Disclaimer Notes to the Annual Report and Accounts This PDF version of the Unilever Annual Report and Accounts 2004 is an exact copy of the document provided to Unilever’s shareholders. Certain sections of the Unilever Annual Report and Accounts 2004 have been audited. Sections that have been audited are set out on pages 96 to 148, 154 to 170 and 172 to 173. The auditable part of the Directors’ Remuneration report as set out on page 89 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 3 of the Report. Unilever accepts no responsibility for any information on other websites that may be accessed from this site by hyperlinks. 2004 Unilever Annual Report and Accounts Adding vitality to life 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. C11742_Unlvr_AR_eng_001-023.qxd 9/3/05 4:40 AM Page 1 Contents Report of the Directors Report of the Directors (continued) General information 02 Corporate governance 52 Key performance measures 04 Structure 52 Financial highlights 07 Corporate governance arrangements 53 Chairmen’s statement 08 Shareholder matters 58 About Unilever 10 Share capital matters 59 Description of business 10 Requirements and compliance 61 Business structure 10 General 61 Foods 10 Netherlands 62 Home and Personal Care 10 United Kingdom 64 Other operations 11 United States 64 Corporate venture activities 11 Nomination Committee report 65 Technology and innovation 11 Combined earnings per share 66 Information technology 12 Auditors 67 Environment 12 Biographical details 68 Corporate responsibility 13 Executive Directors 68 Competition 14 Non-Executive Directors 68 Distribution and selling 14 Business Presidents 69 Exports 14 Corporate Officers 69 Seasonality 14 Board changes 70 People 15 Other changes 70 Related party transactions 15 Remuneration report 71 Intellectual property 16 Introduction 71 Description of our properties 16 Letter to shareholders 71 Legal and arbitration proceedings and regulatory matters 16 Remuneration Committee 72 Government regulation 16 Remuneration policy – Executive Directors 72 Financial review 17 Commentary on Executive Directors’ Remuneration Basis of reporting and discussion 17 payable for 2004 75 Reporting currency and exchange rates 17 Executive Directors’ service contracts 76 Critical accounting policies 17 Other items 76 International Financial Reporting Standards 18 Details – Executive Directors 77 Results commentary 19 Aggregate remuneration for Executive Directors 77 Results – 2004 compared with 2003 19 Remuneration for individual Executive Directors 78 Results – 2003 compared with 2002 19 Executive Directors’ Share Matching Plan 79 Acquisitions and disposals 20 Executive Directors’ conditional share awards under Dividends and market capitalisation 21 the TSR Long-Term Incentive Plan 80 Balance sheet 21 Executive Directors’ share options 81 Off-balance sheet arrangements 22 Executive Directors’ pensions 83 Cash flow 22 Executive Directors’ interests – share capital 85 Finance and liquidity 22 Executive Directors’ service contracts 85 Treasury 22 Details - Non-Executive Directors 86 Pensions investment strategy 23 Non-Executive Directors’ remuneration 87 Total Shareholder Return (TSR) 23 Non-Executive Directors’ interests – share capital 88 Significant changes 23 Summary information in respect of Directors Operating review 24 and Executive Officers 89 Operating review by category – Foods 24 Report of the Audit Committee 90 Financial overview 24 Savoury and dressings 26 Financial statements Spreads and cooking products 28 Contents listing for financial statements 91 Beverages 30 Ice cream and frozen foods 32 Shareholder information Operating review by category – Home and Personal Care 34 Analysis of shareholding 175 Financial overview 34 Information about exchange controls Home care 36 affecting security holders 177 Personal care 38 Nature of the trading market 177 Operating review by region 40 Taxation for US residents holding shares in NV 179 Europe 40 Taxation for US residents holding shares in PLC 180 North America 42 Dividends 181 Africa, Middle East and Turkey 44 Cross reference to Form 20-F 182 Asia and Pacific 46 Glossary 183 Latin America 48 Financial calendar and addresses 184 Risk management 50 Index 185 Website 187 Publications 187 Share registration 187 Unilever Annual Report and Accounts 2004 01 C11742_Unlvr_AR_eng_001-023.qxd 9/3/05 4:40 AM Page 2 General information The Unilever Group Reporting currency and exchange rates Unilever N.V. (NV) is a public limited company registered in the Details of key exchange rates used in preparation of these Netherlands, which has listings of shares or certificates (depositary accounts are given on page 153, together with Noon Buying receipts) of NV on the stock exchanges in Amsterdam, New York, Rates in New York for the equivalent dates. Frankfurt and Zürich. Basis of Discussion and Analysis Unilever PLC (PLC) is a public limited company registered in In parts of this document, notably the Chairmen’s statement England which has shares listed on the London Stock Exchange on pages 8 and 9 and the review of operations by product and, as American Depositary Receipts, on the New York Stock category and region on pages 24 to 49, discussion of Exchange. performance is based on constant rates of exchange. This removes the impact of currency movements and more clearly The two parent companies, NV and PLC, together with their portrays the underlying performance of the operations group companies, operate as nearly as is practicable as a single themselves. The constant rate used is the annual average rate for entity (the Unilever Group, also referred to as Unilever or the the prior year. For each two-year period, the year-on-year trends Group). NV and PLC and their group companies constitute a in euros are the same as those which would arise if the results single group under Netherlands and United Kingdom legislation were shown in sterling or US dollars at constant exchange rates. for the purposes of presenting consolidated accounts. Accordingly, the accounts of the Unilever Group are presented by Wherever used in this document, the abbreviation BEIA refers both NV and PLC as their respective consolidated accounts. to profit measures before exceptional items and amortisation of goodwill and intangible assets. Unilever believes that reporting Publications profit measures before exceptional items and amortisation of This publication is produced in both Dutch and English and goodwill and intangible assets (BEIA) provides valuable additional comprises the full Annual Report and Accounts for 2004 of NV information on underlying earnings trends to shareholders. The and PLC. This document complies with Netherlands and United term BEIA is not a defined term under Netherlands, UK, or US Kingdom regulations. It also forms the basis of the NV and PLC Generally Accepted Accounting Principles (GAAP), and may not Annual Reports on Form 20-F to the Securities and Exchange therefore be comparable with similarly titled profit measurements Commission in the United States for the year ended 31 December reported by other companies. It is not intended to be a substitute 2004, and cross references to Form 20-F are set out on page 182. for or superior to GAAP measurements of profit. It is made available to all shareholders who request or elect to receive it, and on the website at Operating profit BEIA is a key metric used by management and www.unilever.com/ourcompany/investorcentre/. investors to measure the progress of Unilever’s Path to Growth strategy which commenced in 1999, concluding at the end of The separate