Note on cover annual report Punched paper tape was arranged in a pattern to make the design for the cover of this Report and Accounts. It is used for data transfer in the electronic computers and communications equipment employed extensively throughout Unilever. Increasingly these tools of modern management are being used in project control, for scientific, market and operations research, forward planning, order processing and sales accounting, and in the control of production, distribution and stocks. In many other ways as well they provide management with the full and accurate information needed in running a complex world-wide business DesIgned by Design Researcn Unit in collaboration with Unilever. UNILEVER Report and accounts 1968 UNILEVER N.V. Directors H. S. A. Hartog, chairman D. J. Mann The Lord Cole, vice-chairman J. J. H. Nagel G. D. A. Klijnstra, vice-chairman D. A. Orr E. Brough R. H. Siddons A. W. J. Caron E. Smit J. G. Collingwood Sir Arthur Smith R. H. Del Mar J. P. Stubbs J. M. Goudswaard S. G. Sweetman C. T. C. Heyning The Viscount Trenchard J. F. Knight K. H. Veldhuis P. Kuin E. G. Woodroofe P. A. Macrory Advisory directors J. M. Honig F. J. M. A. H. Houben F. J. Tempei G. E. van Walsum Secretaries A. A. Haak H. A. Holmes Auditors Price Waterhouse & Co. Cooper Brothers & Co. This is a translation of the original Dutch report. French and German translations, with the figures remaining in gwilders, are also published. The report and accounts as usual combine the results and operations of Unilever N.V. (‘N.V.‘) and Unilever Limited (‘Limited’). The report and accounts of Limited, which are written in the English language with the figures expressed in sterling, contain the same information as this document. Contents Page Salient figures Report for the year 1968 The year in brief Sales to third parties, profit and capital employed by geographical areas 1959 and 1968 (chart) 9 Return on capital employed and on turnover 1959-1968 (chart) 10 Summary of combined figures 1959-1968 11 The background 12 Mergers and acquisitions 12 Taxation 13 Analysis of sales and operating profit 14 Foods 16 Detergents and toilet preparations 17 Animal feeds 18 Paper, printing, packaging and plastics 18 Chemicals 19 The United Africa Group 20 Plantations 21 Exports 22 Finance 23 Capital projects 24 Research 25 Personnel 26 Capital and membership 26 Dividends 27 Directors 27 Secretaries 27 Auditors 28 Consolidated profit and loss accounts 29 Consolidated balance sheets 30 General notes on the accounts 32 Notes on the consolidated profit and loss accounts 33 Notes on the consolidated balance sheets 38 Balance sheet-N.V. and notes 40 Balance sheet-Limited and notes 43 Reports of the Auditors 44 Dates for Unilever N.V. shareholders to note 45 Principal subsidiaries 46 Principal investments 47 Combined earnings per share and dividends 47 Salient figures in other currencies Salient figures All figures relate to N.V. and Limited Groups combined FL million 1968 1967 Sales to third parties 20,032 19,714 Operating profit 1,494 1,411 Interest on loan capital 96 104 Profit of the year before taxation 1,476 1,380 Taxation on profit of the year 698 634 Consolidated profit of the year 746 698 Profit of the year accruing to ordinary capital 728 680 Ordinary dividends 264 254 Profit of the year retained 464 426 Capital employed 8,962 8,633 Capital expenditure 716 616 Depreciation 523 498 Ordinary dividends N.V. (per FI. 20 of capital) FI. 4.70 FI. 4.67 Limited (per 5s. of capital) 1s. 7’/,d. Is. 6d. Salient figures, together with combined Where necessary the figures for 1967 earnings per share are shown on have been adjusted in accordance with page 47 in certain other currencies. the changes in presentation as explained on page 30. Report for the year 1968 to be submitted at the general meeting of shareholders to be held ot the company’s offices, Burgemeester s’jacobplein 1, Rotterdam, on 7th May 1969. The year in brief Combined sales to third parties rose by about 1.6O/, over 1967 to FI. 20,032 million, combined profit before taxation by about 6”/, to FI. 1,494 million. This comparison is based on the figures for 1967 published last year: if, for a fairer comparison, Limited’s total sales and profit for 1967 are converted at the rates prevailing after sterling devaluation, the increases are 7.3O/, and 10.5O/, respectively. In spite of this higher operating profit, the profit accruing to the ordinary capital of N.V. and Limited (which was already converted in the 1967 accounts at the post-devaluation rates) increased by only a little more than 7”/, to FI. 728 million, largely owing to higher rates of taxation in many countries. Higher sales were achieved in most product groups, notably in foods, detergents and toilet preparations, paper, printing, packaging, plastics and chemicals. All the main product groups except detergents and toilet preparations and animal feeds contributed to the increase in profits. Sales to third parties, profit and capital employed by geographical areas I g5g and I 968 Africa includes all our operations in that continent-namely The United Africa Group operations, the manufacturing businesses and the plantation interests. * Excluding interests not consolidated of FI. 61 million. 8 Return on capital employed and on turnover 1959-1968 The charts on both pages are based on the profit, after taxation, but before loan interest. Summary of combined figures 1959-1968 Unilever N.V. and Unilever Limited and their subsidiaries FL million 1959 1960 1961* 1962 1963 1964 1965 1966 1967** 1968 Sales to third parties 14,140 14,757 14,763 14,972 15,557 17,115 18,464 19,189 19,714 20,032 internal sales 4,876 4,893 4,558 4,251 4,121 4,634 5,117 5,054 4,875 4,961 Turnover 19,016 19,650 19,321 19,223 19,678 21,749 23,581 24,243 24,589 24,993 Operating profit 1,207 1,113 1,020 1,044 1,164 1,220 1,199 1,223 1,411 1,494 Interest on loan capital 15 15 15 21 24 25 40 81 104 96 Profit of the year before taxation 1,216 1,129 1,045 1,080 1,203 1,257 1,186 1,200 1,380 1,476 Taxation on profit of the year 594 571 528 540 608 588 522 541 634 698 profit of the Consolidated year 640 553 537 525 566 635 64’ 627 698 746 Profit of the year accruing to ordinary capital 600 513 497 485 526 594 606 597 680 728 Ordinary dividends-Gross*** 177 189 186 195 223 239 237 236 254 264 United Kingdom income tax retained 31 34 33 34 39 42 42 - -- retained Profit of the year 454 358 344 324 342 397 411 361 426 464 Per FI. 12 or f 1 of ordinary capital****: FI. FI. FI. FI. FL FI. FI. FI. FI. FI. Earnings 6.44 5.46 5.27 5.14 5.58 6.30 6.48 6.39 7.28 7.78 Cost of dividends 1.50 1.58 1.58 1.65 1.89 2.07 2.08 2.53 2.72 2.82 Dividends as “I,, of earnings 23 29 30 32 34 33 32 40 37 36 Preferential capital 815 831 811 815 815 836 836 317 310 310 Ordinary shareholders’ funds 4,204 4,429 4,490 4,757 5,048 5,425 5,750 5,955 5,919 6,221 Outside interest in subsidiaries 258 262 246 251 262 225 199 194 205 209 Loan capital 416 402 392 570 541 688 859 1,570 t,491 1,452 Deferred liabilities 447 549 569 600 653 678 735 769 708 770 Capital employed 6,140 6,473 6,508 6,993 7,319 7,852 8,379 8,805 8,633 8,962 * The revaluation on 6th March, 1961, raised *** For the years 1959-1965 United Kingdom **** The figures for earnings and cost of the guilder parity by 5O/,. income tax deducted from dividends of dividends have been adjusted for scrip issues. Limited was retained by the Company. See note on Combined earnings per share ** Sterling devaluation on 18th November, With the change to corporation tax, income and dividends on page 47. 1967, lowered the exchange rate from tax deducted from dividends has to be handed f 1 = FI. 10.136 to f 1 = FI. 8.688. to the Revenue and the cost of dividends is Where necessary the figures for 1967 have consequently the gross amount. been adjusted in accordance with the changes in presentation as explained on page 30. The background General European integration Despite continuing monetary Politically there are still many The proposed price reductions would difficulties, which twice in the course differences of opinion between the cost about FI. 3,000 million in a year. of the year became dramatically acute, E.E.C. member states, and the dispute The E.E.C. Federation of Margarine 1968 was a favourable year for the over the widening of the Community, Manufacturers (IMACE) has made economies of the world. notably over the entry of the United suggestions to the Commission for Kingdom, continues. Nevertheless, disposing of the surplus in other ways In the Netherlands economic activity progress is being made in many ways. at half the cost and without seriously showed a marked improvement, For example, the Customs Union was affecting the ratio between butter and mainly as a result of increased demand completed in July.