Unilever Report and accounts A accounts I974 Unilever N.V. Report and accoutits 1974 Directors Advisory directors G. D.A. Klijnstra, chairman B. W. Biesheuvel D. A. Orr, vice-chairman H. S. A. Hartog J. M. Goudswaard, vice-chairman R. Mueller A. I. Anderson J. H. van Roijen M. R. Angus P. P. Schweitzer W. 6. Blaisse J. G. Collingwood Secretaries R. H. Del Mar K. Durham C. Zwagerman J. P. Erbe H. A. Holmes G. E. Graham C. T. C. Heyning Auditors A. H. C. Hill I H. F. van den Hoven Price Waterhouse 81 Co. F. A. Maljers Coopers & Lybrand Nederland M. Ormerod Jonkheer I. E. B. Quarles van Ufford C. F. Sedcole A. W. P. Stenham 0. Strugstad S.G. Sweetman The Viscount Trenchard K. H. Veldhuis E. J. Verloop Contents Page The cover i.!nIlever 3 The photograph on the cover, taken 1944 in k)r~ef 3 at our Zwijndrecht mill in the Sl~t~lr-rtary of r~ombined results 4 Netherlands, shows soya beans StirTliTtaty of cnrilblned assets and being processed. In addition to oil llabllltles 5 they provide meal which is the Return on shareholders’ equity, main protein constituent in animal capital employed and sales 6 feeds. We have successfully developed specially treated soya Review of 1974 protein which is likely to become lntroduct!on ‘7 8 an increasingly important element Capital expenditure 9 in human nutrition. Source and use of funds 10 Finance 11 Sales, proflt and capital employed by geographical areas 12 Analysis of sales and operating profit 1 3 Illustrations 14 l?eview of aperations 15-m26 Ex~torts 24 Personnel 25 Research and development 26 Quarterly results 27 Dividends 2% Capital and membership 29 Directors 30 Auditors 30 Accounts Reports of the auditors 31 Accounting policies 32-33 General notes To the accounts 34 Consolidated accounts 36-43 hl.V. balance sheet and notes 44 45 Limited balance sheet and notes’ 46-49 Principal subsidiaries SO--52 Principal trade investments 52 Salient figures in guilders and other currencies 53 Financial review 19661974 54655 Dates to note 56 A special survey of our Detergents business is issued as a supplement to ,this Report. Unilever Unilever comprises Unilever N.V., this document, apart from certain will receive the maximum payment Rotterdam (N.V.) and Unilever statutory information required by permitted by the statutory controls Limited, London (Limited) and the United Kingdom Companies in the United Kingdom, leaving a their respective subsidiary Acts 1948 and 1967. balance of dividends declared to be companies which operate in more carried forward for payment when than seventy-five countries and are circumstances permit. mainly engaged in the manufacture and sale of a wide variety of goods for household use. The principal products are foods (including 1974 in brief margarine, other fats and oils; ice-cream; frozen and other packaged ‘convenience’ foods; meat Apart from the very high rates of and fish); drinks; detergents and inflation experienced in 1974, the toilet preparations; paper, plastics, cost of our particular raw materials packaging; chemicals; and animal rose even more rapidly. Selling feeds. Through UAC International a prices therefore had to be increased substantial business is carried on in sharply; as a result some markets Africa and other parts of the world ceased to expand and it was harder as merchants and retailers, as timber to increase our sales volume. This producers and manufacturers of in turn made cost savings more timber products, in diverse industrial difficult to achieve. Our ice-cream ventures, and in the operation of an sales suffered from the miserable ocean fleet. Unilever also has other summer in Northern Europe. interests in transport and interests in Demand for animal feeds declined. plantations. Price control remained restrictive. We started the year with ample N.V. and Limited have identical funds but large amounts of extra Boards of Directors and are linked working capital were needed as a by agreements, including an consequence of the rise in all costs. Equalisation Agreement which This led to a substantial increase in requires dividends and other rights interest charges. and benefits (including rights on liquidation) attaching to each FI. 12 In these circumstances we were nominal of ordinary share capital of unable to sustain the growth in N.V. to be equal in value at the earnings per share achieved in current guilder/sterling rate of recent years. Helped by the diversity exchange to those attaching to each and wide geographical spread of fl nominal of ordinary capital of our interests, operating profit was Limited as if each such unit formed maintained at about the level of the part of the ordinary capital of one previous year; a marked fall in profit and the same company. In from food and animal feeds in consequence, the combined affairs Europe was offset by substantial of N.V. and Limited are more improvements in other parts of the important to shareholders than the business, notably chemicals, paper, separate affairs of either company. plastics, packaging, UAC International, and the United States The Report and Accounts as usual and Canada. After taxation and deal with the results and operations interest charges, however, profit of Unilever as a whole, with the attributable to ordinary capital was figures expressed in guilders. below that of 1973. Except where otherwise stated, therefore, all figures are for N.V The Boards’ ordinary dividend and Limited combined. proposals reflect the fact that in 1973, when combined earnings rose This is a translation of the original substantially, N.V. was prevented Dutch report. French and German by statutory controls from increasing translations, with the figures its dividend. But for this the Boards remaining in guilders, are also would have proposed increases in published. the 1973 dividends of both companies. The report and accounts of Limited, which are in English with The proposals represent an increase the figures expressed in sterling, of 8% in N.V.‘s total dividend for contain the same information as the year. Shareholders in Limited Summary of combined results for the year ended 31 st December Figures in italics represent deductions FI. million 1973') 1974 Sales to third parties 29 197 34 471 Operating profit 2 193 2 109 Non-recurring and financial items 34 142 Profit before taxation 2159 1 967 Taxation 1035 967 Profit after taxation 1124 1 006 Outside interests and preference dividends 84 91 Profit attributable to ordinary capital 1 040 915 Ordinary dividends 324 348 Profit of the year retained2) 716 567 Earnings per share3) per FI. 20 of capital FI. 18.64 FI. 16.43 per 25p of capital 43.02~ 41.76~ Ordinary dividends N.V.-per FI. 20 of capital FI. 6.71 FI. 7.25 Limited-per 25p of capital 10.63~ 12.48~ 1) The figures for 1973 have been restated rn consequence of a change rn accountrng polrcy-see pages 32 and 33 2) Other movements m Profrts retained are shown in the consolidated accounts on page 36 3) The basis of calculation is shown on page 39. The decrease in guilders is 12o/0 and in sterling 3oi0. The difference arises from the use of the rate of fl = FI. 6.50 in 1973 and fl = FI. 5.90 in 1974. 4 Summary of combined assets and liabilities as at 31 st December Figures in italics represent deductions Fl. million Capital employed 1973 1974 Preferential share capital 298 295 Ordinary shareholders’ equity 7134 7196 Outside interests in subsidiaries 244 327 Loan capital 1 601 2 120 Deferred liabilities 1266 I 421 10543 11 359 Employment of capital Land, buildings and plant 5238 5 577 Trade investments 215 197 Long-term debtors 203 291 Working capital 4574 5858 Provision for taxation 801 635 Dividends 257 299 Net liquid funds 1371 370 10543 II 359 Ordinary shareholders’ equity per share per FI. 20 of capital FI. 127.92 FI. 129.14 per 25p of capital 295.21 p 328.33~ Return on shareholders’ equity, capital employed and sales ,.. , $,i, 14.6 ,i ” Profit3) as percentage of sales to third parties Review of I g 74 Introduction The economic background solutions will be found to the concerned, we hope that the United In 1974 inflation accelerated, while problems created by the balance of Kingdom’s membership of the for the world as a whole economic payments deficits of the oil Community will be re-affirmed. growth was the poorest of any year consuming countries whilst avoiding since the second world war. a drift into major world recession. The United Nations Economic and Social Council has accepted A number of important countries, Exchange rates recommendations for the including the United Kingdom, the In unsettled markets relatively small establishment of a Commission on United States and Japan movements in funds often produced Transnational Corporations, and of experienced a decline in Gross disproportionate changes in an Information and Research Centre National Product. After a record exchange rates. During the year within the United Nations year in 1973, when world trade there were swings of 10% or more Secretariat. By disseminating factual grew by 13% in volume terms, the in the relative positions of major information, the Committee and the estimated growth rate for 1974 was currencies and, on a number of Centre could help dispel the only 4%. occasions, fluctuations in the value misunderstanding and distrust of individual currencies exceeded associated with multinational Double figure inflation rales became 1 o/o in a single day. companies: whether they succeed commonplace. With petroleum in doing this will depend on the prices quadrupled, the cost of The Dutch guilder remained in the degree of expertise and objectivity energy soared.