover from joint ventures fell to €490 million 

(2001: €692 million) as the increase in our holding in 

Unilever Bestfoods Robertsons resulted in its 

reclassification as a subsidiary. 

Operating profit BEIA was €7 260 million (2001: 

€7 269 million). Operating margin BEIA improved to 14.9% 

from 13.9% in 2001. This underlying margin improvement 

reflects the continuing contribution from our Path to 

Growth strategy; it was offset by the strengthening of the 

euro leaving operating profit BEIA in line with 2001. Group 

operating profit BEIA was also flat at €7 165 million. 

Amortisation of goodwill and intangibles was €1 261 

million for the year, down from €1 423 million in 2001. 

7 269 

01 

7 260 

02 

3 238 

00 

5 258 

01 

5 125 

02 


36 Financial review 

The decrease is primarily due to the strengthening of 

the euro during the year. Included in the charge is 

€1 023 million in respect of Bestfoods. 

Exceptional items for the year of €874 million included 

€1 215 million of restructuring costs, a credit of 

€249 million for the net profits and losses on business 

disposals and €98 million credit from the release of legal 

and environmental provisions following the settlement of 

certain legal claims in our favour. Associated costs included 

within operating profit BEIA were €191 million for the year 

(2001: €373 million). 

The exceptional costs incurred during the year primarily 

relate to the Path to Growth initiatives announced in 

February 2000, and to the integration of Bestfoods. The 

total net cost of these programmes over 5 years is estimated 

to be €6.2 billion. Of the €5.0 billion incurred to date, 

€4.3 billion is exceptional and €0.7 billion is associated costs. 

Operating profit and Group operating profit each fell by 3% 

to €5 125 million and €5 041 million respectively, with the 

underlying margin improvement offset by higher exceptional 

charges and the 7% average currency impact. 

An overview of operating performance by region and 

product category is included in the Regional and Category 

texts on pages 18 to 23 and 24 to 34 respectively. 

Net interest cost for the year was €473 million lower at 

€1 173 million as we benefited from strong cash flow from 

operations, the proceeds of business disposals, lower 

interest rates and the favourable effect of currency 

movements. Net interest cover for the year was 4.5 times, 

up from 3.2 times in 2001. The net interest cover on the 

basis of EBITDA (BEI) was 7 times (2001: 5 times). 

The Group’s effective tax rate on profit for the year 

was 38.7% (2001: 42.7%). This rate reflects the nondeductibility 

of the Bestfoods goodwill amortisation and 

a lower effective tax rate on net exceptional items. 

The underlying tax rate on normal operations for the 

year was 32.2% (2001: 33.7%). 

Minority interests increased to €312 million (2001: 

€239 million), mainly as a result of a fiscal policy 

change affecting local shareholders in India. 

Net profit for the year rose by 16% to €2 129 million; 

combined earnings per share were up 18%; combined 

earnings per share BEIA increased by 14%. 

Return on capital employed increased to 11% from 9% 



Results – 2001 compared with 2000 

Turnover rose by 9% to €52 206 million. 

Group turnover increased by 8% to €51 514 million. 

This increase was driven by underlying sales growth of 4%, 

compared with 1.5% in 2000, combined with a net effect 

from acquisitions and disposals of an increase of 7%. 

The most significant of these were the acquisition of 

Bestfoods and the disposal of Elizabeth Arden and some 

European soups and sauces brands. This growth was offset 

by a 3% strengthening of the average exchange rate for 

the euro against the basket of Unilever currencies. 

As a result of the Bestfoods acquisition, the Group’s share 

of joint venture turnover increased by 43% to €692 million. 

Group operating profit BEIA of €7 149 million increased 

by 25% for the year. The improvement in group operating 

margin BEIA by 1.9% to 13.9% reflected the ongoing 

contribution from Path to Growth restructuring and 

procurement savings and the successful integration 

of Bestfoods. 

Amortisation of goodwill and intangibles was €1 387 million 

compared with €435 million in 2000. The increase was 

primarily the result of a full year’s amortisation charge for 

acquisitions made partway through 2000. Included in this 

charge was €1 170 million for Bestfoods and €193 million 

as a result of other acquisitions in 2000, principally Slim•Fast, 

Ben & Jerry’s, Cressida and Amora Maille. 

Exceptional items for the year were €588 million, which 

included €1 515 million of restructuring investment and 

profits on disposals of €927 million. Of the latter, 

€811 million related to the profit on the sale of the 

brands to secure regulatory approval for our acquisition 

of Bestfoods and €114 million related to profit on the sale 

of Unipath. Associated costs included within operating profit 

BEIA were €373 million in 2001. 

Group operating profit increased by 63% to €5 174 million, 

primarily being the net impact of acquisitions and disposals 

offset by an increase in the amortisation charge. 

The share of operating profit of joint ventures increased to 

€84 million (2000: €57 million), reflecting a full year of the 

Bestfoods’ joint ventures. 

Net interest cost rose to €1 646 million compared with 

€632 million in 2000. This reflected the increase in the level 

of borrowings during 2000 to fund acquisitions, principally 

Bestfoods. Cash generation from disposals during the 

year, along with proceeds from the sale of the European 

bakery business in 2000, reduced the interest charge by 

approximately €80 million. Net interest cover for the year 

was just over 3 times. The net interest cover on the basis 

of EBITDA (BEI) was 5 times for the year. 

The Group’s effective tax rate for the year was 42.7% 

(2000: 49.3%). This rate reflected the non-deductibility of

goodwill amortisation and a tax rate on the net exceptional 

charges of 39%. The underlying tax rate for normal trading 

operations was in line with 2000. 

Minority interests increased 11% to €239 million 

(2000: €215 million) as a result of a strong performance 

in India. 

Net profit rose by 66% to €1 838 million. Combined 

earnings per share were up 70%. Combined earnings per 

share BEIA increased by 11%. 

Return on capital employed increased slightly to 9% from 

8% in 2000. 


Dividends and market capitalisation 

Ordinary dividends paid and proposed on PLC ordinary 

capital amounted to 16.04p per 1.4p share (2001:14.54p), 

an increase of 10% per share. Ordinary dividends paid and 

proposed on the NV ordinary capital amount to €1.70 per 

€0.51 share (2001: €1.56), an increase of 9% per share. 

The ratio of dividends to profit attributable to ordinary 

shareholders was 79.5% (2001: 85.6%). 

Unilever’s combined market capitalisation at 31 December 

2002 was €59.9 billion (2001: €64.5 billion). 

Balance sheet 

The euro strengthened considerably against most other 

Unilever currencies between the two balance sheet dates. 

This resulted in an exchange loss on translation of opening 

balances and of movements of €1 517 million. Significant 

translation losses in Argentina and Brazil were partly offset 

by the translation gain on the highly geared balance sheet 

of our US business. Profit retained, after accounting for 

dividends, the writeback of goodwill on disposal of 

DiverseyLever and for the retranslation impact, decreased 

by €640 million to €5 777 million. 

Total capital and reserves decreased to €5 867 million 

(2001: €6 993 million) reflecting the above movements in 

profit retained together with a €551 million net increase in 

shares held to meet employee share option plans. 

Cash flow 

Cash flow from operations increased by €386 million 

to €7 883 million. Strong underlying cashflows and 

working capital improvements were partly offset by higher 

restructuring outflows, and the impact of the strengthening 

of the euro on the consolidated figures. 

Capital expenditure of €1 313 million was 15% below 2001 

levels and at 2.7% of turnover continues the reducing trend 

of recent years. 

Acquisition activity in the year was limited. The most 

significant transaction was the purchase of an additional 

9% share in the Bestfoods Robertsons businesses in Africa 

and the Middle East. During the year cash proceeds of 



€1 834 million were received from the disposal of 

35 businesses, notably DiverseyLever and Mazola. 

Finance and liquidity 

Unilever aims to be in the top third of a reference group 

for Total Shareholder Return of 21 international consumer 

goods companies, as explained on pages 40 and 41. The 

Group’s financial strategy supports this objective and 

provides the financial flexibility to meet its strategic and dayto-day 

needs. The key elements of the financial strategy are: 

• Appropriate access to equity and debt capital 

• Sufficient flexibility for tactical acquisitions 

• A1/P1 short-term credit rating 

• Sufficient resilience against economic turmoil 

• Optimal weighted average cost of capital, given the 

constraints above 

An EBITDA (BEI) net interest cover greater than 8 times is 

consistent with this strategy. An interest cover below this 

level is acceptable for a period following major acquisitions. 

The definition and further details on the EBITDA (BEI) net 

interest cover ratio are given on pages 114 and 115. 

Other relevant disclosures are given in notes 14 and 15 on 

pages 83 to 86. 

Unilever concentrates cash in the parent and finance 

companies in order to ensure maximum flexibility in 

meeting changing business needs. Operating subsidiaries 

are financed through the mix of retained earnings, third 

party borrowings and loans from parent and group 

financing companies that is most appropriate to the 

particular country and business concerned. 

Unilever maintains access to global debt markets through 

an infrastructure of short-term debt programmes (principally 

US domestic and euro commercial paper programmes) 

and long-term debt programmes (principally a US Shelf 

registration and euro-market Debt Issuance Programme). 

Debt in the international markets is, in general, issued in 

the name of NV, PLC or Unilever Capital Corporation. NV 

and PLC will normally guarantee such debt where they are 

not the issuer. 

Unilever has committed credit facilities in place to support 

its commercial paper programmes and for general corporate 

purposes. The committed credit facilities in place at the end 

of 2002 were: bilateral committed credit facilities of in 

aggregate US $3 737 million, bilateral notes commitments 

of in aggregate US $400 million and bilateral money market 

commitments of in aggregate US $2 080 million. Further 

details of these facilities are given in note 14 on page 84. 

In 2002 a total of €3 195 million was raised through term 

financing. The term financing mainly consisted of a 

US $650 million 5 1 /2 year eurobond issued in June, a 

€1 billion 5-year eurobond issued in September and a 

US $1 billion 30-year Global Bond issued in November. 

In addition Unilever Thai Trading Limited (UTT) raised the 



equivalent of €418 million of term financing in the Thai 

capital market, all of which carried a Unilever NV guarantee 

excluding political risk, through a combination of bank loans 

and the issuance of a debenture with a 5-year maturity. 

During 2002, net debt decreased to €16 966 million 

(2001: €23 199 million). This was due to strong operating 

cash flow, the proceeds of business disposals and the 

favourable effect of currency movements. 

Borrowings at the end of 2002 totalled €20 444 million 

(2001: €25 500 million). Taking into account the various 

cross currency swaps and other derivatives, 78% of 

Unilever’s borrowings were in US dollars, 1% in euros 

and 7% in sterling with the remainder spread over a 

large number of other currencies. 

Long-term borrowings decreased by €3 288 million 

to €10 933 million at the end of 2002. At the end of 

2002 short-term borrowings were €9 511 million (2001: 

€11 279 million), including €4 854 million of long-term 

debt coming to within a year of maturity at the year-end. 

At the end of 2002, 68% of the long-term debt is repayable 

within five years (2001: 77%). 

Unilever’s contractual obligations at the end of 2002 include 

capital expenditure commitments, borrowings, operating 

lease commitments and other commitments. Details are set 

out in the following notes to the accounts: note 10 on page 

81, note 14 on page 83, and note 24 on page 99. Details 

on derivatives are given in note 15 on pages 85 and 86. 

Cash and current investments at the end of 2002 totalled 

€3 478 million (2001: €2 301 million); these funds were 

held in euros (34%), sterling (4%), US dollars (14%), and 

other currencies (48%). The funds are mainly to support 

day-to-day needs and are predominantly invested in shortterm 

bank deposits and high-grade marketable securities. 

Treasury and hedging policies 

Unilever Treasury’s strategic purpose is to provide financial 

flexibility in support of Unilever’s Path to Growth strategy 

within the context of the financial strategy set out in the 

‘Finance and liquidity’ section above. Unilever Treasury’s role 

is to ensure that appropriate financing is always available for 

all value-creating investments. Additionally, Treasury delivers 

financial services to allow operating companies to manage 

their financial transactions and exposures in an efficient, 

timely and low cost manner. 

Unilever Treasury operates as a service centre and is 

governed by policies and plans agreed by the Executive 

Committee of the Board. In addition to policies, guidelines 

and exposure limits, a system of authorities and extensive 

independent reporting covers all major areas of activity. 

Performance is monitored closely. Reviews are undertaken 

by the corporate internal audit function. 


The key financial instruments used by Unilever are shortand 

long-term borrowings, cash and other fixed and 

current investments and certain straightforward derivative 

instruments, principally comprising interest rate swaps and 

foreign exchange contracts. The accounting for derivative 

instruments is discussed in Accounting policies on page 68. 

The use of leveraged instruments is not permitted. 

Unilever Treasury manages a variety of market risks, 

including the effects of changes in foreign exchange rates, 

interest rates and credit spreads. Other risks managed 

include liquidity, country and counterparty risks. 

Unilever has an interest rate management policy aimed at 

optimising net interest cost and reducing volatility. This is 

achieved by modifying the interest rate exposure of debt 

and cash positions through the use of interest rate swaps. 

At the 2002 year-end the application of this policy resulted 

in approximately 80% of our projected net debt for 2003 

and 47% for 2004 being fixed. 

Unilever’s foreign exchange policy requires that operating 

companies hedge trading and financial foreign exchange 

exposures. This is achieved primarily through the use of 

forward foreign exchange contracts. Some flexibility is 

permitted within overall exposure limits. At year-end there 

was no material exposure from companies holding assets 

and liabilities other than in their functional currency. 

Unilever aims to hedge its net investment in operating 

companies through borrowings in the same currency, except 

where inhibited by local regulations, lack of local liquidity or 

local market conditions. An exception may also be made 

where the economic value of the net assets locally is 

considered to exceed their book value substantially. The 

business in the US is one such example where the economic 

value of the assets is considerably in excess of book value 

and accordingly we have higher US dollar debt. From time 

to time, currency revaluations will trigger exchange 

translation movements in our balance sheet as a result 

of these exceptions. 

In 2002, we suffered significant retranslation differences as 

aresult of the devaluations in Brazil (€1 106 million) and 

Argentina (€502 million), partly offset by the effect of the 

weakening of the US dollar. The above figures reflect the 

effect exchange rate movements have on the book values 

of assets and liabilities but do not take into account the 

underlying value of our assets or future earnings potential 

in the countries involved. 

Our policies and strategies for the management of liquidity 

risk are discussed in more detail on pages 37 and above. 

Counterparty exposures are minimised by restricting dealing 

counterparties to a limited number of financial institutions 

that have secure credit ratings, by working within agreed 

counterparty limits and by setting limits on the maturity of 

exposures. Counterparty credit ratings are closely monitored 

and concentration of credit risk with any single counterparty

is avoided. There was no significant concentration of credit 

risks with any single counterparty as at the year-end. 

As a result of hedging the share option plans for employees, 

we are exposed to movements in our own share price. 

In recent years we have hedged this risk through buying 

Unilever shares in the market when the share option is 

granted and holding these shares until the share option is 

exercised or lapses. In 2001 we also entered into a contract 

with a bank for the forward purchase of Unilever shares, 

further details of which are given in note 15 on page 86. 

At the year-end 92% of all outstanding employee share 

options were hedged; based on Unilever’s experience with 

the exercise level of options we consider this percentage 

as being fully hedged. 

Risk management 

The following discussion about risk management activities 

includes ‘forward-looking’ statements that involve risk and 

uncertainties. The actual results could differ materially from 

those projected. See the ‘Cautionary Statement’ on page 2. 

The analysis below presents the sensitivity of the fair value 

of the financial and derivative instruments the Group held 

at 31 December 2002, to the hypothetical changes 

described below. 

Interest rate risk 

The fair values of debt, investments and related hedging 

instruments are affected by movements in interest rates. 

The analysis shows the sensitivity of the fair value of 

interest rate sensitive instruments to a hypothetical 10% 

change in the interest rates across all maturities as at 

31 December 2002. 

Foreign exchange rate risk 

The fair values of debt, investments and hedging 

instruments, denominated in currencies other than the 

functional currency of the entities holding them, are 

subject to exchange rate movements. The analysis shows 

the sensitivity of these fair values to a hypothetical 10% 

change in foreign exchange rates as at 31 December 2002. 

Fair value changes: 

Sensitivity to a 

hypothetical 10% change in 

rates as at 31 December 

€ million € million 

2002 2001 

Interest rate risk 298 243 

Foreign exchange rate risk 1 28 

Further details on derivatives, foreign exchange exposures 

and other related information on financial instruments are 

given in note 15 on pages 85 and 86. 

Supply risk and commodities contracts 

Unilever’s products are manufactured from a number 

of raw materials. While materials are expected to be in 

adequate supply, any shortages or disruptions in supply 

would have a material adverse effect on gross margin. 



Some of our businesses, principally edible fats companies 

in Europe, may use forward contracts over a number of 

oils to hedge future requirements. We purchase forward 

contracts in bean, rape, sunflower, palm, coconut and 

palm kernel oils, almost always for physical delivery. 

We may also use futures contracts to hedge future price 

movements; however, the amounts are not material. 

The total value of open forward contracts at the end 

of 2002 was €417 million compared with €292 million 


In addition, our plantations businesses may use forward 

contracts for physical delivery of palm oil and tea under 

strictly controlled policies and exposure limits. We had 

no material outstanding contracts at the end of 2002. 

Distribution 

Unilever’s products are generally sold through its sales force 

and through independent brokers, agents and distributors 

to chain, wholesale, co-operative and independent 

grocery accounts, food service distributors and institutions. 

Products are distributed through distribution centres, 

satellite warehouses, company-operated and public storage 

facilities, depots and other facilities. 

Unilever has undertaken several initiatives to work with 

its customers to accelerate the development of product 

categories, to optimise the flow of merchandise and the 

inventory levels of its customers. These include efficient 

consumer response (ECR) to achieve optimal stock 

management, automatic stock replenishments and 

just-in-time delivery using electronic data interchange 

(EDI) to co-ordinate stock levels in stores and at Unilever’s 

warehouses. ECR is also a process used by Unilever and 

retailers to understand, and deliver against, consumer 

demand and expectations. 

Impact of price changes 

Information concerning the impact of price changes on 

tangible fixed assets and depreciation is shown in note 10 

on page 81. 

Other risk factors 

Particular risks and uncertainties that could cause actual 

results to vary from those described in forward-looking 

statements within this document, or which could impact 

on our ability to meet our published targets under the 

Path to Growth strategy – which consists of focusing 

resources on leading brands, closing manufacturing sites 

and re-organising or divesting under-performing 

businesses – include those previously described above 

and the following: 

• Managing restructuring and reorganisation programmes: 

Unilever has announced wide-ranging business 

restructuring initiatives. This high level of change absorbs 

considerable management time and can interrupt normal 

business operations. 



• Innovation: 

Our growth depends in large part on our ability to 

generate and implement a stream of consumer-relevant 

improvements to our products. The contribution of 

innovation is affected by the level of funding that 

can be made available, the technical capability of the 

research and development functions, and the success 

of operating management in rolling out quickly the 

resulting improvements. 

• Economic conditions in developing countries: 

About a third of Unilever’s sales come from the group of 

developing and emerging economies. These markets are 

also an important source of our growth. These economies 

are more volatile than those in the developed world, 

and there is a risk of downturns in effective consumer 

demand that would reduce the sales of our products. 

• Borrowings: 

The Group had borrowings totalling €20 444 million 

at the end of 2002. Any shortfalls in our cashflow 

commitments to service these borrowings could 

undermine our credit rating and overall investor 

confidence. Market, interest rate and foreign exchange 

risks to which the Group is exposed are described on 

page 39. 

• Price volatility of raw materials: 

Unilever’s raw materials cover a wide range of agricultural 

and mineral products that are subject to movements in 

cyclical commodity prices. There may be times when 

increases in these prices cannot be recovered fully in 

selling prices due to competitor actions or weakness 

in effective consumer demand. 

• Reputation: 

Unilever has a good corporate reputation and many of 

our businesses, which operate in around 100 countries 

around the world, have a high profile in their region. 

Unilever products carrying our famous brand names are 

sold in over 150 countries. Should we fail to meet high 

product safety, social, environmental and ethical standards 

in all our operations and activities, Unilever's corporate 

reputation could be damaged, leading to the rejection 

of our products by consumers, devaluation of our brands 

and diversion of management time into rebuilding our 

reputation. Examples of initiatives to manage key social 

and environmental risks are mentioned on pages 11 

and 12. 

• Customer relationships: 

Sales to large customers or sales via specialised 

distribution channels are significant in some of our 

businesses. The loss of a small number of major 

customers or a major disruption of a specialised 

distribution channel could have an adverse effect 

on the Group’s business and results of operations. 


• Developing our managers: 

Unilever’s performance requires that it have the right 

calibre of managers in place. We must compete to 

obtain capable recruits for the business, and then train 

them in the skills and competencies that we need to 

deliver growth. 

• Our brands: 

A key element of our Path to Growth strategy is the 

development of a small number of global, leading brands. 

Any adverse event affecting consumer confidence or 

continuity of supply of such a brand would have an 

impact on the overall business. 

In addition, as a multinational group, Unilever’s businesses 

are exposed to varying degrees of risk and uncertainty 

related to other factors including competitive pricing, 

consumption levels, physical risks, legislative, fiscal, tax and 

regulatory developments, terrorism and economic, political 

and social conditions in the environments where we 

operate. All of these risks could materially affect the Group’s 

business, our turnover, operating profit, net profit, net assets 

and liquidity. There may also be risks which are unknown to 

Unilever or which are currently believed to be immaterial. 

Total Shareholder Return 

Total Shareholder Return (TSR) is a concept used to compare 

the performance of different companies’ stocks and shares 

over time. It combines share price appreciation and 

dividends paid to show the total return to the shareholder. 

The absolute level of the TSR will vary with stock markets, 

but the relative position reflects the market perception of 

overall performance relative to a reference group. 

The Company calculates TSR over a three-year rolling period. 

This period is sensitive enough to reflect changes but long 

enough to smooth out short-term volatility. The return is 

expressed in US dollars, based on the equivalent US dollar 

share price for NV and PLC. US dollars were chosen to 

facilitate comparison with companies in Unilever’s chosen 

reference group. 

Unilever’s TSR target is to be in the top third of a reference 

group of 21 international consumer goods companies on a 

three year rolling basis. 

At the end of 2001 we were positioned 15th and during 

2002 we rose to 12th, outside our target position which 

remains the top third of our reference group. This position is 

influenced by the decline in the share price in the latter part 

of 1999. On a one year basis, our TSR has been in the top 

third of the reference group for each of the last two years.

Unilever’s position relative to the TSR reference group 

7 

14 

21 

98 99 00 01 02 

The reference group, including Unilever, consists of 21 companies. Unilever’s position is 

based on TSR over a three-year rolling period. 

In 2002 the following companies formed the peer group of 

comparative companies: 

Avon Lion 

Beiersdorf L’Oréal 

Cadbury Schweppes Nestlé 

Clorox Orkla 

Coca-Cola Pepsico 

Colgate Philip Morris 

Danone Procter & Gamble 

Gillette Reckitt Benckiser 

Heinz Sara Lee 

Kao Shiseido 

Significant changes 

Any important developments and post-balance sheet events 

that have occurred since 31 December 2002 have been 

noted in this Annual Report & Accounts and Form 20-F 

2002. Otherwise, there have been no significant changes 

since the year end. 




42 Corporate governance 

Organisational structure of Unilever 

NV and PLC are the two parent companies of the Unilever 

Group of companies. NV was incorporated under the 

name Naamlooze Vennootschap Margarine Unie in the 

Netherlands in 1927. PLC was incorporated under the 

name Lever Brothers Limited in Great Britain in 1894. 

Since 1930 when the Unilever Group was formed, 

NV and PLC together with their group companies have 

operated, as nearly as is practicable, as a single entity. 

They have the same directors, adopt the same accounting 

principles, and are linked by a series of agreements. 

The Equalisation Agreement, which regulates the mutual 

rights of the two sets of shareholders, is particularly 

important. It makes the position of the shareholders of 

both companies, as far as possible, the same as if they 

held shares in a single company. 

NV and PLC are separate companies, with separate stock 

exchange listings and different shareholders. You 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. This happens for a number of 

reasons, including changes in exchange rates. However, 

over time the prices of NV and PLC shares do stay in 

close relation to each other, in particular because 

of our equalisation arrangements. 

NV and PLC are holding and service companies. 

Our businesses are carried out by our group companies 

around the world. The holding companies have agreed 

to co-operate in all areas, to exchange all relevant 

business information and to ensure all group companies 

act accordingly. Usually, shares in the group companies are 

held ultimately by either NV or PLC, with the main exception 

being that the US companies are owned by both and, as a 

result of the legal integration of Bestfoods into Unilever, a 

number of the group companies are partly held by Unilever 

United States, Inc. These group companies are therefore also 

ultimately owned jointly by NV and PLC. 

These arrangements are designed to create a balance 

between the funds generated by the NV and PLC parts of 

the Group. 

See pages 128 to 131 for a listing of the Group’s principal 

subsidiaries and also Control of Unilever on page 138. 

Legal structure of the Group 

Shareholders Shareholders 

Directors 

NV Equalisation and 

other agreements 

PLC 

NV Owned 

Operating Companies 

Jointly Owned 


PLC Owned 



Directors 

The Chairmen and all of the directors are full-time 

executives and directors of both NV and PLC and, as well 

as holding specific management responsibilities, they are 

responsible for the conduct of the business as a whole. 

The Chairmen of NV and PLC are the principal executive 

officers of Unilever. 

Our operations are organised into two global divisions – 

Foods and Home & Personal Care – headed by Division 

Directors. Reporting to their respective Division Directors are 

the Foods and the Home & Personal Care Business 

Presidents, responsible for the profitability of their regional 

and global businesses. For details of the Division Directors 

and Business Presidents, see pages 46 to 48. 

The directors have set out a number of areas for which 

the Boards have direct responsibility for decision-making. 

They meet to consider the following corporate events 

and actions: 

• Agreement of quarterly results announcements 

• Approval of the Annual Report and Accounts 

and Form 20-F 

• Declaration of dividends 

• Convening of shareholders’ meetings 

• Approval of corporate strategy 

• Authorisation of major transactions 

All other matters are delegated to committees whose 

actions are reported to and monitored by the Boards. 

Board meetings are held in London and Rotterdam and 

chaired by the Chairmen of NV and PLC. The Chairmen 

are assisted by the Joint Secretaries, who ensure the 

Boards are supplied with all the information necessary 

for their deliberations. Information is normally supplied 

aweek prior to each meeting. 

Directors are elected by shareholders at the Annual General 

Meetings of NV and PLC, to hold office until the end of the 

next Annual General Meetings. For details of the nomination 

procedure for directors, see Control of Unilever on 

page 138. All directors submit themselves for re-election 

each year and retire at the latest by the age of 62. They are 

executive officers, and cease to hold executive office on 

ceasing to be directors. We appoint our other executive 

officers, who are full-time, for an indefinite period. These 

other executive officers are the corporate officers listed on 

page 48. None of our directors or executive officers is 

elected or appointed under any arrangement or 

understanding. 

A procedure is in place to enable directors, if they so wish, 

to seek independent professional advice. On election, 

directors are briefed thoroughly on their responsibilities.

All of our directors have been with Unilever full-time for 

at least five years, and in most cases for most of their 

business careers. For details see pages 46. There are no 

family relationships between any of our directors or 

executive officers. 

Advisory Directors 

The Advisory Directors are the principal external presence 

in the governance of Unilever. The role of an independent 

Advisory Director involves giving advice to the Boards in 

general, and to the Executive Committee in particular, on 

business, social and economic issues. One of their key roles 

is to assure the Boards that our corporate governance 

provisions are adequate and reflect, as far as possible, best 

practice. They serve on certain key Board committees, the 

roles and membership of which are described below. 

The appointment of Advisory Directors is provided for 

in the Articles of Association of both parent companies, 

although they are not formally members of the Boards. 

They are therefore not entitled to vote at meetings of the 

Boards and bear no legal responsibility for the Boards’ 

actions. Their terms of appointment, role and powers are 

enshrined in resolutions of the Boards. As well as Board 

committee meetings, they attend the quarterly directors’ 

meetings, other directors’ conferences, and other meetings 

with the Chairmen. In addition, the Advisory Directors may 

meet as a body, at their discretion, and appoint a senior 

member as their spokesman. 

Our Advisory Directors are chosen for their broad 

experience, international outlook and independence. 

They are appointed by resolutions of the Boards, normally 

for an initial term of three to four years and thereafter for 

terms of three years. 

Their remuneration is determined by the Boards and this is 

reported on page 59. All appointments and re-appointments 

are based on the recommendations of the Nomination 

Committee. 

In the context of Unilever’s unique arrangements for 

corporate governance, all the Advisory Directors are 

considered to be independent of Unilever. The report on 

pages 59 and 60 describes the relationships between the 

Advisory Directors and Unilever. 

Unilever has always aspired to high standards of corporate 

governance and in the light of the latest developments in 

Europe and the US, it is keeping its arrangements under 

active review. We currently anticipate concluding this review 

early in 2004. 

Board Committees 

The directors have established the following committees: 

Executive Committee 

The Executive Committee comprises the Chairmen of NV 

and PLC and five other members: the two Division Directors 

for Foods and for Home & Personal Care; the Corporate 



Development Director; the Financial Director; and the 

Personnel Director. Members of the Executive Committee 

are appointed by all of the directors for one year at a time. 

The Executive Committee is responsible for agreeing 

priorities and allocating resources, setting overall corporate 

targets, agreeing and monitoring divisional strategies and 

plans, identifying and exploiting opportunities created by 

Unilever’s scale and scope, managing external relations at 

the corporate level and developing future leaders. The 

Executive Committee generally meets formally at least 

monthly and is chaired, alternately, by the Chairmen of NV 

and PLC. The Committee is supplied with information by the 

Executive Committee Secretariat. 

Audit Committee 

The Audit Committee comprises a minimum of three 

Advisory Directors. The Committee has historically met three 

times a year and in accordance with its new charter plans to 

meet five times a year from 2003. It is chaired by Hilmar 

Kopper, and its other members are Oscar Fanjul and Claudio 

X Gonzalez. The Committee’s meetings are attended by the 

Financial Director, the General Counsel, the Controller, the 

Chief Auditor and our external auditors. The Committee 

reviews the overall risk management and control 

environment, financial reporting arrangements and 

standards of business conduct. It also provides independent 

monitoring of internal control arrangements. The Chief 

Auditor ensures that the Committee is supplied with 

necessary information. Both the Chief Auditor and the 

external auditors have direct access to the Audit Committee 

separately from other management. 

See page 61 for the Report of the Audit Committee to 

the shareholders. 

Corporate Risk Committee 

The Corporate Risk Committee currently comprises the 

Financial Director, the Foods Director, the Home & Personal 

Care Director, the Personnel Director, the General Counsel, 

the Chief Auditor and the Controller. It meets at least twice 

a year. The objective of the Committee is to assist the 

Boards to carry out their responsibilities to ensure effective 

risk management and systems of internal control. It reports 

to the Boards, the Executive Committee and, as relevant, 

to the Audit Committee. The Committee is supplied with 

information by the Controller. 

External Affairs and Corporate Relations Committee 

The External Affairs and Corporate Relations Committee 

currently comprises five Advisory Directors and normally 

meets four times a year. It is chaired by Lady Chalker, and 

its other members are Lord Brittan, Senator George J 

Mitchell, Charles R Shoemate and Professor Wim Dik. The 

Committee oversees the Code of Business Principles, advises 

on external matters of relevance to the business – including 

issues of corporate social responsibility – and reviews 

our corporate relations strategy. The Committee is 

supplied with necessary information by the Corporate 

Development Director. 



Nomination Committee 

The Nomination Committee comprises a minimum of three 

Advisory Directors and the Chairmen of NV and PLC and 

meets at least once a year. It is chaired by Frits Fentener 

van Vlissingen and its other members are Antony Burgmans, 

Bertrand Collomb, Niall FitzGerald, Lord Simon and Jeroen 

van der Veer. It recommends to the Boards candidates for 

the positions of Director, Advisory Director and Executive 

Committee member. The Committee is supplied with 

information by the Joint Secretaries. 

Remuneration Committee 

The Remuneration Committee currently comprises four 

Advisory Directors and meets at least three times a year. 

It is chaired by Frits Fentener van Vlissingen, and its other 

members are Bertrand Collomb, Lord Simon and Jeroen van 

der Veer. It reviews executive directors’ remuneration and 

is responsible for the executive share-based incentive plans. 

The Committee determines specific remuneration packages 

for each of the directors. The Committee is supplied with 

information by J A A van der Bijl, Joint Secretary of Unilever. 

The detailed report to shareholders on directors’ 

remuneration is on pages 49 to 60. 

Routine business committees 

Committees are set up to conduct routine business as and 

when they are necessary. They comprise any two of the 

directors and certain senior executives and officers of the 

Company. They administer certain matters previously 

agreed by the Boards or the Executive Committee. 

The Joint Secretaries are responsible for the operation 

of these committees. 

All committees are formally set up by Board resolution 

with carefully defined remits. They report regularly and 

are responsible to the Boards of NV and PLC. 

Requirements in the Netherlands and the UK 

Unilever is subject to corporate governance requirements in 

both the Netherlands and the United Kingdom. A vital factor 

in the arrangements between NV and PLC is their having the 

same directors. The concept of the non-executive director, as 

recognised in the United Kingdom, is not a standard feature 

of corporate governance in the Netherlands, and the 

supervisory board, as recognised in the Netherlands, is 

unknown in the United Kingdom. It has hitherto not been 

considered practicable to appoint supervisory or nonexecutive 

directors who could serve on both Boards. 

Nevertheless, Unilever’s Advisory Directors have long 

provided a strong independent element, performing many 

of the functions of supervisory and non-executive directors. 

The Audit, External Affairs and Corporate Relations and 

Remuneration Committees consist exclusively of Advisory 

Directors and the majority of the members of the 

Nomination Committee are Advisory Directors. See pages 

46 and 47 for details. 

The Committee on Corporate Governance in the 

Netherlands issued its report ‘Recommendations on 


Corporate Governance in the Netherlands’ in 1997. 

NV applies the Committee’s recommendations for 

supervisory directors to its Advisory Directors in so far 

as these are in line with their specific role within Unilever. 

NV complies with all other recommendations of the 

Committee except that the Board of Directors takes the view 

that requests for an item to be placed on the agenda for a 

shareholders’ meeting must be supported by more than an 

insignificant proportion of the shareholders and will 

therefore only accept requests from a shareholder or group 

of shareholders holding at least 1% of the voting rights 

attaching to the issued share capital of NV. Requests must 

be submitted, at the latest, 60 days prior to the date of the 

meeting. 

PLC is required, as a company that is incorporated in 

the United Kingdom and listed on the London Stock 

Exchange, to state how it has applied the principles and 

how far it has complied with the provisions set out in 

Section 1 of the Combined Code (‘the Combined Code’) 

appended to the United Kingdom Listing Rules. 

As already explained, the Boards exercise control through 

the Executive Committee. Responsibilities are shared by the 

Chairmen of NV and PLC, while the Advisory Directors 

perform many of the functions of the supervisory board 

members or non-executive directors, although they are not 

formally members of the Boards. For the purposes of the 

Combined Code, the Boards have not appointed a senior 

independent director, on the basis that issues for the 

Boards can be raised with whichever Advisory Director is 

the Chairman of the relevant Board Committee and the 

Advisory Directors are entitled to meet as a body and 

appoint a senior member as their spokesman. 

Unilever’s remuneration policy is contained within the report 

on the directors’ remuneration and interests on pages 49 to 

60. This also deals with aspects of non-compliance with the 

Combined Code in this area. Members of the Audit, 

Remuneration and Nomination Committees will be available 

to answer questions at the Annual General Meetings of 

both NV and PLC. The members attending each meeting will 

not necessarily include the Chairman of the Committee, 

since these meetings take place at about the same time in 

Rotterdam and London respectively. 

A description of Unilever’s compliance with ‘Internal 

Control – Guidance for Directors on the Combined Code’ 

is given on pages 63 and 64. 

Unilever has, since its inception, adopted the principle 

that it is good practice that the most senior roles in NV 

and PLC are shared and not concentrated in one person. 

As a consequence it is a principal tenet of its governance 

philosophy, which finds expression in two people who each 

combine the roles of Chairman and Chief Executive and 

who meet regularly for joint decision making. This carefully 

balanced arrangement has served Unilever’s unique 

constitutional arrangements very well for many years and 

the Boards believe that to separate these roles would only

introduce undesirable and unnecessary complexity. Since 

the Advisory Directors are not formally members of the 

Boards, it would be inappropriate for one of them to act 

as Chairman. 

In all other respects, PLC has complied with the Combined 

Code throughout 2002. 

Auditors 

Subject to the annual appointment of auditors by the 

shareholders and in addition to our ongoing process of 

monitoring the auditors’ performance, we undertake a 

formal review every three years. The most recent review was 

completed in November 2002. As a result, and on the 

recommendation of the Audit Committee, the directors will 

be proposing the re-appointment of PricewaterhouseCoopers 

at the AGMs on 7 May 2003 (see pages 134 and 137). 

Both the Executive Committee and the auditors have for 

many years had safeguards to avoid the possibility that 

the auditors’ objectivity and independence could be 

compromised. In particular, our procedures in respect of 

other services provided by PricewaterhouseCoopers are: 

• Audit related services – This is work that, in their 

position as the auditors, they must or are best placed to 

undertake. It includes formalities relating to borrowings, 

shareholder and other circulars, various other regulatory 

reports and work in respect of acquisitions and disposals. 

• Tax services – In cases where they are best suited, we use 

the auditors. All other significant tax consulting work is 

put to tender. 

• General consulting – Throughout 2002 our policy was 

that our external auditors may not tender for any new 

general consulting work. Previously, they were able to 

tender for general consulting projects. 

These safeguards have been approved by the Audit 

Committee and are regularly reviewed and updated in the 

light of internal developments, external requirements and 

best practice. Non-audit services to be undertaken by our 

external auditors are now approved in advance by the Audit 

Committee. 

The auditors report to the directors and the Audit 

Committee on the actions they take to comply with 

the professional and regulatory requirements and best 

practice designed to ensure their independence from 

Unilever, including, for example, the periodic rotation 

of key team members. The lead partner in charge of the 

audit changed in 2001. 

See note 2 on page 77 for the actual payments made to 

PricewaterhouseCoopers. 



Relations with shareholders and other investors 

We believe it is important both to explain the business 

developments and financial results to investors and to 

understand their objectives. Within the Executive 

Committee, the Financial Director has lead responsibility 

for investor relations, with the active involvement of the 

Chairmen. They are supported by an Investor Relations 

Department which organises presentations for analysts and 

institutional investors. Such presentations are generally made 

available on our website. Briefings on quarterly results are 

given via teleconference and are accessible by telephone or 

via our website. Briefings are similarly given to update the 

market between each quarterly announcement. For further 

information visit our website at www.unilever.com. 

Both NV and PLC communicate with their respective 

shareholders through the Annual General Meetings. At the 

AGMs, each Chairman gives a full account of the progress 

of the business over the last year and a review of the 

current issues. A summary of their addresses is published 

on our website and released to stock exchanges and media. 

Copies are freely available on request. 

Our Chairmen, both in communications about the Annual 

General Meetings and at the actual meetings, encourage 

shareholders to attend and to ask questions. Question and 

answer sessions form an important part of the meetings 

in both the Netherlands and the United Kingdom. We are 

committed to efforts to establish more effective ways of 

shareholder communication. We actively participate in the 

Shareholders Communication Channel which facilitates 

proxy voting in the Netherlands. 

Electronic communication is becoming an important 

medium for shareholders, providing ready access to 

shareholder information and reports, and for voting 

purposes. Shareholders of PLC in the United Kingdom can 

now choose to receive electronic notification that the 

Annual Review, Annual Report & Accounts and Form 20-F 

and Notice of Annual General Meeting have been published 

on our website, instead of receiving printed copies, and can 

also electronically appoint a proxy to vote on their behalf at 

the Annual General Meeting. Registration for electronic 

communication by shareholders of PLC can be made at 

www.shareview.co.uk. 

Reporting to shareholders 

The directors’ responsibilities are set out formally on 

page 63 and 64. The report to shareholders on directors’ 

remuneration and interests is set out on pages 49 to 60. 

The report of the Audit Committee is set out on page 61. 

The responsibility of the auditors to report on these 

matters is set out on page 65. 

Section 

Report of 

1 

the Directors 

Section 2 Section 3


Biographical details: 

Directors 

Antony Burgmans* 1 

Chairman, Unilever N.V. 

Aged 56. Chairman of Unilever N.V. and Vice-Chairman of Unilever 

PLC since 4 May 1999. Joined Unilever 1972. Appointed director 

8 May 1991. Previous posts include: Vice-Chairman of Unilever N.V. 

1998. Business Group President, Ice Cream & Frozen Foods – 

Europe and Chairman of Unilever Europe Committee 96/98. 

Responsible for South European Foods business 94/96. Personal 

Products Co-ordinator 91/94. External appointments include: 

Member, Supervisory Board of ABN AMRO Bank N.V. and 

International Advisory Board of Allianz AG. 

Niall FitzGerald KBE* 1 

Chairman, Unilever PLC 

Aged 57. Chairman of Unilever PLC and Vice-Chairman of Unilever 

N.V. since 1 September 1996. Joined Unilever 1967. Appointed 

director 20 May 1987. Previous posts include: Vice-Chairman of 

Unilever PLC 1994. Detergents Co-ordinator 91/95. Member, Foods 

Executive 89/91. Edible Fats & Dairy Co-ordinator 89/90. Financial 

Director 87/89. External appointments include: Non-executive 

director of Reuters Group PLC. 

Clive Butler* 

Corporate Development Director 

Aged 56. Corporate Development Director since 1 January 2001. 

Joined Unilever 1970. Appointed director 6 May 1992. Previous 

posts include: Category Director, Home & Personal Care 1996. 

Personnel Director 93/96. Corporate Development Director 1992. 

External appointments include: Non-executive director of Lloyds TSB 

Group plc. 

Patrick Cescau* 9 

Foods Director 

Aged 54. Foods Director since 1 January 2001. Joined Unilever 

1973. Appointed director 4 May 1999. Previous posts include: 

Financial Director 1999. Controller and Deputy Financial Director 

98/99. President, Lipton USA 97/98. President, Van den Bergh Foods 

USA 95/97. Chairman, Indonesia 91/95. External appointments 

include: Non-executive director of Pearson plc. 

Keki Dadiseth* 9 

Home & Personal Care Director 

Aged 57. Home & Personal Care Director since 1 January 2001. 

Joined Unilever 1973. Appointed director 3 May 2000. Previous 

posts include: Hindustan Lever Chairman 1996, Vice-Chairman 

and Managing Director 95/96. External appointments include: 

Non-executive director of The Indian Hotels Company. Member, 

International Advisory Board of DaimlerChrysler AG. 

André baron van Heemstra* 9 

Personnel Director 

Aged 57. Personnel Director since 3 May 2000. Joined Unilever 


Business Group President, East Asia Pacific 1996. Chairman, 

Langnese-Iglo 92/96. 

Rudy Markham* 10 

Financial Director 

Aged 56. Financial Director since 4 August 2000. Joined Unilever 


Strategy & Technology Director 1998. Business Group President, 

North East Asia 96/98. Chairman, Nippon Lever Japan 92/96. 

Group Treasurer 86/89. External appointments include: 

Non-executive director of Standard Chartered PLC. 


Charles Strauss 

President, Home & Personal Care North America and Global Prestige 

Business. Chairman, North America Committee 

Aged 60. Joined Unilever 1986 upon Unilever’s acquisition of Ragú 

Foods. Appointed director 3 May 2000. Previous posts include: 

Business Group President, Latin America 96/99. President, Lever 

Brothers USA 93/96. Chairman, Langnese-Iglo 89/92. External 

appointments include: Non-executive director of Hartford Financial 

Services Group, Inc. 

* Member Executive Committee 


The Rt Hon The Lord Brittan of Spennithorne QC, DL 2 

Aged 63. Appointed 2000. Vice-Chairman of UBS Warburg and 

Chairman of UBS Warburg Ltd. Member of the European 

Commission and Vice-President 89/99. Member of the UK 

Government 79/86. Home Secretary 83/85 and Secretary of State 

for Trade and Industry 85/86. 

Baroness Chalker of Wallasey 3 

Aged 60. Appointed 1998. Director of Freeplay Energy plc, 

Development Consultants International, Group 5 (Pty) Ltd and 

Ashanti Goldfields Company Ltd. UK Minister of State at the 

Foreign and Commonwealth Office 86/97. Created Life Peer 

in 1992. Member of Parliament for Wallasey 74/92. 

Bertrand Collomb 1,4 

Aged 60. Appointed 1994. Chairman and CEO of Lafarge S.A. 

Director of Vivendi Universal, TotalFinaElf and Atco. Member, 

Supervisory Board of Allianz AG and Advisory Board of 

Banque de France. 

Professor Wim Dik 2 

Aged 64. Appointed 2001. Professor at Delft University of 

Technology. Chairman, Supervisory Boards of Van Gansewinkel 

Groep and Holland Casino. Member, Supervisory Boards of ABN 

AMRO Bank N.V., Vos Logistics and Tele Atlas N.V. Non-executive 

director of Aviva plc and LogicaCMG plc. Chairman and CEO of 

Koninklijke PTT Nederland (KPN) 88/98 and Koninklijke KPN N.V. 

(Royal Dutch Telecom) 98/00. Minister for Foreign Trade, 

Netherlands 81/82. 

Oscar Fanjul 7 

Aged 53. Appointed 1996. Honorary Chairman of Repsol-YPF S.A. 

Director of Marsh & McLennan Companies, the London Stock 

Exchange, ACERINOX S.A., Técnicas Reunidas S.A. Member, 

International Advisory Boards of Marsh & McLennan and 

The Chubb Corporation. Member, European Advisory Board of the 

Carlyle Group. Chairman and CEO Repsol 86/96. Chairman of 

Hidroele’ctrica del Canta’brico S.A. 99/01. Secretary General and 

Under Secretary, Spanish Ministry of Industry and Energy 83/85. 

Frits Fentener van Vlissingen 5,6 

Aged 69. Appointed 1990. Retiring 2003. Managing Director of 

Flint Holding N.V. Chairman, Supervisory Board of Draka Holdings 

N.V. Deputy Chairman, Supervisory Boards of Akzo Nobel N.V. and 

SHV Holdings. Member, Supervisory Board of CSM N.V. 

Claudio X Gonzalez 7 

Aged 68. Appointed 1998. Chairman and CEO of Kimberly-Clark 

de Mexico S.A. Director of Kimberly-Clark Corporation, Kellogg 

Company, General Electric Company (USA), Grupo Carso S.A., 

Grupo Alfa, Grupo Televisa, Fondo Mexico, Home Depot, America 

Movil, and Investment Company of America. Member, International 

Advisory Council of JPMorgan Chase. Special Advisor to the 

President of Mexico 88/94.

Hilmar Kopper 8 

Aged 67. Appointed 1998. Chairman, Supervisory Board of 

DaimlerChrysler AG. Non-executive director of Xerox Corp. and 

member, Supervisory Boards of Akzo Nobel N.V. and Solvay S.A. 

Former CEO and Chairman of the Supervisory Board of Deutsche 

Bank AG. 

Senator George J Mitchell 2 

Aged 69. Appointed 1998. Partner of the law firm Piper Rudnik. 

Director of Walt Disney Company, Federal Express Corp., Starwood 

Hotels and Resorts and Staples Inc. Member, International Advisory 

Board of Thames Water Plc. Member of the US Senate 80/95 and 

Senate Majority Leader 88/95. Chairman of the Northern Ireland 

Peace Initiative 95/99. 

Charles R Shoemate 2 

Aged 63. Appointed 2001. Retiring 2003. Director of CIGNA 

Corporation, International Paper Company and Chevron Texaco 

Corporation. Chairman & CEO of Bestfoods 90/00 and President 

88/90. 

The Lord Simon of Highbury CBE 1,4 

Aged 63. Appointed 2000. Member, Advisory Board of LEK 

Consulting and International Advisory Council of Fortis. Nonexecutive 

director of Suez Group. Member, Supervisory Board of 

Volkswagen AG. Senior Advisor and member, European Advisory 

Board of Morgan Stanley Dean Witter. UK Government Minister 

97/99. Group Chief Executive of BP 92/95 and Chairman 95/97. 

Jeroen van der Veer 1,4 

Aged 55. Appointed 2002. President of Royal Dutch Petroleum 

Company and Vice-Chairman of the Committee of Managing 

Directors of Royal Dutch/Shell Group of Companies. Member, 

Supervisory Board of De Nederlandsche Bank. 

1 Member Nomination Committee 

2 Member External Affairs and Corporate Relations Committee 

3 Chairman External Affairs and Corporate Relations Committee 

4 Member Remuneration Committee 

5 Chairman Nomination Committee 

6 Chairman Remuneration Committee 

7 Member Audit Committee 

8 Chairman Audit Committee 

9 Member Corporate Risk Committee 

10 Chairman Corporate Risk Committee 



Business Presidents – Foods 

Regions 

Manfred Stach, Europe. Chairman, Europe Committee Aged 60. 

Joined Unilever 1970. Appointed Business President 1998. Previous 

position: Business Group President Africa. 

Kees van der Graaf, Ice Cream and Frozen Foods Europe Aged 52. 

Joined Unilever 1976. Appointed Business President 2001. Previous 

position: Chief Executive Officer, Unilever Bestfoods Europe. 

John Rice, North America Aged 51. Joined Unilever 1981. 

Appointed Business President 2001. Previous position: Business 

President Latin America. 

Rachid M Rachid, North Africa, Middle East and Turkey Aged 48. 

Joined Unilever 1987. Appointed Business President 2001. (Also is 

arepresentative of the region for HPC). He is interested through 

family holdings in the partner that holds 40% of Unilever Mashreq, 

which comprises Unilever’s operations in Egypt and the Levant. 

Tex Gunning, Asia Aged 52. Joined Unilever 1982. Appointed 

Business President 2000. Previous position: Business Group President 

East Asia Pacific. 

Alberto Sobredo, Latin America Aged 53. Joined Unilever 1998. 

Appointed Business President 2002. Previous position: Executive 

Vice-President, Latin America and Chairman, Unilever Chile. 

Global Businesses 

Diego Bevilacqua, Foodsolutions Aged 49. Joined Unilever 2000 

upon Unilever’s acquisition of Bestfoods. Appointed Business 

President 2001. Previous position: Vice-President Bestfoods and 

President Bestfoods, Asia. 

Robert Polet, Ice Cream & Frozen Foods Global Aged 47. Joined 

Unilever 1978. Appointed Business President 1998. Previous 

position: Business Group President Ice Cream & Frozen Foods 

Europe. 

John Rice, Slim •Fast Worldwide See above. 

Function 

Jean Martin, Global integration leader Aged 58. Joined Unilever 

1968. Appointed Business President 1996. Previous position: 

Business Group President Central and Eastern Europe. 

Anthony Simon, Marketing Aged 57. Joined Unilever 2000 upon 

Unilever’s acquisition of Bestfoods. Appointed Business President 

2001. Previous position: Vice-President Strategies and Core 

Businesses Bestfoods. 



Business Presidents – Home & Personal Care 

Regions 

Ralph Kugler, Europe Aged 47. Joined Unilever 1979. Appointed 


Latin America. 

Charles Strauss, North America Unilever Director see page 46. 

Anton Lenstra, Africa Aged 54. Joined Unilever 1989. Appointed 

Business President 2000. (Also is a representative of the region for 

Foods). Previous position: Vice-President Home & Personal Care 

Europe. 

Jeff Fraser, Asia Aged 59. Joined Unilever 1967. Appointed 


Central Asia & Middle East. 

Harish Manwani, Latin America Aged 49. Joined Unilever 1976. 

Appointed Business President 2001. Previous position: Senior 

Vice-President, Home & Personal Care Category Group. 

Global Businesses 

Charles Strauss, Prestige Unilever Director see page 46. 

Function 

Simon Clift, Marketing Aged 44. Joined Unilever 1982. Appointed 

Business President 2001. Previous position: Chairman Personal Care 

Category Group, Latin America. 

Corporate Officers 

Jan van der Bijl, Joint Secretary and Head of Group Taxation 

Aged 53. Appointed 1 July 2001. Years of service on 31 December 

2002: 15 years. 

Stephen Williams, 9 Joint Secretary and General Counsel Aged 55. 

Appointed 1 December 1986. Years of service on 31 December 

2002: 16 years. 

Jeffrey Allgrove, 9 Controller Aged 50. Appointed 4 May 1999. 

Years of service on 31 December 2002: 25 years. 

Henning Rehder, Treasurer Aged 49. Appointed 23 April 2002. 

Years of service on 31 December 2002: 22 years. 

James Duckworth, 9 Chief Auditor Aged 58. Appointed 1 March 

1999. Years of service on 31 December 2002: 34 years. 


Board changes 

All directors held office throughout the year. 

In accordance with the Articles of Association of NV and 

PLC, all existing directors will retire from office at the Annual 

General Meetings on 7 May 2003 and will offer themselves 

for re-election. 

Details of directors’ service contracts are given on page 54. 

Advisory Directors’ changes 

Frits Fentener van Vlissingen will retire as an Advisory 

Director with effect from the Annual General Meetings in 

2003. The directors wish to record their gratitude for his 

substantial and positive contribution during the last thirteen 

years, and particularly as chairman of the Nomination and 

Remuneration Committees. He will be succeeded as 

Chairman of these committees by Bertrand Collomb. 

Charles R Shoemate will also cease to be an Advisory 

Director at these Annual General Meetings. The Directors 

wish to record their appreciation of his contribution to the 

success of the integration of the Bestfoods business. 

With effect from 1 May 2002, Jeroen van der Veer was 

appointed as an Advisory Director until the Annual General 

Meetings in 2005, serving on both the Remuneration and 

Nomination Committees. Wim Dik was appointed to the 

External Affairs and Corporate Relations Committee at the 

same time. As anticipated, Onno Ruding retired as an 

Advisory Director in 2002. 

The Boards have resolved to re-appoint Lord Brittan, Lord 

Simon and Bertrand Collomb as Advisory Directors until the 

Annual General Meetings in 2006.

Report to shareholders 

This report sets out the policy and disclosures on directors’ 

remuneration, as required by legislation in the Netherlands 

and the United Kingdom. It also takes into account the 

recommendations of the Committee on Corporate 

Governance in the Netherlands (Peters Committee). 

In addition, full consideration has been given to 

the Combined Code of the United Kingdom Listing 

Rules (‘the Combined Code’). 

The Remuneration Committee 

The Remuneration Committee is responsible for making 

recommendations to the Boards on the remuneration policy 

for directors. The Committee consists of Advisory Directors 

who are chosen for their broad experience, international 

outlook and independence. In 2002 the Committee 

comprised F H Fentener van Vlissingen (Chairman), 

B Collomb, Lord Simon of Highbury and, with effect from 

May 2002, J van der Veer. Professor W Dik was a member 

of the Committee until April 2002. 

The Committee meets at least three times a year and, 

on behalf of the Boards, sets the remuneration packages 

for directors, including base salary, pension rights, bonus 

and long-term incentive awards, grants of share options 

and any compensation payments. The Committee is assisted 

by the Secretary to the Remuneration Committee, 

J AAvan der Bijl, Joint Secretary of Unilever. A Burgmans 

and N W A FitzGerald attend part of the Committee 

meetings in their capacity as Chairmen of NV and 

PLC respectively. 

The Remuneration Committee does not retain remuneration 

consultants but seeks professional advice from external 

advisors as it sees fit. During the year professional advice on 

remuneration matters was sought from an independent firm 

of remuneration specialists, Towers Perrin. This firm also 

provides general consultancy advice to Unilever Group 

companies on pension, communications and other human 

resource matters. 

Directors’ remuneration policy 

The objective of Unilever’s remuneration policy for 

directors is to attract, motivate and retain top class 

business executives who are able to direct and lead a 

large global company and to reward them accordingly 

based on performance. 

Levels of remuneration are reviewed annually by the 

Remuneration Committee in the light of external expert 

advice which assesses competitive levels of remuneration 

paid by other major international companies. In particular, 

remuneration arrangements for comparable companies 

based in Continental Europe and the UK are taken into 

account. For our US-based director the Committee also 

reviews remuneration packages applicable in the US market. 



In addition a comparison is made with the remuneration 

arrangements for other senior employees within Unilever. 

In line with the Path to Growth strategy it is the 

Remuneration Committee’s policy to link a significant 

proportion of directors’ remuneration to a number of key 

measures of company performance. As will be seen from 

the descriptions below, the three main measures underlying 

our annual and longer-term incentive plans are earnings per 

share growth (BEIA), underlying sales growth in the leading 

brands and the total shareholder return generated by 

Unilever in comparison with a group of 20 relevant 

competitors. In broad terms, if the Group achieves its target 

levels of performance the variable elements will account for 

about 60% of the directors’ total remuneration. The variable 

elements would, of course, result in no incentive awards if 

performance is unsatisfactory. By the same token, if the 

Group clearly achieves outstanding results the overall value 

of the incentive awards could increase to more than threequarters 

of the directors’ total remuneration. 

NV and PLC and their group companies operate as nearly 

as possible as a single entity. Directors serve both companies 

as executives and therefore receive remuneration from both. 

Whenever we refer to remuneration, this includes payments 

from both NV and PLC. The remuneration for the US-based 

director is paid mainly by Unilever United States, Inc. (UNUS) 

to reflect the fact that a major proportion of his duties is 

performed in the US. He does, however, also receive part 

of his remuneration from NV and PLC to cover his executive 

responsibilities as a director of these companies. In this 

report his total remuneration from all three sources is 

shown in full. 

All remuneration and fees earned by directors from outside 

directorships and similar sources are required to be paid over 

to, and retained by, Unilever. 

The Remuneration Committee keeps its remuneration 

policies under review in the light of company and market 

developments. However it has no plans, at present, to 

materially alter the framework of the current remuneration 

arrangements, as described below, during 2003. 


50 Remuneration report 

Remuneration package 

The remuneration package of the directors consists of a base 

salary, allowances and benefits in kind, annual performance 

bonus, long-term incentive arrangements and pension 

provision. The details are as follows: 

1. Base salary 

Base salaries are set by the Remuneration Committee and 

are fixed in the currency appropriate to the country in which 

the individual is based. Whilst one overall salary framework 

applies to all directors, separate salary ranges are agreed 

each year for directors based in continental Europe, the UK 

and the US. 

2. Allowances and benefits in kind 

Directors enjoy similar benefits to many other employees of 

the Unilever Group. These include private medical insurance, 

the use of company cars (or cash in lieu) and assistance with 

relocation costs when moving from one country to another. 

They also receive an allowance to cover small out-of-pocket 

expenses not covered by the reimbursement of their 

business entertaining expenses. In addition, the UK-based 

directors receive an allowance, where applicable, to 

compensate for the fact that some of their remuneration 

is paid in the Netherlands. 

3. Annual performance bonus 

The annual bonus can range between 0% and 100% of 

base salary. This bonus is based on achievement of specific 

corporate and personal targets which are set by the 

Remuneration Committee at the beginning of each year. 

Up to the equivalent of 80% of base salary is paid by 

reference to corporate targets and up to 20% of base 

salary is paid by reference to personal targets. 

The corporate targets are based on a combination of the 

increase in earnings per share (BEIA) and underlying sales 

growth of the leading brands for the year in question. 

Personal targets are based on agreed key objectives relative 

to the director’s specific responsibilities. 

At the end of each year the Remuneration Committee 

reviews the results against the targets which had been 

set previously. 

For 2002 the earnings per share (BEIA) target range was 

exceeded and underlying sales growth in the leading brands 

was in the upper half of the target range. Moreover the 

personal key objectives set for each director were generally 

achieved. Details of the payments made for 2002 are shown 

in the remuneration table. 

One quarter of the annual bonus for directors is delivered 

in the form of NV and PLC shares and the directors are 

then awarded an equivalent number of ‘matching shares’. 

These matching shares are described as forming part of the 

long-term incentive arrangements (see below). 


4. Long-term incentive arrangements 

Directors are eligible to be considered for participation 

in three long-term incentive arrangements as follows: 

(a) Matching shares 

As explained above, one quarter of the annual bonus is 

delivered in the form of NV and PLC shares. The Group then 

awards an equivalent number of matching shares. These 

matching shares vest three years after grant provided that 

the original ‘bonus shares’ have been retained for the 

three-year period and that the director has not resigned 

or been dismissed during that period. 

Apart from these latter conditions no further performance 

conditions apply to the vesting of the matching shares. The 

Remuneration Committee considers that, as the level of the 

award is directly linked to the payment of the annual bonus 

(to which performance conditions do apply), there is no need 

for further performance conditions on the vesting of the 

award. The Remuneration Committee also wishes to 

encourage directors to hold shares in the company they serve 

to further align the interests of the directors with those of the 

shareholders in general. The necessity to hold the ‘bonus 

shares’ for a minimum of a three-year period (during which 

time the share price will be influenced by the performance 

of the Group) reinforces this commitment on the part 

of the director and is also consistent with the shareholding 

requirement described on page 55. In addition, the 

Remuneration Committee believes that the three-year period 

to vesting of the ‘matching shares’ supports, as far as is 

possible, the retention of key executives. 

(b) Share options 

Directors are able to participate in the UK Employee 

ShareSave Plan and the Netherlands Employee Option Plan, 

which are both All-Employee plans. The US-based director 

is able to participate in the North American Employee Stock 

Purchase Plan. These plans are referred to in note 29 on 

pages 103 to 111. 

In addition, directors participate in the Executive Option 

Plans, as described in note 29 on pages 103 and 106 

to 108. 

The Remuneration Committee has established benchmark 

grant levels, described as the ‘normal’ allocation, to assist 

each year in deciding on actual grant levels under the 

Executive Option Plans. The Committee has reviewed these 

normal allocations in 2002 and has concluded that they are 

still in line with those awarded by other companies with 

which we compare ourselves.

The normal share option allocations for the directors are: 

NV Shares PLC Shares 

Chairmen 12 000 80 000 

US-based director 12 000 80 000 

Other directors 7 500 50 000 

Group performance conditions are set annually by the 

Remuneration Committee, and these conditions must 

be satisfied before a director can be granted an option. 

The Remuneration Committee then sets the level of actual 

grants to be made to each director for the year in question 

by applying the relevant percentage (see below) to the 

‘normal’ allocation shown above. 

The Group performance condition for 2002 in respect of 

the grant of an option under the Executive Option Plans 

is that our earnings per share before exceptional items 

and amortisation of goodwill and intangibles (BEIA) over 

the three financial years preceding the date of grant 

should have cumulatively risen by at least 6% more 

than inflation within the UK and the eurozone over that 

period when measured at current rates of exchange. If it 

had not, no grants would be made. The Remuneration 

Committee regards earnings per share BEIA growth as the 

most appropriate measure of the Group’s underlying 

financial performance. 

Once the Group performance condition has been met, each 

director’s option grant is determined by the percentage 

increase, above the rate of inflation in the UK and the 

eurozone, of the Group’s earnings per share BEIA over the 

financial year preceding the date of grant. For 2002 (as in 

2001) the Remuneration Committee set the following 

targets and levels of grants based on their view that less 

than 4% real growth is unexceptional and more than 6% 

real growth represents above target performance. 

Par level of grant as 

EPS BEIA growth achieved in 2001 percentage of normal allocation 

Inflation + less than 4% 0% 

Inflation + 4% 50% 




Inflation + 8% or more 150% 

The earnings per share BEIA growth for 2001 was in excess 

of inflation + 8% which produced a 150% level of grant 

for 2002. 

There are no additional performance conditions applying 

to the exercise of executive options as the Remuneration 

Committee considers that the underlying financial 

performance of the Group, which in turn affects the growth 

in share price between grant and exercise of an option, is 

sufficient. The Remuneration Committee has also taken 

account of the fact that the Executive Option Plans extend 

to Unilever executives worldwide and in many countries in 

which the Group operates it is not common practice to have 

any performance conditions on exercise. 



The price payable for each share on the exercise of the 

options is not less than the market price of the share on the 

date of grant. In normal circumstances, an option granted 

under the Executive Plans may not be exercised earlier than 

three years from the date of grant. 

Premium options, equivalent to 20% of the number of 

shares included in the original grant, may be granted to 

directors upon the fifth anniversary of each of the share 

option grants they received in the years 1997 to 2000. 

These premium grants are conditional upon sustained good 

performance by both the Group and the individual director 

over the relevant five year period and upon the director 

either not having exercised the original options or having 

retained all ’profit’ from an exercise in the form of shares. 

This incentive was discontinued as part of the changes to 

remuneration arrangements in 2001. 

Under the Executive Option Plan rules the Group has the 

right to substitute the cash value for shares on the exercise 

of any individual’s options. The Group does not generally 

intend to exercise this right unless an individual would be 

disadvantaged if we did not. 

(c) TSR Long-Term Incentive Plan 

Under this plan directors are granted conditional rights 

to shares in NV and PLC. The level of the annual grants is 

made under the guidance of the Remuneration Committee. 

In March 2002 the following conditional awards were made 

to each director: 

• Chairmen: Shares in NV and PLC to the combined value 

of €800 000 

• European-based directors: Shares in NV and PLC to the 

combined value of €500 000 

• US-based director: Shares in NV and PLC to the 

combined value of €400 000 

Depending on the performance of Unilever’s Total 

Shareholder Return (TSR) over a three-year performance 

cycle compared with that of its defined peer group (as set 

out on page 40 and 41), the awards vest following the end 

of the three-year performance cycle in accordance with the 

following table: 

Percentage of 

Ranking within TSR Peer Group award that vests 

Numbers 12 – 21 Nil 

Numbers 10 – 11 25% 

Numbers 8 – 9 50% 

Numbers 5 – 7 100% 

Numbers 3 – 4 150% 

Numbers 1 – 2 200% 

The conditional awards made in March 2002 represent 

100% on the above table and will vest in March 2005. 

The percentage of the award that vests will depend on 

the outcome of the performance tests for the three-year 

performance cycle starting with the financial year 2002 

and ending with the financial year 2004. 



Details of the companies which formed the reference group 

of comparator companies, and a ranking table showing 

Unilever’s position relative to this peer group over the last 

five years are given on page 41. 

By using the TSR table as a performance indicator for our 

Long-Term Incentive Plan there is a clear link between the 

reward given to directors and the investment growth 

enjoyed by our shareholders in comparison with that 

enjoyed by investors in the defined peer group of 

companies. It will be noted from the table that there is 

no award if Unilever’s performance is ranked at less than 

position 11 of the peer group and an award in excess of 

the full conditional award will only be made if Unilever is 

ranked in the top four of the group. 

Unilever’s position relative to broad based 

equity indices 

Under the UK Directors’ Remuneration Report Regulations 

2002 we are also required to show Unilever’s relative share 

performance against a holding of shares in a broad based 

equity index for the last five years. The Remuneration 

Committee has decided to show Unilever’s performance 

against two indices (Euronext AEX Index, Amsterdam and 

FTSE 100 Index) as these are the most generally used 

indices in the Netherlands and the UK, where we have our 

principal listings. 

Unilever PLC vs FTSE 100 % 

Five years ended 31 December 2002 

180 

160 

140 

120 

100 

80 

60 

40 

20 

0 

Unilever NV vs AEX Amsterdam % 

Five years ended 31 December 2002 

180 

160 

140 

120 

100 

80 

60 

40 

20 

Unilever FTSE 100 

0 

Unilever AEX 

98 99 00 01 

98 99 00 01 


02 

02 

Directors’ pensions 

The aim of the Remuneration Committee is that retirement 

benefits should be in line with good practice of major 

companies in continental Europe and the United Kingdom, 

bearing in mind the need to make the retirement benefit 

position of the various directors, who have different 

nationalities, reasonably comparable. 

In accordance with this policy, directors are covered by a 

final salary defined benefit arrangement and can retire with 

retirement benefits broadly equivalent to two-thirds of final 

pensionable pay at age 60. Final pensionable pay includes 

the average annual performance bonuses paid in the last 

three years, up to a maximum of 20% of base pay. This is 

similar to the current Group practice for senior executives. 

It is the view of the Remuneration Committee that a 

significant part of directors’ remuneration should be 

performance related, and that therefore part of the annual 

performance related bonus should be pensionable. 

The Committee reconsiders this topic from time to time in 

the light of the recommendations of the Combined Code 

and continues to take the view that these arrangements 

should be kept in place. 

The tables on page 53 give details of the directors’ pensions 

values for the year ended 31 December 2002.

Directors’ pension values for the year ended 31 December 2002 were as follows: 

NV (1) 



Increase Difference 

in total Total Transfer Transfer between 

accrued accrued value of value of 2001 & 2002 

annual annual accrued accrued transfer 

Age at benefit benefit at benefit at benefit at values less 

31 December 2002 during 31 December 31 December 31 December individual 

years months 2002 (1) 2002 (1) 2002 (2) 2001 (2) contributions (2)(3) 

€’000 €’000 €’000 €’000 €’000 

A Burgmans (4) 55 11 138 571 9 747 6 312 3 435 

P J Cescau (5) 54 3 26 584 7 754 7 807 (53) 

A R van Heemstra 56 11 66 405 6 702 5 753 949 

$’000 $’000 $’000 $’000 $’000 

C B Strauss 59 11 70 800 12 390 11 364 1 026 

PLC £’000 £’000 £’000 £’000 £’000 

N W A FitzGerald (6) 57 4 111 718 11 720 9 420 2 300 

A C Butler 56 6 36 366 5 730 5 200 530 

K B Dadiseth 57 0 67 419 6 950 5 790 1 160 

R H P Markham 56 10 54 393 6 340 5 460 880 

(1) The accrued annual benefits are calculated on the basis that directors would have left service at 31 December 2002 and include all 

benefits provided from Unilever pension plans. Under the NV directors’ arrangement, which operates on the basis of a justifiable 

expectation and does not provide any vested deferred entitlement, NV directors leaving before age 55 are only entitled to benefits from 

other Unilever pension plans, while for those terminating service at age 55 or older an immediate, but reduced, pension is shown in 

line with their expectations under the NV directors’ arrangement. Under the PLC directors’ arrangement, directors terminating service 

between age 55 (50 or older for directors appointed prior to 1 January 1999) and age 60 may elect for early payment of their deferred 

benefits on a reduced basis. 

(2) The transfer values for the NV directors’ arrangement are calculated on the basis used by the Unilever Netherlands pension plan 

(Progress), in line with the Netherlands regulations. The transfer values for the PLC directors’ arrangement are calculated on the basis 

used by the Unilever United Kingdom pension plan (UPF), in line with the GN11 guidance note published by the Institute and Faculty 

of Actuaries in the United Kingdom. 

(3) During 2002 no compulsory contributions were paid by any director, in line with the then current practice for all employees in the 

Netherlands, the United Kingdom and the United States. 

(4) Reached age 55 during the year, therefore the increase in total accrued benefit during 2002 was calculated using the 31 December 

2001 total accrued annual benefit, actuarially converted to be consistent with the form of the 31 December 2002 accrued annual benefit. 

(5) Moved to NV directors’ arrangement with effect from 1 January 2002 with a deferred benefit in the PLC directors’ arrangement. 

(6) During 2002, the qualifying age for pension for N W A FitzGerald was reduced from 60 years 9 months to 60 years, in line with the 

qualifying age for the other directors. The effect of this change was to increase his accrued annual benefit by £19 thousand and his 

transfer value by £940 thousand. 

Supplementary disclosures on directors’ pensions required by the Listing Rules of the Financial Services Authority: 

Increase in accrued 

Transfer value at 

31.12.2002 of 

annual benefit the increase in 

excluding inflation accrued benefit 

during 2002 (1) excluding inflation (2)(3) 

NV €’000 €’000 

A Burgmans (4) 121 2 955 

PJCescau (5) 18 225 

ARvan Heemstra 53 849 

$’000 $’000 

CBStrauss 42 862 

PLC £’000 £’000 

NWAFitzGerald (6) 102 2 165 

ACButler 31 466 

KBDadiseth 62 1 014 

R HPMarkham 49 784 

For footnotes please refer above. 



Directors’ service contracts 

NV’s and PLC’s Articles of Association require that all directors retire from office at every Annual General Meeting. Directors’ 

contracts of service with the Unilever Group are generally terminated no later than the end of the month in which the 

Annual General Meeting closest to their 62nd birthday is held. See table below: 


Effective date Expiry/ 

Date of of current retirement Notice period Notice period 

appointment contract date* for company for director 

A Burgmans 8 May 1991 5 May 1993 31 May 2009 12 months 6 months 

NWAFitzGerald 20 May 1987 5 May 1993 31 May 2007 12 months 6 months 

ACButler 6 May 1992 5 May 1993 31 May 2008 12 months 6 months 

PJCescau 4 May 1999 4 May 1999 31 May 2010 12 months 6 months 

KBDadiseth 3 May 2000 3 May 2000 31 May 2007 12 months 6 months 

ARvan Heemstra 3 May 2000 3 May 2000 31 May 2008 12 months 6 months 

RHPMarkham 6 May 1998 6 May 1998 31 May 2008 12 months 6 months 

CBStrauss 3 May 2000 3 May 2000 31 May 2005 12 months 6 months 

*Assumes that the Annual General Meeting is held in May, as is the current practice. 

The directors are long serving Unilever executives who can reasonably expect, subject to satisfactory performance, to be 

employed by Unilever until retirement. The Committee takes the view that the entitlement by the directors to the security 

of twelve months’ notice of termination of employment is in line both with the practice of many comparable companies 

and the entitlement of other senior executives within Unilever. 

The directors have service contracts with both NV and PLC. The service contracts provide for 12 months’ notice of 

termination on the part of each company. NV and PLC may, if they choose, pay to the director a sum equal to 12 months’ 

salary in lieu of notice. 

The Remuneration Committee’s aim is always to deal fairly with cases of termination whilst taking a robust line in minimising 

any compensation. The Remuneration Committee has given due consideration to the recommendations contained in the 

Combined Code regarding inclusion of explicit provisions in directors’ service contracts for compensation commitments in the 

event of early termination. The Committee will continue to keep under review its current practice, which is not to include 

such provisions in order to enable it to respond appropriately to particular circumstances. 

In both 2002 and 2001, all eight directors served for the whole of the year. In 2001, two other directors served for only part 

of the year.



Directors’ shareholding requirements 

It is a requirement of the long-term incentive arrangements described on pages 50 to 52 that over a period of five years 

(starting from the date of appointment or 1 April 2000, whichever is the later), each director must build up and maintain 

a personal shareholding in NV and PLC equivalent in value to one and a half times their annual base salary. 

Directors’ interests: share capital 

The interests in the share capitals of NV and PLC and their group companies of those who were directors at the beginning 

and end of 2002 and of their immediate families were as shown in the tables below: 

Shares Matching Total Shares Matching Total 

held at shares at shares at held at shares at shares at 

1 January 1 January (c) 

1 January 31 December 31 December (c) 31 December 

NV (€0.51 ordinary shares) 

A Burgmans 44 765 1 867 46 632 30 533 3 635 34 168 

N W A FitzGerald 6 766 3 195 9 961 5 510 5 511 11 021 

A C Butler 2 351 1 288 3 639 3 502 2 439 5 941 

P J Cescau 942 942 1 884 2 403 2 403 4 806 

K B Dadiseth 434 434 868 1 752 1 752 3 504 

A R van Heemstra 1 000 1 000 2 000 1 953 1 953 3 906 

R H P Markham 32 106 1 274 33 380 33 430 2 598 36 028 

C B Strauss 3 859 2 245 6 104 12 971 4 157 17 128 

NV (€0.05 preference shares) 

A Burgmans 7 750 7 750 

PLC (1.4p ordinary shares) 

N W A FitzGerald 48 965 24 191 73 156 361 951 40 581 402 532 

156 815 034 (a) 156 815 034 (a) 

A Burgmans 24 643 14 076 38 719 37 159 26 592 63 751 

A C Butler 32 110 9 943 42 053 44 910 18 091 63 001 

P J Cescau 7 129 7 129 14 258 17 471 17 471 34 942 

K B Dadiseth 5 360 3 172 8 532 17 679 12 499 30 178 

A R van Heemstra 7 429 7 429 14 858 14 174 14 174 28 348 

R H P Markham 48 319 9 803 58 122 57 689 19 173 76 862 

C B Strauss 16 475 16 475 32 950 (b) 30 014 30 014 60 028 (b) 

Hindustan Lever Limited (ordinary shares) 

KBDadiseth 107 490 107 490 

Margarine Union (1930) Limited (shares) 

N W A FitzGerald 400 (a) 400 (a) 

(a) Held jointly as a trustee of the Leverhulme Trust and the Leverhulme Trade Charities Trust with no beneficial interest. The holding of 

156 815 034 PLC ordinary shares represents 5.39% of the ordinary issued share capital of PLC. 

(b) Partially held as American Depositary Receipts (ADRs). 

(c) Matching shares were conditionally awarded as part of the annual performance bonus plan (see page 50). 

The directors, in common with other employees of PLC and its United Kingdom subsidiaries, had beneficial interests in 

41 531 145 PLC ordinary shares at 1 January 2002 and 43 176 360 PLC ordinary shares at 31 December 2002, acquired 

by the Unilever Employee Share Trusts for the purpose of satisfying options under the PLC Executive Option Plans and 

the UK Employee Sharesave Plan. Further information, including details of the NV and PLC ordinary shares acquired 

by certain group companies in connection with other share option plans, is given in note 29 on page 111. 

The voting rights of the directors who hold interests in the share capitals of NV and PLC are the same as for other 

holders of the class of shares indicated. Except as stated above, none of the directors’ or other executive officers’ 

shareholdings amounts to more than 0.01% of the issued shares in that class of share. Except as stated above, all 

shareholdings are beneficial. 

The only changes in the interests of the directors and their families in NV and PLC ordinary shares between 

31 December 2002 and 28 February 2003 were that: 

(i) the holding of the Unilever Employee Trusts has reduced to 42 945 620 PLC shares. 

(ii) N W A FitzGerald acquired 36 PLC shares through a reinvestment of dividends. 

(iii) C B Strauss gifted 100 NV shares. 



Remuneration of directors and executive officers 

The total amount of remuneration (including share option gains but excluding pension provisions) received by all directors 

and executive officers (being the directors and corporate officers listed on pages 46 and 48 respectively) for services in all 

capacities during 2002 was €26 474 466 (£16 625 972). 

The total amount set aside by the Unilever Group during 2002 to provide pension, retirement or similar benefits for directors 

and executive officers was €4 585 032 (£2 879 401). 

Directors’ emoluments 

The aggregate remuneration of the directors was as follows: 


2002 2001 2002 2001 

€’000 €’000 £’000 £’000 

Salary 7 975 7 857 5 008 4 887 

Allowances 515 662 323 412 

Value of benefits in kind 800 959 503 597 

Performance related payments 8 024 8 726 5 039 5 427 

Total 17 314 18 204 10 873 11 323 

Gains on exercise of share options (1) 3 037 2 180 1 907 1 356 

The figures for 2001 include emoluments paid to Mr R D Brown and Mr A Kemner prior to their retirement in that year. 

The emoluments of the individual directors for 2002 (excluding gains on exercise of share options) were as follows: 

Value of Performance Equivalent totals (8) 

benefits in related Total Total 

Salary Allowances (10) 

kind (9) 

payments (7) 


Paid in euros: €’000 €’000 €’000 €’000 €’000 €’000 £’000 £’000 

A Burgmans (2) 1 210 29 141 1 301 2 681 2 262 1 684 1 407 

P J Cescau (5) 975 12 170 1 048 2 205 2 565 1 385 1 595 

A R van Heemstra 650 203 (4) 46 650 1 549 1 257 972 782 

Paid in pounds sterling: £’000 £’000 £’000 £’000 £’000 £’000 €’000 €’000 

N W A FitzGerald (3) 940 99 47 1 011 2 097 1 925 3 340 3 095 

A C Butler 510 4 21 510 1 045 990 1 664 1 592 

K B Dadiseth 575 55 (11) 56 632 1 318 1 126 2 098 1 811 

R H P Markham 535 9 23 555 1 122 1 087 1 787 1 748 

Equivalent totals (’000) (8) 

Paid in US dollars: $’000 $’000 $’000 $’000 $’000 $’000 2002 2001 

C B Strauss (6) 1 000 5 196 670 1 871 2 301 €1 990 €2 570 

£1 250 £1 599 

(1) See pages 57 and 58. 

(2) Chairman of NV. 

(3) Chairman of PLC. 

(4) Allowances include €197 thousand paid in respect of relocation costs taxed in the Netherlands. 

(5) Excluded from the emoluments are incentive payments of €639 thousand paid in 2002 and €614 thousand paid in 2001 which relate 

to an appointment prior to joining the Board. 

(6) Excluded from the emoluments are payments totalling $2 448 thousand paid in 2002 and $1 009 thousand paid in 2001 which relate 

to an appointment prior to joining the Board. 

(7) Includes value of shares (both ‘bonus shares’ and ‘matching shares’) awarded under the bonus scheme relating to 2002. 

(8) Based on average rates for the year of £1.00 = €1.592, £1.00 = $1.497, $1.00 = €1.064 (2001: £1.00 = €1.608, 

£1.00 = $1.439, $1.00 = €1.117). 

(9) Includes value of benefits in kind relating to company provided accommodation, company cars and private medical insurance. All 

items are taxable in the country of residence of the directors concerned (apart from the value of accommodation provided for 

Netherlands based directors). 

(10) Includes cash allowances in lieu of company car, entertaining allowance, financial planning assistance and an allowance, where 

applicable, for UK-based directors to compensate for the fact that part of their remuneration is paid in the Netherlands. All allowances 

are taxable in either the UK, the Netherlands or the US, apart from the entertaining allowance which is tax free. 

(11) Includes long service award of £49 thousand. 

For the years up to and including 1997, NV loaned the amount of taxation charged on the grant of options under 

Netherlands fiscal legislation to the recipients. Amounts were repaid on exercise. During 2002 all options in question were 

exercised and all outstanding loans were repaid. In 2001 loans of €0.03 million were outstanding.



No compensation for loss of office, payments for loss of office or other termination payments were paid to directors 

in 2002. 

Directors’ share options 

Details of the option plans under which directors and employees are able to acquire ordinary shares of NV and PLC are 

shown in note 29 on pages 103 to 111. 

As at 28 February 2003 the directors and officers as a group held options to purchase the following ordinary shares: 

594 795 NV shares of €0.51 

4 407 793 PLC shares of 1.4p 

246 134 NV shares of €0.51 of the New York Registry 

706 828 PLC shares of 1.4p (held as 176 707 ADRs) 

Options to acquire NV ordinary shares of €0.51 each and options to acquire PLC ordinary shares of 1.4p each were granted, 

exercised and held during 2002 as follows: 

Options outstanding Options outstanding 

below market price above market price 

at end of year at end of year 

Weighted Weighted 

Range of dates average average 

1 January 31 December for earliest and exercise exercise 

Name €0.51/1.4p Granted (g) Exercised €0.51/1.4p latest exercise Number price Number price 

A Burgmans (a) 66 000 19 800 9 000 76 800 08.05.01 - 06.06.12 30 000 €51.00 46 800 €66.09 

(b) 216 50 16 250 15.09.03 - 12.06.07 100 €55.34 150 €65.40 

(c) 440 000 132 000 60 000 512 000 08.05.01 - 06.06.12 440 000 504p 72 000 660p 

(d) 2 904 – – 2 904 01.10.03 - 31.03.04 – – 2 904 594p 

N W A FitzGerald (a) 84 000 21 600 – 105 600 02.06.00 - 06.06.12 48 000 €47.92 57 600 €66.64 

(b) 200 50 – 250 15.09.03 - 12.06.07 100 €55.34 150 €65.40 

(c) 955 392 144 000 353 092 746 300 29.05.99 - 06.06.12 602 300 471p 144 000 660p 

(d) 3 543 – – 3 543 01.10.03 - 31.03.06 2 382 425p 1 161 594p 

A C Butler (a) 52 502 13 500 – 66 002 02.06.00 - 06.06.12 30 002 €47.92 36 000 €66.64 

(b) 150 50 – 200 01.06.04 - 12.06.07 50 €53.05 150 €65.40 

(c) 588 212 90 000 – 678 212 07.06.98 - 06.06.12 588 212 411p 90 000 660p 

(d) 4 652 – 4 652 – – – – – 

P J Cescau (a) 49 143 14 250 – 63 393 08.05.01 - 06.06.12 18 750 €51.00 44 643 €66.25 

(b) 50 50 – 100 30.05.04 - 12.06.07 – – 100 €66.28 

(c) 334 626 95 040 – 429 666 08.05.01 - 06.06.12 349 626 511p 80 040 657p 

(e) 45 000 – – 45 000 29.05.97 - 02.06.07 45 000 $38.84 – – 

(f) 100 192 – – 100 192 03.06.98 - 02.06.07 100 192 $6.72 – – 

K B Dadiseth (a) 30 750 11 850 – 42 600 02.06.00 - 06.06.12 21 750 €49.87 20 850 €66.71 

(c) 222 240 79 000 2 992 298 248 10.06.97 - 06.06.12 264 248 476p 34 000 662p 

(d) – 2 744 – 2 744 01.10.07 - 31.03.08 – – 2 744 603p 

A R van Heemstra (a) 45 750 13 050 9 000 49 800 08.05.01 - 06.06.12 27 750 €55.06 22 050 €67.95 

(b) 50 50 – 100 30.05.04 - 12.06.07 – – 100 €66.28 

(c) 348 276 87 000 103 276 332 000 08.05.01 - 06.06.12 185 000 468p 147 000 621p 

R H P Markham (a) 50 250 13 050 – 63 300 02.06.00 - 06.06.12 27 750 €48.34 35 550 €66.63 

(b) 200 50 – 250 15.09.03 - 12.06.07 100 €55.34 150 €65.40 

(c) 367 292 87 000 – 454 292 06.12.99 - 06.06.12 367 292 474p 87 000 662p 

(d) 3 283 – – 3 283 01.10.04 - 31.03.05 3 283 514p – – 

C B Strauss (e) 172 200 19 800 7 200 184 800 10.06.94 - 02.06.12 165 000 $36.87 19 800 $72.28 

(f) 380 000 132 000 – 512 000 03.06.98 - 02.06.12 452 000 $7.41 60 000 $10.85 

(a) Options in NV shares under the Executive Plan. (b) Options in NV shares under the Netherlands Employee Option Plan. 

(c) Options in PLC shares under the Executive Plan. (d) Options in PLC shares under the UK Employee Sharesave Plan. 

(e) Options in NV New York shares under the Executive Plan. 

(f) Options in PLC shares in the form of American Depositary Receipts under the Executive Plan (1 ADR equivalent to 4 PLC shares). 

(g) Granted in the year on the basis, where applicable, of earnings per share (BEIA) in the prior year. 

The term ’Executive Plan’ refers to options granted under the PLC, NV or NA Executive Option Plans (see page 106). 

See also notes on page 58. 



Supplementary table of options granted and exercised in 2002: 

Market 

price at 

Exercised Exercise date of 

Name Granted (g) Price quantity price exercise 

A Burgmans (a) 18 000 €66.90 9 000 €42.79 €71.69 

1 800 €67.85 

(b) 50 €67.90 16 €43.00 €68.50 

(c) 120 000 583p 60 000 407p 633p 

12 000 624p 

N W A FitzGerald (a) 18 000 €66.90 

3 600 €67.85 

(b) 50 €67.90 

(c) 120 000 583p 92 320 283p 577p 

24 000 624p 59 112 254p 577p 

104 808 283p 577p 

96 852 307p 577p 

A C Butler (a) 11 250 €66.90 

2 250 €67.85 

(b) 50 €67.90 

(c) 75 000 583p 

15 000 624p 

(d) 4 652 371p 589p 

P J Cescau (a) 11 250 €66.90 

3 000 €67.85 

(b) 50 €67.90 

(c) 75 000 583p 

20 040 624p 

K B Dadiseth (a) 11 250 €66.90 

600 €67.85 

(c) 75 000 583p 2 992 254p 634p 

4 000 624p 

(d) 2 744 603p 

A R van Heemstra (a) 11 250 €66.90 9 000 €42.79 €71.55 

1 800 €67.85 

(b) 50 €67.90 

(c) 75 000 583p 43 276 343p 577p 

12 000 624p 60 000 407p 630p 

R H P Markham (a) 11 250 €66.90 

1 800 €67.85 

(b) 50 €67.90 

(c) 75 000 583p 

12 000 624p 

C B Strauss (e) 18 000 $59.00 7 200 $25.69 $58.34 

1 800 $65.70 

(f) 120 000 $8.36 

12 000 $9.32 

No options lapsed unexercised during the year. The market price of the ordinary shares at the end of the year was for NV 

€58.55 and $61.71 and for PLC 591p and $38.25, and the range during the year was between €49.65 and €72.20 and 

$50.10 and $66.90, and between 473p and 659p and $29.86 and $39.44 respectively. Options outstanding above and 

below the market prices at 31 December 2002 are set out in the table on page 57. 

For footnotes please refer to page 57. 




Directors’ conditional share awards under the TSR Long-Term Incentive Plan 

Conditional rights to ordinary shares in PLC and NV were granted, vested or lapsed in 2002 as follows: 

End date of 

final 

Grant Performance period performance 

Name Share type 1 January Granted (1) price (2) Vested Lapsed 31 December for 2002 award period 

A Burgmans NV 6 472 5 980 583p – – 12 452 01/01/02-31/12/04 31/12/04 

PLC 48 360 42 319 €66.90 – – 90 679 01/01/02-31/12/04 31/12/04 

N W A FitzGerald NV 6 472 5 980 583p – – 12 452 01/01/02-31/12/04 31/12/04 

PLC 48 360 42 319 €66.90 – – 90 679 01/01/02-31/12/04 31/12/04 

AC Butler NV 4 045 3 737 583p – – 7 782 01/01/02-31/12/04 31/12/04 

PLC 30 225 26 450 €66.90 – – 56 675 01/01/02-31/12/04 31/12/04 

P J Cescau NV 4 045 3 737 583p – – 7 782 01/01/02-31/12/04 31/12/04 

PLC 30 225 26 450 €66.90 – – 56 675 01/01/02-31/12/04 31/12/04 

K B Dadiseth NV 4 045 3 737 583p – – 7 782 01/01/02-31/12/04 31/12/04 

PLC 30 225 26 450 €66.90 – – 56 675 01/01/02-31/12/04 31/12/04 

A R van Heemstra NV 4 045 3 737 583p – – 7 782 01/01/02-31/12/04 31/12/04 

PLC 30 225 26 450 €66.90 – – 56 675 01/01/02-31/12/04 31/12/04 

R H P Markham NV 4 045 3 737 583p – – 7 782 01/01/02-31/12/04 31/12/04 

PLC 30 225 26 450 €66.90 – – 56 675 01/01/02-31/12/04 31/12/04 

C B Strauss NV (3) 3 223 2 977 $59.09 – – 6 200 01/01/02-31/12/04 31/12/04 

PLC (4) 23 580 21 032 $8.3625 – – 44 612 01/01/02-31/12/04 31/12/04 

(1) Number of conditional rights to NV and PLC shares granted in 2002. The precise number of shares that will vest in March 2005 will 

depend on the TSR ranking of Unilever, during the performance period shown above, against a peer group of 20 comparator companies 

and will vary between 0% and 200% of the original number of conditional shares granted. 

(2) Price of shares at date of grant on 21 March 2002. 

(3) NV New York shares. 

(4) The award was made in the form of American Depository Receipts (1 ADR equivalent to 4 PLC shares). The number of ADRs granted in 

2002 was 5 258 (equivalent to 21 032 PLC shares) at a price of $33.45. 


The Advisory Directors are not formally members of the Boards of NV and PLC and are therefore excluded when reference 

is made to directors in this report. 

The remuneration of the Advisory Directors is decided by the Boards. Advisory Directors receive an annual fee and are 

reimbursed expenses incurred in attending meetings. They do not receive any performance related bonuses, pension 

provisions, share options or other forms of benefit as Advisory Directors. They do not have service contracts. The annual 

fees paid to each Advisory Director in 2002 were as follows: 

Advisory Directors fees paid in 2002: 

Paid in euros 

Name Fees € 

B Collomb 55 000 

Professor W Dik 55 000 

O Fanjul 55 000 

F H Fentener van Vlissingen 55 000 

H Kopper 55 000 

H O C R Ruding 27 500 

J van der Veer 41 250 

Paid in pounds 

Name Fees £ 

Lord Brittan 35 000 

Lady Chalker 35 000 

C X Gonzalez 35 000 

Senator G J Mitchell 35 000 

C R Shoemate 35 000 

Lord Simon 35 000 



In addition, Advisory Directors benefited directly or indirectly from the following payments made in 2002: 

Lady Chalker: £40 800 paid to Africa Matters Limited for advice provided to Unilever’s Africa Business Group by her and 

other consultants from that company; 

C X Gonzalez: US $15 000 paid to him for advice provided to Unilever’s Latin America Region Advisory Council; and 

Senator G J Mitchell: US $75 000 paid to him for advice provided to Unilever’s North American businesses. 

As at 28 February 2003 the interests of the Advisory Directors in the share capital of NV and PLC were as follows: 


NV (1) PLC (2) 

Lord Brittan 

Lady Chalker 2 526 

B Collomb 111 

Professor W Dik 

O Fanjul 692 

F H Fentener van Vlissingen 10 385 

C X Gonzalez 60 000 (3) 

H Kopper 

Senator G J Mitchell 1 000 

C R Shoemate 2 000 

Lord Simon 2 857 

J van der Veer 5 600 

Aggregate interests 19 788 65 383 

(1) Ordinary €0.51 shares of NV. 

(2) Ordinary 1.4p shares of PLC. 

(3) Held as American Depositary Receipts (ADRs). 

As at 28 February 2002, the aggregate interests of the Advisory Directors in the share capital of NV and PLC were 14 188 

Ordinary €0.51 shares of NV and 5 383 Ordinary 1.4p shares of PLC. 

The voting rights of the Advisory Directors are the same as for other holders of the class of share indicated. 

The Report has been approved by the Boards and has been signed on their behalf by the Joint Secretaries, J A A van der Bijl 

and S G Williams. 

By order of the Board 

JA A van der Bijl 

S G Williams 

Joint Secretaries of Unilever N.V. and Unilever PLC 

4 March 2003 

Auditable part of remuneration report 

In compliance with the UK Directors’ Remuneration Report Regulation 2002, and under Title 9, Book 2 of the Civil Code 

in the Netherlands, the auditable part of the remuneration report comprises ’Directors’ pensions’ on pages 52 and 53, 

’Directors’ interests: share capital’ on page 55, ’Directors’ emoluments’ on page 56, ’Directors’ share options’ on pages 57 

and 58, ’Directors’ conditional share awards under the TSR Long-Term Incentive Plan’ on page 59 and ‘Advisory Directors’ 

on pages 59 and 60.

The role of the Audit Committee is to assist the Unilever 

Board in fulfilling its oversight responsibilities regarding the 

integrity of Unilever’s financial statements, risk management 

and internal control, compliance with legal and regulatory 

requirements, the external auditors’ performance, 

qualifications and independence, and the performance 

of the internal audit function. During the year ended 

31 December 2002 the principal activities of the Committee 

were as follows: 

Financial Statements 

The Committee considered reports from the Financial 

Director on the quarterly and annual financial statements. 

It also reviewed proposed changes in accounting principles 

in response to the changes in Netherlands, UK and US law 

and UK GAAP. 

Audit of the Annual Accounts 

PricewaterhouseCoopers, Unilever’s external auditors, 

reported in depth to the Committee on the scope and 

outcome of the annual audit, and management’s response. 

Their reports included accounting matters, governance and 

control, and accounting developments. 

Risk Management and Internal Control Arrangements 

The Committee reviewed Unilever's overall approach to risk 

management and control, and its processes, outcomes and 

disclosure, including specifically: 

• Corporate Audit’s interim and year-end reports on the 

Status of Risk Management & Control, and management’s 

response. 

• The Corporate Risk Committee’s annual report, which 

included its recommendation for the Board's statement on 

internal control, its analysis of the 2002 risk assessment 

process, and the corporate risks identified for 2003. 

• The reports from the Code of Business Principles 

Compliance Committee. 

• Controls over trade marketing investments. 


Report of the Audit Committee 61 

External Auditors 

The report from PricewaterhouseCoopers confirming 

their independence and objectivity was reviewed by the 

Committee. It also reviewed the audit, audit-related, tax and 

consulting services provided by PricewaterhouseCoopers, 

and compliance with Unilever’s policy, introduced in January 

2002, under which the types of engagements for which the 

external auditors can be used are prescribed. 

The Committee oversaw the external auditor tender process 

which was conducted during the year, and made its formal 

recommendation to the Board, which was adopted. (See 

page 45 for further details of the tender.) 

Internal Audit Function 

The Committee engaged in discussion and review of the 

Corporate Audit Department’s audit plan for the year, 

together with its budget and resource requirements. 

Audit Committee Charter 

The Committee’s charter has been updated to reflect recent 

developments in corporate governance in the UK, the 

European Union and the US. The revised charter enhances 

the Committee’s role and responsibilities, and in particular 

makes it responsible for overseeing Unilever’s relations with 

the external auditors. 

The Audit Committee Charter can be viewed on Unilever’s 

external website at www.unilever.com. 


62 Financial statements – Contents 

Statement of directors’ responsibilities 63 

Report of independent auditors 65 

Accounting information and policies 66 

Consolidated profit and loss account 69 

Consolidated statement of total recognised 

gains and losses 70 

Consolidated cash flow statement 70 

Consolidated balance sheet 71 

Notes to the consolidated accounts 72 

1 Segmental information 72 

2 Operating costs 77 

3 Staff costs and employees 77 

4 Exceptional items 77 

5 Interest 78 

6 Taxation on profit on ordinary activities 78 

7 Combined earnings per share 79 

8 Dividends on ordinary capital 80 

9 Goodwill and intangible assets 80 

10 Tangible fixed assets 81 

11 Fixed investments 81 

12 Stocks 82 

13 Debtors 82 

14 Net funds/(debt) 83 

15 Financial instruments 85 

16 Trade and other creditors 86 

17 Pensions and similar obligations 87 

18 Deferred taxation 94 

19 Restructuring and other provisions 95 

20 Capital and reserves 96 

21 Called up share capital 97 

22 Profit retained 98 

23 Other reserves 98 

24 Commitments and contingent liabilities 99 

25 Acquisition and disposal of group companies 99 

26 Reconciliation of group operating profit to 

operating cash flows 101 

27 Analysis of cash flows for headings netted in 

the cash flow statement 102 

28 Analysis of net funds/(debt) 103 

29 Equity-based compensation plans 103 

30 Summarised accounts of the NV and PLC 

parts of the Group 112 

Five year record 113 

Additional information for US investors 118 

Principal group companies and fixed investments 128 

Company accounts – Unilever N.V. 132 

Notes to the company accounts – Unilever N.V. 133 

Further statutory information – Unilever N.V. 134 

Company accounts – Unilever PLC 135 

Notes to the company accounts – Unilever PLC 136 

Further statutory information and other 

information – Unilever PLC 137 


Annual accounts 

The directors are required by Title 9, Book 2 of the 

Civil Code in the Netherlands and the United Kingdom 

Companies Act 1985 to prepare accounts for each financial 

year which give a true and fair view of the state of affairs 

of the Unilever Group, NV and PLC as at the end of the 

financial year and of the profit or loss for that year. 

The directors consider that in preparing the accounts, 

the Group, NV and PLC have used the most appropriate 

accounting policies, consistently applied and supported by 

reasonable and prudent judgements and estimates, and 

that all United Kingdom accounting standards which they 

consider to be applicable have been followed, except as 

noted under ‘Accounting standards’ on page 66. 

The directors have responsibility for ensuring that NV and 

PLC keep accounting records which disclose with reasonable 

accuracy their financial position and which enable the 

directors to ensure that the accounts comply with the 

relevant legislation. They also have a general responsibility 

for taking such steps as are reasonably open to them to 

safeguard the assets of the Group and to prevent and 

detect fraud and other irregularities. 

This statement, which should be read in conjunction with 

the ‘Report of independent auditors’ set out on page 65, 

is made with a view to distinguishing for shareholders the 

respective responsibilities of the directors and of the auditors 

in relation to the accounts. 

A copy of the financial statements of the Unilever Group 

is placed on our website at www.unilever.com. The 

maintenance and integrity of the website is the responsibility 

of the directors, and 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 occurred to the financial statements since they 

were initially placed on the website. Legislation in the United 

Kingdom and the Netherlands governing the preparation 

and dissemination of financial statements may differ from 

legislation in other jurisdictions. 

Going concern 

The directors continue to adopt the going concern basis 

in preparing the accounts. This is because the directors, 

after making enquiries and following a review of the 

Group’s budget for 2003 and 2004, including cash flows 

and borrowing facilities, consider that the Group has 

adequate resources to continue in operation for the 

foreseeable future. 


Statement of directors’ responsibilities 63 

Internal and disclosure controls and procedures 

Unilever has a well established control environment, which is 

well documented and regularly reviewed. This incorporates 

risk management, internal control procedures and disclosure 

controls and procedures which are designed to provide 

reasonable assurance that assets are safeguarded, the risks 

facing the business are being controlled and all information 

required to be disclosed is reported to the Group’s senior 

management, including where appropriate the Chairmen 

and Financial Director, within the required timeframe. 

Our procedures cover financial, operational, social and 

environmental risks and regulatory matters. The Boards 

of NV and PLC have also established a clear organisational 

structure, including delegation of appropriate authorities. 

The Group’s control environment is supported through 

a Code of Business Principles, which sets standards of 

professionalism and integrity for its operations worldwide. 

The Boards have overall responsibility for establishing 

key procedures designed to achieve systems of internal 

control and disclosure control and for reviewing and 

evaluating their effectiveness. The day-to-day responsibility 

for implementation of these procedures and ongoing 

monitoring of risk and the effectiveness of controls rests 

with the Group’s senior management at individual operating 

company and Business Group level. Business Groups, each 

of which has its own Risk Committee, review, on an 

ongoing basis, the risks faced by their group and the related 

internal control arrangements and provide written reports to 

the Corporate Risk Committee. This is comprised mainly of 

Board members and chaired by the Financial Director. The 

Corporate Risk Committee is a committee of the Board and 

maintains oversight, on behalf of the Boards, of the controls 

in place to identify, evaluate and manage risk. It reports 

regularly to the Boards, which retain ultimate responsibility, 

and to the Audit Committee. 

Unilever’s corporate internal audit function plays a key role 

in providing an objective view and continuous reassurance 

of the effectiveness of the risk management and related 

control systems throughout Unilever to both operating 

management and the Boards. The Group has an 

independent Audit Committee, entirely comprised of 

Advisory Directors. This Committee meets regularly with 

corporate internal audit and the external auditors. 

Unilever has a comprehensive budgeting system with an 

annual budget approved by the Boards, which is regularly 

reviewed and updated. Performance is monitored against 

budget and the previous year through monthly and 

quarterly reporting routines. The Group reports to 

shareholders quarterly. 

Financial Statements

64 Statement of directors’ responsibilities 

Unilever’s system of risk management has been in place 

throughout 2002 and up to the date of this report, and 

complies with the recommendations of ’Internal Control – 

Guidance for Directors on the Combined Code’, published 

by the Internal Control Working Party of the Institute of 

Chartered Accountants in England & Wales in September 

1999. The Boards have carried out an annual review of 

the effectiveness of the systems of risk management 

and internal control during 2002, and have ensured 

that the necessary actions have been taken to address 

any weaknesses or deficiencies arising out of that review. 

Based on an evaluation by the Board, which comprises the 

Chairmen, the Financial Director and the Group’s senior 

management, each Chairman and the Financial Director 

concluded that the design and operation of the Group’s 

disclosure controls and procedures as at 31 December 2002 

were reasonably effective and that subsequently there 

have been no significant changes in the Group’s internal 

controls or in other factors that could significantly affect 

those controls. 

It is Unilever’s policy to bring acquired companies 

within the Group’s governance procedures as soon as is 

practicable and, in any event, by the end of the first full 

year of operation. 


Report of the auditors to the members 

of Unilever N.V. and Unilever PLC 

We have audited the accounts, which have been prepared 

under the historical cost convention, set out on page 66 to 

112, 118 to 133 and 135 to 136. We have also audited the 

auditable part of the directors’ remuneration report as set 

out on page 60. 

Respective responsibilities of directors and auditors 

As described on pages 63 and 64, the directors are 

responsible for preparing the Annual Report & Accounts 

and Form 20-F. This includes responsibility for preparing 

the accounts in accordance with applicable accounting 

standards. Our responsibility is to audit the accounts in 

accordance with applicable law, auditing standards and 

listing rules in the Netherlands and United Kingdom. 

We report to you our opinion as to whether the accounts 

give a true and fair view and are properly prepared in 

accordance with Title 9, Book 2 of the Civil Code in the 

Netherlands and the United Kingdom Companies Act 1985. 

We also report whether the auditable part of the directors’ 

remuneration report is properly prepared in accordance with 

the applicable requirements in the Netherlands and the 

United Kingdom. We would also report to you if, in our 

opinion, the directors’ report was not consistent with the 

accounts, if proper accounting records had not been kept, 

if we had not received all the information and explanations 

we require for our audit, or if information required regarding 

directors’ remuneration and transactions were not disclosed. 

We read the other information contained in the 

Annual Report & Accounts and Form 20-F and consider 

the implications for our audit report if we become aware 

of any material misstatements or inconsistencies with 

the accounts. 

As auditors of Unilever PLC we review whether the 

statement on pages 44 and 45 reflects the Company’s 

compliance with the seven provisions of the Combined 

Code specified for our review by the United Kingdom’s 

Financial Services Authority and we report if it does not. 

We are not required to consider whether the directors’ 

statements on internal control cover all risks and controls 

or to form an opinion on the effectiveness of the Group’s 

corporate governance procedures or its risk and control 

procedures. 

Basis of opinion 

We conducted our audit in accordance with auditing 

standards generally accepted in the Netherlands, the 

United Kingdom and the United States. An audit includes 

an examination, on a test basis, of evidence relevant to the 

amounts and disclosures in the accounts and the auditable 

part of the directors’ remuneration report. It also includes an 

assessment of the most important estimates and judgements 

made by the directors in the preparation of the accounts, 

and of whether the accounting policies are appropriate to 

the Group’s circumstances, consistently applied and 

adequately disclosed. 


Report of independent auditors 65 

We planned and performed our audit so as to obtain all 

the information and explanations which we considered 

necessary in order to provide us with sufficient evidence 

to give reasonable assurance that the accounts and the 

auditable part of the directors’ remuneration report are free 

from material misstatement, whether caused by fraud or 

other irregularity or error. In forming our opinion we also 

evaluated the overall adequacy of the presentation 

of information in the accounts. 

Netherlands and United Kingdom opinion 

In our opinion, the accounts give a true and fair view of 

the state of affairs of the Unilever Group, Unilever N.V. and 

Unilever PLC at 31 December 2002 and of the profit, total 

recognised gains and cash flows of the Group for the year 

then ended. In our opinion the accounts of the Unilever 

Group, and of Unilever N.V. and Unilever PLC respectively, 

have been properly prepared in accordance with Title 9, 

Book 2 of the Civil Code in the Netherlands and the United 

Kingdom Companies Act 1985. In our opinion, the auditable 

part of the directors’ remuneration report has been properly 

prepared in accordance with the applicable requirements in 

the Netherlands and the United Kingdom. 

United States opinion 

In our opinion, the accounts present fairly, in all material 

respects, the financial position of the Unilever Group 

at 31 December 2002 and 2001, and the results of its 

operations, total recognised gains and its cash flows for each 

of the three years in the period ended 31 December 2002, 

in accordance with the accounting information and policies 


The accounting principles applied vary in certain significant 

respects from accounting principles generally accepted 

in the United States. The effect of the major differences 

in the determination of net profit and capital and reserves 

is shown on pages 118 and 119. 

As discussed in note 18 to the consolidated accounts, the 

Group changed its method of accounting for deferred taxes 

in 2002 in accordance with accounting principles generally 

accepted in the United Kingdom. The change has been 

accounted for by restating comparative information at 

31 December 2001 and 2000, and for the years then ended. 

PricewaterhouseCoopers Accountants N.V. 

Rotterdam, The Netherlands 

As auditors of Unilever N.V. 

PricewaterhouseCoopers LLP 

Chartered Accountants and Registered Auditors 

London, England 

As auditors of Unilever PLC 

4 March 2003 


66 Accounting information and policies 

Unilever 

The two parent companies, NV and PLC, together with their 

group companies, operate as nearly as is practicable as a 

single entity (the Unilever Group, also referred to as Unilever 

or the Group). NV and PLC have the same directors and are 

linked by a series of agreements, including an Equalisation 

Agreement, which are designed so that the position of the 

shareholders of both companies is as nearly as possible the 

same as if they held shares in a single company. 

The Equalisation Agreement provides for both companies 

to adopt the same accounting principles and requires as 

a general rule the dividends and other rights and benefits 

(including rights on liquidation) attaching to each Fl. 12 

(€5.445) nominal of ordinary share capital of NV to be 

equal in value at the relevant rate of exchange to the 

dividends and other rights and benefits attaching to each 

£1 nominal of ordinary share capital of PLC, as if each such 

unit of capital formed part of the ordinary capital of one 

and the same company. For additional information please 

refer to ‘Control of Unilever’ on page 138. 

Basis of consolidation 

Because of the operational and contractual arrangements 

referred to above and the internal participating interests set 

out in note 21 on page 97, NV and PLC and their group 

companies constitute a single group under Netherlands and 

United Kingdom legislation 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. These accounts are 

supplemented in notes 22 and 23 on page 98 and note 30 

on page 112 by additional information for the NV and PLC 

parts of the Group in which group companies are 

consolidated according to respective ownership. 

Companies legislation 

The consolidated accounts of the Unilever Group comply 

with Book 2 of the Civil Code in the Netherlands and the 

United Kingdom Companies Act 1985. The consolidated 

accounts of the Unilever Group also comply with accounting 

standards generally accepted in the United Kingdom, as 

allowed by Article 362.1 of Book 2 of the Civil Code in the 

Netherlands, unless such standards conflict with the Civil 

Code in the Netherlands which would in such case prevail. 

The company accounts, the notes to those accounts and 

the further statutory information given for each of NV 

and PLC comply with legislation in the Netherlands and the 

United Kingdom respectively. As explained under ‘Group 

companies’ below and on page 67, in order to give a true 

and fair view, the presentation of the consolidated capital 

and reserves differs from that specified by the United 

Kingdom Companies Act 1985. 

Accounting standards 

The accounts are prepared under the historical cost convention 

and comply in all material respects with legislation in the 

Netherlands and with United Kingdom Accounting Standards. 

The accounting policies of the Unilever Group are set out 

on pages 66 to 68. Our accounting policy for the treatment 

of exceptional items is given on page 77. Material variations 


from United States generally accepted accounting principles 

are set out on pages 118 to 127. 

United Kingdom Urgent Issues Task Force Abstracts 13 and 

17 (UITFs 13 and 17) require that NV or PLC shares held by 

employee trusts to satisfy options should be classified by the 

sponsoring company as fixed assets, and, as explained in 

note 29 on page 111, that certain costs in relation to these 

shares be recognised in the profit and loss account. 

Netherlands law requires such shares and certain related 

costs to be accounted for within capital and reserves. In 

order to comply with Netherlands law and the Equalisation 

Agreement, the requirements of UITF 13 and certain aspects 

of UITF 17 have not been followed. All shares held internally 

are accounted for in accordance with Netherlands law. The 

effects of this departure are shown in note 23 on page 98 

and note 29 on page 111. 

United Kingdom Financial Reporting Standard 17 

‘Retirement Benefits’ (FRS 17) mandates that certain 

disclosures relating to retirement benefits be made in 

financial statements for accounting periods ending on or 

after 22 June 2001. These disclosures are shown in note 17 

on page 89. Unilever will adopt the full requirements of the 

standard, which will change the basis of accounting for 

retirement benefits, from 1 January 2003. This will have 

a significant impact on Unilever’s reported results. 

United Kingdom Financial Reporting Standard 19 (FRS 19) 

‘Deferred Tax’ requires that full provision be made for most 

timing differences between the recognition of profits for 

accounting purposes and the recognition of profits for tax 

purposes. Prior to the implementation of the standard, 

Unilever used a form of full provisioning for such timing 

differences and therefore the standard has been adopted 

by the Group for the year ended 31 December 2002 with 

no material impact on reported net profit. The effect of 

the implementation of this standard on the balance sheet 

is shown in note 18 on page 94 and note 20 on page 96. 

Recent changes in reporting requirements under US GAAP 

are discussed on page 122. 

OECD Guidelines 

In preparing its Annual Review and Annual Report & 

Accounts and Form 20-F Unilever adheres to the disclosure 

recommendations of the OECD Guidelines for 

Multinational Enterprises. 

Group companies 

Group companies are those companies in whose share 

capital NV or PLC holds an interest directly or indirectly, 

and whose consolidation is required for the accounts to 

give a true and fair view. 

In order that the consolidated accounts should present 

a true and fair view, it is necessary to differ from the 

presentational requirements of the United Kingdom 

Companies Act 1985 by including amounts attributable 

to both NV and PLC shareholders in the capital and reserves 

shown in the balance sheet. The Companies Act would 

require presentation of the capital and reserves attributable

to NV and PLC shareholders as minority interests in the 

respective consolidated accounts of PLC and NV. This 

presentation would not give a true and fair view of the 

effect of the Equalisation Agreement, under which the 

position of all shareholders is as nearly as possible the 

same as if they held shares in a single company. 

Net profit and result for the year retained are presented on 

a combined basis on page 69, with the net profit attributable 

to NV and PLC shareholders shown separately. Movements 

in profit retained are analysed between those attributable 

to NV and PLC shareholders in note 22 on page 98. 

Foreign currencies 

Exchange differences arising in the accounts of individual 

companies are dealt with in their respective profit and loss 

accounts. Those arising on trading transactions are taken 

to operating profit; those arising on cash, current 

investments and borrowings are classified as interest. 

In preparing the consolidated accounts, the profit and loss 

account, the cash flow statement and all other movements 

in assets and liabilities are translated at annual average rates 

of exchange. The balance sheet, other than the ordinary 

share capital of NV and PLC, is translated at year-end rates 

of exchange. In the case of hyper-inflationary economies, 

the accounts are adjusted to remove the influences of 

inflation before being translated. 

The ordinary share capital of NV and PLC is translated 

at the rate contained in the Equalisation Agreement of 

£1 = Fl. 12 (equivalent to €5.445). The difference between 

this and the value derived by applying the year-end rate 

of exchange is taken to other reserves (see note 23 on 

page 98). 

The effects of exchange rate changes during the year on 

net assets at the beginning of the year are recorded as a 

movement in profit retained, as is the difference between 

profit of the year retained at average rates of exchange 

and at year-end rates of exchange. 

Goodwill and intangible assets 

No value is attributed to internally generated intangible 

assets. Goodwill (being the difference between the fair value 

of consideration paid for new interests in group companies, 

joint ventures and associated companies and the fair value 

of the Group’s share of their net assets at the date of 

acquisition) and identifiable intangible assets purchased after 

1 January 1998 are capitalised and amortised in the profit 

and loss account over the period of their expected useful 

life, up to a maximum of 20 years. Periods in excess of five 

years are used only where the directors are satisfied that the 

life of these assets will clearly exceed that period. Goodwill 

and intangible assets purchased prior to 1 January 1998 

were written off in the year of acquisition as a movement 

in profits retained. 

On disposal of a business acquired prior to 1 January 1998, 

purchased goodwill written off on acquisition is reinstated 

in arriving at the profit or loss on disposal. 


Accounting information and policies 67 

The treatment of goodwill and intangibles under US GAAP is 

discussed on pages 118 to 120. 

Goodwill and intangible assets are subject to review for 

impairment in accordance with United Kingdom Financial 

Reporting Standard (FRS) 11 ‘Impairment of Fixed Assets and 

Goodwill’ and United States Statement of Financial 

Accounting Standards (SFAS) 142 ‘Goodwill and Other 

Intangible Assets’. Any impairment is charged to the profit 

and loss account as it arises. 

Tangible fixed assets 

Tangible fixed assets are stated at cost less depreciation. 

Depreciation is provided on a straight-line basis at 

percentages of cost based on the expected average useful 

lives of the assets. Estimated useful lives by major class of 

assets are as follows: 

Freehold buildings 33-40 years 

(no depreciation on freehold land) 

Leasehold land and buildings *33-40 years 

Plant and equipment 3-20 years 

Motor vehicles 3-6 years 

* or life of lease if less than 33 years 

Tangible fixed assets are subject to review for impairment 

in accordance with FRS 11 and United States SFAS 144 

‘Accounting for the Impairment or Disposal of Long-Lived 

Assets’. Any impairment is charged to the profit and loss 

account as it arises. 

Current cost information is given in note 10 on page 81. 

Fixed investments 

Joint ventures are undertakings in which the Group has 

a long-term participating interest and which are jointly 

controlled by the Group and one or more other parties. 

Associated companies are undertakings in which the 

Group has a participating interest and is able to exercise 

significant influence. 

Interests in joint ventures and associated companies are 

stated in the consolidated balance sheet at the Group’s 

share of their aggregate assets and liabilities. 

Other fixed investments are stated at cost less any amounts 

written off to reflect a permanent impairment. 

Current assets 

Stocks are valued at the lower of cost and estimated net 

realisable value. Cost is mainly average cost, and comprises 

direct costs and, where appropriate, a proportion of 

production overheads. 

Debtors are stated after deducting adequate provision for 

doubtful debts. 

Current investments are liquid funds temporarily invested 

and are stated at their realisable value. The difference 

between this and their original cost is taken to interest 

in the profit and loss account. 


68 Accounting information and policies 

Retirement benefits 

The expected costs of providing retirement pensions under 

defined benefit plans, as well as the costs of other postretirement 

benefits, are charged to the profit and loss 

account over the periods benefiting from the employees’ 

services. Variations from expected cost are normally 

spread over the average remaining service lives of 

current employees. 

Contributions to defined contribution pension plans are 

charged to the profit and loss account as incurred. 

Liabilities arising under defined benefit plans are either 

externally funded or provided for in the consolidated 

balance sheet. Any difference between the charge to 

the profit and loss account in respect of funded plans and 

the contributions payable to each plan is recorded in the 

balance sheet as a prepayment or provision. 

Deferred taxation 

Full provision is made for deferred taxation on all significant 

timing differences arising from the recognition of items for 

taxation purposes in different periods from those in which 

they are included in the Group accounts. Full provision is 

made at the rates of tax prevailing at the year end unless 

future rates have been enacted or substantively enacted. 

Deferred tax assets and liabilities have not been discounted. 

Provision is made for taxation which will become payable if 

retained profits of group companies and joint ventures are 

distributed to the parent companies only to the extent that 

we are committed to such distributions. 

Provisions 

Provisions are recognised when either a legal or constructive 

obligation, as a result of a past event, exists at the balance 

sheet date and where the amount of the obligation can be 

reasonably estimated. 

Derivative financial instruments 

The types of derivative financial instruments used by 

Unilever are described in note 15 on pages 85 and 86 and 

in the Financial review on pages 37 to 39. Hedge 

accounting, as described below, is applied. 

Changes in the value of forward foreign exchange contracts 

are recognised in the results in the same period as changes 

in the values of the assets and liabilities they are intended 

to hedge. Interest payments and receipts arising from 

interest rate derivatives such as swaps and forward rate 

agreements are matched to those arising from underlying 

debt and investment positions. 

Payments made or received in respect of the early 

termination of derivative financial instruments are spread 

over the original life of the instrument so long as the 

underlying exposure continues to exist. 


Research, development and market support costs 

Expenditure on research and development and on market 

support costs such as advertising is charged against the 

profit of the year in which it is incurred. 

Group turnover and Turnover 

Group turnover comprises sales of goods and services after 

deduction of discounts and sales taxes. It includes sales to 

joint ventures and associated companies but does not 

include sales by joint ventures and associated companies 

or sales between group companies. Turnover includes the 

Group share of the turnover of joint ventures, but does not 

include our share of the turnover of associates. 

Revenue is recognised when the risks and rewards of the 

underlying products and services have been substantially 

transferred to the customer. 

Transfer pricing 

The preferred method for determining transfer prices for 

own manufactured goods is to take the market price. 

Where there is no market price, the companies concerned 

follow established transfer pricing guidelines, where 

available, or else engage in arm’s length negotiations. 

Trademarks owned by the parent companies and used by 

operating companies are, where appropriate, licensed in 

return for royalties or a fee. 

General services provided by central advisory departments, 

business groups, divisions and research laboratories are 

charged to operating companies on the basis of fees. 

Leases 

Lease payments, which are principally in respect of operating 

leases, are charged to the profit and loss account on a 

straight-line basis over the lease term, or over the period 

between rent reviews where these exist. 

Shares held by employee share trusts 

The assets and liabilities of certain PLC trusts, NV and group 

companies which purchase and hold NV and PLC shares to 

satisfy options granted are included in the Group accounts. 

The book value of shares held is deducted from capital and 

reserves, and trust borrowings are included in the Group’s 

borrowings. The costs of the trusts are included in the 

results of the Group. These shares are excluded from the 

calculation of earnings per share.


Consolidated profit and loss account 69 

For the year ended 31 December 

Unilever Group 

€ million € million € million 

2002 2001 2000 

Turnover 1 48 760 52 206 48 066 

Less: Share of turnover of joint ventures 1 (490) (692) (484) 

Group turnover 1 48 270 51 514 47 582 

Cost of sales 2 (24 030) (26 962) (25 221) 

Gross profit 24 240 24 552 22 361 

Distribution, selling and administrative costs 2 (19 199) (19 378) (19 180) 

Group operating profit 1 5 041 5 174 3 181 

Group operating profit BEIA 1 7 165 7 149 5 729 

Exceptional items (879) (588) (2 113) 

Amortisation of goodwill and intangibles 1 (1 245) (1 387) (435) 

Add: Share of operating profit of joint ventures 84 84 57 

Operating profit 1 5 125 5 258 3 238 

Operating profit BEIA 1 7 260 7 269 5 794 

Exceptional items 4 (874) (588) (2 113) 

Amortisation of goodwill and intangibles (1 261) (1 423) (443) 

Share of operating profit of associates 1 34 – – 

Other income from fixed investments 11 (7) 12 (4) 

Interest 5 (1 173) (1 646) (632) 

Profit on ordinary activities before taxation 3 979 3 624 2 602 

Taxation on profit on ordinary activities 6 (1 538) (1 547) (1 282) 

Profit on ordinary activities after taxation 2 441 2 077 1 320 

Minority interests (312) (239) (215) 

Net profit 2 129 1 838 1 105 

Attributable to: NV 22 1 681 817 675 

PLC 22 448 1 021 430 

Dividends (1 701) (1 581) (1 458) 

Preference dividends (42) (51) (44) 

Dividends on ordinary capital 8 (1 659) (1 530) (1 414) 

Result for the year retained 428 257 (353) 

Combined earnings per share 7 

Euros per €0.51 of ordinary capital 2.14 1.82 1.07 

Euro cents per 1.4p of ordinary capital 32.05 27.27 16.08 

On a diluted basis the figures would be: 



All amounts are related to continuing operations as defined by United Kingdom Financial Reporting Standard 3. 

References in the consolidated profit and loss account, consolidated statement of total recognised gains and losses, consolidated cash 

flow statement and consolidated balance sheet relate to notes on pages 72 to 112, which form an integral part of the consolidated 

financial statements. 

Accounting policies of the Unilever Group are set out on pages 66 to 68. 

Variations from United States generally accepted accounting principles and Regulation S-X are outlined on pages 118 to 127. 

In accordance with Article 402 of Book 2 of the Civil Code in the Netherlands, the profit and loss account of the entity NV on page 132 

mentions only the income from fixed investments after taxation and other income and expenses as separate items. 

Amounts reported in 2000 for exceptional items within operating profit and for taxation on profit on ordinary activities have been restated 

to comply with the requirements of FRS 19. See note 18 on page 94. 


70 Consolidated statement of total 

recognised gains and losses 





2002 2001 2000 

Net profit 2 129 1 838 1 105 

Unrealised gain on partial disposal of a group company 25 56 – – 

Currency retranslation (1 582) (1 065) (247) 

Total recognised gains for the year 603 773 858 

Adjustment related to prior year restatement 18 (202) – – 

Total recognised gains since last annual accounts 401 773 858 

Amounts reported against currency retranslation in 2000 and 2001 have been restated to comply with the requirements of FRS 19. 

See note 18 on page 94. 

Consolidated cash flow statement 




2002 2001 2000 

Cash flow from group operating activities 26 7 883 7 497 6 738 

Dividends from joint ventures 83 82 38 

Returns on investments and servicing of finance 27 (1 386) (1 887) (798) 

Taxation (1 817) (2 205) (1 734) 

Capital expenditure and financial investment 27 (1 706) (1 358) (1 061) 

Acquisitions and disposals 27 1 755 3 477 (27 373) 

Dividends paid on ordinary share capital (1 580) (1 420) (1 365) 

Cash flow before management of liquid resources and financing 3 232 4 186 (25 555) 

Management of liquid resources 27 (592) 1 106 2 464 

Financing 27 (2 591) (5 098) 22 902 

Increase/(decrease) in cash in the period 49 194 (189) 

Reconciliation of cash flow to movement in net funds/(debt) 


2002 2001 2000 

Net funds/(debt) at 1 January 28 (23 199) (26 468) 684 

Increase/(decrease) in cash in the period 49 194 (189) 

Cash flow from (increase)/decrease in borrowings 2 600 5 095 (22 920) 

Cash flow from increase/(decrease) in liquid resources 592 (1 106) (2 464) 

Change in net funds resulting from cash flows 3 241 4 183 (25 573) 

Borrowings within group companies acquired (77) (1) (3 113) 

Borrowings within group companies sold 20 3 2 

Liquid resources within group companies acquired – – 13 

Liquid resources within group companies sold (1) – – 

Non-cash movements 1 467 (408) 455 

Currency retranslation 1 583 (508) 1 064 

(Increase)/decrease in net debt in the period 6 233 3 269 (27 152) 

Net funds/(debt) at 31 December 28 (16 966) (23 199) (26 468)


Consolidated balance sheet 71 

As at 31 December 




Fixed assets 28 389 35 088 

Goodwill and intangible assets 9 20 274 24 964 

Tangible fixed assets 10 7 436 9 240 

Fixed investments 11 679 884 

Interest in joint ventures 11 274 708 

Interest in associates 11 1 – 

Other fixed investments 11 404 176 


Stocks 12 4 500 5 343 

Debtors 13 8 231 10 034 

Debtors due within one year 13 5 875 7 185 

Debtors due after more than one year 13 2 356 2 849 

Current investments 14 1 226 439 

Cash at bank and in hand 14 2 252 1 862 

Total current assets 16 209 17 678 

Creditors due within one year (20 602) (23 212) 

Borrowings 14 (9 511) (11 279) 

Trade and other creditors 16 (11 091) (11 933) 

Net current assets (4 393) (5 534) 

Total assets less current liabilities 23 996 29 554 

Creditors due after more than one year 11 574 15 026 

Borrowings 14 10 933 14 221 

Trade and other creditors 16 641 805 

Provisions for liabilities and charges 5 927 6 871 

Pensions and similar obligations 17 4 220 4 602 

Deferred taxation 18 504 910 

Restructuring and other provisions 19 1 188 1 359 

Interest in associates 11 15 – 

Minority interests 628 664 

Capital and reserves 20 5 867 6 993 

Attributable to: NV: Called up share capital 21 420 420 

Share premium account 1 397 1 397 

Other reserves 23 (1 498) (1 077) 

Profit retained 22 5 381 4 149 

5 700 4 889 

PLC: Called up share capital 21 222 222 

Share premium account 144 154 

Other reserves 23 (595) (540) 

Profit retained 22 396 2 268 

167 2 104 

Total capital employed 23 996 29 554 

Capital and reserves include amounts relating to preference shares in NV which under United Kingdom Financial Reporting Standard 4 are 

classified as non-equity. Minority interests in group companies are substantially all equity interests. 

The 2001 amounts for goodwill, debtors due after more than one year, provisions for deferred taxation and profit retained have been 

restated to comply with the requirements of FRS 19, see note 18 on page 94. 

Commitments and contingent liabilities are shown in note 24 on page 99. 


72 Notes to the consolidated accounts 


1 Segmental information 

€ million € million € million € million € million € million 

North Africa, Middle Asia & Latin 

Analysis by geographical area Europe America East & Turkey Pacific America Total 


Group turnover (a) 19 573 12 446 3 139 7 679 5 433 48 270 

Share of turnover of joint ventures 84 122 86 186 12 490 

Turnover (a) 19 657 12 568 3 225 7 865 5 445 48 760 

Group operating profit BEIA 2 990 1 995 341 1 080 759 7 165 

Exceptional items (729) (66) (39) 14 (59) (879) 

Amortisation of goodwill and intangibles (511) (494) (16) (17) (207) (1 245) 

Group operating profit 1 750 1 435 286 1 077 493 5 041 

Share of operating profit of joint ventures 22 32 9 21 – 84 

Operating profit 1 772 1 467 295 1 098 493 5 125 

Operating profit BEIA (b) (f) 3 006 2 027 353 1 115 759 7 260 

Share of operating profit of associates (c) 12 14 1 5 2 34 

Net operating assets (d) 9 954 8 945 1 097 1 124 3 614 24 734 

2001 



Turnover (a) 20 220 13 880 3 455 8 046 6 605 52 206 


Exceptional items 254 (285) (139) (157) (261) (588) 

Amortisation of goodwill and intangibles (511) (564) (4) (26) (282) (1 387) 

Group operating profit 2 689 1 092 203 862 328 5 174 

Share of operating profit of joint ventures 21 32 12 18 1 84 

Operating profit 2 710 1 124 215 880 329 5 258 


Net operating assets (d) 11 243 12 091 1 082 1 525 6 256 32 197 

2000 



Turnover (a) 19 075 11 708 3 512 8 091 5 680 48 066 

Group operating profit BEIA 2 402 1 476 338 901 612 5 729 

Exceptional items (d) (566) (1 249) (16) (109) (173) (2 113) 

Amortisation of goodwill and intangibles (143) (179) (1) (16) (96) (435) 

Group operating profit (d) 1 693 48 321 776 343 3 181 

Share of operating profit of joint ventures 18 24 8 5 2 57 

Operating profit (d) 1 711 72 329 781 345 3 238 

Operating profit BEIA (b) (f) 2 420 1 500 351 909 614 5 794 

Please refer to footnotes on page 76. 





1 Segmental information continued 

€ million € million € million € million € million € million € million € million 

Savoury Spreads and Health & Ice cream Home care & 

Analysis by operation 

and cooking wellness and and professional Personal Other 

(e) 

dressings products beverages frozen foods cleaning care operations Total 


Group turnover 9 272 6 145 4 064 7 456 8 565 12 236 532 48 270 

Share of turnover of joint ventures 231 71 151 – 14 9 14 490 

Turnover 9 503 6 216 4 215 7 456 8 579 12 245 546 48 760 

Group operating profit BEIA 1 497 991 578 880 955 2 221 43 7 165 

Exceptional items (24) (181) (105) (237) (183) (149) – (879) 


and intangibles (1 051) (17) (119) (27) (17) (13) (1) (1 245) 


Share of operating profit of 

joint ventures 28 19 36 – (1) 3 (1) 84 


Operating profit BEIA (b) (f) 1 539 1 006 615 880 954 2 224 42 7 260 

Share of operating profit 

of associates (c) – – – – 34 – – 34 

Net operating assets (d) 16 959 1 120 3 015 1 674 858 719 389 24 734 

2001 


Share of turnover of joint ventures 402 90 149 – 35 3 13 692 

Turnover 9 999 6 771 4 299 7 727 10 467 12 310 633 52 206 

Group operating profit BEIA 1 628 1 066 531 797 885 2 217 25 7 149 

Exceptional items 347 (260) (128) (322) (201) (49) 25 (588) 


and intangibles (1 182) (9) (136) (29) (18) (11) (2) (1 387) 



joint ventures 21 20 41 – 1 2 (1) 84 


Operating profit BEIA (b) (f) 1 685 1 086 572 797 886 2 219 24 7 269 

Net operating assets (d) 22 788 651 3 025 2 496 1 540 1 312 385 32 197 

2000 


Share of turnover of joint ventures 124 79 195 21 26 22 17 484 

Turnover 6 074 6 749 3 625 7 869 10 284 12 589 876 48 066 


Exceptional items (d) (170) (22) (18) (394) (323) (1 190) 4 (2 113) 


and intangibles (326) (64) (3) (17) (16) (7) (2) (435) 

Group operating profit (d) 296 823 391 225 578 837 31 3 181 


joint ventures 13 16 28 2 – – (2) 57 

Operating profit (d) 309 839 419 227 578 837 29 3 238 







Additional segmental information as required by US GAAP 

Segmental information is provided in accordance with SFAS 131 on the basis of product categories. For management reporting purposes 

Unilever uses a number of measures of segment performance at constant average rates of exchange (that is, the same rates as in the 

preceding year). The internal management measure of profit which is most consistent with operating profit reported in the accounts is 

‘Trading Result’. This measure differs from operating profit, mainly because it excludes amortisation of goodwill and intangibles and certain 

exceptional items and includes depreciation on the basis of replacement cost. There are a number of additional adjustments, including the 

application of an inflation charge on working capital and certain other statistical items which are added back in order to arrive at operating 

profit. Tangible fixed assets are measured at depreciated replacement cost for management reporting purposes. 

Analysis by operation (e) 







Group turnover 

At constant 2001 exchange rates 9 887 6 401 4 308 7 646 9 422 13 264 571 51 499 

Exchange rate adjustments (615) (256) (244) (190) (857) (1 028) (39) (3 229) 

At current 2002 exchange rates 9 272 6 145 4 064 7 456 8 565 12 236 532 48 270 

Trading result at constant 

2001 exchange rates: 

Before exceptional items 1 602 1 021 641 943 979 2 322 16 7 524 

Exceptional items (160) (174) (106) (226) (193) (166) 14 (1 011) 

At constant 2001 exchange rates 1 442 847 535 717 786 2 156 30 6 513 

Exchange rate adjustments (80) (13) (31) (13) (61) (180) (3) (381) 

At current 2002 exchange rates 1 362 834 504 704 725 1 976 27 6 132 


and intangibles (1 245) 

Other adjustments 154 

Group operating profit 5 041 

2001 



Exchange rate adjustments (102) (130) (70) (65) (416) (374) (12) (1 169) 

At current 2001 exchange rates 9 597 6 681 4 150 7 727 10 432 12 307 620 51 514 



Before exceptional items 1 674 1 038 556 818 863 2 286 25 7 260 

Exceptional items 348 (265) (128) (329) (203) (31) 36 (572) 

At constant 2000 exchange rates 2 022 773 428 489 660 2 255 61 6 688 

Exchange rate adjustments (5) (2) (1) 5 (30) (74) (2) (109) 

At current 2001 exchange rates 2 017 771 427 494 630 2 181 59 6 579 


and intangibles (1 387) 

Other adjustments (18) 

Group operating profit 5 174 

2000 



Exchange rate adjustments 438 510 246 450 819 1 246 80 3 789 

At current 2000 exchange rates 5 950 6 670 3 430 7 848 10 258 12 567 859 47 582 



Before exceptional items 755 829 390 666 825 1 845 24 5 334 

Exceptional items (d) (166) 1 (19) (385) (306) (1 058) 3 (1 930) 

At constant 1999 exchange rates (d) 589 830 371 281 519 787 27 3 404 

Exchange rate adjustments 56 45 30 19 34 45 (1) 228 

At current 2000 exchange rates (d) 645 875 401 300 553 832 26 3 632 


and intangibles (435) 


Group operating profit (d) 3 181 

Please refer to footnotes on page 76.







Analysis by operation 


(e) 


Depreciation and amortisation 


At constant 2001 exchange rates 1 395 213 238 325 476 271 87 3 005 


At current 2002 exchange rates 1 291 204 220 315 437 252 83 2 802 


2001 

At constant 2000 exchange rates 1 500 276 227 376 391 292 86 3 148 

Exchange rate adjustments (30) (24) (5) 21 (11) (5) (1) (55) 

At current 2001 exchange rates 1 470 252 222 397 380 287 85 3 093 


2000 

At constant 1999 exchange rates 423 297 71 399 433 364 75 2 062 

Exchange rate adjustments 60 12 6 22 26 26 4 156 

At current 2000 exchange rates 483 309 77 421 459 390 79 2 218 


Capital expenditure 




At current 2002 exchange rates 202 166 167 270 215 251 27 1 298 

2001 


Exchange rate adjustments 29 (13) (8) (21) (14) (9) (3) (39) 


2000 


Exchange rate adjustments 11 8 6 21 29 25 3 103 


Total assets 


Total assets by operation 19 717 3 610 4 095 3 851 3 581 4 066 2 662 41 582 

Corporate 3 778 


2 582 

2 845 

1 954 

44 598 

2001 (d) 

Total assets by operation 27 326 2 844 3 811 5 004 4 716 5 328 1 918 50 947 

Corporate 2 672 



52 766 





€ million € million € million € million 

United 

Kingdom & United 

Additional geographic analysis Netherlands States Other Total 

Group turnover (a) 


At constant 2001 exchange rates 5 444 11 992 34 063 51 499 

Exchange rate adjustments (38) (571) (2 620) (3 229) 

At current 2002 exchange rates 5 406 11 421 31 443 48 270 

2001 


Exchange rate adjustments (89) 348 (1 428) (1 169) 

At current 2001 exchange rates 5 705 12 626 33 183 51 514 

2000 


Exchange rate adjustments 300 1 466 2 023 3 789 

At current 2000 exchange rates 5 377 10 619 31 586 47 582 

Tangible fixed assets 

2002 979 1 564 4 893 7 436 

2001 1 634 2 131 5 475 9 240 

Footnotes to note 1: 

(a) The analysis of turnover by geographical area is stated on the basis of origin. Turnover on a destination basis would not be materially 

different. Inter-segment sales between operational segments and between geographical areas are not material. For the United Kingdom 

and the Netherlands, the combined Group operating profit was €578 million (2001: €1 226 million; 2000: €716 million). 

(b) In 2002 the Group’s share of amortisation of goodwill and intangibles in joint ventures was €(16) million (2001: €(36) million; 

2000: €(8) million), of which €(3) million (2001: €(22) million; 2000: €(5) million) arose in Africa, Middle East and Turkey and 

€(13) million (2001: €(14) million; 2000: €(3) million) arose in Asia and Pacific. Of the total amortisation €(13) million 

(2001: €(36) million; 2000: €(8) million) arose in the savoury and dressings segment, €(2) million arose in the spreads and cooking 

products segment and €(1) million arose in the health & wellness and beverages segment. These amounts are taken into account in 

the calculation of operating profit BEIA. 

(c) Nil in 2001 and 2000. 

(d) The 2001 amounts for goodwill within net operating assets and amounts reported in 2000 for exceptional items within operating 

profit have been restated to comply with the requirements of FRS 19. See note 18 on page 94. For the definition of net operating 

assets see page 115. 

(e) Analysis for Foods operations has been reclassified over new categories, as noted on page 24. 

(f) In 2002 the Group’s share of exceptional items in joint ventures was €5 million (2001: €nil; 2000: €nil), of which €6 million arose in 

Europe and €(1) million arose in Asia and Pacific. Of the total exceptional items €(1) million arose in the savoury and dressings segment 

and €6 million arose in the spreads and cooking products segment. These amounts are taken into account in the calculation of 

operating profit BEIA. 


2 Operating costs 





2002 2001 2000 

Cost of sales (24 030) (26 962) (25 221) 

Distribution and selling costs (12 175) (12 543) (12 045) 

Administrative expenses (a) (7 024) (6 835) (7 135) 

Operating costs (43 229) (46 340) (44 401) 

(a) Includes amortisation of goodwill and intangibles. 


2002 2001 2000 

Operating costs include: 

Staff costs 3 (7 008) (7 131) (6 905) 

Raw materials and packaging (18 086) (19 924) (18 085) 

Amortisation of goodwill and 

intangibles (b) (1 245) (1 387) (435) 

Depreciation of tangible 

fixed assets (c) (1 337) (1 458) (1 519) 

Advertising and promotions (6 839) (6 648) (6 545) 

Research and development (1 166) (1 178) (1 187) 

Remuneration of auditors: 

Audit fees (15) (16) (14) 

Audit related services (d) (13) (11) (10) 

Other payments to 

PricewaterhouseCoopers 

for non-audit services: 

Tax (d) (6) (5) (4) 

General consulting (d) (16) (60) (42) 

Lease rentals: 

Minimum lease payments (503) (548) (563) 

Contingent lease payments (15) (28) (8) 

(518) (576) (571) 

Less: Sub-lease income 8 10 12 

(510) (566) (559) 

of which: 

Plant and machinery (141) (147) (148) 

Other (369) (419) (411) 

(b) Includes exceptional amount of €(22) million in 2002 and 

€(8) million in 2001. 

(c) Includes exceptional amount of €(256) million in 2002 and 

€(263) million in 2001. 

(d) Details of our policy on the non-audit work we allow our 

auditors to perform are given within the Corporate governance 

section on page 45. 

3 Staff costs and employees 


2002 2001 2000 

Staff costs: 

Remuneration of employees (5 834) (6 021) (5 828) 

Emoluments of directors 

as managers (17) (18) (13) 

Pensions and other 

post-retirement benefits 17 (416) (326) (305) 

Social security costs (741) (766) (759) 

Total staff costs (7 008) (7 131) (6 905) 

Details of the remuneration of directors and Advisory Directors 

which form part of these accounts are given in the auditable part of 

the Remuneration report on pages 49 to 60. 

The average number of employees during the year was: 

‘000 ’000 ’000 

2002 2001 2000 

Europe 65 75 74 

North America 22 30 27 

Africa, Middle East and Turkey 52 49 48 

Asia and Pacific 84 84 79 

Latin America 35 41 33 

Total 258 279 261 

4 Exceptional items 


2002 2001 2000 

Included in operating profit 

Restructuring (1 215) (1 515) (1 150) 

Other, principally business 

disposals (a) 341 927 (963) 

Total (874) (588) (2 113) 

(a) Restated for FRS 19, see note 18 on page 94. 

These amounts are mainly included in administrative expenses. 

Exceptional items are those items within ordinary activities which, 

because of their size or nature, are disclosed to give a proper 

understanding of the underlying result for the period. These 

include restructuring charges in connection with reorganising 

businesses (comprising impairment of fixed assets, costs 

of severance, and other costs directly attributable to the 

restructuring), and profits and losses on disposal of businesses. 

United Kingdom FRS 3 would require profits and losses on 

disposal of most businesses to be excluded from operating 

profit. However, because the business disposals above and the 

restructuring costs are part of a series of linked initiatives, separate 

presentation would not give a true and fair view and therefore 

we have included all exceptional items arising from these 

initiatives on a single line in operating profit. Costs associated 

with restructuring, such as training and information technology 

development costs, are recognised as they arise and are not 

treated as exceptional. 

The exceptional items in 2002, 2001 and 2000 principally relate 

to a series of linked initiatives (the ‘Path to Growth’), announced 

on 22 February 2000 to align the organisation behind plans for 

accelerating growth and expanding margins and to restructuring 

arising from the integration of Bestfoods. 




4 Exceptional items continued 

The total net cost of these programmes is estimated to be 

€6.2 billion over five years, most of which is expected to be 

exceptional restructuring costs. Provisions for these costs and asset 

write downs are being recognised as necessary consultations are 

completed and plans finalised. 

In 2002, €1.3 billion of net costs have been incurred under Path 

to Growth programmes of which a net €1.1 billion is exceptional. 

To date, which is three years into the five year programme, the total 

cost incurred is €5.2 billion of which €4.5 billion is exceptional. 

Other exceptional items include the release of provisions 

(€98 million) against environmental exposures when events showed 

that the provisions were no longer required. These provisions were 

originally recorded on the acquisition of the Bestfoods business. 

In 2001 exceptional items included €1.4 billion of Path to Growth 

net costs and €811 million gain on the sale of brands to secure 

regulatory approval for the acquisition of Bestfoods. 

In 2000 other exceptional items included a profit of €143 million 

on the disposal of the European bakery business and a loss of 

€980 million on the agreed disposal of Elizabeth Arden. The latter 

amount has been restated as a result of the implementation of FRS 

19; there was no impact on net profit arising from this restatement. 


5 Interest 


2002 2001 2000 

Total interest payable 

and similar charges (1 446) (1 914) (1 008) 

Group interest payable 

and similar charges: 

Bank loans and overdrafts (186) (451) (221) 

Bonds and other loans 

Share of interest payable 

(1 228) (1 463) (787) 

of joint ventures 

Share of interest payable 

(5) – – 

of associates 

Group interest receivable 

(27) – – 

and similar income 247 210 374 

Exchange differences 26 (3) 12 

(1 173) (1 707) (622) 

Less: interest capitalised on 

businesses held for resale – 61 27 

Add: exceptional interest – – (37) 

Total (1 173) (1 646) (632) 

Exceptional interest in 2000 principally comprised fees paid on 

the unused financing facility put in place prior to the acquisition 

of Bestfoods. 


6 Taxation on profit on ordinary activities 


2002 2001 2000 

Parent and group companies (a)(b) (1 515) (1 522) (1 271) 

Joint ventures (19) (25) (11) 

Associates (4) – – 

Total (1 538) (1 547) (1 282) 

Of which: 

Adjustments to previous years 

United Kingdom taxes 11 (3) (5) 

Other taxes 245 61 36 

(a) United Kingdom 

Corporation Tax at 30.0% (173) (381) (451) 

less: double tax relief 66 140 334 

United Kingdom taxes (107) (241) (117) 

plus: non-United Kingdom taxes (1 408) (1 281) (1 154) 

(1 515) (1 522) (1 271) 

(b) Of which, tax on exceptional 

items amounted to 241 232 404 

Deferred taxation has been included 

on a full provision basis for: 

Accelerated depreciation 50 87 119 

Other 242 (207) 153 

292 (120) 272 

Where appropriate, amounts have been restated for FRS 19, see 

note 18 on page 94. 

Europe is Unilever’s domestic tax base. The reconciliation between 

the computed rate of income tax expense which is generally 

applicable to Unilever’s European companies and the actual rate of 

taxation charged, expressed in percentages of the profit of ordinary 

activities before taxation is as follows: 

% % % 

2002 2001 2000 

Computed rate of tax 

(see below) 33 33 32 

Differences due to: 

Other rates applicable to 

non-European countries 3 (1) 2 

Incentive tax credits (3) (3) (2) 

Withholding tax on dividends 1 3 3 

Adjustments to previous years (6) (2) (2) 

Non-deductible goodwill impairment – – 10 

Non-deductible goodwill amortisation 9 12 4 

Other 2 1 2 

Actual rate of tax 

(current and deferred) 39 43 49 

Actual rate of deferred tax for: 


Other 6 (6) 6 

Actual rate of current tax 46 39 60 

In the above reconciliation, the computed rate of tax is the average 

of the standard rate of tax applicable in the European countries 

in which Unilever operates, weighted by the amount of profit 

on ordinary activities before taxation generated in each of 

those countries.

6 Taxation on profit on ordinary activities continued 

The total charge in future periods will be affected by any changes 

to the corporate tax rates in force in the countries in which the 

Group operates. The current tax charges will also be affected by 

changes in the excess of tax depreciation over book depreciation 

and the use of tax credits. 

Analyses of European and non-European profit on ordinary 

activities before taxation, and of the actual taxation charge 

thereon, are as follows: 


2002 2001 2000 

Profit on ordinary activities 

before taxation 

Europe: 

Parent and group companies 2 062 2 429 1 792 

Joint ventures 19 21 14 

Associates 12 – – 




2 093 2 450 1 806 

Outside Europe: 

Group companies 1 831 1 111 754 

Joint ventures 60 63 42 


1 886 1 174 796 

Total 3 979 3 624 2 602 


2002 2001 2000 

Taxation on profit on 

ordinary activities 

Europe: 

Parent and group companies 

Taxes payable (723) (760) (942) 


of which: 

95 (114) 293 


Other (18) (176) 177 



(639) (880) (654) 

Outside Europe: 

Group companies 

Taxes payable (1 084) (642) (722) 


of which: 

197 (6) 100 

Accelerated depreciation (63) 25 3 

Other 260 (31) 97 


Associates 1 – – 

(899) (667) (628) 

Total (1 538) (1 547) (1 282) 

7 Combined earnings per share 

€ € € 

2002 2001 2000 

Per €0.51 share of NV ordinary capital: 

Basic earnings per share 2.14 1.82 1.07 

Basic earnings per share before 

exceptional items and amortisation 

of goodwill and intangibles 4.06 3.55 3.21 

Diluted earnings per share 2.07 1.77 1.05 

€ cents € cents € cents 

2002 2001 2000 

Per 1.4p share of PLC ordinary capital: 

Basic earnings per share 32.05 27.27 16.08 

Basic earnings per share before 

exceptional items and amortisation 

of goodwill and intangibles 60.86 53.29 48.20 

Diluted earnings per share 31.10 26.54 15.69 

Basis of calculation: 

The calculations of combined earnings per share are based on the 

net profit attributable to ordinary capital divided by the average 

number of share units representing the combined ordinary capital 

of NV and PLC in issue during the year, after deducting shares held 

to meet Unilever employee share options which are not yet exercised. 

For the calculation of combined ordinary capital the exchange rate 

of £1 = Fl. 12 = €5.445 has been used, in accordance with the 

Equalisation Agreement. 

Earnings per share before exceptional items and amortisation of 

goodwill and intangibles is provided because the directors believe 

it better explains the ongoing trends in the Group’s performance 

during the duration of the Path to Growth programme. 

The calculations of diluted earnings per share are based on 

(a) conversion into PLC ordinary shares of the shares in a group 

company which are convertible in the year 2038 as described in 

‘Control of Unilever’ on page 141, and (b) the exercise of share 

options, details of which are set out in note 29 on pages 103 

to 111. 

Calculation of average number of share units: 

Millions of €0.51 share units 

2002 2001 2000 

Average ordinary capital: NV 571.6 571.6 571.6 

PLC 436.7 436.7 436.7 

less: shares held by employee share 

trusts and companies (31.6) (25.5) (19.1) 

Combined average number of share 

units for all bases except diluted 

earnings per share 976.7 982.8 989.2 

add: shares issuable in 2038 23.6 23.6 23.6 

add: shares under option 35.3 23.5 17.2 

less: shares issuable at fair value (29.0) (19.9) (15.7) 

Adjusted combined average number 

of share units for diluted earnings 

per share basis 1 006.6 1 010.0 1 014.3 




7 Combined earnings per share continued 

Millions of 1.4p share units 

2002 2001 2000 

Average ordinary capital: NV 3 810.5 3 810.5 3 810.5 

PLC 2 911.5 2 911.5 2 911.5 

less: shares held by employee share 

trusts and companies (210.4) (169.7) (127.2) 

Combined average number of share 

units for all bases except diluted 

earnings per share 6 511.6 6 552.3 6 594.8 

add: shares issuable in 2038 157.5 157.5 157.5 

add: shares under option 235.3 156.3 114.6 

less: shares issuable at fair value (193.6) (132.7) (105.1) 

Adjusted combined average number 

of share units for diluted earnings 

per share basis 6 710.8 6 733.4 6 761.8 

Calculation of earnings: 


2002 2001 2000 

Net profit 2 129 1 838 1 105 

less: preference dividends (42) (51) (44) 

Net profit attributed to ordinary 

capital for basic and diluted earnings 

per share calculations 2 087 1 787 1 061 

add: exceptional items net of tax 661 334 1 709 

add: amortisation of goodwill and 

intangibles net of tax 1 216 1 371 409 

Net profit attributed to ordinary 

capital before exceptional items 

and amortisation 3 964 3 492 3 179 

8 Dividends on ordinary capital 


2002 2001 2000 

Dividends on ordinary capital 

Interim (537) (491) (475) 

Final (1 122) (1 039) (939) 

Total (1 659) (1 530) (1 414) 

€ € € 

2002 2001 2000 

Dividends per €0.51 share of 

NV ordinary capital 

Interim 0.55 0.50 0.48 

Final 1.15 1.06 0.95 

Total 1.70 1.56 1.43 


Pence Pence Pence 

2002 2001 2000 

Dividends per 1.4p share of 

PLC ordinary capital 

Interim 5.21 4.65 4.40 

Final 10.83 9.89 8.67 

Total 16.04 14.54 13.07 

Full details of dividends for the years 1998 to 2002 are given on 

page 147. 

9 Goodwill and intangible assets 

No value is attributed to internally generated intangible assets. 

Goodwill and identifiable intangible assets purchased after 

1 January 1998 are capitalised and amortised in operating profit 

over the period of their expected useful life, up to a maximum 

of 20 years. Goodwill and intangible assets purchased prior to 

1 January 1998 were written off in the year of acquisition 

as a movement in profits retained. 

Goodwill and intangible assets are subject to review for impairment 

in accordance with United Kingdom FRS 11 ‘Impairment of Fixed 

Assets and Goodwill’ and United States SFAS 142. Any impairment 

is charged to the profit and loss account as it arises. 

Intangible assets principally consist of trademarks. 



At cost less amortisation 

Goodwill (a) 15 328 18 715 

Intangible assets 4 946 6 249 

20 274 24 964 


Movements during 2002 Intangible 

Goodwill (a) 

assets 

Cost 

1 January 20 093 6 702 

Additions/reductions – 18 

Acquisitions/disposals 282 (227) 

Currency retranslation (3 030) (890) 

31 December 17 345 5 603 

Amortisation 

1 January (1 378) (453) 

Disposals 11 19 

Charged to profit and loss account (b) (932) (313) 

Currency retranslation 282 90 

31 December (2 017) (657) 

Net book value 31 December 15 328 4 946 


(b) Including exceptional write down arising on 

restructuring of €22 million.

10 Tangible fixed assets 

Tangible fixed assets are stated at cost less depreciation. 

Depreciation is provided on a straight-line basis at percentages of 

cost based on the expected average useful lives of the assets. 

Estimated useful lives by major class of assets are as follows: 

Freehold buildings 33-40 years 

(no depreciation on freehold land) 

Leasehold land and buildings *33-40 years 

Plant and equipment 3-20 years 

Motor vehicles 3-6 years 

*or life of lease if less than 33 years 

Tangible fixed assets are subject to review for impairment in 

accordance with United Kingdom FRS 11 and United States 

SFAS 144. Any impairment in the value of such fixed assets 

is charged to the profit and loss account as it arises. 






At cost less depreciation: 

Land and buildings (a) 2 622 3 106 

Plant and machinery 4 814 6 134 

Total 7 436 9 240 

(a) includes: freehold land 282 383 

leasehold land 

(mainly long-term leases) 63 84 

Approximate current replacement cost 

of tangible fixed assets net of 

accumulated current cost depreciation 8 535 10 529 

On a current replacement cost basis the 

depreciation charge to the profit and 

loss account would have been 

increased by (220) (248) 

Commitments for capital expenditure 

at 31 December 244 298 


Movements during 2002 Land and Plant and 

buildings machinery 

Gross 

1 January 4 570 13 597 

Currency retranslation (556) (1 501) 

Capital expenditure 182 1 116 

Disposals (255) (918) 

Acquisitions/disposals of group companies (176) (761) 

Other adjustments 85 (85) 

31 December 3 850 11 448 

Depreciation 

1 January (1 464) (7 463) 

Currency retranslation 184 855 

Disposals 136 696 

Acquisitions/disposals of group companies 81 450 

Charged to profit and loss account (b) (124) (1 213) 

Other adjustments (41) 41 

31 December (1 228) (6 634) 

Net book value 31 December 2 622 4 814 

Includes payments on account and 

assets in course of construction 64 495 

(b) Including a charge of €300 million in respect of certain fixed 

assets written down to net realisable value in connection with 

restructuring projects, €256 million of which was exceptional. 

11 Fixed investments 

Joint ventures are undertakings in which the Group has a long-term 

participating interest and which are jointly controlled by the Group 

and one or more other parties. Associated companies are 

undertakings in which the Group has a participating interest and 

is able to exercise significant influence. 

Interests in joint ventures and associated companies are stated in 

the consolidated balance sheet at the Group’s share of their 

aggregate assets and liabilities. 

Other fixed investments are stated at cost less any amounts written 

off to reflect a permanent impairment. 



Share of gross assets of joint ventures 370 855 

Share of gross liabilities of joint ventures (96) (147) 

Interest in net assets of joint ventures 274 708 

Interest in net assets of associates 1 – 

Total joint ventures and associates 275 708 

Other fixed investments 404 176 

Total fixed investments 679 884 




11 Fixed investments continued 

The following tables show the movements during the year in 

connection with joint ventures, associates and other fixed 

investments: 


Joint ventures – movements during 2002 Goodwill Other 

1 January 513 195 

Acquisitions/disposals (225) (100) 

Amortisation (16) – 

Currency retranslation (61) (19) 

Additions/reductions – (8) 

Share of profit retained – (5) 

31 December 211 63 


Associates – movements during 2002 Goodwill Other 

1 January – – 

Acquisitions/disposals 178 (195) 

Amortisation (6) – 

Currency retranslation (18) 20 

Additions/reductions – 1 

Share of profit retained – 6 

154 (168) 

Of which: Net liabilities of JohnsonDiversey 

reclassified to provisions for liabilities 

and charges (€15 million net) (154) 169 

31 December – 1 

Associated companies primarily comprise our investments in 

JohnsonDiversey Holdings Inc. and Langholm Capital. Other Unilever 

Ventures investments are included under Other fixed investments 

below. For further details of these investments see page 10. 

Other fixed investments – movements during 2002 € million 

1 January 176 

Acquisitions/disposals 215 

Currency retranslation (51) 

Additions/reductions 64 

31 December 404 


Analysis of listed and unlisted investments 2002 2001 

Investments listed on a recognised 

stock exchange 19 21 

Unlisted investments 660 863 

Total fixed investments 679 884 

Market value of listed investments 19 21 

Unlisted investments include the Senior Discount Note issued by 

JohnsonDiversey as part consideration for the purchase of the 

DiverseyLever business. 

Sales agency fees payable to JohnsonDiversey are approximately 

€85 million per annum; interest receivable of €17 million was 

accrued during 2002. 



2002 2001 2000 

Other income from fixed 

investments 

Income from other fixed investments 8 2 2 

Profit/(loss) on disposal (15) 10 (6) 

(7) 12 (4) 

The following related party balances existed with associates at 

31 December: 



Trading balances receivable 38 – 

Financing balances receivable 247 – 

12 Stocks 



Raw materials and consumables 1 720 2 105 

Finished goods and goods for resale 2 780 3 238 

Total stocks 4 500 5 343 

13 Debtors 



Due within one year: 

Trade debtors 4 112 5 344 

Prepayments and accrued income 573 548 

Other debtors 1 190 1 293 

5 875 7 185 

Due after more than one year: 

Prepayments to funded pension schemes 17 840 917 

Deferred taxation (a) 18 1 292 1 610 

Other debtors 224 322 

2 356 2 849 

Total debtors 8 231 10 034 


The following information is required by schedule 210.12-09 

under Regulation S-X of the United States Securities and 

Exchange Commission: 


2002 2001 2000 

Provision for doubtful debtors 

Movements during the year: 

1 January 328 307 279 

Charged to profit and loss account 155 96 84 

Charged to other accounts (a) (24) 13 54 

Deductions (165) (88) (110) 

31 December 294 328 307 

(a) Includes currency retranslation of opening balances.

14 Net funds/(debt) 






Current investments 

Listed 62 43 

Unlisted 1 164 396 

1 226 439 

Cash at bank and in hand 

On call and in hand 1 602 1 576 

Repayment notice required 650 286 

2 252 1 862 

Borrowings 

Bank loans and overdrafts (1 844) (2 893) 

Bonds and other loans (18 600) (22 607) 

(20 444) (25 500) 

Total net funds/(debt) (16 966) (23 199) 

Current investments include short-term deposits, government 

securities and A- or higher rated money and capital market 

instruments. 



Borrowings – additional details 

The repayments fall due as follows: 

Within one year: 

Bank loans and overdrafts 1 514 2 719 

Bonds and other loans 7 997 8 560 

Total due within one year 9 511 11 279 

After one year but within two years 1 734 5 090 

After two years but within three years 2 047 1 736 

After three years but within four years 1 807 2 257 

After four years but within five years 1 807 1 917 

After five years: By instalments – – 

Not by instalments 3 538 3 221 

Total due after more than one year 10 933 14 221 

Total amount repayable by instalments any of 

which are payable after five years 2 – 

Secured borrowings – mainly bank loans 

and overdrafts 44 24 

Of which secured against tangible fixed assets 6 15 

The tables set out below and on page 84 take into account the 

various interest rate swaps and forward foreign currency contracts 

entered into by the Group, details of which are set out in note 15 

on pages 85 and 86. Details of specific bonds and other loans are 

also given below. 



NV 

Floating rate notes 2002 (US $) – 2 541 

Floating rate notes 2003 (€) 1 000 999 

Floating rate notes 2003 (US $) 477 564 

Floating rate notes 2003 (Japanese Yen) 402 430 

4.750% Bonds 2004 (€) 998 997 

7.250% Bonds 2004 (US $) 238 282 

6.500% Bonds 2004 (€) 159 159 

7.125% Bonds 2004 (€) 228 228 

6.625% Notes 2005 (US $) 191 226 

3.375% Bonds 2005 (Swiss Francs) 343 337 

5.125% Bonds 2006 (€) 998 997 

5.125% Notes 2006 (US $) 474 561 

4.250% Bonds 2007 (€) 996 – 

5.000% Bonds 2007 (US $) 617 – 

Commercial paper (€) 962 797 

Commercial paper (£) 234 1 007 

Commercial paper (US $) 595 1 055 

Commercial paper (Swiss Francs) 93 168 

Other 788 433 

Total NV 9 793 11 781 

PLC 

Eonia indexed note 2002 (€) – 500 

Floating rate notes 2002 (€) – 1 000 

Floating rate notes 2002 (£) – 213 

5.375% Notes 2003 (€) 1 250 1 249 

Commercial paper (€) 59 – 

Commercial paper (£) 98 – 

Other (a) – (6) 

Total PLC 1 407 2 956 

Other group companies: 

United States: 

6.750% Notes 2003 (US $) 1 429 1 694 

6.875% Notes 2003 (US $) 95 113 

6.875% Notes 2005 (US $) 1 427 1 694 

6.150% Bonds 2006 (US $) 277 325 

7.125% Bonds 2010 (US $) 1 657 1 977 

7.000% Bonds 2017 (US $) 135 160 

7.250% Bonds 2026 (US $) 270 319 

6.625% Bonds 2028 (US $) 209 246 

5.900% Bonds 2032 (US $) 943 – 

5.000% Bonds 2045 (Swiss Francs) 138 135 

5.600% Bonds 2097 (US $) 87 103 

Commercial paper (US $) 351 838 

Other 41 82 

Thailand: 

3.300% Bonds 2007 (Thai baht) 144 – 

Other countries 197 184 

Total other group companies 7 400 7 870 

Total bonds and other loans 18 600 22 607 

(a) The negative amount shown in 2001 relates to the exchange 

difference on the currency swap used to swap certain euro 

borrowings into sterling. 




14 Net funds/(debt) continued 

Unilever had the following undrawn committed facilities at 

31 December 2002: 

• revolving 364-day bilateral credit facilities of in aggregate 

US $3 403 million (2001: US $3 020 million) with a 364-day 

term out; 

• revolving 5 year bilateral credit facilities of in aggregate 

US $334 million (2001: nil); 

• revolving 364-day notes commitments of US $400 million 

(2001: US $200 million) with the ability to issue notes with a 

maturity up to 364 days; 

• 364-day bilateral money market commitments of in aggregate 

US $2 080 million (2001: US $1 775 million), under which the 

underwriting banks agree, subject to certain conditions, to 

subscribe for notes with maturities of up to three years. 

In addition, operating companies have a variety of facilities, most of 

which are uncommitted. 

The average interest rate on short-term borrowings in 2002 was 

5% (2001: 7%). 

The interest rate profiles of the Group’s financial assets and liabilities 

analysed by principal currency are set out in the table below. 

Interest rate profile and currency analysis of 

financial assets 


Fixed Fixed Fixed Floating 

rate rate rate rate Total 


average average 

interest fixing 

rate period 

Assets – 2002 

Euro (b) 512 10.9% 1.4 years 670 1 182 

Sterling – 123 123 

US Dollar 246 10.7% 10.3 years 445 691 

Indian Rupee – 568 568 

Other – 1 122 1 122 

Total (a) 758 2 928 3 686 

Assets – 2001 

Euro (b) 806 11.0% 1.3 years (202) 604 

Sterling – 334 334 

US Dollar – 79 79 

Indian Rupee – 558 558 

Other – 726 726 

Total 806 1 495 2 301 

(a) Includes certain non equity assets held within fixed investments. 

(b) The fixed interest rate of 10.9% in 2002 (2001: 11.0%) relates 

to one leg of a cross-currency interest rate swap of an 

intercompany loan: a corresponding interest charge is included 

in the US dollar fixed rate liabilities. 


Interest rate profile and currency analysis of 

financial liabilities 


Fixed Fixed Fixed Floating 

rate rate rate rate Total 


average average 

interest fixing 

rate period 

Liabilities – 2002 

Euro 32 4.8% 4.7 years 221 253 

Sterling 367 6.3% 1.4 years 1 017 1 384 

US Dollar 11 363 6.2% 6.7 years 4 542 15 905 

Thai baht 262 3.7% 2.9 years 128 390 

Other 247 5.1% 24.0 years 2 265 2 512 

Total 12 271 8 173 20 444 

Liabilities – 2001 

Euro 68 6.0% 3.1 years 1 728 1 796 

Sterling 1 429 7.2% 0.7 years 320 1 749 

US Dollar 11 687 6.7% 5.4 years 7 288 18 975 

Other 252 5.0% 24.2 years 2 728 2 980 

Total 13 436 12 064 25 500

15 Financial instruments 

The Group has comprehensive policies in place, approved by the 

directors, covering the use of derivative financial instruments. These 

instruments are used for hedging purposes. Established controls are 

in place covering all financial instruments. These include policies, 

guidelines, exposure limits, a system of authorities and independent 

reporting. Performance is closely monitored with independent 

reviews undertaken by internal audit. The accounting policies 

governing these instruments are in line with generally accepted 

practice in the UK and the Netherlands and follow hedge 

accounting principles described in the accounting policies on page 

68. The use of leveraged instruments is not permitted. Details of the 

instruments used for interest rate and foreign exchange exposure 

management, together with information on related exposures, are 

given below. 

Except for the description of Unilever’s currency exposures, all 

debtors and trade and other creditors have been excluded from the 

analysis below and from the interest rate and currency profiles in 

note 14 on page 84 either due to the exclusion of short-term items, 

as permitted by United Kingdom Financial Reporting Standard 13, 

or because the amounts are not material. 

Unilever operates an interest rate management policy aimed at 

optimising net interest and reducing volatility. Derivatives are used 

to manage the interest rate exposure of debt and cash positions. 

The Group’s financial position is largely fixed by fixed rate long-term 

debt issues and straightforward derivative financial instruments such 

as interest rate swaps. In general, cash is invested short-term at 

floating interest rates. 

At the end of 2002 interest rates were fixed on approximately 

80% of the projected net debt for 2003 and 47% for 2004 

(compared with 54% for 2002 and 47% for 2003 at the end 

of 2001). 

Nominal values of interest rate derivative instruments are shown in 

the table below. These nominal values do not reflect the actual level 

of use of financial instruments when compared with the nominal 

value of the underlying debt. This is because certain financial 

instruments have consecutive strike and maturity dates on the same 

underlying debt in different time periods. Whilst the nominal 

amounts reflect the volume of activity, they are not indicative of the 

amount of credit risk to which the Group is exposed. For details of 

our policy for managing credit risk see page 38. 





Nominal amounts 

at 31 December 


Interest rate swaps 15 804 21 360 

The following table shows the extent to which the Group had 

unrecognised gains and losses in respect of interest rate instruments 

at the beginning and end of the year. It shows the movement in the 

market value of these instruments during the year ended 

31 December 2002. 


Total net 

gains/ 

Gains Losses (losses) 

Unrecognised gains and losses: 

Balance at 1 January 151 (293) (142) 

Brought forward balance 

recognised in current year 61 (234) (173) 

Brought forward balance not 

recognised in current year 90 (59) 31 

Current year items not recognised 

in current year 210 (145) 65 

Balance at 31 December 2002 300 (204) 96 

Expected to be dealt with next year 129 (147) (18) 

Expected to be dealt with later 171 (57) 114 

The following table shows the extent to which the Group has 

recognised but deferred gains and losses in respect of interest rate 

instruments at the beginning and end of the year. It also shows the 

amount which has been included in the profit and loss account for 

the year and those gains and losses which will be reflected in the 

profit and loss account in 2003 or in subsequent years. 


Total net 

gains/ 

Gains Losses (losses) 

Deferred gains and losses: 

Balance at 1 January 10 (82) (72) 

Brought forward balance 


Brought forward balance not 


Current year items not recognised 

in current year – 5 5 

Balance at 31 December 2002 5 (48) (43) 

To be recognised in the profit and 

loss account for next year 5 (25) (20) 

To be recognised in the profit and 

loss account later – (23) (23) 




15 Financial instruments continued 

Under the Group’s foreign exchange policy, transaction exposures, 

which usually have a maturity of less than one year, are generally 

hedged; this is primarily achieved through the use of forward 

foreign exchange contracts. The market value of these instruments 

at the end of 2002 represented a recognised unrealised gain of 

€572 million (2001: loss of €157 million) which was largely offset 

by recognised unrealised losses on the underlying assets and 

liabilities. 



Nominal amounts 

at 31 December 


Foreign exchange contracts – buy 3 627 6 053 

– sell 11 076 13 812 

Total 14 703 19 865 

Our policy for financing the net investments in our subsidiaries is 

discussed in the Financial Review on page 37 and 38. At the end of 

2002 some 75% (2001: 67%) of Unilever’s total capital and reserves 

were denominated in the currencies of the two parent companies, 

euros and sterling. 

Counterparty exposures are minimised by dealing with a limited 

range of financial institutions with secure credit ratings, and by 

working within agreed counterparty limits. There is no significant 

concentration of credit risk with any single counterparty. 

Master netting agreements are in place for the majority of interest 

rate derivative instruments. The risk in the event of default by a 

counterparty is determined by the extent to which market prices 

have moved since the contracts were made. The Group believes 

that the risk of incurring such losses is remote. 

The following table summarises the fair values and carrying 

amounts of the various classes of financial instruments as at 

31 December: 


Fair value Carrying amount 


Financial assets: 

Other fixed investments 404 176 404 176 

Current investments 1 226 439 1 226 439 

Cash 2 252 1 862 2 252 1 862 

3 882 2 477 3 882 2 477 

Financial liabilities: 

Bank loans and overdrafts (1 849) (2 899) (1 844) (2 893) 

Bonds and other loans (19 675) (23 125) (18 600) (22 607) 

(21 524) (26 024) (20 444) (25 500) 

Derivatives: 

Interest rate swaps 

– assets 300 151 152 134 

– liabilities (204) (293) (6) (10) 

Foreign exchange 

contracts – assets 780 190 780 190 

– liabilities (208) (347) (208) (347) 

The fair values of listed fixed investments are based on their 

market values. The fair values of unlisted fixed investments are 

not materially different from their carrying amounts. The carrying 

amount of current investments is based on their market value. 

Cash, bank loans and overdrafts have fair values which approximate 

to their carrying amounts because of their short-term nature. The 

fair values of forward foreign exchange contracts represent the 

unrealised gain or loss on revaluation of the contracts to year-end 

exchange rates. The fair values of bonds and other loans, interest 

rate swaps and forward rate agreements are based on the net 

present value of the anticipated future cash flows associated 

with these instruments. Short-term debtors and creditors have fair 

values which approximate to their carrying values. 

In November 2001, NV entered into a forward purchase contract 

with a counterparty bank to buy 10 000 000 PLC shares at 559p 

per share in November 2006. If the PLC share price falls by more 

than 5% below 559p, cash collateral for the difference must be 

placed with the counterparty bank. 

Currency exposures 

Group Treasury manages the foreign exchange exposures that arise 

from Unilever’s financing and investing activities in accordance with 

Unilever policies. 

The objectives of Unilever’s foreign exchange policies are to allow 

operating companies to manage foreign exchange exposures that 

arise from trading activities effectively within a framework of control 

that does not expose Unilever to unnecessary foreign exchange 

risks. Operating companies are required to cover substantially all 

foreign exchange exposures arising from trading activities and each 

company operates within a specified maximum exposure limit. 

Business Groups monitor compliance with these policies. 

Compliance with the Group’s policies means that the net amount 

of monetary assets and liabilities at 31 December 2002 that are 

exposed to currency fluctuations is not material. 

16 Trade and other creditors 




Trade creditors 4 414 4 882 

Social security and sundry taxes 458 534 

Accruals and deferred income 2 889 3 196 

Taxation on profits 857 977 

Dividends 1 138 1 057 

Others 1 335 1 287 

11 091 11 933 


Accruals and deferred income 147 246 

Taxation on profits 365 377 

Others 129 182 

641 805 

Total trade and other creditors 11 732 12 738

17 Pensions and similar obligations 




Description of Plans 

In most countries the Group operates defined benefit pension plans based on employee pensionable remuneration and length of service. 

The majority of these plans are externally funded; for the unfunded plans, provisions are maintained in the Group balance sheet. The Group 

also provides other post-retirement benefits, mainly post-retirement medical benefits in the United States. These plans are predominantly 

unfunded, with provisions maintained in the Group balance sheet. 

The Group also operates a number of defined contribution plans, the assets of which are held in independently administered funds. 

The pension costs charged to the profit and loss account in respect of these plans represent the contributions payable by the Group to 

these funds. 

Accounting policies 

The Group currently accounts for pensions under the United Kingdom accounting standard SSAP 24. The objective of the standard is to 

spread pension costs systematically over the service lives of employees and for the regular costs to be a reasonably stable percentage of pay. 

Other post-retirement arrangements are currently accounted for in accordance with United States accounting standards SFAS 106 and SFAS 

112 which apply principles similar to those for pensions in the UK. All plans are subject to regular actuarial review using the projected unit 

method, either by external consultants or by actuaries employed by Unilever. The actuarial assumptions used to calculate the benefit 

obligations vary according to the country in which the plan is situated. In line with the accounting objective, assumptions are generally set 

reflecting long-term expectations and asset values are smoothed relative to market values. 

The UK Accounting Standards Board also requires companies to provide disclosures based on FRS 17, the objective of which is to present 

the pension and other post retirement benefit plans’ assets and liabilities at their fair value at the balance sheet date. Unilever will fully 

adopt FRS 17 as the basis for pension accounting from 1 January 2003. FRS 17 disclosures are given on pages 89 to 91. 

SSAP 24 – Pension and similar obligations 


Profit and loss account 2002 2001 2000 

Charged to operating profit in staff costs: 

Defined benefit plans 

Regular costs (354) (381) (324) 

Special termination benefits (96) (78) (88) 

Exceptional increase in irrecoverable surplus (46) – – 

Financing charge on pension provisions (136) (110) (117) 

Amortisation of surplus/deficits 339 370 309 

Defined contribution plans (26) (24) (8) 

Other post-retirement benefits (97) (103) (77) 

Total pensions and other post-retirement benefits 3 (416) (326) (305) 

Pension costs, and contributions paid by the Group to the funded plans, have been reduced in recent years, mainly due to surpluses in the 

Group’s two biggest funds. These surpluses are recognised by amortisation through the profit and loss account using the mortgage method. 

Balance Sheet 

Pensions and similar obligations in the balance sheet are predominantly long-term liabilities comprising: 



Unfunded pension plans 1 320 1 414 

Funded pension plans 987 987 

Other post-retirement benefit plans 1 073 1 284 

SSAP 24 pre-tax net liability 3 380 3 685 

Comprising: 

Asset balances reclassified as debtors due after more than one year 13 (840) (917) 

Provisions for liabilities and charges 4 220 4 602 


1 January 4 602 


Profit and loss account 416 

Payments (400) 

Acquisitions/disposals (74) 






17 Pensions and similar obligations continued 

Additional information 

Group policy is that plans are formally valued at least every three years. The results of the valuations for the principal pension plans (that 

represent 90% of all defined benefit pension plans by market value of assets and net provisions) have been updated to the year end to 

provide the following aggregated information: 


31 December 31 December 31 December 31 December 


Other post retirement 

Pension plans benefit plans 

Actuarial value of assets at the last valuation date 15 515 16 762 2 3 

Provisions 3 147 3 318 1 073 1 284 

Prepayments (840) (917) – – 

Liabilities 16 590 16 306 1 042 1 210 

Financing level % (a) 107% 118% 103% 106% 

Actual market value of assets 12 725 16 976 2 3 

(a) Actuarial value of assets plus net provision as % of liabilities. 

The actuarial value of assets is generally a smoothed market value determined by spreading gains and losses relative to the actuarial basis 

over a three-to-five-year period. 

Assumptions 

The long-term average assumptions used for valuing the principal pension plans, weighted by liabilities, were: 


31 December 31 December 


Interest rate 6.0% 7.0% 

Inflation 2.4% 3.0% 

Salary increases 3.7% 4.3% 

Pension increases 2.2% 2.9% 

Assumptions for the remaining defined benefit plans vary considerably depending on the economic conditions of the country where they 

are situated. 

For the most significant plans (representing over 75% of all defined benefit plans by liabilities) the assumptions at 31 December 2002 were: 

United Kingdom Netherlands United States Germany 

Interest rate 5.4% 6.5% 6.5% 5.8% 

Inflation 2.2% 2.5% 2.5% 2.0% 

Salary increases 3.7% 3.3% 4.5% 2.8% 

Pension increases 2.5% 2.5% 0.0% 2.0% 

Pension contributions to funded pension plans are reviewed regularly. Following the latest reviews in the UK, the Netherlands and Germany, 

decisions have been made to recommence contributions in both the UK and Germany and the cash impact of this is expected to be 

€46 million in 2003.





FRS 17 Disclosures 

With the objective of presenting pensions and other post retirement benefit plans’ assets and liabilities at their fair value on the balance 

sheet, assumptions for FRS 17 are set by reference to market conditions at the balance sheet date. As such, there will be differences 

between the assumptions used in SSAP 24 and those under FRS 17 and the values placed on assets and liabilities. 

Assumptions 

The major market-based actuarial assumptions, weighted by liabilities, used to value the principal defined benefit pension plans and plans 

providing other post-retirement benefits and the expected long-term rates of return on assets, weighted by asset value, were: 

31 Dec 2002 31 Dec 2001 31 Dec 2000 

Principal Other Principal Other Principal Other 

defined benefit post retirement defined benefit post retirement defined benefit post retirement 

pension plans benefit plans pension plans benefit plans pension plans benefit plans 

Discount rate 5.70% 6.50% 6.00% 7.25% 6.20% 7.50% 

Inflation assumption 2.30% n/a 2.25% n/a 2.50% n/a 

Rate of increase in salaries 3.60% 4.30% 3.50% 4.50% 3.80% 4.50% 

Rate of increase for pensions in payment 2.20% n/a 2.00% n/a 2.10% n/a 

Rate of increase for pensions in deferment 

(where provided) 2.60% n/a 1.50% n/a 2.30% n/a 

Long-term medical cost inflation (a) n/a 4.90% n/a 5.00% n/a 5.00% 

Expected long-term rates of return: 

Equities 8.20% 9.00% 8.40% 

Bonds 4.90% 5.50% 5.30% 

Others 5.40% 6.00% 5.30% 

(a) The valuations of other benefit plans generally assume a higher initial level of medical cost inflation, which falls from 10% to the 

long-term rate within the next five years. 

Assumptions for the remaining defined benefits plans vary considerably depending on the economic conditions of the country where they 

are situated. 

For the most significant pension plans, representing over 75% of all defined benefit plans by liabilities, the assumptions at 

31 December 2002 were: 

United Kingdom Netherlands United States Germany 

Discount rate 5.50% 5.40% 6.50% 5.40% 

Inflation assumption 2.25% 2.25% 2.50% 2.00% 

Rate of increase in salaries 3.75% 3.00% 4.50% 2.75% 

Rate of increase for pensions in payment 2.50% 2.25% 0.00% 2.00% 

Rate of increase for pensions in deferment (where provided) 2.50% 2.25% 0.00% 0.00% 

Expected long-term rates of return: 

Equities 8.00% 8.30% 8.30% 8.30% 

Bonds 4.90% 4.70% 4.30% 4.70% 

Others 5.80% 5.60% 4.30% 4.90% 





Balance Sheet 

The assets, liabilities and surplus/deficit position of the pension and other post retirement benefit plans and the expected rates of return on 

the principal plan assets, at the balance sheet date, were: 


€ million € million % € million € million % 

31 December 2002 31 December 2001 

Other post Long-term Other post Long-term 

retirement rates of retirement rates of 

Pension benefit return Pension benefit return 

plans plans expected plans plans expected 

Assets of principal plans: 

Equities 7 281 – 8.2% 10 494 – 9.0% 

Bonds 3 383 – 4.9% 4 138 – 5.5% 

Other 1 644 – 5.4% 1 808 – 6.0% 

Assets of other plans 417 2 8.2% 536 3 8.0% 

Total plan assets 12 725 2 16 976 3 

Present value of liabilities: (a) 

Principal plans (15 305) – (15 547) – 

Other plans (1 675) (1 042) (1 781) (1 171) 

Total present value of liabilities (16 980) (1 042) (17 328) (1 171) 

Aggregate net surplus/(deficit) of the plans (4 255) (1 040) (352) (1 168) 

Irrecoverable surplus (b) (87) – (265) – 

Related deferred tax asset/(liability) 1 058 388 (74) 467 

Net pension asset/(liability) (3 284) (652) (691) (701) 

Of which in respect of 

Funded plans in surplus: 

Aggregate surplus 677 – 2 454 – 

Irrecoverable surplus (b) (87) – (265) – 

Related deferred tax liability (209) – (740) – 

Net pension asset 

Funded plans in deficit: 

381 – 1 449 – 

Aggregate deficit (2 575) – (607) – 

Related deferred tax asset 808 – 199 – 

Net pension liability 

Unfunded plans: 

(1 767) – (408) – 

Aggregate liability (2 357) (1 040) (2 199) (1 168) 

Related deferred tax asset 459 388 467 467 

Net pension liability (1 898) (652) (1 732) (701) 

(a) The basis for valuation of risk benefits has been changed following the issue of UITF 35. The effect has been to increase the liabilities 

of the principal plans by €500 million as at 31 December 2002 (2001: €508 million). 

(b) The surplus in the plans is only recoverable to the extent that the Group can benefit from either refunds formally agreed or future 

contribution reductions. 

If the above amounts had been recognised in the financial statements, the Group’s net assets and profit retained would be: 


31 December 2002 31 December 2001 

Net assets Profit retained Net assets Profit retained 

Unilever Group as reported 6 495 5 777 7 657 6 417 

Excluding SSAP 24 net pre-tax liability 3 380 3 344 3 685 3 647 

Excluding associated deferred tax asset (691) (679) (843) (830) 

Including FRS 17 net liability after tax (3 936) (3 903) (1 392) (1 373) 

Net assets/profit retained including FRS 17 pension liability 5 248 4 539 9 107 7 861





Profit and loss account 

Had FRS 17 been adopted in the preparation of the Group’s financial statements, the profit and loss account would have been as follows: 



Charged to operating profit: 

Defined benefit pension and other benefit plans: 

Current service cost (364) (384) 

Special termination benefits (96) (79) 

Past service cost 9 (16) 

Gains on settlements/curtailments 119 9 

Operating gain on irrecoverable surplus 7 – 

Defined contribution plans (26) (24) 

Total operating cost (351) (494) 

Charged to interest: 

Interest on retirement benefits (1 072) (1 121) 

Exceptional financing loss on recoverable surplus – (128) 

Expected return on assets 1 180 1 291 

Total interest cost 108 42 

Net impact on the profit and loss account (before tax) (243) (452) 

Statement of total recognised gains and losses 

Had FRS 17 been adopted in the preparation of the Group’s financial statements, the following amounts would have been recognised in the 

statement of total recognised gains and losses: 



Actual return less expected return on pension and other benefit plan assets (3 276) (2 343) 

Experience gains/(losses) arising on pension plan and other benefit plan liabilities (95) 197 

Changes in assumptions underlying the present value of the pension and other benefit plan liabilities (952) (198) 

Actuarial gain/(loss) to be recognised in statement of total recognised gains and losses (4 323) (2 344) 

Reconciliation of change in surplus/deficit 

Movements in surplus/deficit during the year: 



Surplus/(deficit) at beginning of the year (1 520) 1 126 

Movements in year 

Current service cost (364) (384) 

Special termination benefits (96) (79) 

Past service costs 9 (16) 

Settlements/curtailments 119 9 

Other finance income 108 42 

Actuarial gain/(loss) (4 323) (2 344) 

Contributions 400 138 

Currency retranslation 372 (12) 

Surplus/(deficit) at end of the year (5 295) (1 520) 

History of experience gains and losses 

% % 


Actual return less expected return on plan assets: 

% of plan assets at beginning of year 

Experience gains/(losses) on plan liabilities: 

(19) (12) 

% of present value of plan liabilities at beginning of year (1) 1 

Total actuarial gain/(loss): 

% of present value of plan liabilities at beginning of year (23) (13) 





US GAAP disclosures 

Under US GAAP, the actuarial assumptions used to calculate the benefit obligations are set by reference to market conditions at the balance 

sheet date, in a similar manner to that used under FRS 17. The accounting methodology however is not the same as under FRS 17 since 

certain cost items are amortised rather than recognised immediately. 

The following tables summarise the balance sheet impact, as well as the benefit obligations, assets, funded status and economic 

assumptions associated with the key defined benefit pension plans and the other post retirement benefit plans as computed in accordance 

with SFAS 87 and SFAS 106. At 31 December 2002 these key defined benefit pension plans (‘key pension plans’) represented approximately 

90% (2001: 76%; 2000: 76%) of all pension plans while 100% of the other post retirement benefit plans are represented (2001: 100%; 

2000: 100%), based on the market value of the funds plus the provisions held in the Group’s accounts. 



Key Key Other post Other post 

pension pension retirement retirement 

plans plans benefit plans benefit plans 


Change in benefit obligations 

Benefit obligations at 1 January 12 750 12 047 1 171 1 132 

Extension of coverage (a) 2 261 – – – 

Service cost 315 252 20 20 

Interest cost 864 737 78 83 

Plan member contributions 8 1 – – 

Amendments – 90 (4) – 

Plan mergers 170 41 – – 

Actuarial (gains)/losses 1 215 291 33 – 

Acquisitions/disposals (57) (11) (22) (12) 

Settlements/curtailments (321) (31) – (3) 

Special termination benefits – 29 – 1 

Benefits paid (1 204) (873) (88) (89) 

Currency retranslations (786) 177 (176) 39 

Benefit obligations at 31 December 15 215 12 750 1 012 1 171 

Change in plan assets 

Fair value of plan assets at 1 January 13 560 15 401 3 3 

Extension of coverage (a) 2 320 – – – 

Plan mergers 154 – – – 

Actual return on plan assets (1 953) (928) (1) – 

Acquisitions/(disposals) (10) (11) – – 

Settlements (249) (31) – – 

Employer contribution/surplus refunds 36 (144) 88 88 

Plan member contributions 8 1 – – 

Benefits paid (1 118) (873) (88) (89) 

Currency retranslations (651) 145 – 1 

Fair value of plan assets at 31 December 12 097 13 560 2 3 

Funded status at 31 December (3 118) 810 (1 010) (1 168) 

Unrecognised net transition liability/(asset) (178) (247) – 3 

Unrecognised net actuarial loss/(gain) 3 285 (1 119) (34) (85) 

Unrecognised prior service cost 178 201 1 5 

Other (SFAS 112 liabilities) n/a n/a (30) (39) 

Net amount recognised at 31 December 167 (355) (1 073) (1 284) 

Amount recognised in the statement of financial position consists of: 

Prepaid benefit cost 1 543 813 – – 

Accrued benefit liability (1 376) (1 168) (1 069) (1 283) 

Additional minimum liability (2 454) (20) – – 

Intangible asset 94 4 – – 

Accumulated other comprehensive income 2 360 16 (4) (1) 

Net amount recognised at 31 December 167 (355) (1 073) (1 284) 

(a) With effect from 1 January 2002 a number of additional pension plans were included in the SFAS 87 valuation exercise. This increases 

the overall coverage provided by the key pension plans from 76% to 90%.





% % % % % % 

Other post Other post Other post 

Key Key Key retirement retirement retirement 

Pension plans Pension plans Pension plans benefit plans benefit plans benefit plans 

2002 2001 2000 2002 2001 2000 

Weighted-average assumptions as at 

31 December 

Discount rate 5.70 6.00 6.25 6.50 7.25 7.50 

Expected return on plan assets 6.90 7.75 7.25 n/a n/a n/a 

Salary increases 3.60 3.75 3.75 4.30 4.50 4.50 

Pension increases 2.20 2.50 2.50 n/a n/a n/a 

The valuations of other benefit plans typically assume that medical cost inflation will fall from its current level (assumed to be approximately 

10% in 2003) over the next few years and reach a constant level of 4.9% (2001: 5%; 2000: 5%) within five years. 


Other post Other post Other post 

Key Key Key retirement retirement retirement 

Pension plans Pension plans Pension plans benefit plans benefit plans benefit plans 


Components of net periodic benefit cost 

Service cost (gross) 324 253 231 20 20 16 

Interest cost 864 737 698 78 83 64 

Expected return on plan assets (1 189) (1 007) (932) – – – 

Expected employee contributions (9) (1) – – – – 

Amortisation of prior service cost 33 24 26 – – – 

Amortisation of transition (asset) (63) (63) (66) – – – 

Amortisation of actuarial loss/(gain) (45) (81) (58) (6) (2) (2) 

Total before SFAS 88 events (85) (138) (101) 92 101 78 

Adjustments for SFAS 88 events (118) 43 19 (23) (2) (1) 

Net periodic benefit cost (203) (95) (82) 69 99 77 

The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with accumulated 

benefit obligations in excess of plan assets were €11 015 million, €10 188 million, and €7 334 million respectively, as of 31 December 

2002 and €2 171 million, €2 035 million, and €1 308 million respectively, as of 31 December 2001. 

The Group also maintains a number of smaller defined benefit plans. Approximately €1 129 million (2001: €1 685 million) is provided for 

on their behalf in the Group balance sheet. In 2002, €158 million (2001: €202 million; 2000: €151 million) was charged in the accounts. 

These amounts would not have been materially different under SFAS 87. 

In addition to the special termination benefits included in the table above, during 2002, the Group also charged €96 million 

(2001: €49 million; 2000: €56 million) in respect of pension or similar obligations arising on terminations of employment. 

Expected return on plan assets 

Beginning 1 January 2002 the Group changed its method for determining the expected return on plan assets under US GAAP by changing 

the value placed on the plan assets. The value now used is the fair value at the balance sheet date instead of a market related value 

calculated by smoothing asset gains and losses over a five year period. Management believe that using the actual fair value at the balance 

sheet date provides a better representation of the financial position of the Group. The impact of this change in methodology on reported 

results is given on pages 114 and 121. 

Post-retirement health care benefits 

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point 

change in assumed health care cost trend rates would have the following effects: 


1% point 1% point 

increase decrease 

Effect on total of service and interest cost components 7 (6) 

Effect on post-retirement benefit obligations 68 (62) 




18 Deferred taxation 

United Kingdom Financial Reporting Standard 19 (FRS 19) ’Deferred Tax’, which requires full provision to be made for deferred taxes, has 

been adopted with effect from 1 January 2002. The impact on the balance sheet of adoption of this standard has been reflected in all 

periods covered by these accounts by means of a prior period adjustment. As Unilever has previously provided for deferred taxes on a full 

provision basis in accordance with Netherlands law, FRS 19 does not have a material impact on reported net profit. 

FRS 19 does not allow deferred tax to be provided on the revaluation of fixed assets and therefore deferred tax so provided in respect of 

the revaluation of Bestfoods’ tangible fixed assets has been adjusted against goodwill in the comparative figures. Deferred tax was provided 

in respect of the planned remittance of unremitted earnings of Bestfoods’ subsidiaries; FRS 19 does not allow such provision unless the 

dividend has been declared. These deferred tax liabilities have also been adjusted against goodwill in the comparative figures. In addition, 

where (prior to 1998) tax-deductible goodwill was written off directly to reserves, FRS 19 does not allow a deferred tax asset to be created 

at acquisition. Instead, a deferred tax liability must be created over the life of the goodwill. The consequent reversal of deferred tax assets 

and creation of deferred tax liabilities has been adjusted in the comparative figures. These two adjustments result in a reduction of 

shareholders’ equity as at 31 December 2001 of € 202 million. 

The implementation of FRS 19 has also changed the accounting treatment in the year ended 31 December 2000 for our (then) anticipated 

disposal of Elizabeth Arden. The effect of implementing FRS 19 means that operating profit for that year is reduced by €121 million, whilst 

the tax charge on ordinary activities is also reduced by €121 million. This adjustment has been made in the comparative figures for the year 

ended 31 December 2000. There is no impact on reported net profit. 

Capital and reserves at 31 December 2001 have been reduced in aggregate by €202 million (2000: €195 million). In the 2001 closing 

balance sheet, goodwill has been reduced by €133 million (2000: €77 million) while debtors have been reduced by €60 million 

(2000: €91 million) through a reduction in deferred tax assets. Deferred tax liabilities at the end of 2001 have been increased by €9 million 

(2000: €27 million). 

There are no material unrecognised deferred tax assets. 



Deferred taxation on: 


Stock reliefs 41 55 

Pension and similar provisions (691) (843) 

Short-term and other timing differences (1 015) (921) 

(788) (700) 

Less asset balances reclassified as debtors 

due after more than one year 13 1 292 1 610 

Movements in deferred taxation: 

1 January 910 

Currency retranslation 187 

Acquisition/disposal of group companies 17 

Profit and loss account (292) 

Other movements (318) 



504 910

19 Restructuring and other provisions 



Provisions are recognised when either a legal or constructive obligation, as a result of a past event, exists at the balance sheet date and 

where the amount of the obligation can be reasonably estimated. 



Restructuring provisions 633 773 

Other provisions 555 586 

Total 1 188 1 359 

Movements in restructuring provisions: 

1 January 773 



Profit and loss account: 

New charges 575 

Releases (56) 

Utilisation (610) 


Movements in other provisions: 

1 January 586 



Profit and loss account (80) 

Utilisation (30) 


Restructuring provisions at the end of 2002 relate to the Path to Growth initiatives described in note 4 on page 77. These amounted to 

€0.6 billion the cash impact of which is expected to be a cash outflow of €0.4 billion in 2003 and €0.2 billion thereafter. Other provisions 

principally comprise balances held in respect of legal, environmental and other exposures. The cash impact of these balances is expected to 

be a cash outflow of €0.2 billion in 2003, and €0.4 billion thereafter. 





20 Capital and reserves 

From 1 January 2002, Unilever has adopted UK Financial Reporting Standard 19 (FRS 19) ‘Deferred Tax’ which requires full provision to be 

made for deferred taxes. The impact of the adoption of FRS 19 was as follows: 


As at As at As at 

31 December 31 December 31 December 

2001 2000 1999 

Shareholders’ equity as previously reported 7 195 8 169 7 761 

Accounting policy change (202) (195) (306) 

Shareholders’ equity as restated 6 993 7 974 7 455 

The table below presents combined disclosure of movements in capital and reserves of NV and PLC for the years 2002, 2001 and 2000 in 

order to show these changes for the Unilever Group as a whole. This information does not reflect the separate legal status of NV and PLC; 

information on capital and reserves attributable to each of NV and PLC is given in notes 21 and 23 on pages 97 and 98. 


€ million € million € million € million € million 

Called up Share premium 

share capital account Other reserves Profit retained Total 

2002 (a) 

1 January 2002 642 1 551 (1 617) 6 417 6 993 

Result for the year retained – – – 428 428 

Goodwill movements – – – 458 458 

Unrealised gain on partial disposal of a group company – – – 56 56 

Currency retranslation – (10) 75 (1 582) (1 517) 

Change in book value of shares or certificates held 

in connection with share options – – (551) – (551) 

31 December 2002 642 1 541 (2 093) 5 777 5 867 

2001 (a) 

1 January 2001 642 1 548 (1 167) 6 951 7 974 

Result for the year retained – – – 257 257 

Goodwill movements – – – 274 274 

Currency retranslation – 3 (14) (1 065) (1 076) 



31 December 2001 642 1 551 (1 617) 6 417 6 993 

2000 (a) 

1 January 2000 642 1 547 (971) 6 237 7 455 

Result for the year retained – – – (353) (353) 

Goodwill movements (b) – – – 1 314 1 314 

Currency retranslation – 1 (12) (247) (258) 



31 December 2000 642 1 548 (1 167) 6 951 7 974 

As required by UK Financial Reporting Standard 4 capital and reserves can be analysed as follows: 



Equity: 

Ordinary capital 4 365 5 491 

Non-equity: 

7% Cumulative Preference 13 13 



5 euro cents Cumulative Preference 1 382 1 382 

Total non-equity 1 502 1 502 

Total capital and reserves 5 867 6 993 


(b) Includes €980 million written back in 2000 in respect of the agreed disposal of Elizabeth Arden.

21 Called up share capital 





Nominal Number Issued, Issued, 

€ million € million value of shares called up and called up and 

Authorised Authorised Preferential share capital per share issued fully paid fully paid 

2002 2001 NV 2002 2001 

34 34 7% Cumulative Preference €453.78 29 000 13 13 



29 29 5 euro cents Cumulative Preference €0.05 211 473 785 10 10 

188 188 130 130 

Ordinary share capital 

NV 

508 508 Ordinary €0.51 571 575 900 290 290 

1 1 Ordinary (Shares numbered 

1 to 2 400 – ‘Special Shares’) €453.78 2 400 1 1 

– – Internal holdings eliminated in consolidation (€453.78 shares) (1) (1) 

509 509 290 290 

Total NV share capital 420 420 

£ million £ million Ordinary share capital £ million £ million 

2002 2001 PLC 2002 2001 

136.2 136.2 Ordinary: 1.4p 2 911 458 580 40.8 40.8 

0.1 0.1 Deferred £1 stock 100 000 0.1 0.1 

– – Internal holdings eliminated in consolidation (£1 stock) (0.1) (0.1) 

136.3 136.3 Total PLC share capital 40.8 40.8 

Euro equivalent in millions (at £1 = €5.445) 222 222 

For NV share capital, the euro amounts shown above and elsewhere in this document are representations in euros on the basis of Article 

67c of Book 2 of the Civil Code in the Netherlands, rounded to two decimal places, of underlying amounts of share capital in Dutch 

guilders, which have not been converted into euros in NV’s Articles of Association. Until conversion formally takes place by amendment 

of the Articles of Association the entitlements to dividends and voting rights are based on the underlying Dutch guilder amounts. 

The 7%, 6% and 4% preference shares of NV are entitled to dividends at the rates indicated. The €0.05 preference shares of NV are 

entitled to a dividend of 65% of the six months Euribor interest rate on their notional value of €6.580 each. A nominal dividend of 1 ⁄4% 

is paid on the deferred stock of PLC. 

The 4% cumulative preference capital of NV is redeemable at par at the Company‘s option either wholly or in part. 

The Company has agreed that it will not buy back the €0.05 cumulative preference share capital of NV before 9 June 2004. At any time 

after this date, at the Company’s option, €6.534 of the notional value of the preference shares is convertible into ordinary NV shares and 

the remaining notional value is then redeemable. The Company expects to exercise the conversion right if any preference shares remain 

outstanding after 1 December 2004. 

The other classes of preferential share capital of NV and the deferred stock of PLC are not redeemable. 

For information on the rights of shareholders of NV and PLC and the operation of the Equalisation Agreement see ‘Control of Unilever’ 


Internal holdings 

The ordinary shares numbered 1 to 2 400 (inclusive) in NV and deferred stock of PLC are held as to one half of each class by N.V. Elma – 

a subsidiary of NV – and one half by United Holdings Limited – a subsidiary of PLC. This capital is eliminated in consolidation. It carries the 

right to nominate persons for election as directors at general meetings of shareholders. The subsidiaries mentioned above have waived 

their rights to dividends on their ordinary shares in NV. For more information see ‘Control of Unilever’ on pages 138 to 141. 

Share options 

The Group operates a number of equity-based compensation plans involving options over ordinary shares of NV and PLC. Full details of 

these plans are given in note 29 on page 103. 




22 Profit retained 



NV NV NV PLC PLC PLC 


Net profit 1 681 817 675 448 1 021 430 

Preference dividends (42) (51) (44) – – – 

Dividends on ordinary capital (941) (868) (803) (718) (662) (611) 

Result for the year retained 698 (102) (172) (270) 359 (181) 

Goodwill movements 158 192 1 005 300 82 309 

Unrealised gain on partial disposal 

of a group company – – – 56 – – 

Adjustment arising from change in 

ownership of group companies (a) 1 646 – – (1 646) – – 

Currency retranslation (1 270) (815) (384) (312) (250) 137 

Net movement during the year 1 232 (725) 449 (1 872) 191 265 

Profit retained – 1 January (b) 4 149 4 874 4 425 2 268 2 077 1 812 

Profit retained – 31 December 5 381 4 149 4 874 396 2 268 2 077 

Of which retained by: 

Parent companies 6 591 3 508 2 375 1 590 1 552 1 499 

Other group companies (1 179) 630 2 494 (1 205) 713 576 

Joint ventures and associates (31) 11 5 11 3 2 

5 381 4 149 4 874 396 2 268 2 077 

Cumulative goodwill written off directly to reserves (5 298) (5 456) (5 648) (2 099) (2 399) (2 481) 

(a) Arising from the legal integration of Bestfoods into Unilever, following which a number of group companies are partly held by Unilever 

United States, Inc. and therefore are ultimately owned jointly by NV and PLC. As a result of this, goodwill of €1 646 million arising in 

PLC has been eliminated in reserves on consolidation. 

(b) Profit retained has been restated following the adoption of FRS 19. Profit retained at 1 January 2000 has been reduced in aggregate by 

€306 million (of which €245 million relates to NV and €61 million relates to PLC). Movements in profit retained since 1 January 2000 

have been restated as appropriate. See note 18 on page 94. 

23 Other reserves 




Adjustment on translation of PLC‘s ordinary 

capital at £1 = Fl. 12 = €5.445 – – – (159) (155) (157) 

Capital redemption reserve – – – 18 18 18 

Book value of shares or certificates held in 

connection with share options (a) (1 498) (1 077) (553) (454) (403) (475) 

(a) Under UITF 13 these shares would be classified as fixed assets. 

(1 498) (1 077) (553) (595) (540) (614) 

The change in book value of shares or certificates held in connection with share options on the other reserves of NV was €(421) million 

(2001: €(524) million; 2000: €(189) million) and for PLC was €(51) million (2001: €72 million; 2000: €(7) million).

24 Commitments and contingent liabilities 





2002 2001 2000 

Long-term lease commitments under operating leases in respect of: 

Land and buildings 1 399 1 419 1 777 

Other tangible fixed assets 475 615 793 

1 874 2 034 2 570 

The commitments fall due as follows: 

Within 1 year 321 392 488 

After 1 year but within 2 years 301 330 414 

After 2 years but within 3 years 260 273 347 



After 5 years 562 573 747 

1 874 2 034 2 570 

Other commitments 516 407 310 

Of which payable within one year 226 108 82 

In addition to the above Unilever has long-term global and regional supply contracts for a variety of materials and services. Amounts 

contracted under these arrangements are approximately €3 billion, including €750 million over seven years for global telecommunications 

services and €500 million over four years for advertising in the UK. 

Contingent liabilities amounted to some €511 million (2001: €443 million) of which €176 million (2001: €202 million) relates to 

guarantees. These guarantees are not expected to give rise to any material loss. Guarantees given by parent or group companies relating to 

liabilities included in the consolidated accounts are not included. Other contingent liabilities arise in respect of litigation against companies 

in the Group, investigations by competition and regulatory authorities and obligations under environmental legislation in various countries. 

These are not expected to give rise to any material loss. 

25 Acquisition and disposal of group companies 

Acquisitions 

The net assets and results of acquired businesses are included in the consolidated accounts from their respective dates of acquisition. 

The following tables set out the effect of acquisitions of group companies in 2002 on the consolidated balance sheet. Acquisition 

accounting (purchase accounting) has been applied in all cases. The fair values currently established for all acquisitions made in 2002 are 

provisional. The goodwill arising on these transactions has been capitalised and is being amortised over 20 years. 

The following acquisition tables include the impact of the restructuring of the Bestfoods Robertsons (Holdings) Limited LLC joint venture 

(‘Unilever Bestfoods Robertsons’). On 1 April 2002, Unilever disposed of its assets in Unifoods South Africa and Hudson & Knight South 

Africa to Unilever Bestfoods Robertsons, a joint venture between Unilever and Robertsons in which Unilever had a 50% equity stake. 

In exchange, Unilever received a 9% equity interest in Unilever Bestfoods Robertsons thereby obtaining control. 

This transaction has been accounted for in accordance with United Kingdom Urgent Issues Task Force Abstract 31 (‘UITF 31’) ’Exchange of 

businesses or other non-monetary assets for an interest in a subsidiary, joint venture or associate’. The net effect of this transaction was to 

dispose of a 41% interest in the Unifoods South Africa and Hudson & Knight South Africa businesses in return for the acquisition of an 

additional 9% interest in Unilever Bestfoods Robertsons. The unrealised gain on disposal of the 41% interest was €56 million and, in 

accordance with UITF 31, has been recognised in the Statement of Total Recognised Gains and Losses. 


Provisional Provisional 

Balance sheets adjustments to fair values 

of acquired align accounting Provisional at date of 

businesses policies revaluations acquisition 

2002 acquisitions 

Fixed assets 122 (4) – 118 

Current assets 116 – (1) 115 

Creditors (74) – (1) (75) 

Provisions for liabilities and charges (10) (1) – (11) 

Minority interest – (42) – (42) 

154 (47) (2) 105 

Adjustment to reflect 50% net assets previously owned (68) 

Net assets acquired 37 




25 Acquisition and disposal of group companies continued 



2002 2001 2000 

Acquisitions 

Net assets acquired 37 49 3 910 

Adjustments to acquisitions made in 2000 – 5 546 – 

Goodwill arising in subsidiaries 116 (5 407) 26 019 

Goodwill arising in joint ventures – (51) 632 

Consideration 153 137 30 561 

Of which: 

Cash 27 57 132 27 777 

Cash balances of businesses acquired – 1 231 

Current investments, cash deposits and borrowings of businesses acquired 77 1 3 100 

Non-cash items and deferred consideration (57) 3 (547) 

Fair value of Unilever business contributed 76 – – 

Disposals 

The results of disposed businesses are included in the consolidated accounts up to their date of disposal. In 2001, disposed businesses 

principally comprised Unipath and Batchelors/Oxo in the United Kingdom, Royco in the Netherlands and Elizabeth Arden and Gortons 

in the USA. 

Included in the following table is the disposal of the DiverseyLever business. On 3 May 2002, Unilever disposed of its DiverseyLever business 

to JohnsonDiversey Inc. in exchange for cash, loan notes and a 33.3% stake in JohnsonDiversey’s parent, JohnsonDiversey Holdings Inc. 

The net consideration received, including our share of the net debt of JohnsonDiversey Holdings Inc. group was €1 053 million. Johnson 

Professional Holdings Inc. also contributed its own professional cleaning business to JohnsonDiversey Inc. 

This transaction has been accounted for in accordance with UITF 31. The net effect of this transaction was to dispose of a 66.6% interest in 

DiverseyLever and to acquire a 33.3% interest in Johnson Professional’s professional cleaning business. 

Unilever’s acquired share of net assets of the Johnson professional cleaning business has been recorded at fair value, with the difference 

between this and the fair value of the consideration given in return being recorded as goodwill. The goodwill arising of €178 million is 

being amortised over 20 years. Unilever retained an interest in DiverseyLever which is included at its pre-transaction carrying amount. 

To the extent that the fair value of the consideration received by Unilever exceeds the book value of the DiverseyLever business disposed, 

Unilever has recognised a gain of €98 million, after taking into account certain provisions recorded in respect of the disposal. Unilever’s 

33.3% interest in JohnsonDiversey Holdings Inc. is accounted for by Unilever as an associated undertaking.

25 Acquisition and disposal of group companies continued 

Disposals 





2002 2001 2000 

Goodwill and intangible assets 274 6 – 

Other fixed assets 531 273 276 

Current assets 776 351 203 

Creditors (330) (112) (219) 

Provisions for liabilities and charges (100) (11) (51) 

Minority interest 3 (2) 8 

1 154 505 217 

33% interest in DiverseyLever (114) – – 

Net assets sold 1 040 505 217 

Specific provisions related to the disposal 159 – – 

Attributable goodwill 458 223 258 

Profit on sale attributable to Unilever 249 927 167 

Consideration 1 906 1 655 642 

Of which: 

Cash 27 1 834 1 650 626 

Cash balances of businesses sold 27 (34) (9) 11 

Current investments, cash deposits and borrowings of businesses sold 19 3 2 

Non cash and deferred consideration 217 11 3 

Fair value of Johnson Professional business acquired (130) – – 

During 2001 we completed the disposal of Elizabeth Arden, which is therefore reflected in the table above. A charge of €980 million was 

recognised in 2000 in respect of an impairment of Elizabeth Arden goodwill previously written off to reserves. 

26 Reconciliation of group operating profit to operating cash flows 


2002 2001 2000 

Group operating profit 5 041 5 174 3 181 

Depreciation and amortisation 2 582 2 845 1 954 

Changes in working capital: 

Stocks (98) (177) 415 

Debtors 88 (40) (28) 

Creditors 463 440 302 

Pensions and similar provisions less payments (44) 114 475 

Restructuring and other provisions less payments (53) 173 (204) 

Elimination of (profits)/losses on disposals (143) (941) 785 

Other adjustments 47 (91) (142) 

Cash flow from group operating activities 7 883 7 497 6 738 

Cash flow from group operating activities in 2000 included payments of approximately €550 million to settle share options and similar 

obligations in Bestfoods consequent to the change of control. 

Cash flow from exceptional items included in the group operating profit above comprises: 


2002 2001 2000 

Restructuring (406) (1 131) (485) 

Business disposals 1 834 1 650 626 

Other, including asset disposals 229 429 428 

Total 1 657 948 569 

Of which related to items included in group operating profit in the current year 2 064 1 313 

Of which related to items included in group operating profit in prior years (407) (365) 

Total 1 657 948 




27 Analysis of cash flows for headings netted in the cash flow statement 



2002 2001 2000 

Returns on investments and servicing of finance 

Dividends from other fixed investments 8 7 4 

Interest received 324 191 346 

Interest paid (1 467) (1 842) (966) 

Preference dividend paid (31) (48) (41) 

Dividends and other payments to minority shareholders (220) (195) (141) 

Total (1 386) (1 887) (798) 

Capital expenditure and financial investment 

Purchase of intangible assets (18) – – 

Purchase of tangible fixed assets (1 295) (1 536) (1 361) 

Disposal of tangible fixed assets 233 579 471 

Acquisition/disposal of fixed investments (68) 35 13 

Purchase of own shares (employee share plans) (558) (436) (184) 

Total (1 706) (1 358) (1 061) 

Acquisitions and disposals 

Acquisition of group companies 25 (57) (132) (27 777) 

Bestfoods – – (23 623) 

Other acquisitions (57) (132) (4 154) 

Cash balances of businesses acquired – (1) (231) 

Bestfoods – – (22) 

Other acquisitions – (1) (209) 

Consideration paid in respect of acquisitions made in previous years – (1) (2) 

Disposal of acquired business held for resale – 1 968 – 

Disposal of group companies 25 1 834 1 650 626 

Cash balances of businesses sold 25 (34) (9) 11 

Consideration received in respect of disposals made in previous years 12 2 – 

Total 1 755 3 477 (27 373) 

Management of liquid resources 

Purchase of current investments (219) (108) (217) 

Sale of current investments 30 121 1 428 

(Increase)/decrease in cash on deposit (403) 1 093 1 253 

Total (592) 1 106 2 464 

Financing 

Issue/purchase of shares by group companies to/(from) minority shareholders 9 (3) (18) 

Debt due within one year: 

Increases 2 698 3 854 15 001 

Repayments (8 347) (13 618) (2 716) 

Debt after one year: 

Increases 3 195 4 933 10 692 

Repayments (146) (264) (57) 

Total (2 591) (5 098) 22 902 

Included as liquid resources are term deposits of less than one year, government securities and A- or higher rated money and capital 

market instruments.

28 Analysis of net funds/(debt) 


Acquisitions/ 

disposals Other 

1 January Cash (excl. cash & non-cash Currency 31 December 

2002 flow overdrafts) changes movements 2002 

Cash on call and in hand 1 576 (46) 72 1 602 

Overdrafts (400) 95 28 (277) 

Borrowings due within one year (10 879) 5 649 7 (4 579) 568 (9 234) 

Borrowings due after one year (14 221) (3 049) (64) 5 346 1 055 (10 933) 

Current investments 439 189 (1) 700 (101) 1 226 

Cash on deposit 286 403 – – (39) 650 

Net funds/(debt) (23 199) 3 241 (58) 1 467 1 583 (16 966) 

Other non-cash changes include profits and losses on disposal and adjustments to realisable value of current investments; exchange gains 

and losses on inter-company borrowings and related derivatives; and the reclassification of long-term borrowings falling due within one year 

at the balance sheet date. 

29 Equity-based compensation plans 

49 

2 600 

As at 31 December 2002, the Group had a number of equity-based compensation plans: 

(i) All-Employee Option Plans 

Local All-Employee Option Plans have been set up in 16 countries to enhance employee involvement with Unilever and its performance 

by providing a potential financial benefit linked to the Unilever share price. There are no individual performance targets to be met. 

The plans permit participation by all permanent employees in the country where the relevant plan applies. 

(ii) Executive Option Plans 

The Executive Option Plans were introduced in 1985 to reward key employees throughout the world for their contribution to the 

enhancement of the Group’s longer-term future and their commitment to the Group over a sustained period. The grant is dependent on 

performance of the Group and the individual. 

(iii) The Share Matching Plans 

If managers invest part of their annual bonus in Unilever shares, the Company will match this with the same number of shares on the 

condition that they keep all shares for an agreed number of years and will still be employed by Unilever on the vesting date. 

(iv) The TSR Long-Term Incentive Plan 

This plan was introduced in 2001 and depending on the TSR ranking (see page 40 and 41) of Unilever in comparison with its peer group 

it will potentially award top executives on the vesting date three years later with a number of Unilever shares. 

(v) The Restricted Share Plan 

Restricted shares are awarded to a select number of executives for special performance. After the agreed number of years the awards will 

vest provided they are still employed by Unilever at that time. 

(vi) The North American Performance Share Plan 

A long-term incentive plan for North American managers awarding Unilever shares if company and personal performance targets are met 

over a three-year period. 

Unilever will not grant share options in total in respect of Executive Option Plans of more than 5% of its issued ordinary capital, and for all 

Plans together, of more than 10% of its issued ordinary capital. The Board does not apportion these limits to each plan separately. 

In recent years we have met the obligations under our share option and award plans by purchasing shares in advance and transferring 

them, in return for the grant price, to directors and employees as the options are exercised. 




592 




29 Equity-based compensation plans continued 

The Group applies accounting policies based on Netherlands law and UK GAAP which are consistent with APB Opinion 25 and related 

interpretations in accounting for these plans. Accordingly, the Group has recognised the following compensation costs: €86 million in 

2002, €46 million in 2001 and €6 million in 2000. Had the Group accounted for options under the requirement of SFAS 123, the impact 

on reported results would have been as follows: 


2002 2001 2000 

Net profit as reported 2 129 1 838 1 105 

Add back actual compensation costs recognised 86 46 6 

Less pro forma compensation cost under SFAS 123 (a) (185) (106) (57) 

Pro forma net profit under SFAS 123 2 030 1 778 1 054 


Euros per €0.51 Euro cents per 1.4p 


Actual earnings per share 2.14 1.82 1.07 32.05 27.27 16.08 

Pro forma earnings per share 2.04 1.76 1.02 30.53 26.36 15.32 

Actual diluted earnings per share 2.07 1.77 1.05 31.10 26.54 15.69 

Pro forma diluted earnings per share 1.97 1.71 1.00 29.62 25.65 14.94 

(a) Included in this amount is €2 million (2001: nil; 2000: nil) relating to the HLL Executive Option Plan in India. See also under Executive 

Option Plans on page 106. 

The remaining disclosures required by SFAS 123, including a description of the method and significant assumptions used to estimate the 

fair values of options and the weighted-average information, are given below for each type of plan, on a combined basis. 

(i) All-Employee Option Plans 

Unilever has All-Employee Plans in 16 countries, which can be grouped together as follows: 

(a) Plans which follow a standard framework: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Portugal, 

Spain, Sweden and Switzerland. 

(b) Other plans: North America, South Africa and United Kingdom. 

Group (a): 

The standard framework for these countries means, in principle, an annual grant of options over NV shares, at the same grant date, 

exercise price (the market price on the grant date) and grant size (including part-time employees pro rata) and with the same eligibility 

criteria (all permanent employees in a country). There are no vesting conditions other than being continuously employed by a Group 

company until the vesting date. 

Group (b): 

The UK and South Africa plans annually offer options over PLC shares, combined with a compulsory (UK) or optional (South Africa) savings 

plan. The exercise price is the market price at date of grant, except that prior to 2000 the exercise price of the UK plan was set at either 

80% or 90% of the market price with the discount being amortised to remuneration cost over the vesting period. 

The North American plan is a share purchase offering, with a compulsory savings plan, under which up to 10% of the salary of eligible 

employees is withheld. At the end of the period employees can use the savings to buy NV New York shares at a discount of 10%. 

This discount is amortised to remuneration cost over the vesting period. The maximum number of shares made available under the plan 

is 8.9 million. Until 2001 the plan had an offering period of two years; the 2002 plan one year. 

The table below summarises the main country-specific differences between the plans applicable in 2002: 

Maximum term Vesting period 

Country (year of introduction) Years Years Exercise period Remarks 

Austria (2001) 5 3 24 months 

Belgium (2001) 5 4 12 months 

Denmark (2001) 5 3 24 months 

Finland (2001) 5 3 24 months On 3rd, 4th or 5th anniversary 

France (2000) 5.5 5 6 months 

Germany (2000) 5 3 24 months 

Ireland (2002) 5 3 24 months 

Italy (2001) 5 3 24 months 

Netherlands (1995) 5 0 5 years Keep shares during the first 

3 years after grant 

Portugal (2001) 3.5 3 6 months 

Spain (2001) 5 3 24 months 

Sweden (2001) 5 5 1 day Partly convertible bonds 

Switzerland (2001) 5 3 24 months 

UK (1985) 5.5 5 6 months Sharesave plan 

South Africa (2001) 3.5 3 6 months Optional sharesave plan 

North America (1995) 1 1 1 day Purchase plan





A summary of the status of the All-Employee Plans as at 31 December 2002, 2001 and 2000 and changes during the years ended on these 

dates is presented below: 

2002 2001 2000 

Weighted Weighted Weighted 

Number of average Number of average Number of average 

shares price shares price shares price 

NV shares of €0.51 

Outstanding at 1 January 3 109 260 €60.56 1 634 437 €54.41 690 838 €54.38 

Granted 1 589 107 €67.90 1 853 007 €64.65 1 204 863 €53.05 

Exercised (322 625) €58.72 (225 614) €51.85 (125 707) €40.72 

Forfeited/Expired (a) (349 312) €63.24 (152 570) €57.10 (135 557) €54.94 

Outstanding at 31 December 4 026 430 €63.38 3 109 260 €60.56 1 634 437 €54.41 

Exercisable at 31 December 231 979 €67.90 42 412 €42.99 94 861 €37.58 

PLC shares of 1.4p 

Outstanding at 1 January 22 002 314 £4.61 26 512 577 £4.14 30 777 318 £4.00 

Granted 4 122 000 £6.06 4 411 833 £5.29 7 960 043 £4.25 

Exercised (5 771 480) £3.78 (5 756 768) £2.94 (5 717 614) £2.74 

Forfeited/Expired (a) (2 347 242) £4.90 (3 165 328) £4.62 (6 507 170) £4.84 

Outstanding at 31 December 18 005 592 £5.17 22 002 314 £4.61 26 512 577 £4.14 

Exercisable at 31 December 430 696 £3.71 250 760 £2.78 192 156 £2.68 

NV New York shares of €0.51 

Outstanding at 1 January – – 470 680 $52.43 633 913 $52.43 

Granted 149 431 $54.11 – – – – 

Exercised – – (255 208) $52.43 – – 

Forfeited/Expired (a) – – (215 472) $52.43 (163 233) $52.43 

Outstanding at 31 December 149 431 $54.11 – – 470 680 $52.43 

Exercisable at 31 December – – – – – – 

(a) The number of expired options is immaterial. 

2002 2001 2000 

NV option value information (b) 

Fair value per option (c) €14.66 €15.13 €10.18 

Valuation assumptions 

Expected option term 3.8 years 3.5 years 4.0 years 

Expected volatility 26.8% 29.3% 28.6% 

Expected dividend yield 2.4% 2.2% 4.5% 

Risk-free interest rate 4.5% 4.5% 4.9% 

PLC option value information (b) 

Fair value per option (c) £1.57 £1.31 £1.05 






NV New York shares option value information (b) 

Fair value per option (c) $8.57 – – 


Expected option term 1 year – – 

Expected volatility 25.2% – – 

Expected dividend yield 2.5% – – 

Risk-free interest rate 1.2% – – 

Actual compensation costs recognised (€ million) 2 4 4 

(b) Weighted average of options granted during each period. 

(c) Estimated using Black Scholes option pricing method. 





The exercise prices and remaining life of the All-Employee Option Plans as at 31 December 2002 are as follows: 


Options outstanding Options exercisable 

Weighted 

Number average Number 

outstanding at remaining Weighted exercisable at Weighted 

Range of 31 December contractual average 31 December average 

exercise prices 2002 life exercise price 2002 exercise price 

NV shares of €0.51 €53.05 - €57.63 897 413 2 years €53.77 – – 

€63.65 - €70.00 3 129 017 4 years €66.28 231 979 €67.90 

PLC shares of 1.4p £3.71 - £4.25 5 832 050 3 years £4.21 430 696 £3.71 

£5.14 - £6.20 12 173 542 3 years £5.63 – – 

NV New York shares of €0.51 $54.11 149 431 1 year $54.11 – – 

(ii) Executive Option Plans 

The Executive Option Plans are made up of the following plans, which are granted to key employees of the Group on a discretionary basis: 

The NV Executive Option Plan 

The NV Executive Option Plan provides for the granting of options to purchase shares of Unilever N.V. and, from 1997 onwards, also 

shares of Unilever PLC, at a price not lower than the market price on the day the options were granted. Options granted until March 2001 

become exercisable immediately from the date of grant but cannot be sold within three years; options granted from November 2001 

become exercisable after three years. The options have a maximum term of five years for the grants made up to 1998 and of ten years for 

subsequent grants. 

The PLC Executive Option Plan 

The PLC Executive Option Plan provides for the granting of options to purchase shares of Unilever PLC and from 1997 onwards, also shares 

of Unilever N.V., at a price not lower than the market price on the day the options were granted. These options become exercisable after a 

three-year period from the date of grant and have a maximum term of ten years. 

The NA Executive Option Plan 

The NA Executive Option Plan provides for the granting of options to purchase a maximum of 40.5 million shares in Unilever N.V. of the 

New York Registry, and 262.0 million shares of Unilever PLC, at a price not lower than the market value on the day the options are granted. 

These options become exercisable over a three-year period from the date of grant and have a maximum term of ten years. 

In addition, managers working in India can participate in an Executive Option Plan relating to Hindustan Lever Limited’s shares. As these 

are neither NV nor PLC shares, no figures for this plan are disclosed in this note. 

A summary of the status of the Executive Option Plans as at 31 December 2002, 2001 and 2000 and changes during the years ended on 

these dates is presented below: 

2002 2001 2000 





Outstanding at 1 January 8 198 049 €58.95 4 835 834 €57.68 3 856 658 €54.49 

Granted 3 658 548 €66.84 4 017 741 €58.26 1 659 616 €54.56 

Exercised (373 219) €51.37 (372 052) €33.83 (615 538) €28.88 

Forfeited/Expired (a) (343 981) €62.73 (283 474) €60.40 (64 902) €61.73 

Outstanding at 31 December 11 139 397 €61.71 8 198 049 €58.95 4 835 834 €57.68 

Exercisable at 31 December 4 795 216 €59.84 4 788 521 €58.75 3 418 554 €56.22 


Outstanding at 1 January 57 255 712 £4.96 34 455 159 £4.89 26 221 302 £4.98 

Granted 23 811 993 £5.83 26 126 694 £4.97 10 793 301 £4.35 

Exercised (3 931 699) £3.96 (1 649 129) £3.42 (2 129 344) £3.25 

Forfeited/Expired (a) (1 995 236) £5.48 (1 677 012) £5.11 (430 100) £5.56 


Exercisable at 31 December 33 370 192 £5.07 34 846 599 £4.90 25 183 453 £4.72





2002 2001 2000 





Outstanding at 1 January 2 736 921 $49.23 2 030 941 $47.29 1 963 471 $45.41 

Granted 755 295 $59.44 840 937 $52.22 294 645 $51.77 

Exercised (242 276) $36.00 (119 965) $36.02 (185 740) $30.53 

Forfeited/Expired (a) (28 926) $57.52 (14 992) $59.43 (41 435) $65.22 

Outstanding at 31 December 3 221 014 $52.54 2 736 921 $49.23 2 030 941 $47.29 

Exercisable at 31 December 1 888 079 $50.10 1 632 955 $46.29 1 473 860 $42.00 

PLC shares of 1.4p in the form of ADRs (d) 

Outstanding at 1 January 12 744 844 $7.89 7 491 864 $8.33 5 830 480 $8.82 

Granted 4 994 640 $8.42 5 566 904 $7.25 1 975 788 $6.95 

Exercised (598 300) $7.14 (208 116) $6.86 (47 572) $6.72 

Forfeited/Expired (a) (144 032) $8.40 (105 808) $8.08 (266 832) $9.13 

Outstanding at 31 December 16 997 152 $8.06 12 744 844 $7.88 7 491 864 $8.33 

Exercisable at 31 December 8 175 172 $8.29 5 415 724 $8.57 3 758 584 $8.35 

(a) The number of expired options is immaterial. 

(d) 1 ADR is equivalent to 4 PLC shares. 

2002 2001 2000 

NV option value information (b) 

Fair value per option (c) €18.74 (e) €16.57 (e) €10.83 (e) 

£11.59 (f) £8.94 (f) £6.25 (f) 

$16.32 (g) $13.96 (g) $15.97 (g) 






PLC option value information (b) 

Fair value per option (c) €2.62 (e) €2.01 (e) €1.82 (e) 

£1.62 (f) £1.24 (f) £1.00 (f) 

$2.23 (g) $1.86 (g) $1.95 (g) 






Actual compensation costs recognised (€ million) – – – 

(b) Weighted average of options granted during each period. 

(c) Estimated using Black Scholes option pricing method. 

(e) Fair value per option of the NV Executive Option Plan. 

(f) Fair value per option of the PLC Executive Option Plan. 

(g) Fair value per option of the NA Executive Option Plan. 





The exercise prices and remaining life of the Executive Option Plans as at 31 December 2002 are as follows: 


Options outstanding Options exercisable 

Weighted 

Number average Number 

outstanding at remaining Weighted exercisable at Weighted 

Range of 31 December contractual average 31 December average 

exercise prices 2002 life exercise price 2002 exercise price 

NV shares of €0.51 €42.79 - €60.85 5 338 303 8 years €56.68 2 551 726 €54.88 

€63.50 - €73.97 5 801 094 8 years €66.35 2 243 490 €65.48 

PLC shares of 1.4p £2.54 - £3.08 1 795 242 2 years £2.98 1 795 242 £2.98 

£3.43 - £4.78 24 183 118 8 years £4.54 16 389 469 £4.54 

£5.22 - £6.79 49 162 410 8 years £5.73 15 185 481 £5.89 

NV New York shares of €0.51 $25.67 - $33.89 647 995 2 years $31.03 647 995 $31.03 

$41.16 - $56.13 1 312 546 7 years $51.37 706 730 $50.73 

$58.76 - $76.69 1 260 473 8 years $64.82 533 354 $72.44 

PLC shares of 1.4p in the form $5.56 - $7.73 8 619 296 7 years $7.08 4 604 564 $6.97 

of ADRs (d) $8.35 - $10.85 8 377 856 8 years $9.07 3 570 608 $10.00 

(d) 1 ADR is equivalent to 4 PLC shares. 

(iii) The Share Matching Plans 

Under these plans managers can invest up to 25% of their gross bonus in Unilever shares. The Company matches this with the same 

number of shares on condition that all shares are held for the agreed period (five years for awards made until 2001, three years from 2002 

onwards), and that the manager has not resigned from Unilever at the end of this period. The North American managers participate in the 

North American Share Bonus Plan, the others in the Variable Pay in Shares Plan. The numbers below include the numbers under the plan for 

the directors described in the Remuneration report on page 50. 

A summary of the status of the Share Matching Plans as at 31 December 2002, 2001 and 2000 and changes during the years ended on 


2002 2001 2000 





Outstanding at 1 January 77 613 €0.00 26 302 €0.00 4 891 €0.00 

Awarded 148 990 €0.00 51 526 €0.00 21 411 €0.00 

Exercised (143) €0.00 – – – – 

Forfeited/Expired (a) (1 056) €0.00 (215) €0.00 – – 

Outstanding at 31 December 225 404 €0.00 77 613 €0.00 26 302 €0.00 



Outstanding at 1 January 570 703 £0.00 198 676 £0.00 36 779 £0.00 

Awarded 1 065 406 £0.00 373 646 £0.00 161 897 £0.00 

Exercised (1 053) £0.00 – – – – 

Forfeited/Expired (a) (7 670) £0.00 (1 619) £0.00 – – 

Outstanding at 31 December 1 627 386 £0.00 570 703 £0.00 198 676 £0.00 


(a) The number of expired share awards is immaterial.





2002 2001 2000 





Outstanding at 1 January 29 255 $0.00 5 034 $0.00 – – 

Awarded 87 743 $0.00 24 221 $0.00 5 034 $0.00 

Exercised – – – – – – 

Forfeited/Expired (a) (513) $0.00 – – – – 

Outstanding at 31 December 116 485 $0.00 29 255 $0.00 5 034 $0.00 



Outstanding at 1 January 214 752 $0.00 37 264 $0.00 – – 

Awarded 599 064 $0.00 177 488 $0.00 37 264 $0.00 

Exercised – – – – – – 

Forfeited/Expired (a) (3 568) $0.00 – – – – 

Outstanding at 31 December 810 248 $0.00 214 752 $0.00 37 264 $0.00 


(a) The number of expired share awards is immaterial. (d) 1 ADR is equivalent to 4 PLC shares. 

2002 2001 2000 

NV share award value information (b) 

Fair value per share award €69.14 €61.73 €52.68 

$58.68 $56.54 $49.13 

PLC share award value information (b) 

Fair value per share award £6.17 £5.22 £4.22 

$8.58 $7.70 $6.63 

Actual compensation costs recognised (€ million) 12 2 – 

(b) Weighted average of share awards granted during each period. 

(iv) The TSR Long-Term Incentive Plan 

This plan was introduced in 2001 and grants were made to Board members and some senior executives. The level of award which will 

vest will vary in accordance with the Total Shareholder Return in comparison with a peer group (see description on page 40). If the ranking 

is below the median, the award will lapse; the higher the ranking above the median, the higher the award. 

A summary of the status of the TSR Long-Term Incentive Plan as at 31 December 2002 and 2001 and changes during the year ended on 




Number of average Number of average 

shares price shares price 


Outstanding at 1 January 71 564 €0.00 – – 

Awarded 118 445 €0.00 71 564 €0.00 

Exercised – – – – 

Forfeited/Expired (a) (1 495) €0.00 – – 

Outstanding at 31 December 188 514 €0.00 71 564 €0.00 

Exercisable at 31 December – – – – 


Outstanding at 1 January 533 481 £0.00 – – 

Awarded 837 973 £0.00 533 481 £0.00 


Forfeited/Expired (a) (10 580) £0.00 – – 

Outstanding at 31 December 1 360 874 £0.00 533 481 £0.00 


(a) The number of expired share awards is immaterial. 








Fair value per share award (h) €26.94 €57.33 


Fair value per share award (h) £2.41 £5.11 

Actual compensation costs recognised (€ million) 11 2 


(h) Estimated using adapted binomial pricing model based on cross-volatilities of peer group TSR. 

(v) The Restricted Share Plan 

In specific once-off cases a number of executives are awarded the right to receive NV and PLC shares at a specified date in the future, on 

the condition that they will still be employed by Unilever at that time. No directors participate in this plan. 

A summary of the status of the Restricted Share Plan as at 31 December 2002, 2001 and 2000 and changes during the years ended on 


2002 2001 2000 





Outstanding at 1 January 381 328 €0.00 165 046 €0.00 – – 

Awarded 37 380 €0.00 256 662 €0.00 165 046 €0.00 

Exercised (160 405) €0.00 (40 380) €0.00 – – 

Forfeited/Expired (a) (7 696) €0.00 – – – – 

Outstanding at 31 December 250 607 €0.00 381 328 €0.00 165 046 €0.00 


Outstanding at 1 January 2 815 138 £0.00 1 220 226 £0.00 – – 

Awarded 275 502 £0.00 1 894 148 £0.00 1 220 226 £0.00 

Exercised (1 178 708) £0.00 (299 236) £0.00 – – 

Forfeited/Expired (a) (57 116) £0.00 – – – – 


(a) The number of expired share awards is immaterial. 

2002 2001 2000 


Fair value per share award €64.21 €67.40 €53.72 


Fair value per share award £5.65 £5.73 £4.45 

Actual compensation costs recognised (€ million) 6 6 2 


(vi) The North American Performance Share Plan 

This long-term incentive plan for North American managers awards Unilever shares if company and personal performance targets are met 

over a three-year period. It was introduced in 2001 to replace a former long-term incentive plan which had cash awards rather than shares. 

A summary of the status of the North American Performance Share Plan as at 31 December 2002 and 2001 and changes during the years 

ended on these dates is presented below: 






Outstanding at 1 January 625 451 $0.00 – – 

Awarded 639 396 $0.00 625 451 $0.00 


Forfeited/Expired (a) (41 555) $0.00 – – 

Outstanding at 31 December 1 223 292 $0.00 625 451 $0.00 

Exercisable at 31 December – – – –










Outstanding at 1 January 4 665 064 $0.00 – – 

Awarded 4 769 348 $0.00 4 665 064 $0.00 


Forfeited/Expired (a) (303 880) $0.00 – – 

Outstanding at 31 December 9 130 532 $0.00 4 665 064 $0.00 


(a) The number of expired share awards is immaterial. (d) 1 ADR is equivalent to 4 PLC shares. 



Fair value per share award $59.00 $59.65 


Fair value per share award $8.35 $8.59 

Actual compensation costs recognised (€ million) 55 32 


Employee share option plans: additional information 

At 31 December 2002, there were options outstanding to purchase 16 693 951 (2001: 12 446 685) €0.51 ordinary NV shares, and 

79 141 530 (2001: 56 763 080) 1.4p ordinary PLC shares in respect of equity-based compensation plans of NV and its subsidiaries and 

the North American plans, and 3 846 623 (2001: 2 782 756) €0.51 ordinary NV shares and 45 785 840 (2001: 44 038 928) 1.4p ordinary 

PLC shares in respect of equity-based compensation plans of PLC and its subsidiaries. 

To satisfy the options granted, certain NV group companies hold 17 711 169 (2001: 13 679 007) certificates or depositary receipts of ordinary 

shares of NV and 69 162 782 (2001: 43 038 640) of PLC and a forward equity contract to buy 10 000 000 PLC shares in 2006, and trusts in 

Jersey and the United Kingdom hold 43 176 360 (2001: 41 531 145) PLC shares. The book value of the shares held by the trusts, together 

with their borrowings, is taken up in the entity accounts of PLC, as required by United Kingdom UITF Abstract 13. The trustees of these 

trusts have agreed, until further notice, to waive dividends on these shares, save for the nominal sum of 0.01p per 1.4p ordinary share. 

Shares acquired during 2002 represent 1.0% of the Group’s called-up capital. The balance at year end is 3.4% (2001: 2.6%). 

The book value of €1 952 million (2001: €1 480 million) of all shares held in respect of equity-based compensation plans for both NV and 

PLC is eliminated on consolidation by deduction from other reserves (see note 23 on page 98). Their market value at 31 December 2002 

was €2 058 million (2001: €1 681 million). 

At 31 December 2002 the exercise price of 11 163 031 (2001: 1 314 187) NV options and of 13 156 190 (2001: 11 382 978) PLC options 

was above the market price of the shares. 

Shares held to satisfy options are accounted for in accordance with Netherlands law. Any difference between the market value of the shares 

at the grant date and the exercise price of the related options is charged to the profit and loss account over the vesting period. In 

accordance with Netherlands law, all other differences between the purchase price of the shares held to satisfy options granted and the 

exercise price of those options, or sale proceeds in the event that options lapse, are charged to other reserves. Urgent Issues Task Force 

Abstract 17 in the United Kingdom would require differences between the purchase price of the shares held and the exercise price or sale 

proceeds to be charged to the profit and loss account. For 2002 this charge would have been €23 million (2001: €13 million). In addition, 

a further €8 million would have been recognised as an impairment charge for shares held to meet options expiring in the short term which 

are priced above market value. 

Obligations over the following number of shares were granted, exercised, forfeited or expired between 31 December 2002 and 

28 February 2003. 

Granted Exercised, forfeited or expired 

Shares of 1.4p (i) 

Shares of €0.51 (ii) 

Shares of 1.4p (i) Shares of €0.51 (ii) 

All-Employee Option Plans – – 437 933 88 271 

Executive Option Plans – – 794 497 115 782 

Share Matching Plans – – 4 424 624 

TSR Long-Term Incentive Plan – – – – 

Restricted Share Plan 8 640 1 200 623 164 83 487 

North American Performance Share Plan – – 44 400 5 950 

(i) When under a North American Plan, in the form of PLC ADRs. 

(ii) When under a North American Plan, in the form of NV New York shares. 




30 Summarised accounts of the NV and PLC parts of the Group 

The following summarised accounts present the profit and loss account and balance sheet of the Unilever Group, analysed between the 

NV and PLC parts of the Group according to respective ownership. 

Profit and loss account for the year ended 31 December 





Group turnover 31 828 35 584 32 398 16 442 15 930 15 184 

Group operating profit (a) 3 457 2 938 1 883 1 584 2 236 1 298 

Total income from fixed investments 73 43 55 38 53 (2) 

Interest (812) (1 228) (442) (361) (418) (190) 

Profit on ordinary activities before taxation 2 718 1 753 1 496 1 261 1 871 1 106 

Taxation (a) (986) (892) (794) (552) (655) (488) 

Profit on ordinary activities after taxation 1 732 861 702 709 1 216 618 

Minority interests (51) (44) (27) (261) (195) (188) 

Net profit 1 681 817 675 448 1 021 430 

Balance sheet as at 31 December 


NV NV PLC PLC 


Fixed assets 

Goodwill and intangibles (a) 15 593 18 899 4 681 6 065 

Tangible fixed assets 4 749 6 065 2 687 3 175 

Fixed investments 394 535 285 349 

20 736 25 499 7 653 9 589 


Stocks 2 870 3 520 1 630 1 823 

Debtors 5 888 7 403 2 343 2 631 

Debtors due within one year 4 323 5 418 1 552 1 767 

Debtors due after more than one year (a) 1 565 1 985 791 864 

Cash and current investments 2 459 1 124 1 019 1 177 

11 217 12 047 4 992 5 631 

Creditors due within one year (14 869) (17 128) (5 733) (6 084) 

Borrowings (7 293) (8 983) (2 218) (2 296) 

Trade and other creditors (7 576) (8 145) (3 515) (3 788) 

Net current assets (3 652) (5 081) (741) (453) 

Total assets less current liabilities 17 084 20 418 6 912 9 136 

Creditors due after more than one year 10 013 11 894 1 561 3 132 

Borrowings 9 536 11 233 1 397 2 988 

Trade and other creditors 477 661 164 144 

Provisions for liabilities and charges (a) 4 448 5 351 1 479 1 520 

Intra-group – NV/PLC (3 106) (1 757) 3 106 1 757 

Minority interests 29 41 599 623 

Capital and reserves (a) (b) 5 700 4 889 167 2 104 

Total capital employed 17 084 20 418 6 912 9 136 

(a) Amounts restated following the implementation of FRS 19, see note 18 on page 94. 

(b) Capital and reserves of PLC have decreased during 2002 due to the elimination of goodwill arising on intercompany transfers as 

explained in note 22 on page 98.




The financial data below shows key figures which are derived from the audited consolidated accounts of the Unilever Group for the last five 

years and is qualified by reference to those accounts and notes. Please refer also to the notes on page 114. 

From 1 January 2000, Unilever adopted the euro as its principal reporting currency. For the years prior to the introduction of the euro on 

1 January 1999, euro values have been derived by converting values previously reported in guilders, using the official conversion rate 

announced on 31 December 1998 of €1.00 = Fl. 2.20371. The effect of exchange fluctuations over time means that the trends shown may 

differ significantly from those previously shown in sterling and from those which would arise if these euro amounts had been translated 

from the historic sterling accounts. 

Consolidated profit and loss account (a)(e) 


2002 2001 2000 1999 1998 

Group turnover 48 270 51 514 47 582 40 977 40 437 



Exceptional items (879) (588) (2 113) (269) 125 

Amortisation of goodwill and intangibles (1 245) (1 387) (435) (23) (8) 

Income from fixed investments 111 96 53 52 37 

Interest (b) (1 173) (1 646) (632) (14) 156 

Profit on ordinary activities before taxation 3 979 3 624 2 602 4 341 4 603 

Profit on ordinary activities after taxation 2 441 2 077 1 320 2 972 3 088 

Net profit 2 129 1 838 1 105 2 771 2 944 

Preference dividends (42) (51) (44) (20) (7) 

Normal dividends on ordinary capital (1 659) (1 530) (1 414) (1 245) (1 237) 

Special dividends on ordinary capital – – – – (7 430) 

Result for the year retained 428 257 (353) 1 506 (5 730) 

Combined earnings per share (c) 

Euros per €0.51 (1998: Fl. 1) of ordinary capital 2.14 1.82 1.07 2.63 2.63 

Euro cents per 1.4p (1998: 1.25p) of ordinary capital 32.05 27.27 16.08 39.48 39.47 

Ordinary dividends 

NV – euros per €0.51 (1998: Fl. 1) of ordinary capital (d) 1.70 1.56 1.43 1.27 1.14 

PLC – pence per 1.4p (1998: 1.25p) of ordinary capital 16.04 14.54 13.07 12.50 10.70 

Special ordinary dividends 

NV – euros per Fl. 1 of ordinary capital (d) – – – – 6.58 

PLC – pence per 1.25p of ordinary capital – – – – 66.13 

Consolidated balance sheet (a)(e) 


2002 2001 2000 1999 1998 

Goodwill and intangible assets 20 274 24 964 26 390 643 284 

Other fixed assets and investments 8 115 10 124 10 996 8 963 8 336 

Stocks 4 500 5 343 5 421 5 124 4 747 

Debtors 8 231 10 034 9 726 7 405 6 474 

Acquired businesses held for resale – – 1 666 – – 

Total cash and current investments 3 478 2 301 3 273 5 473 10 383 

Total assets 44 598 52 766 57 472 27 608 30 224 

Creditors due within one year (f) (20 602) (23 212) (28 364) (12 134) (17 976) 

Total assets less current liabilities 23 996 29 554 29 108 15 474 12 248 

Creditors due after one year 11 574 15 026 14 085 2 832 3 042 

Provisions for liabilities and charges 5 927 6 871 6 431 4 608 4 321 

Minority interests 628 664 618 579 408 

Capital and reserves (f) 5 867 6 993 7 974 7 455 4 477 

Total capital employed 23 996 29 554 29 108 15 474 12 248 


114 Five year record 


Consolidated cash flow statement (a) 



2002 2001 2000 1999 1998 

Cash flow from operating activities 7 883 7 497 6 738 5 654 4 514 

Dividends from joint ventures 83 82 38 28 24 

Returns on investments and servicing of finance (1 386) (1 887) (798) (156) 67 

Taxation (1 817) (2 205) (1 734) (1 443) (1 261) 

Capital expenditure and financial investment (1 706) (1 358) (1 061) (1 501) (1 399) 

Acquisitions and disposals 1 755 3 477 (27 373) (362) 338 

Dividends paid on ordinary share capital (1 580) (1 420) (1 365) (1 266) (1 073) 

Special dividend – – – (6 093) – 

Cash flow before management of 

liquid resources and financing 3 232 4 186 (25 555) (5 139) 1 210 

Management of liquid resources (592) 1 106 2 464 5 675 (2 003) 

Financing (2 591) (5 098) 22 902 (146) 42 

Increase/(decrease) in cash in the period 49 194 (189) 390 (751) 

Key ratios (g)(e) 

2002 2001 2000 1999 1998 

Return on shareholders’ equity (%) 31.7 23.8 12.8 44.7 25.1 

Return on capital employed (%) 10.5 8.8 7.8 22.6 16.2 

Group operating margin (%) 10.4 10.0 6.7 10.5 10.9 

Net profit margin (%) 4.4 3.6 2.3 6.8 7.3 

Net interest cover (times) 4.5 3.2 5.1 319.0 – 

Net interest cover based on EBITDA before exceptional items (times) 7 5 11 412 – 

Net gearing (adjusted) (%) 67 72 73 – – 

Ratio of earnings to fixed charges (times) 3.5 2.7 3.2 8.1 9.7 

Funds from operations after interest and tax before exceptional 

items over lease adjusted net debt (%) 26 18 14 250 – 

Selected financial data on a US GAAP basis (a)(h)(i) 


2002 2001 2000 1999 1998 

Net profit 4 309 1 506 1 266 2 490 2 543 

Capital and reserves 11 699 13 553 15 075 15 375 19 292 

Combined earnings per share (c) 



Diluted earnings per share 



Ratio of earnings to fixed charges (times) 4.7 2.5 3.2 7.6 8.4 

Net gearing (%) 54.3 62.0 62.8 – – 

Net interest cover (times) 6.1 3.1 5.0 178.4 – 

Notes 

(a) Amounts previously reported in guilders have been restated and are now reported in euros using the fixed conversion rate of 

€1.00 = Fl. 2.20371 that became effective on 1 January 1999. 

(b) Interest cost in 2000 includes €37 million of exceptional interest (see note 5 on page 78). 

(c) For the basis of the calculations of combined earnings per share see note 7 on page 79 and 80. 

(d) In 1999 and prior years, NV dividends were declared and paid in guilders. For comparative purposes, guilder values have been 

converted into euros in this table using the official rate of €1.00 = Fl. 2.20371. Full details of dividends for the years 1998 to 2002 

are given on page 147. 

(e) Amounts restated following the implementation of FRS 19, see note 18 on page 94. 

(f) Figures for 1998 include the special dividend of €7 267 million assuming all shareholders had taken the cash dividend. Capital and 

reserves in 1999 reflect the increase of €1 382 million as a result of the issue of the preference shares. 

(g) Return on shareholders’ equity is substantially influenced by the Group’s policy prior to 1998, of writing off purchased goodwill in 

the year of acquisition as a movement in profit retained. Return on capital employed and net gearing are also influenced but to a 

lesser extent. 

(h) During the year ended 31 December 2002, Unilever recognised for US GAAP reporting purposes SFAS 142 which ceased amortisation 

of goodwill and indefinite-lived assets. Amortisation expense on goodwill and indefinite-lived intangible assets on a US GAAP basis for 

the years ended 31 December 2001, 2000, 1999 and 1998 were €1 748 million, €810 million, €369 million and €356 million 

respectively. 

(i) During the year ended 31 December 2002, Unilever changed its method of calculating expected return on plan assets for US GAAP 

purposes by adopting the actual fair market value at the balance sheet date rather than a market related value. Had this methodology 

been applied in previous years, it would have resulted in an increase in net income for the years ended 31 December 2001, 2000, 1999 

and 1998 of €86 million, €210 million, €57 million and €83 million respectively.

Definitions 




Return on shareholders’ equity Net profit attributable to ordinary shareholders expressed as a percentage of the 

average capital and reserves attributable to ordinary shareholders during the year. 

Return on capital employed The sum of profit on ordinary activities after taxation plus interest after taxation on 

borrowings due after more than one year, expressed as a percentage of the average 

capital employed during the year. 

Group operating margin Group operating profit expressed as a percentage of group turnover. 

Operating margin Operating profit expressed as a percentage of turnover. 

Net profit margin Net profit expressed as a percentage of group turnover. 

Net interest cover Profit on ordinary activities excluding associates before net interest and taxation divided 

by net interest excluding associates. 

Net interest cover based on EBITDA Earnings on ordinary activities excluding associates before net interest, taxation, 

(before exceptional items) depreciation and amortisation and exceptional items divided by net interest 

excluding associates. 

Net gearing (adjusted) Net debt (borrowings less cash and current investments) expressed as a percentage of 

the sum of capital and reserves, minority interests and net debt. In calculating capital 

and reserves, the book value of shares or certificates held in connection with share 

option plans is classified as fixed assets, rather than deducted from reserves as required 

by Netherlands law. 

Net operating assets The total of: 

• goodwill and intangible assets of subsidiaries purchased after 1 January 1998 

• tangible fixed assets 

• stocks 

• debtors (excluding deferred taxation) 

less: 

• trade and other creditors (excluding taxation and dividend creditors) 

• provisions for liabilities and charges (excluding deferred taxation and deferred 

purchase consideration). 

Ratio of earnings to fixed charges Earnings consist of net profit excluding joint ventures and associates increased 

by fixed charges and income taxes. 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. 

Funds from operations after interest and tax Profit on ordinary activities excluding joint ventures and associates before depreciation 

(before exceptional items) over lease adjusted and amortisation of goodwill and intangibles and exceptional items, and after actual 

net debt tax paid and other non exceptional non cash items, expressed as a percentage of the 

lease adjusted net debt. Lease adjusted net debt is calculated by adding to the net 

debt five times the operational lease costs. 

Weighted average cost of capital The real cost of equity multiplied by the market capitalisation, plus the real after 

taxation interest cost of debt multiplied by the market value of the net debt, divided 

by the sum of the market values of debt and equity. 


116 Five year record 


By geographical area 



2002 2001 2000 1999 1998 


Europe 19 573 20 119 18 967 18 040 18 165 

North America 12 446 13 767 11 631 8 838 8 417 

Africa, Middle East and Turkey 3 139 3 191 3 296 3 048 3 034 

Asia and Pacific 7 679 7 846 8 038 6 723 5 803 

Latin America 5 433 6 591 5 650 4 328 5 018 

48 270 51 514 47 582 40 977 40 437 

Group operating profit 

Europe 1 750 2 689 1 693 2 131 2 254 

North America 1 435 1 092 48 847 942 

Africa, Middle East and Turkey 286 203 321 302 268 

Asia and Pacific 1 077 862 776 642 457 


5 041 5 174 3 181 4 303 4 410 

Net operating assets 

Europe 9 954 11 243 12 174 3 215 3 025 

North America 8 945 12 091 11 814 1 996 1 738 

Africa, Middle East and Turkey 1 097 1 082 1 075 1 034 936 

Asia and Pacific 1 124 1 525 1 487 1 499 1 282 

Latin America 3 614 6 256 7 526 1 520 1 370 

24 734 32 197 34 076 9 264 8 351 


Europe 552 631 605 652 687 

North America 334 355 310 222 182 

Africa, Middle East and Turkey 108 114 116 123 129 

Asia and Pacific 170 217 183 148 158 


By operation 

1 298 1 513 1 356 1 304 1 329 


2002 2001 2000 1999 1998 


Foods 26 937 28 155 23 898 20 339 20 919 

Home & Personal Care 20 801 22 739 22 825 19 781 18 783 

Other Operations 532 620 859 857 735 

48 270 51 514 47 582 40 977 40 437 

Group operating profit 

Foods 2 185 2 303 1 735 1 788 1 801 



5 041 5 174 3 181 4 303 4 410 

Net operating assets 

Foods 22 768 28 960 30 341 5 315 4 891 



24 734 32 197 34 076 9 264 8 351 


Foods 805 810 704 690 775 

Home & Personal Care 466 678 619 577 510 


1 298 1 513 1 356 1 304 1 329

Exchange rates and European Economic and Monetary Union 




Before 1 January 1999, the guilder was a part of the European Monetary System (‘EMS’) exchange rate mechanism. Within this mechanism, 

exchange rates fluctuated within permitted margins, fixed by central bank intervention. Under the provisions of the Treaty on European 

Union negotiated at Maastricht in 1991 and signed by the then 12 member states of the European Union in early 1992, the European 

Monetary Union (‘EMU’) superseded the EMS on 1 January 1999 and the euro was introduced as the single European currency. Since this 

date, the euro has been the lawful currency of the EMU states. The following 11 member states participate in the EMU and adopted the 

euro as their national currency with effect from 1 January 1999: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, 

The Netherlands, Portugal and Spain. Greece adopted the euro as the national currency with effect from 1 January 2001. The legal rate 

of conversion between the euro and the guilder was announced on 31 December 1998 at €1.00 = Fl. 2.20371. On 1 January 1999 the 

exchange rate for euro to pound sterling was €1.00 = £0.706. 

The information in the following table is based on exchange rates between US dollars and guilders, euros and US dollars, sterling and 

guilders, and euros and sterling. These translation rates were used in preparation of the accounts. 

2002 2001 2000 1999 1998 

Year end 

$1 = Fl. 1.88 

€1 = $ 1.049 0.885 0.930 1.005 

£1 = Fl. 3.12 

€1 = £ 0.651 0.611 0.624 0.621 

Annual average 

$1 = Fl. 1.98 

€1 = $ 0.940 0.895 0.921 1.065 

£1 = Fl. 3.29 

€1 = £ 0.628 0.622 0.609 0.659 

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: 

2002 2001 2000 1999 1998 

Year end 

$1 = Fl. 1.88 

€1 = $ 1.049 0.890 0.939 1.007 

Annual average 

$1 = Fl. 1.97 

€1 = $ 0.945 0.895 0.923 1.065 

High 

$1 = Fl. 2.09 

€1 = $ 1.049 0.954 1.034 1.181 

Low 

$1 = Fl. 1.81 

€1 = $ 0.859 0.837 0.827 1.001 

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

September October November December January February 

2002 2002 2002 2002 2003 2003 

High: 

€1 = $ 0.996 0.988 1.014 1.049 1.086 1.088 

Low: 

€1 = $ 0.969 0.971 0.990 0.993 1.036 1.071 


118 Additional information for US investors 


Unilever´s consolidated accounts are prepared in accordance with accounting principles which differ in some respects from those applicable 

in the United States. The following is a summary of the effect on the Group’s net profit, combined earnings per share and capital and 

reserves of the application of United States generally accepted accounting principles (US GAAP). 



2002 2001 2000 

Net profit as reported in the consolidated profit and loss account 2 129 1 838 1 105 

Attributable to: NV 1 681 817 675 

PLC 

US GAAP adjustments: 

448 1 021 430 

Currency retranslation written back on disposals (22) – 115 

Goodwill 1 074 (124) (45) 

Identifiable intangibles 284 (118) (128) 

Restructuring costs 34 (18) 76 

Interest (77) (55) (68) 

Derivative financial instruments 201 (119) – 

Pensions and similar liabilities 143 – 95 

Gain on partial disposal of a group company 56 – – 

Taxation effect of above adjustments (35) 108 116 

Net increase/(decrease) 1 658 (326) 161 

Net income under US GAAP before cumulative effect of change 

in accounting principles for pensions and derivative financial instruments 3 787 1 512 1 266 

Cumulative effect of change in accounting principle net of tax charge 

of €249 million in 2002 and tax benefit of €3 million in 2001 522 (6) – 

Net income under US GAAP 4 309 1 506 1 266 


PLC 1 089 966 434 

Combined net income per share under US GAAP before cumulative 

effect of change in accounting principles 



Combined diluted net income per share under US GAAP before 

cumulative effect of change in accounting principles 



Cumulative effect of change in accounting principles – 

combined net income per share 

Euros per €0.51 of ordinary capital 0.53 (0.01) – 

Euro cents per 1.4p of ordinary capital 8.02 (0.09) – 

Cumulative effect of change in accounting principles – 

diluted combined net income per share 

Euros per €0.51 of ordinary capital 0.52 (0.01) – 

Euro cents per 1.4p of ordinary capital 7.78 (0.09) –






Capital and reserves as reported in the consolidated balance sheet (a) 5 867 6 993 


PLC 

US GAAP adjustments: 

167 2 104 

Goodwill 2 645 2 436 

Identifiable intangibles 2 782 3 009 

Restructuring costs 198 166 

Interest 355 432 

Other comprehensive income effect of derivative financial instruments transition adjustment (61) (101) 

Derivative financial instruments 73 (128) 

Pensions and similar liabilities (975) 538 

Dividends 1 119 1 059 

Taxation effect of above adjustments (a) (304) (851) 

Net increase 5 832 6 560 

Capital and reserves under US GAAP 11 699 13 553 


PLC 1 797 4 213 


The aggregate amounts included in the consolidated Unilever Group capital and reserves (under Unilever accounting principles) in respect 

of cumulative currency translation adjustments are as follows: 


2002 2001 2000 

Balance 1 January (4 745) (3 669) (3 411) 

Arising during the year (1 517) (1 076) (258) 

Balance 31 December (6 262) (4 745) (3 669) 

The aggregate amounts of foreign currency transaction gains and (losses) charged in 

the consolidated profit and loss account are: (84) (30) 8 

The consolidated accounts of the Unilever Group have been prepared in accordance with accounting principles which differ in certain 

respects from those generally accepted in the United States (US GAAP). 

The principal differences are set out below. 

Profit or loss on disposal of businesses 

Unilever calculates profit or loss on sale of businesses after writing back any goodwill previously written off directly to reserves as a 

movement in profit retained. Under US GAAP the profit or loss on disposal of the businesses is stated net of the relevant unamortised 

goodwill included on the balance sheet and the cumulative currency retranslation differences recognised through the statement of total 

recognised gains and losses. 

Under UK GAAP, gains on the partial disposal of group companies involving non-monetary consideration are recorded in the statement of 

total recognised gains and losses. Under US GAAP, these gains are recorded in the profit and loss account. 

Goodwill and other intangibles 

Under UK and Netherlands GAAP, goodwill (being the difference between the fair value of consideration paid for new interests in group 

companies, joint ventures and associated companies and the fair value of the Group’s share of their net assets at the date of acquisition) 

and identifiable intangible assets purchased after 1 January 1998 are capitalised and amortised in operating profit over the period of their 

expected useful life, up to a maximum of 20 years. Periods in excess of five years are used only where the directors are satisfied that the 

life of these assets will clearly exceed that period. Goodwill and intangible assets purchased prior to 1 January 1998 were written off in the 

year of acquisition as a movement in profits retained. 

On disposal of a business acquired prior to 1 January 1998, purchased goodwill written off on acquisition is reinstated in arriving at the 

profit or loss on disposal. 

Under US GAAP prior to 1 January 2002, purchased goodwill and identifiable intangibles were capitalised and amortised over their useful 

lives. From 1 January 2002, under SFAS 142, the amortisation of goodwill and identifiable intangibles that have indefinite useful lives 

ceased. Intangible assets that have finite useful lives continue to be amortised over their useful lives. 




Goodwill and identifiable intangible assets that have indefinite lives are assessed annually for impairment. Within six months of the initial 

application of SFAS 142, management completed an impairment assessment and have concluded that there is no impairment of goodwill 

or identifiable intangible assets with indefinite lives. 

An analysis of goodwill by reporting segment is given below: 

Spreads Health & Home care and 

Savoury and and cooking wellness and Ice cream and professional Other 

€ million dressings products beverages frozen foods cleaning Personal care operations Total 

As at 1 January 2002 16 620 212 1 685 1 135 733 633 – 21 018 

Currency retranslation (2 540) (32) (255) (171) (112) (97) – (3 207) 

Acquisitions/disposals 126 100 (36) (17) (168) 26 – 31 

As at 31 December 2002 14 206 280 1 394 947 453 562 – 17 842 

Had the Group accounted for its goodwill and identifiable intangible assets that have indefinite lives under SFAS 142 for the years ending 

31 December 2001 and 2000, the impact on reported results would have been as follows: 


2001 2000 

Net income under US GAAP 1 506 1 266 

Amortisation, net of tax: 

Goodwill 1 266 624 

Intangibles 404 141 

Adjusted net income under US GAAP 3 176 2 031 

Adjusted net income per share 3.18 2.01 

Adjusted diluted net income per share 3.09 1.96 

Indefinite lived intangible assets principally comprise trademarks and have a net book value of €6 726 million as at 31 December 2002. 

Finite lived intangible assets principally comprise technologies and have a net book value of €567 million, net of accumulated amortisation 

of €72 million, as at 31 December 2002. Amortisation expense recorded in the year in respect of finite lived intangible assets was 

€36 million. This expense is not expected to change materially over the next five years. 

Restructuring costs 

Under Unilever’s accounting policy certain restructuring costs relating to employee terminations are recognised when a restructuring plan 

has been announced. Under US GAAP, additional criteria must be met before such charges are recognised. 

Interest 

Unilever treats all interest costs as a charge to the profit and loss account in the current period. Under US GAAP interest incurred during 

the construction periods of tangible fixed assets is capitalised and depreciated over the life of the assets. 

Derivative financial instruments 

Transition adjustment 

Unilever applied the provisions of SFAS 133 ‘Accounting for Derivative Instruments and Hedging Activities’ in this divergence statement 

as from 1 January 2001. In accordance with the transition provisions of SFAS 133, an adjustment of €6 million (net of tax of €3 million) 

was recorded as the cumulative effect of a change in accounting principle to recognise the fair value of all the Group’s derivative financial 

instruments and hedge items under US GAAP. In addition, Unilever recorded a one-time unrealised loss of €85 million (net of tax of 

€37 million) to consolidated other comprehensive income under US GAAP. During the year ended 31 December 2002, a reclassification 

of derivative losses from other comprehensive income to net income of €40 million was recorded as a result of the underlying hedged 

transactions which impacted earnings. 

Hedging policy 

Unilever’s accounting policies in respect of derivative financial instruments are described in the accounting information and policies on 

page 68. Unilever has not designated any of its derivative instruments as qualifying hedge instruments under SFAS 133 and, accordingly, 

this divergence statement assumes that derivative financial instruments are valued at fair value and that changes in their value are reflected 

in earnings. 


Pensions 

Under Unilever´s accounting policy the expected costs of providing retirement pensions are charged to the profit and loss account 

over the periods benefiting from the employees´ services. Variations from expected cost are similarly spread. Under US GAAP, pension 

costs and liabilities are calculated in accordance with SFAS 87, which requires the use of a prescribed actuarial method and a 

prescribed set of measurement principles. 

Under US GAAP an additional minimum liability is recognised and a charge made to other comprehensive income when the accumulated 

benefit obligation exceeds the fair value of plan assets to the extent that this amount is not covered by the net liability recognised in the 

balance sheet. 

With effect from 1 January 2002, and for the purposes of determining the expected return on plan assets, Unilever changed the method of 

valuing its pension plan assets from a market related value calculated by smoothing gains and losses over a five year period to an actual fair 

value at the balance sheet date. Management believe that the actual fair value methodology provides a better representation of the financial 

position and results of Unilever’s pension plans. 

The impact of this change in methodology on reported results under US GAAP is given in the table below: 


2001 2000 

Net income under US GAAP 1 506 1 266 

Change in basis of expected return on plan assets calculation 86 210 

Adjusted net income under US GAAP 1 592 1 476 

Euro per €0.51 Euro cents per 1.4p 

2001 2000 2001 2000 

Adjusted net income per share 1.57 1.45 23.52 21.71 

Adjusted diluted net income per share 1.52 1.41 22.89 21.18 

As required under US APB 20 for a change in accounting policy, a cumulative effect adjustment has been calculated to record the impact of 

the change as if the fair value methodology had been the accounting policy from the initial adoption of SFAS 87 by Unilever. The cumulative 

effect adjustment net of tax is €522 million in 2002. 

Investments 

Unilever accounts for current investments, which are liquid funds temporarily invested, at their market value, which is consistent with 

UK GAAP. 

Unilever accounts for changes in the market value of current investments as interest receivable in the profit and loss account for the year. 

Under US GAAP, such current asset investments are classified as ‘available for sale securities’ and changes in market values, which represent 

unrealised gains or losses, are excluded from earnings and taken to stockholders’ equity. Unrealised gains and losses arising from changes in 

the market values of securities available for sale are not material. 

Unilever accounts for fixed investments other than in joint ventures and associates at cost less any amounts written off to reflect a 

permanent impairment. Under US GAAP such investments are held at fair value. The difference is not material. 

Dividends 

The proposed final ordinary dividends are provided for in the Unilever accounts in the financial year to which they relate. Under US GAAP 

such dividends are not provided for until they become irrevocable. 


Unilever has restated its deferred tax charge for the year ended 31 December 2000, and its deferred tax balances as at 31 December 2001 

to comply with the new UK accounting standard FRS 19, as described in note 18 on page 94. Under FRS 19, deferred tax is not recognised 

on fair value adjustments made to assets acquired; under US GAAP, deferred tax is recorded on all fair value adjustments. Also, as described 

on page 94, FRS 19 has changed the treatment of deferred tax on tax-deductible goodwill previously written off to reserves. Such goodwill 

is reinstated, net of amortisation, under US GAAP, and the tax effect of such restatement has been adjusted accordingly. 







Classification differences between UK and US GAAP 

Revenue recognition 

Under US GAAP, certain sales incentive expenses which have been included in operating costs under Unilever’s accounting would be 

deducted from turnover. The decrease in turnover for the years to 31 December 2002, 2001 and 2000 is €1 337 million, €1 279 million 

and €1 237 million respectively. There is no impact on Unilever’s net profit. 

Cash flow statement 

Under US GAAP, various items would be reclassified within the consolidated cash flow statement. In particular, interest received, interest 

paid and taxation would be part of net cash flow from operating activities, and dividends paid would be included within net cash flow from 

financing. In addition, under US GAAP, cash and cash equivalents comprise cash balances and current investments with an original maturity 

at the date of investment of less than three months. Under Unilever’s presentation, cash includes only cash in hand or available on demand 

less bank overdrafts. Movements in those current investments which are included under the heading of cash and cash equivalents under 

US GAAP form part of the movement entitled ‘Management of liquid resources’ in the cash flow statements. At 31 December 2002, the 

balance of such investments was €45 million (2001: €9 million; 2000: €58 million). 

Recently issued accounting pronouncements 

In August 2001, FASB issued SFAS 143, ‘Accounting for Asset Retirement Obligations’. This statement is effective from January 2003 and 

requires obligations associated with the retirement of a tangible long-lived asset to be recorded as a liability upon acquisition of the asset. 

SFAS 143 would not have a material impact on Unilever’s financial position or results of operations. 

In July 2002, the FASB issued SFAS 146, ‘Accounting for Costs Associated with Exit or Disposal Activities’. This standard will require Unilever 

to recognise certain costs associated with disposal activities when they are incurred, rather than at the date of a commitment to a disposal 

plan. SFAS 146 is effective for disposal activities initiated after 31 December 2002. Given the nature of disposal plans, it is not possible to 

determine in advance the impact it might have on Unilever’s financial position at a particular date or Unilever’s results of operations for a 

particular period in the future. For 2002, the impact is shown against restructuring costs in the US GAAP reconciliation statements on pages 

118 and 119. 

In December 2002, the FASB issued SFAS 148, ’Accounting for Stock-Based Compensation - Transition and Disclosure - an Amendment 

of SFAS No. 123’. This standard provides two additional transition methods for companies electing to adopt the fair value accounting 

provisions of SFAS 123, ’Accounting for Stock-Based Compensation’, but does not change the fair value measurement principles of 

SFAS 123. When Unilever adopts the fair value method for accounting for stock options, we expect to use full retrospective restatement. 

The impact of this is shown in the table on page 104. 

In November 2002, the FASB issued Financial Interpretation No. 45 (FIN 45), ’Guarantor’s and Disclosure Requirements for Guarantees, 

Including Direct Guarantees’. Under this interpretation, a guarantor must recognise the fair value of the obligation undertaken in issuing 

a guarantee. The initial recognition and initial measurement provisions of this interpretation are applicable on a prospective basis to 

guarantees issued or modified after 31 December 2002. FIN 45 is not expected to have a material impact on Unilever’s financial position 

or results of operations. 

In January 2003, the FASB issued Financial Interpretation No. 46 (FIN 46), ’Consolidation of Variable Interest Entities’. Under this 

interpretation, certain entities known as variable interest entities must be consolidated by the primary beneficiary of the entity. 

The measurement principles of this interpretation will be effective for Unilever’s 2003 financial statements. FIN 46 is not expected 

to have any impact on Unilever’s financial position or results of operations. 

Documents on display in the United States 

Unilever files and furnishes reports and information with the United States Securities and Exchange Commission (SEC), and 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 at www.sec.gov. 





Guarantor statements 

On 2 October 2000, NV and Unilever Capital Corporation (UCC) filed a US $15 billion Shelf registration, which is unconditionally and fully 

guaranteed, jointly and severally, by NV, PLC and Unilever United States, Inc. (UNUS). Of the US $15 billion Shelf registration, US $5.75 

billion of Notes were outstanding at 31 December 2002 (2001: US $7 billion) with coupons ranging from 5.90% to 7.125%. These Notes 

are to be repaid between 1 November 2003 and 15 November 2032. 

Provided below are the profit and loss accounts, cash flow statements and balance sheets of each of the companies discussed above, 

together with the profit and loss account, 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 Netherlands law and with United Kingdom Accounting Standards. Divergences from US GAAP are disclosed 

on pages 118 to 122. We have not provided reconciliations from the accounting principles used by Unilever to US GAAP for the columns 

relating to the guarantor entities, as such reconciliations would not materially affect an investor’s understanding of the nature of this 

guarantee. The financial information in respect of NV, PLC and UNUS has been prepared with all subsidiaries accounted for on an equity 

basis. The financial information in respect of the non-guarantor subsidiaries has been prepared on a consolidated basis. 

Unilever Unilever 

Capital United 

Corporation Unilever N.V. Unilever PLC States Inc. Nonsubsidiary 

parent issuer/ parent subsidiary guarantor 

€ million issuer guarantor guarantor guarantor subsidiaries Eliminations Unilever Group 


for the year ended 31 December 2002 

Group turnover – – – – 48 270 – 48 270 

Operating costs – 89 (53) (34) (43 231) – (43 229) 

Group operating profit – 89 (53) (34) 5 039 – 5 041 

Share of operating profit of joint ventures – – – – 84 – 84 

Operating profit – 89 (53) (34) 5 123 – 5 125 

Share of operating profit of associates – – – – 34 – 34 

Dividends – 3 779 1 011 – (4 790) – – 

Other income from fixed investments – – – – (7) – (7) 

Interest (395) (206) (83) (1) (488) – (1 173) 

Intercompany finance costs 403 450 (3) (89) (761) – – 


before taxation 8 4 112 872 (124) (889) – 3 979 

Taxation (3) (41) (3) 46 (1 537) – (1 538) 


after taxation 5 4 071 869 (78) (2 426) – 2 441 

Minority interests – – – – (312) – (312) 

Equity earnings of subsidiaries – (1 942) 1 260 136 – 546 – 

Net profit 5 2 129 2 129 58 (2 738) 546 2 129 










for the year ended 31 December 2001 


Operating costs – (27) 82 4 (46 399) – (46 340) 

Group operating profit – (27) 82 4 5 115 – 5 174 


Operating profit – (27) 82 4 5 199 – 5 258 

Dividends – 2 202 738 – (2 940) – – 

Other income from fixed investments – – – – 12 – 12 

Interest (782) (444) (177) 2 (245) – (1 646) 

Intercompany finance costs 1 010 423 72 (424) (1 081) – – 


before taxation 228 2 154 715 (418) 945 – 3 624 

Taxation (84) (98) (24) 155 (1 496) – (1 547) 


after taxation 144 2 056 691 (263) (551) – 2 077 


Equity earnings of subsidiaries – (218) 1 147 (315) – (614) – 

Net profit 144 1 838 1 838 (578) (790) (614) 1 838 




Operating costs – 256 8 (19) (44 646) – (44 401) 

Group operating profit – 256 8 (19) 2 936 – 3 181 


Operating profit – 256 8 (19) 2 993 – 3 238 

Dividends – 706 734 – (1 440) – – 

Other income from fixed investments – – – – (4) – (4) 

Interest (268) (218) (69) 13 (90) – (632) 

Intercompany finance costs 270 375 (6) (328) (311) – – 


before taxation 2 1 119 667 (334) 1 148 – 2 602 

Taxation (1) (63) (2) 123 (1 339) – (1 282) 


after taxation 1 1 056 665 (211) (191) – 1 320 


Equity earnings of subsidiaries – 49 440 (618) – 129 – 

Net profit 1 1 105 1 105 (829) (406) 129 1 105 








for the year ended 31 December 2002 

Cash flow from group 

operating activities 34 222 (52) (45) 7 724 – 7 883 

Dividends from joint ventures 

Returns on investments and 

– – – – 83 – 83 

servicing of finance 16 155 (105) (50) (1 402) – (1 386) 

Taxation 

Capital expenditure and 

– (6) 142 (335) (1 618) – (1 817) 

financial investment – (554) (42) 16 (1 126) – (1 706) 

Acquisitions and disposals – – – – 1 755 – 1 755 

Dividends paid on ordinary share capital – (910) (689) – – 19 (1 580) 

Cash flow before management 

of liquid resources and financing 50 (1 093) (746) (414) 5 416 19 3 232 

Management of liquid resources 2 (126) – – (468) – (592) 

Financing (53) 1 547 578 419 (5 082) – (2 591) 

Increase/(decrease) in cash in the period (1) 328 (168) 5 (134) 19 49 




operating activities 24 2 92 66 7 313 – 7 497 



– – – – 82 – 82 

servicing of finance 202 2 092 900 (422) (4 659) – (1 887) 

Taxation 


– (53) (154) (502) (1 496) – (2 205) 

financial investment – (369) (32) 310 (1 267) – (1 358) 

Acquisitions and disposals – – – – 3 477 – 3 477 



of liquid resources and financing 226 854 192 (548) 3 450 12 4 186 

Management of liquid resources 50 428 400 – 228 – 1 106 

Financing (273) (1 422) (592) 551 (3 362) – (5 098) 

Increase/(decrease) in cash in the period 3 (140) – 3 316 12 194 




operating activities (80) 361 (5) (19) 6 481 – 6 738 



– – – – 38 – 38 

servicing of finance 103 865 677 (315) (2 128) – (798) 

Taxation 


– 23 128 (301) (1 584) – (1 734) 

financial investment – (202) 7 (320) (546) – (1 061) 

Acquisitions and disposals – – – – (27 373) – (27 373) 



of liquid resources and financing 23 285 196 (955) (25 112) 8 (25 555) 

Management of liquid resources 802 1 652 (628) – 638 – 2 464 

Financing (832) (1 642) 432 946 23 998 – 22 902 

Increase/(decrease) in cash in the period (7) 295 – (9) (476) 8 (189) 












Balance sheet 

as at 31 December 2002 

Goodwill and intangible assets – – 5 – 20 269 – 20 274 

Tangible fixed assets – – – 5 7 431 – 7 436 

Fixed investments – 576 – 10 296 92 (10 285) 679 

Net assets of subsidiaries 

(equity accounted) – 9 337 7 827 (9 223) (14 344) 6 403 – 

Fixed assets – 9 913 7 832 1 078 13 448 (3 882) 28 389 

Stocks – – – – 4 500 – 4 500 

Amounts due from group companies 6 025 20 303 1 107 3 996 (31 431) – – 

Debtors due within one year – 299 32 1 222 4 322 – 5 875 

Debtors due after more than one year 43 – 42 14 2 257 – 2 356 

Cash and current investments 9 780 51 – 2 638 – 3 478 

Current assets 6 077 21 382 1 232 5 232 (17 714) – 16 209 

Borrowings (1 780) (4 540) (1 407) (4) (1 780) – (9 511) 

Amounts due to group companies – (14 121) (1 156) – 15 277 – – 

Trade and other creditors (64) (1 248) (619) (125) (9 035) – (11 091) 

Creditors due within one year (1 844) (19 909) (3 182) (129) 4 462 – (20 602) 

Total assets less current liabilities 4 233 11 386 5 882 6 181 196 (3 882) 23 996 

Borrowings 4 027 5 257 – – 1 649 – 10 933 

Trade and other creditors – – – 76 565 – 641 

Creditors due after more than one year 4 027 5 257 – 76 2 214 – 11 574 

Provisions for liabilities and charges – 262 15 495 5 155 – 5 927 

Minority interests – – – – 628 – 628 

Capital and reserves attributable to: 

PLC – 164 – – – (164) – 

NV – – 5 699 – – (5 699) – 

Called up share capital – 421 222 – (1) – 642 

Share premium account – 1 399 145 – (3) – 1 541 

Other reserves – (1 498) (595) (365) (573) 938 (2 093) 

Profit retained 206 5 381 396 5 975 (7 224) 1 043 5 777 

Total capital and reserves 206 5 867 5 867 5 610 (7 801) (3 882) 5 867 

Total capital employed 4 233 11 386 5 882 6 181 196 (3 882) 23 996 







Balance sheet 

as at 31 December 2001 

Goodwill and intangible assets – – – – 24 964 – 24 964 

Tangible fixed assets – – – 6 9 234 – 9 240 

Fixed investments – 280 – 10 594 – 884 

Net assets of subsidiaries 

(equity accounted) – 9 496 9 185 11 432 (10 790) (19 323) – 

Fixed assets – 9 776 9 185 11 448 24 002 (19 323) 35 088 

Stocks – – – – 5 343 – 5 343 

Amounts due from group companies 12 327 19 177 3 156 – (34 660) – – 

Debtors due within one year – 197 70 816 6 102 – 7 185 

Debtors due after more than one year 88 – – 33 2 728 – 2 849 

Cash and current investments 14 361 226 – 1 700 – 2 301 

Current assets 12 429 19 735 3 452 849 (18 787) – 17 678 

Borrowings (837) (5 937) (1 707) (11) (2 787) – (11 279) 

Amounts due to group companies (5 924) (9 443) (2 209) (4 755) 22 331 – – 

Trade and other creditors (65) (959) (463) 96 (10 542) – (11 933) 

Creditors due within one year (6 826) (16 339) (4 379) (4 670) 9 002 – (23 212) 

Total assets less current liabilities 5 603 13 172 8 258 7 627 14 217 (19 323) 29 554 

Borrowings 5 365 5 883 1 249 – 1 724 – 14 221 

Trade and other creditors – – – 77 728 – 805 

Creditors due after more than one year 5 365 5 883 1 249 77 2 452 – 15 026 

Provisions for liabilities and charges 84 296 16 95 6 380 – 6 871 

Minority interests – – – – 664 – 664 

Capital and reserves attributable to: 

PLC – 2 101 – – – (2 101) – 

NV – – 4 889 – – (4 889) – 

Called up share capital – 421 222 – (1) – 642 

Share premium account – 1 399 154 – (2) – 1 551 

Other reserves – (1 077) (540) (260) (358) 618 (1 617) 

Profit retained 154 4 149 2 268 7 715 5 082 (12 951) 6 417 

Total capital and reserves 154 6 993 6 993 7 455 4 721 (19 323) 6 993 

Total capital employed 5 603 13 172 8 258 7 627 14 217 (19 323) 29 554 





128 Principal group companies and fixed investments 

As at 31 December 2002 


The companies listed below and on pages 129 to 131 are those 

which in the opinion of the directors, principally affect the amount 

of profit and assets shown in the Unilever Group accounts. 

The directors consider that those companies not listed are not 

significant in relation to Unilever as a whole. 

Full information as required by Articles 379 and 414 of Book 2 of 

the Civil Code in the Netherlands has been filed by Unilever N.V. 

with the Commercial Registry in Rotterdam. 

Particulars of PLC group companies and other significant holdings 

as required by the United Kingdom Companies Act 1985 will be 

annexed to the next Annual Return of Unilever PLC. 

The main activities of the companies listed below are indicated 

according to the following key: 

Holding companies H 

Foods F 

Home & Personal Care P 

Other Operations O 

Unless otherwise indicated, the companies are incorporated and 

principally operate in the countries under which they are shown. 

The aggregate percentage of equity capital directly or indirectly 

held by NV or PLC is shown in the margin, except where it is 

100%. All these percentages are rounded down to the nearest 

whole number. 

Shares in the companies listed are usually held directly or indirectly 

by one of NV or PLC. A long standing exception is in the United 

States where companies are jointly owned by NV (73%) and 

PLC (27%). As a result of the Bestfoods integration during 2002, 

the shares of certain Bestfoods and Unilever companies (or their 

merged successor) are held partly by Unilever United States, Inc. 

and, as a consequence, both NV and PLC have indirect 

shareholdings in them. The percentage of Unilever’s shareholdings 

held either directly or indirectly by NV and PLC are identified in the 

tables according to the following code: 

NV 100% a 

PLC 100% b 

NV 73%; PLC 27% c 

NV 88%; PLC 12% d 

NV 21%; PLC 79% e 

NV 2%; PLC 98% f 

Principal group companies 

% Europe Ownership Activity 

Austria 

Österreichische Unilever Ges.m.b.H. d FP 

Belgium 

99 Bestfoods Belgium B.V.B.A/S.P.R.L. d F 

Unilever Belgium N.V./S.A. d FP 

Bulgaria 

Unilever Bulgaria E.O.O.D. a FP 

Croatia 

Unilever Croatia d.o.o. a FP 

Czech Republic 

Unilever C v 

R s.r.o. a FP 


% Europe continued Ownership Activity 

Denmark 

Unilever Bestfoods A/S d F 

Unilever Danmark A/S a FP 

Estonia 

Unilever Eesti OU a FP 

Finland 

Suomen Unilever Oy a FP 

France 

99 Amora Maille Société Industrielle S.A.S. d F 

99 Bestfoods France Société Industrielle S.A. d F 

99 Cogesal-Miko S.A.S. d F 

99 FRALIB Sourcing Unit S.A. d F 

99 Frigedoc S.A. d F 

99 Lever Fabergé France S.A. d P 

99 Unilever Bestfoods France S.A. d F 

99 Unilever France S.A.S. d H 

Germany 

Langnese-Iglo GmbH d F 

Lever Fabergé Deutschland GmbH d P 

Monda Beteiligungs GmbH d F 

Monda IPR GmbH & Co. OHG (1) d F 

Monda Vermögensverwaltungs 

GmbH & Co. OHG (1) d F 

Pfanni GmbH & Co. OHG Stavenhagen (1) d F 

PW Vermietungs GmbH & Co. KG (1) d F 

UBG Vermietungs GmbH & Co. OHG (1) d H 

Unilever Bestfoods Deutschland GmbH d F 

Unilever Beteiligungs GmbH d H 

Unilever Deutschland GmbH d H 

Greece 

67 ‘Elais’ Oleaginous Products S.A. a F 

Unilever Hellas A.E.B.E. a FP 

Hungary 

Unilever Magyarország Kft a FP 

Ireland 

Lever Fabergé Ireland Ltd. b P 

Unilever Bestfoods (Ireland) Limited. b F 

Italy 

Lever Fabergé Italia Srl d P 

Sagit Srl d F 

Unilever Bestfoods Italia Srl d F 

Unilever Italia SpA d H 

Latvia 

Unilever Baltic LLC a FP 

Lithuania 

Unilever Lietuva UAB a FP 

(1) Due to the inclusion of the partnerships in the consolidated 

group accounts of Unilever, para 264(b) of the German trade law 

grants an exemption from the duty to prepare individual statutory 

financial statements and management reports in accordance 

with the requirements for limited liability companies and to have 

these audited.




Principal group companies continued 


The Netherlands 

Iglo Mora Groep B.V. a F 

Lever Fabergé Nederland B.V. a P 

Mixhold B.V. d H 

Unilever Bestfoods Nederland B.V. d F 

Unilever N.V. (2) H 

Unilever Nederland B.V. a H 

Norway 

Unilever Bestfoods A/S a F 

Poland 

99 Unilever Polska S.A. d FP 

Portugal 

74 IgloOlá-Distribuição de Gelados e de 

Ultracongelados Lda. a F 

60 LeverElida-Distribuição de Produtos de 

Limpeza e Higiene Pessoal Lda. a P 

Unilever Bestfoods Portugal-Produtos 

Alimentares S.A. d F 

Romania 

99 Unilever South Central Europe S.R.L a FP 

Russia 

Unilever SNG a FP 

Slovakia 

Unilever Slovensko spol. sr. o. a FP 

Slovenia 

Unilever Slovenia d.o.o. a FP 

Spain 

Unilever España S.A. a HP 

Unilever Foods España S.A. a F 

Sweden 

GB Glace AB a F 

Lever Fabergé AB a P 

Unilever Bestfoods AB a F 

Switzerland 

Knorr Nährmittel AG d H 

Lever Fabergé GmbH d P 

Meina Holding AG d H 

51 Lusso Foods AG d F 

Sunlight AG a O 

Unilever Bestfoods Schweiz GmbH d F 

Unilever Cosmetics International S.A. a P 

Unilever (Schweiz) AG a O 

Unilever Swiss Holdings AG a H 

Unilever Raw Materials AG a F 

Ukraine 

Unilever Ukraine LLCM a FP 

(2) See ‘Basis of consolidation’ on page 66. 

(3) A division of Conopco, Inc., a subsidiary of 

Unilever United States, Inc. 



United Kingdom 

Ben & Jerry’s Homemade Ltd. e F 

Birds Eye Wall’s Ltd. e F 

Lever Fabergé Ltd. b P 

Lipton Ltd. b F 

Slim •Fast Foods Ltd. b F 

Unilever Bestfoods UK Ltd. e F 

Unilever Cosmetics International (UK) Ltd. b P 

Unilever PLC (2) H 

Unilever UK Central Resources Ltd. b O 

Unilever UK Holdings Ltd. b H 

Unilever UK & CN Holdings Ltd. e H 

% North America Ownership Activity 

Canada 

Bestfoods Canada Inc. e F 

Bestfoods Holdings Inc., Canada e H 

U L Canada Inc. e FP 

United States of America 

Ben & Jerry’s Homemade Inc. c F 

Good Humor-Breyers Ice Cream (3) c F 

Slim•Fast Foods Company (3) c F 

Unilever Bestfoods (3) c F 

Unilever Bestfoods Foodsolutions (3) c F 

Unilever Capital Corporation c O 

Unilever Cosmetics International (3) c P 

Unilever Home & Personal Care (3) c P 

Unilever Ice Cream (3) c F 

Unilever United States, Inc. c H 

% Africa, Middle East and Turkey Ownership Activity 

Algeria 

60 Unilever Algérie SPA a P 

Côte d’Ivoire 

90 Unilever Côte d’Ivoire b FPO 

Democratic Republic of Congo 

76 Plantations et Huileries du Congo s.a.r.l. a O 

Dubai 

Unilever Gulf Free Zone Establishment b FP 

Egypt 

60 Fine Foods Products SAE b F 

60 Fine Tea Company SAE b F 

60 Lever Egypt SAE b P 

Ethiopia 

72 Unilever Ethiopia Private Limited Company b FP 

Ghana 

67 Unilever Ghana Ltd. b FPO 

Israel 

51 Glidat Strauss Ltd. b F 

59 Unilever Bestfoods Israel Ltd. c F 

Lever Israel Ltd. b P 

Kenya 

Bestfoods Kenya Ltd. b F 

88 Brooke Bond Kenya Ltd. b O 

Unilever Kenya Ltd. b FP 

Malawi 

Lever Brothers (Malawi) Ltd. b FP 


130 Principal group companies and fixed investments 




% Africa, Middle East and Turkey contd Ownership Activity 

Morocco 

Knorr Bestfoods Morocco S.A. a F 

Unilever Maghreb S.A. a P 

Nigeria 

50 Unilever Nigeria Plc b FP 

Saudi Arabia 

49 Binzagr Lever Ltd.* b FP 

49 Lever Arabia Ltd.* b P 

South Africa 

59 Unilever Bestfoods Robertsons (Pty) Limited c F 

Unilever South Africa (Pty) Limited b FP 

Tanzania 

Brooke Bond Tanzania Ltd. b O 

Tunisia 

99 CODEPAR Tunisia a P 

52 Maghreb Alimentation S.A. a F 

99 Société de Produits Chimiques et Détergents a P 

Turkey 

99 Lever Elida Temizlik ve Kis,isel Bakım Ürünleri 

Sanayi ve Ticaret A.S,. a P 

Unilever Sanayi ve Ticaret Türk A.S,. a F 

Unilever Tüketim Ürünleri Satıs, Pazarlama 

ve Ticaret A.S,. a FP 

Uganda 

Unilever Uganda Ltd. b FP 

Zambia 

Lever Brothers Zambia Limited b FP 

Zimbabwe 

Lever Brothers (Private) Ltd. b FP 

% Asia and Pacific Ownership Activity 

Australia 

Unilever Australia Ltd. b FP 

Bangladesh 

61 Lever Brothers Bangladesh Ltd. b FP 

China 

80 Bestfoods Guangzhou Foods Ltd. c F 

Unilever (China) Ltd. a H 

77 Unilever Company Ltd. a P 

Unilever Foods (China) Company Ltd. a F 

Unilever Services (Shanghai) Company Limited a P 

Wall’s (China) Company Ltd. a F 

China S.A.R. 

Unilever Hong Kong Ltd. a FP 

India 

25 Hindlever Chemicals Ltd. f O 

51 Hindustan Lever Ltd. f FPO 

Indonesia 

85 P.T. Unilever Indonesia Tbk a FP 

Japan 

Nippon Lever KK a FP 


% Asia Pacific continued Ownership Activity 

Malaysia 

Pamol Plantations Sdn. Bhd. b O 

70 Unilever (Malaysia) Holdings Sdn. Bhd. b FP 

New Zealand 

Unilever New Zealand Ltd. b FP 

Pakistan 

67 Unilever Pakistan Ltd. b FP 

Philippines 

Unilever Philippines, Inc. a FP 

Singapore 

Unilever Singapore Private Ltd. b FP 

South Korea 

Unilever Korea Chusik Hoesa a FP 

Sri Lanka 

Unilever Ceylon Ltd. b FPO 

Taiwan 

Unilever Taiwan Ltd. a FP 

Thailand 

Unilever Thai Trading Ltd. a FP 

Vietnam 

Elida P/S a P 

66 Lever Vietnam a P 

Unilever Bestfoods Vietnam a F 

% Latin America Ownership Activity 

Argentina 

Refinerias de Maiz S.A.I.C.F. d F 

Unilever de Argentina S.A. d FP 

Bolivia 

Quimbol Lever S.A. a FP 

Brazil 

Mavibel Brasil Ltda. d H 

Unilever Brasil Ltda. d FP 

Unilever Bestfoods Brasil Ltda. d F 

Chile 

Unilever Chile Ltda. d FP 

Colombia 

Disa S.A. d F 

Unilever Andina Colombia S.A. d FP 

60 Varela S.A. d P 

Costa Rica 

Productos Agroindustriales del Caribe S.A. c F 

Unilever de Centroamerica S.A. a FP 

Dominican Republic 

70 Knorr Alimentaria S.A. a F 

Unilever Dominicana S.A. a P 

Ecuador 

Unilever Andina – Ecuador S.A. a FP 

* These companies are consolidated on the basis that Unilever is 

able to exercise a dominant influence.





% Latin America continued Ownership Activity 

El Salvador 


Guatemala 


Honduras 


Mexico 

Circulo Esmeralda S.A. de C.V. d F 

Corporativo Unilever de Mexico S.de R.L. de C.V. d H 

Unilever de Mexico S.A. de C.V. d FP 

Netherlands Antilles 

Unilever Becumij N.V. a O 

Nicaragua 


Panama 


Paraguay 

Unilever de Paraguay S.A. a FP 

Peru 

Apromsa S.A. b F 

99 Industrias Pacocha S.A. a FP 

Trinidad & Tobago 

50 Lever Brothers West Indies Ltd. b FP 

Uruguay 

Bestfoods Uruguay S.A. c F 

Sudy Lever S.A. a FP 

Venezuela 

Aliven S.A. b F 

Unilever Andina S.A. a FP 


Principal fixed investments 

Joint ventures 


Portugal 

40 FIMA/VG-Distribuição de Produtos 

Alimentares, Lda. a F 

% North America 


50 The Pepsi/Lipton Partnership c F 

% Asia and Pacific 

China S.A.R. 

50 CPC/AJI (Hong Kong) Ltd. c F 

Malaysia 

50 CPC/AJI (Malaysia) Sdn. Bhd. c F 

Philippines 

50 California Manufacturing Company Inc. c F 

Singapore 

50 CPC/AJI (Singapore) Pte Ltd. c F 

Taiwan 

50 CPC/AJI (Taiwan) Ltd. c F 

Thailand 

50 CPC/AJI (Thailand) Ltd. c F 

Associated companies 



33 Langholm Capital Partners b O 

% North America 


33 JohnsonDiversey Holdings Inc a P 


132 Company accounts 

Unilever N.V. 





Fixed assets 



Debtors 20 602 19 374 

Cash at bank and in hand 780 361 

Total current assets 21 382 19 735 


Net current assets 1 473 3 396 


Creditors due after more than one year 5 257 5 883 

Provisions for liabilities and charges 262 296 

Capital and reserves 7 370 4 545 

Called up share capital: 

Preferential share capital 21 130 130 

Ordinary share capital 21 291 291 

421 421 

Share premium account 1 399 1 399 

Profit retained and other reserves 5 550 2 725 


Profit and loss account for the year ended 31 December 



Income from fixed investments after taxation 3 779 2 202 

Other income and expenses 292 (146) 

Profit for the year 4 071 2 056 

Pages 66 to 112 and 128 to 133 contain the notes to the NV company accounts. For the information required by Article 392 of Book 2 of 

the Civil Code in the Netherlands, refer to pages 65 and 133. 

In accordance with Article 402 of Book 2 of the Civil Code in the Netherlands, the accounts of NV have been included in the consolidated 

accounts. The profit and loss account mentions only income from fixed investments after taxation as a separate item. The balance sheet 

includes the proposed profit appropriation. 

The Board of Directors 

4 March 2003



Notes to the company accounts 133 




Shares in group companies 11 008 7 201 

Book value of PLC shares held in 

connection with share options 368 264 

Less NV shares held by group companies (168) (153) 

Other unlisted investments 208 16 



Movement in PLC shares held in 

connection with share options 104 

Movement in NV shares held by 

group companies (14) 

Other unlisted investments 191 

Additions 6 423 

Decrease (2 616) 


11 416 7 328 

Shares in group companies are stated at cost in accordance with 

international accounting practice in various countries, in particular 

the United Kingdom. 

Debtors 



Loans to group companies 19 214 16 607 

Other amounts owed by group companies 1 089 2 570 

Amounts owed by undertakings in which 

the company has a participating interest 1 1 

Other 298 196 

20 602 19 374 

Of which due after more than one year 882 9 

Cash at bank and in hand 



This includes amounts for which repayment 

notice is required of: 187 61 

Creditors 




Bank loans and overdrafts 4 39 


Loans from group companies 1 817 638 

Other amounts owed to group companies 12 304 8 805 

Taxation and social security 238 79 


Dividends 643 601 

Other 162 15 

19 909 16 339 



Provisions for liabilities and charges 



Pension provisions 131 124 

Deferred taxation and other provisions 131 172 

262 296 

Of which due within one year 73 68 

Ordinary share capital 

Shares numbered 1 to 2 400 are held by a subsidiary of NV and 

a subsidiary of PLC, each holding 50%. Additionally, 17 711 169 

€0.51 ordinary shares are held by NV and other group companies. 

Full details are given in note 29 on page 111. 

Share premium account 

The share premium shown in the balance sheet is not available 

for the issue of bonus shares or for repayment without incurring 

withholding tax payable by the company. This is despite the change 

in the Netherlands tax law, as a result of which dividends received 

from 2001 onwards by individual shareholders who are Netherlands 

residents are no longer taxed. 

Profit retained and other reserves 



Profit retained 31 December 6 591 3 508 

Cost of NV shares purchased and held by 

NV and by its subsidiaries (1 041) (783) 

Balance 31 December 5 550 2 725 

Profit retained shown in the company accounts and the notes 

thereto is greater than the amount shown in the consolidated 

balance sheet, mainly because of certain inter-company transactions 

which are eliminated in the consolidated accounts. 

Contingent liabilities 

These are not expected to give rise to any material loss and include 

guarantees given for group and other companies, under which 

amounts outstanding at 31 December were: 



Group companies 8 878 11 033 

Of the above, guaranteed also by PLC 5 864 6 247 


134 Further statutory information 


The rules for profit appropriation in the Articles of 

Association (summary of Article 41) 

The profit for the year is applied firstly to the reserves required 

by law or by the Equalisation Agreement, secondly to cover losses 

of previous years, if any, and thirdly to the reserves deemed 

necessary by the Board of Directors. Dividends due to the holders 

of the Cumulative Preference Shares, including any arrears in such 

dividends, are then paid; if the profit is insufficient for this purpose, 

the amount available is distributed to them in proportion to the 

dividend percentages of their shares. Any profit remaining thereafter 

is at the disposal of the General Meeting. Distributions from this 

remaining profit are made to the holders of the ordinary shares pro 

rata to the nominal amounts of their holdings. The General Meeting 

can only decide to make distributions from reserves on the basis of 

a proposal by the Board and in compliance with the law and the 

Equalisation Agreement. 



Proposed profit appropriation 

Profit for the year 4 071 2 056 

Preference dividends (42) (51) 

Profit at disposal of the Annual General 

Meeting of shareholders 4 029 2 005 

Ordinary dividends (946) (872) 

Profit for the year retained 3 083 1 133 

Profit retained – 1 January 3 508 2 375 

Profit retained – 31 December 6 591 3 508 

Special controlling rights under the Articles of Association 


Auditors 

A resolution will be proposed at the Annual General Meeting on 

7 May 2003 for the reappointment of PricewaterhouseCoopers 

Accountants N.V. as auditors of NV. The present appointment will 

end at the conclusion of the Annual General Meeting. 

Corporate Centre 


Weena 455 

PO Box 760 

3000 DK Rotterdam 

J A A van der Bijl 

S G Williams 

Joint Secretaries of Unilever N.V. 

4 March 2003 




Company accounts 135 

Unilever PLC 

£ million £ million 


Fixed assets 

Goodwill and intangible assets 3 – 



Debtors 

Debtors due within one year 787 2 007 

Debtors due after more than one year 27 – 

Cash and current investments 33 138 

Total current assets 847 2 145 


Net current assets/(liabilities) (1 279) (576) 


Creditors due after more than one year – 763 

Capital and reserves 1 180 1 094 

Called up share capital 21 41 41 

Share premium account 94 94 

Capital redemption reserve 23 11 11 

Profit retained 1 034 948 


All amounts included in capital and reserves are classified as equity as defined under United Kingdom Financial Reporting Standard 4. 

As permitted by Section 230 of the United Kingdom Companies Act 1985, PLC’s profit and loss account does not accompany its 

balance sheet. 

On behalf of the Board of Directors 

N W A FitzGerald Chairman 

A Burgmans Vice-Chairman 

4 March 2003 


136 Notes to the company accounts 


Fixed assets 

Goodwill and Intangibles 




Goodwill – – 

Intangible assets 3 – 


3 – 



Shares in group companies 2 237 2 237 

Book value of PLC shares held in 

connection with share options 219 196 

2 456 2 433 

Shares in group companies 

Shares in group companies are stated at cost or valuation, less 

amounts written off. 

£ million 




Additions 36 

Disposals (36) 


Shares held in connection with share options £ million 



1 January 196 

Additions 55 

Disposals (30) 

Valuation adjustments (2) 


Debtors 




Amounts owed by group companies 720 1 928 

Other 67 79 

787 2 007 


Other 27 – 

Cash and current investments 



This includes amounts for which 

repayment notice is required 33 138 

Creditors 




Amounts owed to group companies 752 1 349 

Bonds and other loans 915 1 043 

Taxation and social security 135 34 

Dividends 311 284 

Other 9 2 


2 126 2 721 


Bonds and other loans – 763 

Profit retained 



1 January 948 935 

Profit for the year 546 430 

Dividends on ordinary and deferred shares (460) (417) 

31 December 1 034 948 

Contingent liabilities 



These are not expected to give rise to any 

material loss and include guarantees given 

for group companies, under which amounts 

outstanding at 31 December were: 8 077 8 526 

Of the above, guaranteed also by NV 3 816 3 817 

Remuneration of auditors 



Parent company audit fee 1.6 1.4 

Payments by the parent company for 

non-audit services provided by 

PricewaterhouseCoopers United Kingdom (a) 9.3 17.3 

(a) See also note 2 on page 77. 

Profit appropriation 



The proposed appropriation of the profit 

of PLC is as follows: 

Interim and recommended final dividends 460 417 

Profit for the year retained 86 13

Further statutory information and other information 137 


Employee involvement and communication 

Unilever’s UK companies maintain formal processes to inform, 

consult and involve employees and their representatives. Most of 

the United Kingdom sites are accredited to the Investors in People 

standard. The European Foundation for Quality Management’s 

model for measuring Business Excellence, with its strong emphasis 

on maximising the potential of employees, is also widely employed. 

A European Works Council, embracing employee and management 

representatives from 15 countries of Western Europe, has been 

in existence for several years and provides a forum for discussing 

issues that extend across national boundaries. 

The directors’ reports of the United Kingdom group companies 

contain more details about how they have communicated with 

their employees during 2002. 

Equal opportunities and diversity 

The heads of all operating companies and units in the UK 

have committed their businesses to achieving greater diversity. 

Every Unilever company in the United Kingdom has an equal 

opportunities policy and actively pursues equality of opportunity 

for all employees. 

The Company has committed itself to carrying out an Equal Pay 

Audit, and Richard Greenhalgh, Chairman of Unilever UK, is an 

Equal Pay Champion by the UK Government. The Company is also 

reviewing ways in which diversity in recruitment and selection may 

be further improved. 

A major initiative is underway to increase the take-up of 

flexible working options where appropriate for business and 

employee needs. 

The Company was delighted to be awarded one of the 

Government’s first ‘Castle awards’ recognising its achievements in 

providing equality of opportunity for women. 

Charitable and other contributions 

During the year UK group companies made a total contribution to 

the community of £9 million, based on the London Benchmarking 

Group Model. 

No contribution was made for political purposes. 

Supplier payment policies 

Individual operating companies are responsible for agreeing the 

terms and conditions under which business transactions with their 

suppliers are conducted. The directors’ reports of the United 

Kingdom operating companies give information about their 

supplier payment policies as required by the United Kingdom 

Companies Act 1985. PLC, as a holding company, does not 

itself make any relevant payments in this respect. 


Auditors 

Following the transfer of the business of the PLC auditors 

PricewaterhouseCoopers to a Limited Liability Partnership (LLP) 

from 1 January 2003, PricewaterhouseCoopers resigned on 

11 February 2003 and the PLC directors appointed its successor, 

PricewaterhouseCoopers LLP as auditors. A resolution will be 

proposed at the Annual General Meeting on 7 May 2003 for the 

re-appointment of PricewaterhouseCoopers LLP as auditors of PLC. 

The present appointment will end at the conclusion of the Annual 

General Meeting. 

Authority to purchase own shares 

At the Annual General Meeting of PLC held on 8 May 2002, 

authority was given pursuant to Article 64 of the PLC Articles of 

Association to make market purchases of PLC ordinary shares of 

1.4p each, to a maximum of 290 million shares. This authority will 

expire on 7 May 2003. The Company has not exercised this 

authority during the year. 

Details of shares purchased by employee share trusts and Unilever 

group companies to satisfy options granted under PLC’s employee 

share schemes are given in the Remuneration report on page 55 

and in note 29 to the consolidated accounts on page 111. 

Directors report of PLC 

For the purposes of Section 234 of the Companies Act 1985, 

the Directors Report of Unilever PLC for the year ended 

31 December 2002 comprises this page and the information 

contained in the Report of the Directors on pages 2 to 61, 

Dividends on page 147 and Principal group companies and 

fixed investments on pages 128 to 131. 

Corporate Centre 


PO Box 68 Unilever House 

Blackfriars 

London EC4P 4BQ 

Unilever PLC Registered Office 

Port Sunlight 

Wirral 

Merseyside CH62 4UJ 

Unilever PLC Registrars 

Lloyds TSB Registrars 

The Causeway 

Worthing 

West Sussex BN99 6DA 

By Order of the Board 

J A A van der Bijl 

S G Williams 

Joint Secretaries of Unilever PLC 

4 March 2003 


138 Control of Unilever 

Share capital 

NV’s issued share capital on 31 December 2002 was made 

up of: 

• €291 503 709 split into 571 575 900 ordinary shares 

of €0.51 each 

• €1 089 072 split into 2 400 ordinary shares numbered 

1 to 2 400, known as special shares 

• €130 854 115 split into several classes of cumulative 

preference shares. 

PLC’s issued share capital on 31 December 2002 was made 

up of: 

• £40 760 420 split into 2 911 458 580 ordinary shares 

of 1.4p each 

• £100 000 of deferred stock. 

For NV share capital, the euro amounts quoted in this 

document are representations in euros on the basis of 

Article 67c of Book 2 of the Civil Code in the Netherlands, 

rounded to two decimal places, of underlying amounts in 

Dutch guilders, which have not been converted into euros 

in NV’s Articles of Association or in the Equalisation 

Agreement. Until conversion formally takes place by 

amendment of the Articles of Association, the entitlements 

to dividends and voting rights are based on the underlying 

Dutch guilder amounts. 

Unity of management 

In order to ensure unity of management, NV and PLC have 

the same directors. We achieve this through our nomination 

procedure. Only the holders of NV’s special shares can 

nominate candidates for election to the NV Board, and only 

the holders of PLC’s deferred stock can nominate candidates 

for election to the PLC Board. The current directors, who 

have agreed to act on the recommendations of the 

Nomination Committee, can ensure that both NV and PLC 

shareholders are presented with the same candidates for 

election as directors, because the joint holders of both the 

special shares and the deferred stock are NV Elma and 

United Holdings Limited, which are subsidiaries of NV 

and PLC. 

NV and PLC both act as directors of NV Elma and of 

United Holdings Limited. The Chairmen of NV and PLC 

are additional directors of United Holdings Limited. 

Equalisation Agreement 

To ensure that NV and PLC operate for all practical purposes 

as a single company, we have an Equalisation Agreement. 

Under the Equalisation Agreement NV and PLC adopt the 

same financial periods and accounting policies. Neither 

company can issue or reduce capital without the consent 

of the other. If one company had losses, or was unable to 

pay its preference dividends, we would make up the loss or 

shortfall out of: 

• the current profits of the other company (after it has paid 

its own preference shareholders) 


•then its own free reserves 

•then the free reserves of the other company. 

If either company could not pay its ordinary dividends, we 

would follow the same procedure, except that the current 

profits of the other company would only be used after it 

had paid its own ordinary shareholders and if the directors 

thought it appropriate. 

So far NV and PLC have always been able to pay their own 

dividends, so we have never had to follow this procedure. 

If we did, the payment from one company to the other 

would be subject to any United Kingdom and Netherlands 

tax and exchange control laws applicable at that time. 

The Equalisation Agreement also makes the position of the 

shareholders of both companies, as far as possible, the same 

as if they held shares in a single company. To make this 

possible we compare the ordinary share capital of the two 

companies in units: a unit made up of €5.445 nominal of 

NV’s ordinary capital carries the same weight as a unit made 

up of £1 nominal of PLC’s ordinary capital. For every unit 

(€5.445) you have of NV you have the same rights and 

benefits as the owner of a unit (£1) of PLC. NV’s ordinary 

shares currently each have a nominal value of €0.51, 

and PLC’s share capital is divided into ordinary shares of 

1.4p each. This means that a €5.445 unit of NV is made 

up of 10.7 NV ordinary shares of €0.51 each and a £1 unit 

of PLC is made up of 71.4 PLC ordinary shares of 1.4p each. 

Consequently, one NV ordinary share equates to 

6.67 ordinary shares of PLC. 

When we pay ordinary dividends we use this formula. 

On the same day NV and PLC allocate funds for the dividend 

from their parts of our current profits and free reserves. 

We pay the same amount on each NV share as on 6.67 PLC 

shares calculated at the relevant exchange rate. For interim 

dividends this exchange rate is the average rate for the 

quarter before we declare the dividend. For final dividends 

it is the average rate for the year. In arriving at the equalised 

amount we include any tax payable by the company in 

respect of the dividend, but calculate it before any tax 

deductible by the company from the dividend. 

In principle, issues of bonus shares and rights offerings 

can only be made in ordinary shares. Again we would 

ensure that shareholders of NV and PLC received shares 

in equal proportions, using the ratio of €5.445 NV nominal 

share capital to £1 PLC nominal share capital. The 

subscription price for one new NV share would have to be 

the same, at the prevailing exchange rate, as the price for 

6.67 new PLC shares. 

Under the Equalisation Agreement (as amended in 1981) 

the two companies are permitted to pay different dividends 

in the following exceptional circumstances: 

• if the average annual sterling/euro exchange rate changed 

so substantially from one year to the next that to pay 

equal dividends at the current exchange rates, either 

NV or PLC would have to pay a dividend that was 

unreasonable (ie, substantially larger or smaller in its own 

currency than the dividend it paid in the previous year).

• the governments of the Netherlands or the United 

Kingdom could in some circumstances place restrictions 

on the proportion of a company’s profits which can be 

paid out as dividends; this could mean that in order to pay 

equal dividends one company would have to pay out an 

amount which would breach the limitations in place at the 

time, or that the other company would have to pay a 

smaller dividend. 

In either of these rare cases, NV and PLC could pay different 

amounts of dividend if the Boards thought it appropriate. 

The company paying less than the equalised dividend 

would put the difference between the dividends into a 

reserve: an equalisation reserve in the case of exchange 

rate fluctuations, or a dividend reserve in the case of a 

government restriction. The reserves would be paid out to 

its shareholders when it became possible or reasonable to 

do so, which would ensure that the shareholders of both 

companies would ultimately be treated the same. 

If both companies go into liquidation, NV and PLC will each 

use any funds available for shareholders to pay the prior 

claims of their own preference shareholders. Then they will 

use any surplus to pay each other’s preference shareholders, 

if necessary. After these claims have been met, they will 

pay out any equalisation or dividend reserve to their own 

shareholders before pooling the remaining surplus. 

This will be distributed to the ordinary shareholders of both 

companies, once again on the basis that the owner of 

€5.445 nominal NV ordinary share capital will get the same 

as the owner of £1 nominal PLC ordinary share capital. If 

one company goes into liquidation, we will apply the same 

principles as if both had gone into liquidation simultaneously. 

In addition to the Equalisation Agreement, NV and PLC have 

agreed to follow common policies, to exchange all relevant 

business information, and to ensure that all group 

companies act accordingly. They aim to co-operate in all 

areas, including in the purchase of raw materials and the 

exchange and use of technical, financial and commercial 

information, secret or patented processes and trade marks. 

More information about our constitutional documents 

Under the Articles of Association of NV and the 

Memorandum and Articles of Association of PLC both 

companies are required to carry out the Equalisation 

Agreement with the other. Both documents state that the 

agreement cannot be changed or terminated without the 

approval of both sets of shareholders. 

For NV the necessary approval is as follows: 

• at least one half of the total issued ordinary capital must 

be represented at an ordinary shareholders meeting, 

where the majority must vote in favour; and 

• (if they would be disadvantaged or the agreement is to 

be terminated), at least two thirds of the total issued 

preference share capital must be represented at a 

preference shareholders meeting, where at least three 

quarters must vote in favour. 



For PLC, the necessary approval must be given by: 

• the holders of a majority of all issued shares voting 

at a general meeting; and 

• the holders of the ordinary shares, either by three 

quarters in writing, or by three quarters voting at a 

general meeting where the majority of the ordinary 

shares in issue are represented. 

The Articles of NV establish that any payment under the 

Equalisation Agreement will be credited or debited to the 

profit and loss account for the financial year in question. 

The PLC Articles state that the Board must carry out the 

Equalisation Agreement and that the provisions of the 

Articles are subject to it. 

We are advised by Counsel that these provisions oblige 

the Boards to carry out the Equalisation Agreement, unless 

it is amended or terminated with the approval of the 

shareholders of both companies. If the Boards fail to enforce 

the agreement shareholders can compel them to do so 

under Netherlands and United Kingdom law. 

General Meetings and voting rights 

General Meetings of shareholders of NV and PLC are held 

at times and places decided by the Boards. NV meetings 

are held in Rotterdam and PLC meetings are held in London. 

To be entitled to attend and vote at NV General Meetings 

you must be a shareholder on the Record Date, which may 

be set by the directors and must be not more than 7 days 

before the meeting. In addition you must, within the time 

specified in the Notice calling the meeting, either 

• (if you have registered shares) advise NV in writing that 

you intend to attend; or 

• (if you have bearer shares) deposit your share certificates 

at the place specified in the Notice. 

You can vote in person or by proxy, and you can cast 

one vote for each €0.05 nominal amount you hold of 

NV preference shares, ordinary shares or New York registry 

shares. NV Elma and United Holdings Limited, the holders of 

the special shares, and other group companies of NV which 

hold preference or ordinary shares, are not permitted to 

vote, by law. 

For information on the rights of Nedamtrust certificate 

holders see page 141. 

To be able to vote by proxy at PLC General Meetings you 

must lodge your Form of Appointment of Proxy with PLC’s 

Registrars 48 hours before the meeting, either in paper 

or electronic format. You can cast one vote for each PLC 

ordinary 1.4p share you hold. United Holdings Limited, 

which owns half of the deferred stock, is not permitted 

to vote at General Meetings. 

Shareholder information

140 Control of Unilever 

If you are a holder of NV New York shares or PLC American 

Depository Receipts of shares, you will receive a proxy form 

enabling you to authorise and instruct ABN AMRO N.V. or 

JPMorgan Chase Bank respectively to vote on your behalf 

at the shareholders’ meeting of NV or PLC. 

Resolutions are usually adopted at NV and PLC shareholder 

meetings by an absolute majority of votes cast, unless there 

are other requirements under the law or the NV or PLC 

Articles. There are special requirements for resolutions 

relating to the alteration of NV or PLC’s Articles of 

Association or the Equalisation Agreement, or to the 

liquidation of NV or PLC. 

According to NV’s Articles, shareholders who together 

represent at least 10% of the issued capital of NV can 

propose resolutions for inclusion in the agenda of any 

General Meeting. They can also requisition Extraordinary 

General Meetings to deal with specific resolutions. However, 

following the recommendations of the Committee of 

Corporate Governance, the board of directors has confirmed 

that shareholders may propose resolutions if: 

• they individually or together hold 1% of the issued 

capital; or 

• they hold shares or depository receipts worth at least 

€226 890. 

They must submit the request at least 60 days before the 

date of the General Meeting, and it will be honoured unless, 

in the opinion of the Board of Directors, it is against the 

interests of the company. 

Under United Kingdom company law, 

• shareholders who together hold shares representing 

at least 5% of the total voting rights of PLC; or 

• at least 100 shareholders who hold on average 

£100 each in nominal value of PLC capital 

can require PLC to propose a resolution at a 

General Meeting. 

There are no limitations on the right to hold NV and 

PLC shares. 

Directors 

The directors of NV are able to vote on transactions in which 

they are materially interested so long as they are acting in 

good faith. In general PLC directors cannot vote in respect 

of contracts in which they know they are materially 

interested, unless, for example, their interest is shared with 

other shareholders and employees. 

The borrowing powers of NV directors are not limited by 

the Articles of Association of NV. PLC directors have the 

power to borrow up to three times the Adjusted Capital 

and Reserves of PLC without the sanction of an 

ordinary resolution. 


The Articles of Association of NV and PLC do not require 

directors of NV, or full-time employed directors of PLC, to 

hold shares in NV or PLC. Directors of PLC who are not 

employed full-time by NV or PLC must hold either £1 000 

in nominal value of PLC ordinary shares, or €5 445 in 

nominal value of NV ordinary shares. The remuneration 

arrangements applicable to directors as employees contain 

requirements for the holding and retention of shares (see 

Remuneration report on page 55). 

Mutual guarantee of borrowings 

There is a contractual arrangement between NV and PLC 

under which each will, if asked by the other, guarantee the 

borrowings of the other. They can also agree jointly to 

guarantee the borrowings of their subsidiaries. We use this 

arrangement, as a matter of financial policy, for certain 

significant public borrowings. The arrangements enable 

lenders to rely on our combined financial strength. 

Combined earnings per share 

Because of the Equalisation Agreement and the other 

arrangements between NV and PLC we calculate combined 

earnings per share for NV and PLC (see note 7 on pages 79 

and 80). 

We base the calculation on the average amount of NV and 

PLC’s ordinary capital in issue during the year. For the main 

calculation we exclude shares which have been purchased 

to satisfy employee share options. We also calculate a 

diluted earnings per share figure, where we include these 

shares, as well as certain PLC shares which may be issued 

in 2038 under the arrangements for the variation of the 

Leverhulme Trust (see below). 

The process by which we calculate earnings per share 

is as follows. First we convert the average capital of NV 

and PLC into units using the formula contained in the 

Equalisation Agreement: one unit equals 10.7 NV shares 

or 71.4 PLC shares. We add these together to find the total 

number of units of combined share capital. Then the amount 

of net profit in euros which is attributable to ordinary capital 

is divided by this total number of units to find the amount 

per combined unit. Finally we convert the combined unit 

back into NV and PLC ordinary shares, to show the amount 

per one share of each. The amount per unit is divided by 

10.7 to find the amount per €0.51 share, and by 71.4 to 

find the amount per 1.4p share. 

Despite the Equalisation Agreement, NV and PLC are 

independent corporations, and are subject to different 

laws and regulations governing dividend payments in the 

Netherlands and the United Kingdom. We assume in 

our combined earnings per share calculation that both 

companies will be able to pay their dividends out of their 

part of our profits. This has always been the case in the 

past, but if we did have to make a payment from one to 

the other it could result in additional taxes, and reduce 

our combined earnings per share.

Leverhulme Trust 

The first Viscount Leverhulme was the founder of the 

company which became PLC. When he died in 1925, 

he left in his will a large number of PLC shares in various 

trusts. The High Court of Justice in England varied these trusts 

in 1983, and established two independent charitable trusts: 

• the Leverhulme Trust, which awards grants for research 

and education, and 

• the Leverhulme Trade Charities Trust, for the benefit of 

members of trades which the first Viscount considered 

to have particular associations with the business. 

The major assets of both these trusts are PLC 

ordinary shares. 

When the will trusts were varied in 1983 the interests of 

the beneficiaries of his will were also preserved. Four classes 

of special shares were created in Margarine Union (1930) 

Limited, a subsidiary of PLC. One of these classes can be 

converted at the end of the year 2038, into a maximum 

of 157 500 000 PLC ordinary shares of 1.4p each. These 

convertible shares replicate the rights which the descendants 

of the Viscount would have had under his will. This class of 

the special shares only has a right to dividends in specified 

circumstances, and no dividends have yet been paid. 

PLC guarantees the dividend and conversion rights of 

the special shares. 

The first Viscount wanted the trustees of the trusts he 

established to be directors of PLC. On 28 February 2003 the 

trustees of both the charitable trusts and the will trust were: 

• Sir Michael Angus – former Chairman of PLC 

• Sir Michael Perry – former Chairman of PLC 

• Mr N W A FitzGerald – Chairman of PLC 

• Dr J I W Anderson – former director 

• Dr A S Ganguly – former director 

On 28 February 2003, in their capacity as trustees of the 

two charitable trusts, they held approximately 5.38% of 

PLC’s issued ordinary capital. 

N.V. Nederlandsch Administratie- en Trustkantoor 

(Nedamtrust) 

Nedamtrust is an independent trust company under the 

Netherlands’ law, which has an agreement with NV to issue 

depositary receipts against NV shares. We do not control 

Nedamtrust – it is a wholly owned subsidiary of N.V. 

Algemeen Nederlands Trustkantoor ANT (ANT). Five Dutch 

financial institutions hold 45% of ANT’s shares between 

them – they have between 5% and 10% each, and 

the rest of its shares are owned by a large number of 

individual shareholders. 

As part of its corporate objects Nedamtrust is able to: 

• issue depositary receipts; 

• carry out administration for the shares which underlie 

depositary receipts it has issued; and 

• exercise voting rights for these underlying shares. 



The depositary receipts issued by Nedamtrust against 

NV shares are known as Nedamtrust certificates. They are 

in bearer form, and are traded and quoted on the Euronext 

Stock Exchange and other European stock exchanges. 

Nedamtrust has issued certificates for NV’s ordinary and 

7% cumulative preference shares, and almost all the NV 

shares traded and quoted in Europe are in the form of these 

certificates. The exception is that there are no certificates for 

NV’s 4%, 6% and €0.05 cumulative preference shares. 

If you hold Nedamtrust certificates you can attend or 

appoint a proxy at NV shareholders’ meetings. If you wish 

to vote at a meeting, on your request Nedamtrust will give 

you a power of attorney to vote. If you hold Nedamtrust 

certificates with a bank or broker in the Netherlands and 

have notified the Shareholders Communication Channel 

(see page 45), you will receive a proxy form enabling you 

to authorise and instruct Nedamtrust to vote at the NV 

shareholders’ meeting on your behalf. Nedamtrust is 

obliged to follow these instructions. 

For shares for which Nedamtrust does not receive 

instructions, Nedamtrust’s Board decides on the best way 

to vote the NV ordinary and preference shares it holds at 

shareholders’ meetings. Trust companies in the Netherlands 

will not usually vote to influence the operations of 

companies, and in the past Nedamtrust has always followed 

this policy. However, if a change to shareholders’ rights is 

proposed Nedamtrust will let shareholders know if it intends 

to vote, at least 14 days in advance if possible. It will do this 

by advertising in the press, but it will not necessarily say 

which way it is planning to vote. 

As a holder of Nedamtrust certificates you can exchange 

your Nedamtrust certificate at any time for the underlying 

ordinary or preference share (or vice versa). 

Hitherto the majority of votes cast by ordinary and 

preference shareholders at NV meetings have been cast 

by Nedamtrust. 

Nedamtrust’s NV shareholding fluctuates daily – its holdings 

on 28 February 2003 were: 

•Ordinary shares of €0.51: 471 163 741 (82.43%) 

• 7% Cumulative Preference Shares of €453.78: 

9 820 (33.86%) 


6 (0.00%) 


23 (0.00%) 

Material modifications to the rights of security holders 

On 10 May 1999 the share capitals of NV and PLC were 

each consolidated (see notes to NV and PLC Dividends tables 

on page 147). Otherwise there have been no material 

modifications to the rights of security holders. 


142 Analysis of shareholding 

Significant shareholders of NV 

As far as we are aware the only holders of more than 5% of any class of NV shares (apart from Nedamtrust, see page 141) 

are Nationale Nederlanden N.V. and Aegon Levensverzekering N.V. The voting rights of such shareholders are the same as 

for other holders of the class of share indicated. Details of such holdings on 28 February 2003 are as follows: 

Nationale Nederlanden N.V. 

• 13 709 019 (2.40%) ordinary shares (€6 967 387) 

• 20 670 (71.26%) 7% Cumulative Preference Shares (€9 377 595) 



• 21 013 355 (9.94%) 5 euro cents Cumulative Preference Shares (€953 545) 

Aegon Levensverzekering N.V. 

• 458 560 (0.08%) ordinary shares (€233 056) 

•4 998 (17.23%) 7% Cumulative Preference Shares (€2 266 768) 



Some of the above holdings are in the form of depositary receipts against NV shares issued by Nedamtrust (see page 141). 

There have been no material changes to the holdings of significant shareholders of NV during the three years up to and 

including 2002. 

Significant shareholders of PLC 

The following table gives details of shareholders who held more than 3% of PLC’s shares or deferred stock on 28 February 

2003. The voting rights of such shareholders are the same as for other holders of the class of share indicated. We take this 

information from the register we hold under section 211 of the UK Companies Act 1985. 

Number of Approximate 

Title of class Name of holder shares held % held 

Deferred Stock Naamlooze Vennootschap Elma £50 000 50 

United Holdings Limited £50 000 50 

Ordinary shares Trustees of the Leverhulme Trust and the 

Leverhulme Trade Charities Trust 156 815 034 5 

The Capital Group Companies, Inc. 145 115 954 4 

Fidelity Management and Research Company 87 795 464 3 

The holding by The Capital Group Companies, Inc. is on behalf of affiliated investment management companies and that of 

Fidelity Management and Research Company is on behalf of FMR Corp. and its direct and indirect subsidiaries and Fidelity 

International Limited (FIL) and its direct and indirect subsidiaries. These holdings were first notified to PLC in November 2000 

and September 2002 respectively. In September 2002 Brandes Investment Partners, which had held 7% in 2000, 6% in 2001 

and a reducing percentage during 2002, ceased to be a significant shareholder of PLC. In May 2000 the Prudential 

Corporation plc ceased to be a significant shareholder of PLC. Otherwise, there have been no changes to the holdings of 

significant shareholders of PLC during the three years up to and including 2002. 

Analysis of PLC registered holdings 

At 31 December 2002 PLC had 95 424 ordinary shareholdings. 

The following table analyses the registered holdings of PLC’s 1.4p ordinary shares at 31 December 2002: 

Number Total 

Number of shares of holdings % shares held % 

1 – 1 000 34 689 36.35 19 324 029 0.67 

1 001 – 2 500 27 247 28.55 45 212 563 1.55 

2 501 – 5 000 16 019 16.79 57 395 093 1.97 

5 001 – 10 000 9 594 10.05 67 603 418 2.32 

10 001 – 25 000 4 970 5.21 74 898 667 2.57 

25 001 – 50 000 1 130 1.18 39 066 620 1.34 

50 001 – 100 000 597 0.63 43 007 387 1.48 

100 001 – 1 000 000 863 0.91 275 360 264 9.46 

Over 1 000 000 315 0.33 2 289 590 539 78.64 


95 424 100.00 2 911 458 580 100.00


Under the Dutch External Financial Relations Act of 

28 May 1980 the Government, the Minister of Finance 

and the Central Bank of Netherlands are all authorised to 

issue regulations relating to financial transactions involving 

Dutch residents, if a non-Dutch resident is also involved, 

or if the transactions are conducted in a foreign currency. 

If regulations are issued in the future, we could be in 

need of a licence for this type of transaction. To date 

no regulations of this type have been issued. 

The principal trading markets upon which Unilever shares 

are listed are the Euronext Stock Exchange for NV ordinary 

shares and the London Stock Exchange for PLC ordinary 

shares. NV ordinary shares trade in the form of Nedamtrust 

Certificates and almost all the shares are in bearer form. 

PLC ordinary shares are all in registered form. 

In the United States, NV ordinary shares in registered form 

and PLC American Depositary Receipts, representing four 

PLC ordinary shares, are traded on the New York Stock 

Exchange. JPMorgan Chase Bank of New York acts for 

NV and PLC as issuer, transfer agent and, in respect of 

the American Depositary Receipts, depositary. 

The NV ordinary shares are also listed on the stock 

exchanges in London, France, Germany and Switzerland. 

These shares were also listed in Belgium until 31 December 

2002 and in Luxembourg until 24 January 2003. 

At 28 February 2003 there were 7 963 registered holders 

of NV ordinary shares and 901 registered holders of PLC 

American Depositary Receipts in the United States. We 

estimate that approximately 21% of NV’s ordinary 

shareholdings were in the United States (approximately 

33% in 2001), based on the distribution of the 2002 interim 

dividend payments, whilst most holders of PLC ordinary 

shares are registered in the United Kingdom – approximately 

99% in both 2002 and 2001. 

The high and low trading prices for the separate stock 

exchange listings are shown in the tables on the 

following page. 


Information about exchange controls 143 

affecting security holders 


None. 

Nature of the trading market 

NV and PLC are separate companies with separate stock 

exchange listings and different shareholders. You 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. This happens for various reasons, 

including changes in exchange rates. However, over 

time the prices of NV and PLC shares do stay in close 

relation to each other, in particular because of our 

equalisation arrangements. 

If you are a shareholder of NV, you have an interest 

in a Netherlands legal entity, your dividends will be paid in 

euros (converted into US dollars if you have shares registered 

in the United States) and you will be subject to Netherlands 

tax. If you are a shareholder of PLC, your interest is in a 

United Kingdom legal entity, your dividends will be paid in 

sterling (converted into US dollars if you have American 

Depositary Receipts) and you will be subject to United 

Kingdom 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. 

(See Taxation for US residents on pages 145 and 146 and 

Equalisation Agreement on pages 138 and 139.) 


144 Nature of the trading market 

Share prices at 31 December 2002: 

The share price of the ordinary shares at the end of the year was for NV €58.55 and $61.71 and for PLC 591p and $38.25. 

Monthly high and low prices for the last six months of 2002: 


July August September October November December 

NV per €0.51 ordinary share in Amsterdam (in €) 

High 67 62 62 65 64 59 

Low 50 57 58 60 59 56 

NV per €0.51 ordinary share in New York (in $) 

High 66 61 60 64 65 62 

Low 50 56 56 59 58 58 

PLC per 1.4p ordinary share in London (in pence) 

High 610 616 599 632 633 593 

Low 473 555 568 578 573 562 

PLC per American Share in New York (in $) 

Quarterly high and low prices for 2002 and 2001: 

High 37 38 37 39 39 38 

Low 30 34 35 36 36 35 

2002 1st 2nd 3rd 4th 

NV per €0.51 ordinary share in Amsterdam (in €) High 68 72 67 65 

Low 62 63 50 56 

NV per €0.51 ordinary share in New York (in $) High 60 67 66 65 

Low 54 57 50 58 

PLC per 1.4p ordinary share in London (in pence) High 592 659 616 633 

Low 545 554 473 562 

PLC per American Share in New York (in $) High 35 39 38 39 

Low 32 32 30 35 

2001 1st 2nd 3rd 4th 

NV per €0.51 ordinary share in Amsterdam (in €) High 68 71 71 66 

Low 56 59 55 56 

NV per €0.51 ordinary share in New York (in $) High 65 60 63 58 

Low 50 52 52 50 

PLC per 1.4p ordinary share in London (in pence) High 574 605 610 573 

Low 478 497 480 485 

PLC per American Share in New York (in $) High 35 35 35 34 

Low 28 29 28 28 

Annual high and low prices for 2000, 1999 and 1998: 

2000 1999 1998 

NV per €0.51 ordinary share in Amsterdam (in € (a) ) High 71 74 77 

Low 42 49 49 

NV per €0.51 ordinary share in New York (in $) High 64 88 89 

Low 40 50 59 

PLC per 1.4p (1998: 1.25p) ordinary share in High 584 695 702 

London (in pence) Low 335 401 457 

PLC per American Share in New York (in $) High 35 47 46 

Low 22 27 32 

(a) Amounts previously reported in guilders have been restated and are now reported in euros using the fixed conversion rate of 

€1.00 = Fl. 2.20371 that became effective on 1 January 1999.

The following notes are provided for guidance. US residents 

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: 

Netherlands 

Taxation on dividends 

Dividends of companies in the Netherlands are subject 

to dividend withholding tax of 25%. 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 United States resident; 

• 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 Netherlands 

withholding tax on dividends from 25% to 15% (to 5% 

if the beneficial owner is a company which directly holds 

at least 10% of the voting power of NV shares and to 0% 

if the beneficial owner is a qualified ‘Exempt Organisation’ 

as defined in Article 36 of the Convention). 

The entire dividend (including the withheld amount) will 

be dividend income to the United States shareholder not 

eligible for the dividends received deduction allowed to 

corporations. However, the Netherlands withholding tax will 

be treated as a foreign income tax that is eligible for credit 

against the shareholder’s United States income taxes. 

Where a United States resident or corporation 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 the Netherlands 

income tax or corporation tax, as appropriate, and the 

Netherlands tax on dividends will generally be applied at the 

full rate of 25%. This tax will be treated as foreign income 

tax eligible for credit against the shareholder’s United States 

income taxes. 

Under a provision of the Netherlands Dividend Tax Act 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 the 

Netherlands tax authorities. For dividends paid on or after 

1 January 1995, the United States tax authority may take 

the position that the Netherlands withholding tax eligible 

for credit should be limited accordingly. 


Taxation for US residents 145 

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 Netherlands corporation. 

An agreement published by the US Internal Revenue Service 

on 20 April 2000 in release IR-INT-2000-9 between the 

United States and the Netherlands tax authorities describes 

the eligibility of these US organisations for benefits under 

the Convention. 

A United States trust, company or organisation that is 

operated exclusively for religious, charitable, scientific, 

educational or public purposes, is now subject to an initial 

25% withholding tax rate. Such an exempt organisation 

is entitled to reclaim from the Netherlands Tax Authorities a 

refund of the Netherlands 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 a Unilever shareholder resident in any country 

other than the United States or the Netherlands, any 

exemption from, or reduction or refund of, the Netherlands 

dividend withholding tax may be governed by the ‘Tax 

Regulation for the Kingdom of the Netherlands’ or by the 

tax convention, if any, between the Netherlands and your 

country of residence. 

Taxation on capital gains 

Under the Convention, if you are a United States resident or 

corporation and you have capital gains on the sale of shares 

of a Netherlands 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 

Under the Estate and Inheritance Tax Convention between 

the United States and the Netherlands of 15 July 1969, 

United States individual residents 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 Netherlands company by a person who 

is not a resident or a deemed resident of the Netherlands is 

generally not subject to Netherlands gift tax. 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. 


146 Taxation for US residents 


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. 

If you are a shareholder resident in the United Kingdom 

you are entitled to a tax credit against your liability for 

United Kingdom income tax, equal to 10% of the aggregate 

amount of the dividend plus tax credit (or one-ninth of the 

dividend). For example, a dividend payment of £9.00 will 

carry a tax credit of £1.00. 

If you are a shareholder resident in the US, the dividend 

actually declared is taxable in the US as ordinary income and 

is not eligible for the dividends received deduction allowable 

to corporations. The dividend is foreign source income for 

US foreign tax credit purposes. 

In addition, under the current income tax Convention 

between the US and the UK (the ‘Convention’), a US 

shareholder eligible for the benefits of the Convention 

may elect to be treated for US tax purposes only as having 

received an additional taxable dividend. The additional 

deemed dividend is equal to one-ninth of the actual cash 

dividend received (an additional dividend of £1 in the above 

example). The shareholder will be eligible to claim a US 

foreign tax credit in the amount of the additional deemed 

dividend. The tax credit may, subject to certain limitations 

and restrictions, reduce the shareholder’s US Federal income 

tax liability. The procedure for making this election is 

described in IRS Revenue Procedure 2000-13. 

On 24 July 2001, the US and the UK signed a new income 

tax Convention (the ‘New Convention’). Under the New 

Convention, US shareholders would not be entitled to 

make the election described in the preceding paragraph. 

These provisions of the New Convention will apply to US 

shareholders beginning on the first day of the second month 

following the date on which the New Convention is ratified 

by the US and the UK. 


However, US shareholders may elect to remain subject to 

all the provisions of the current Convention for a period of 

12 months after the date on which the New Convention 

would otherwise be applicable. It is uncertain when the 

New Convention will be ratified. 

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 not be liable to United Kingdom tax on any capital 

gains made on disposal of your shares. 

The exception is 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. 

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.


Dividends 147 

Our interim ordinary dividends are normally announced in November and paid in December. Final ordinary dividends are 

normally proposed in February and, if approved by shareholders at the Annual General Meetings, paid in May or June. 

The following tables show the dividends paid by NV and PLC for the last five years. NV dividends are per €0.51 

(1998: Fl. 1) ordinary share and PLC dividends are per 1.4p (1998: 1.25p) ordinary share and per depositary receipt of 

5.6p (1998: 5p). Dividends for NV have been translated into US dollars at the exchange rates prevailing on the dates of 

declaration. Dividends for PLC up to and including the interim dividend for 2001 have been translated into US dollars at 

the exchange rates prevailing on the date of payment of the sterling dividends. Following a change in practice, starting 

with the final dividend for 2001, PLC dividends have been translated into US dollars at the rate prevailing on the date of 

declaration of the dividend. 

The interim dividend is normally 35% of the previous year’s total normal dividend per share, based on the stronger of our 

two parent currencies over the first nine months of the year. Equalisation of the interim dividend in the other currency 

takes place at the average exchange rate of the third quarter. Equalisation of the final dividend takes place at the average 

exchange rate for the full year. 

The dividend timetable for 2003 is shown on page 150. 

NV Dividends 

2002 2001 2000 1999 1998 

Interim dividend per €0.51 (1998: Fl. 1) €0.55 €0.50 €0.48 Fl. 0.88 Fl. 0.81 

Exchange rate Fl. to $ 2.1173 1.8717 

Exchange rate € to $ 0.9820 0.9097 0.8646 

Interim dividend per €0.51 (1998: Fl. 1) (US registry) $0.540100 $0.454850 $0.415008 $0.415624 $0.432762 

Normal final dividend per €0.51 (1998: Fl. 1) €1.15 €1.06 €0.95 Fl. 1.91 Fl. 1.70 

Special final dividend per Fl. 1 Fl. 14.50 

Final exchange rate Fl. to $ 2.4725 2.0861 

Final exchange rate € to $ 1.0735 0.9088 0.8827 

Normal final dividend per €0.51 (1998: Fl. 1) (US registry) $1.234525 $0.963328 $0.838565 $0.772497 $0.814918 

Special final dividend per Fl. 1 (US registry) $6.950769 

Note 1: For the purposes of illustration, the US dollar dividends shown above are those paid on the €0.51 (1998: Fl. 1) ordinary shares of 

NV registered in New York. The above exchange rates were those ruling on the dates of declaration of the dividend. 

Note 2: The final euro dividend for 2002 is payable on 9 June 2003. The dollar dividend will be calculated with reference to the exchange 

rates prevailing on 7 May 2003. 

Note 3: On 10 May 1999 the share capital was consolidated on the basis of 100 new ordinary shares with a nominal value of Fl. 1.12 

(now €0.51) for every 112 existing ordinary shares with a nominal value of Fl. 1. 

PLC Dividends 

2002 2001 2000 1999 1998 

Interim dividend per 1.4p (1998: 1.25p) 5.21p 4.65p 4.40p 3.93p 2.95p 

Exchange rate $ to £1 1.5580 1.4527 1.4622 1.6002 1.6745 

Interim dividend per 5.6p (1998: 5p) $0.3247 $0.2702 $0.2573 $0.2515 $0.1976 

Normal final dividend per 1.4p (1998: 1.25p) 10.83p 9.89p 8.67p 8.57p 7.75p 

Special final dividend per 1.25p 66.13p 

Normal final exchange rate $ to £1 1.6173 1.4591 1.4355 1.4732 1.5921 

Special final exchange rate $ to £1 1.5984 

Normal final dividend per 5.6p (1998: 5p) $0.7006 $0.5772 $0.4978 $0.5050 $0.4935 

Special final dividend per 5p $4.2280 

Note 1: If you are a United States resident and received dividends before 6 April 1999, under the Anglo-United States taxation treaty, 

you received an amount equal to the total of the declared dividend, plus the United Kingdom tax credit less withholding tax. If you are a 

United States resident and received dividends after 5 April 1999, you simply received the declared dividend; see Taxation for US residents 

on pages 145 and 146. 

Note 2: The final sterling dividend for 2002 is payable on 9 June 2003. The dollar dividend will be calculated with reference to the 

exchange rates prevailing on 7 May 2003. 

Note 3: It is not possible to make a direct comparison between PLC dividends paid before and after 6 April 1999 because of the abolition 

of United Kingdom ACT (Advance Corporation Tax) from that date (see note 1 above). 

Note 4: On 10 May 1999 the share capital was consolidated on the basis of 100 new ordinary shares with a nominal value of 1.4p for 

every 112 existing ordinary shares with a nominal value of 1.25p. 


148 Cross reference to Form 20-F 

PART I 

1 Identity of directors, senior management 

and advisers n/a 

2 Offer statistics and expected timetable n/a 

3 Key information 

3A Selected financial data 97, 113-117, 147 

3B Capitalization and indebtedness n/a 

3C Reasons for the offer and use of proceeds n/a 

3D Risk factors 39-40 

4 Information on the company 

4A History and development 

of the company 2, 16-17, 37, 42, 102, 148, 150 

4B Business overview 9-14, 18-34, 39 

4C Organisational structure 42, 128-131 

4D Property, plants and equipment 14 

5 Operating and financial review and prospects 

5A Operating results 15-39 

5B Liquidity and capital resources 37-38, 63 

5C Research and development, patents and licences, etc. 10, 13-14 

5D Trend information 5-6, 15-34 

6 Directors, senior management and employees 

6A Directors and senior management 42, 46-48 

6B Compensation 49-60, 87-93 

6C Board practices 42-44, 46-48, 54 

6D Employees 13 

6E Share ownership 55-60, 103-111 

7 Major shareholders and related party transactions 

7A Major shareholders 141-142 

7B Related party transactions 13 

7C Interests of experts and counsel n/a 

8 Financial information 

8A Consolidated statements 

and other financial information 14, 69-112, 134, 147 

8B Significant changes 41 

9 The offer and listing 

9A Offer and listing details 144 

9B Plan of distribution n/a 

9C Markets 2, 143 

9D Selling shareholders n/a 

9E Dilution n/a 

9F Expenses of the issue n/a 

10 Additional information 

10A Share capital n/a 

10B Memorandum and 

articles of association Inside front cover, 42, 97, 134, 138-140 

10C Material contracts 138-139 

10D Exchange controls 143 

10E Taxation 145-146 

10F Dividends and paying agents n/a 

10G Statement by experts n/a 

10H Documents on display 122 

10I Subsidiary information n/a 

11 Quantitative and qualitative disclosures 

about market risk 38-39 

12 Description of securities other than equity securities n/a 


PART II 

13 Defaults, dividend arrearages and delinquencies n/a 

14 Material modifications to the rights of security 

holders and use of proceeds 141 

15 Disclosure control and procedures 63 

16 Reserved 

PART III 

17 Financial statements n/a 

18 Financial statements 65-137 

19 Exhibits * 

*Filed with the United States Securities and Exchange Commission. 

Unilever’s agent in the United States is Mr R Soiefer, Vice-President, 

Secretary and General Counsel, Unilever United States, Inc., 

390 Park Avenue, New York, NY 10022-4698.


Glossary 149 

The following is intended to provide a general guide, particularly for United States readers, as to the meanings of various 

terms which may be used in this report. Please refer also to page 115 for definitions of specific accounting measures as they 

are applied by Unilever. 

Term used in this report US equivalent or brief description 

Accounts Financial statements 

Associate A business which is not a subsidiary or a joint venture, but in which the Group has 

a shareholding and exercises significant influence 

Called up share capital Ordinary shares, issued and fully paid 

Creditors Accounts payable/Payables 

Creditors: amounts due after more than one year Long-term accounts payable 

Creditors: amounts due within one year Current accounts payable 

Debtors Accounts receivable/Receivables 

Finance lease Capital lease 

Freehold Ownership with absolute rights in perpetuity 

Gearing Leverage 

Group, or consolidated accounts Consolidated financial statements 

Interest payable Interest expense 

Interest receivable Interest income 

Joint venture A business which is jointly controlled by the Group and one or more external partners 

Nominal value Par value 

Operating profit Net operating income 

Profit Income (or earnings) 

Profit and loss account Income statement 

Profit attributable to ordinary shareholders Net income attributable to ordinary shareholders 

Profit retained Retained earnings 

Provisions Long-term liabilities other than debt and specific accounts payable 

Reconciliation of movements in Statement of changes in stockholders’ equity 

shareholders’ funds 

Reserves Stockholders’ equity other than paid-up capital 

Share capital Capital stock or common stock 

Share option Stock option 

Share premium account Additional paid-in capital relating to proceeds of sale of stock in excess of par value or 

paid-in surplus 

Shareholders’ funds Stockholders’ equity 

Shares in issue Shares outstanding 

Statement of total recognised gains and losses Comprehensive income 

Stocks Inventories 

Tangible fixed assets Property, plant and equipment 

Turnover Sales revenues 


150 Financial calendar and addresses 

Annual General Meetings 

NV 10:30 am Wednesday 7 May 2003 Rotterdam 

PLC 11:00 am Wednesday 7 May 2003 London 

Announcements of results 

First Quarter 2 May 2003 Third Quarter 29 October 2003 

First Half Year 30 July 2003 Final for Year (provisional) 12 February 2004 

Dividends on ordinary capital 

Final for 2002 – announced 13 February 2003 and to be declared 7 May 2003 


Ex-dividend Record Payment 

date date date 

NV 9 May 2003 8 May 2003 9 June 2003 

PLC 14 May 2003 16 May 2003 9 June 2003 

NV – New York Shares 14 May 2003 16 May 2003 9 June 2003 

PLC – ADRs 14 May 2003 16 May 2003 9 June 2003 

Interim for 2003 – to be announced 29 October 2003 

Ex-dividend Record Payment 

date date date 

NV 30 October 2003 29 October 2003 1 December 2003 

PLC 5 November 2003 7 November 2003 1 December 2003 

NV – New York Shares 5 November 2003 7 November 2003 1 December 2003 

PLC – ADRs 5 November 2003 7 November 2003 1 December 2003 

Preferential dividends 

NV 

4% Cumulative Preference Paid 1 January 

6% Cumulative Preference Paid 1 October 

7% Cumulative Preference Paid 1 October 

€0.05 Cumulative Preference Paid 9 June and 9 December 

Contact details 

Rotterdam London New York 

Unilever N.V. Unilever PLC Unilever United States, Inc. 

Corporate Relations Department Corporate Relations Department Corporate Relations Department 

Weena 455, PO Box 760 PO Box 68, Unilever House 390 Park Avenue, New York 

3000 DK Rotterdam Blackfriars, London EC4P 4BQ NY 10022-4698 

Telephone +31 (0)10 217 4000 Telephone +44 (0)20 7822 5252 Telephone + 1 212 906 4240 

Telefax +31 (0)10 217 4798 Telefax +44 (0)20 7822 6907 Telefax + 1 212 906 4666 

e-mail: e-mail: e-mail: 

corporate.relations-rotterdam corporate.relations-london corporate.relations-newyork 

@unilever.com @unilever.com @unilever.com

Website Share registration 151 

Shareholders are encouraged to visit our website 

www.unilever.com, which has a wealth of information 

about the Unilever Group. 

There is a section designed specifically for investors at 

www.unilever.com/investorcentre. It includes detailed 

coverage of the Unilever share price, our quarterly and 

annual results, performance charts, financial news and 

analyst communications. It also includes transcripts of 

our investor relations speeches and copies of Unilever 

results presentations. 

You can also view this year’s and prior years’ Annual Review 

and Annual Report & Accounts and Form 20-F documents at 

www.unilever.com/investorcentre/financialreports. 

PLC shareholders can elect not to receive paper copies of 

the Annual Review, the Annual Report & Accounts and Form 

20-F, and other shareholder documents by registering at 

www.shareview.co.uk if they prefer to view these on our 

website. 

Publications 

Copies of the following publications can be obtained without 

charge from Unilever’s Corporate Relations Departments. 

Unilever Annual Review 2002 

Including Summary Financial Statement. Available in English 

or Dutch, with financial information in euros, sterling and 

US dollars. 

Unilever Annual Report & Accounts and 

Form 20-F 2002 

Available in English or Dutch, with figures in euros. It includes 

the Form 20-F that is filed with the United States Securities 

and Exchange Commission. 

Quarterly Results Announcements 

Available in English or Dutch, with figures in euros; 

supplements in English, with sterling or US dollar figures, 

are available. 


Netherlands 

N.V. Algemeen Nederlands Trustkantoor ANT 

PO Box 11063 

1001 GB Amsterdam 

Telephone +31 (0)20 522 2555 

Telefax +31 (0)20 522 2500 

e-mail: registers@ant-trust.nl 

UK 

Lloyds TSB Registrars 

The Causeway 

Worthing 

West Sussex BN99 6DA 

Telephone +44 (0)870 600 3977 

Telefax +44 (0)870 600 3980 

Website www.lloydstsb-registrars.co.uk 

USA 

JPMorgan Service Centre 

PO Box 43013 

Providence RI 02940-3013 

Telephone + 1 781 575 4328 

Telefax + 1 781 575 4082 

Website www.adr.com 


Design: Fitch: London 

Typesetting: Pauffley Limited 

Printed by: St Ives Westerham Press Ltd

For more information: 

www.unilever.com 


Weena 455, PO Box 760 

3000 DK Rotterdam 

T +31 (0) 10 217 4000 

F +31 (0) 10 217 4798 


PO Box 68, Unilever House 

Blackfriars, London EC4P 4BQ 

T +44 (0)20 7822 5252 

F +44 (0)20 7822 5951

Report & accounts 2002 in full - Unilever

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