Disclaimer Notes to the Annual Report and Accounts This PDF version of the Unilever Annual Report and Accounts 2005 is an exact copy of the document provided to Unilever’s shareholders. Certain sections of the Unilever Annual Report and Accounts 2005 have been audited. Sections that have been audited are set out on pages 78 to 151, 157 to 172 and 174 to 177. The auditable part of the report of the Remuneration Committee as set out on page 69 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 and Accounts does not constitute an invitation to invest in Unilever shares. Any decisions you make in reliance on this information are solely your responsibility. The information is given as of the dates specified, is not updated, and any forward-looking statements are made subject to the reservations specified on page 4 of the Report. Unilever accepts no responsibility for any information on other websites that may be accessed from this site by hyperlinks. 2005 Unilever Annual Report and Accounts Our corporate purpose Unilever’s mission is to add vitality to life. We meet everyday needs for nutrition, hygiene and personal care with brands that help people feel good, look good and get more out of life. Our deep roots in local cultures and markets around the world give us our strong relationship with consumers and are 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. To succeed also requires, we believe, the highest standards of corporate behaviour towards everyone we work with, the communities we touch, and the environment on which we have an impact. This is our road to sustainable, profitable growth, creating long-term value for our shareholders, our people, and our business partners. Contents Report of the Directors 03 Financial statements 73 Shareholder information 179 Unilever Annual Report and Accounts 2005 01 At a glance (a) Earnings per share are stated on a total operations basis. Dividend figures for each year comprise dividends declared or proposed for that year. Under International Financial Reporting Standards (IFRSs), dividends are only recorded against the year in which they become payable. For further information please refer to note 35 on page 145. (b) For Unilever N.V. 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 Unilever N.V.’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 euro equivalent of the underlying Dutch guilder according to the official euro exchange rate. The term ‘shares’ as used in this document should, with respect to shares issued by Unilever N.V., be construed to include depositary receipts for shares issued by Stichting Administratiekantoor Unilever N.V., unless the context otherwise requires or unless it is clear from the nature of the notification that this is not the case. For further information please refer to page 44. (c) Rounded to two decimal places. (d) Actual dividends payable for 2005 on Unilever N.V. New York shares and American Depositary Receipts of Unilever PLC may differ from those shown above, which include final dividend values calculated using the rates of exchange ruling on 8 February 2006 (€1.00 = $1.1948, £1.00 = $1.7427). 02 Unilever Annual Report and Accounts 2005 Report of the Directors General information 04 Chairman’s foreword 05 Group Chief Executive 06 About Unilever 09 Financial and operating reviews 15 Risk management 31 Corporate governance 33 Reports of Board committees 51 Unilever Annual Report and Accounts 2005 03 General information The Unilever Group Basis of discussion and analysis Unilever N.V. (NV) is a public limited company registered in the In parts of this document, notably the Group Chief Executive’s Netherlands, which has listings of shares or certificates (depositary discussion on pages 6 and 7 and the review of operations by receipts) of NV on the stock exchanges in Amsterdam, New York, region on pages 26 to 28, discussion of performance is based on Frankfurt and Zürich. constant rates of exchange. This removes the impact of currency movements on translation into euros, and more clearly portrays Unilever PLC (PLC) is a public limited company registered in the underlying performance of the operations themselves. The England which has shares listed on the London Stock Exchange constant rate used is the annual average rate for the prior year. and, as American Depositary Receipts, on the New York The year-on-year trend in euros is the same as that which would Stock Exchange. arise if the results were shown in sterling or US dollars at constant exchange rates. The two parent companies, NV and PLC, together with their group companies, operate as a single economic entity (the € is used in this report to denote amounts in euros. Unilever Group, also referred to as Unilever or the Group). NV and PLC and their group companies constitute a single reporting £ and p are used in this report to denote amounts in pounds entity for the purposes of presenting consolidated accounts. sterling and pence respectively. Accordingly, the accounts of the Unilever Group are presented by both NV and PLC as their respective consolidated accounts. Fl. is used in this report to denote amounts in Dutch guilders. Publications $ is used in this report to denote amounts in United States This publication is produced in both Dutch and English and dollars, except where specifically stated otherwise. comprises the full Annual Report and Accounts for 2005 of the Unilever Group. This document complies with Netherlands and The brand names shown in italics in this report are trademarks United Kingdom regulations. It also forms the basis of the NV and owned by or licensed to companies within the Unilever Group. PLC Annual Reports on Form 20-F to the Securities and Exchange Commission in the United States for the year ended 31 December Cautionary statement 2005, and cross references to Form 20-F are set out on page 191. This document may contain forward-looking statements, including It is made available to all shareholders who request or elect to ‘forward-looking statements’ within the meaning of the United receive it, and on our website at States Private Securities Litigation Reform Act of 1995. Words www.unilever.com/investorcentre. such as ‘expects’, ‘anticipates’, ‘intends’ or the negative of these terms and other similar expressions of future performance or The separate publication, ‘Unilever Annual Review 2005’, results and their negatives are intended to identify such forward containing a Summary Financial Statement with figures expressed looking statements. These forward-looking statements are based in euros, with translations into pounds sterling and US dollars, is upon current expectations and assumptions regarding anticipated also published in Dutch and English. It is a short form document developments and other factors affecting the Group. They are not that is prepared in accordance with the United Kingdom historical facts, nor are they guarantees of future performance. regulations for Summary Financial Statements. The Unilever Because these forward-looking statements involve risks and Annual Review 2005 is mailed to all registered shareholders and uncertainties, there are important factors that could cause actual to other shareholders who are either entitled or have asked to results to differ materially from those expressed or implied by receive it, and is also made available on the website at these forward-looking statements, including, among others, www.unilever.com/investorcentre. competitive pricing and activities, consumption levels, costs, the ability to maintain and manage key customer relationships and Accounting standards supply chain sources, currency values, interest rates, the ability to With effect from 1 January 2005, Unilever adopted International integrate acquisitions and complete planned divestitures, physical Financial Reporting Standards (IFRSs) as adopted by the EU, with a risks, environmental risks, the ability to manage regulatory, tax transition date of 1 January 2004. For further details of this and legal matters and resolve pending matters within current change please refer to note 35 on page 144. For Unilever, there estimates, legislative, fiscal and regulatory developments, political, are