Meeting everyday needs of people everywhere - Unilever

13 Unilever Annual Report on Form 20-F 1999 Report of the Directors
Performance review
This discussion, unless otherwise indicated, is based on
the results of our Group’s continuing operations, which:
•
•
includes acquisitions made each year;
excludes from 1997 the speciality chemicals
businesses that were sold in 1997 and the proceeds
of that sale.
Our accounting policies are based on United Kingdom
generally accepted accounting principles (GAAP) and
Dutch GAAP which differ significantly from United States
G A A P. The principal diff e rences are described on page 1 0 7 .
We have shown reconciliations to the approximate net
income and capital and reserves under US GAAP on
page 106.
Euro reporting
Following the introduction of the euro, we have
published supplementary information in euros
throughout 1999 and will replace the guilder and
sterling with the euro for reporting purposes from the
start of the year 2000.
Effect of exchange rates on the way we
present our financial statements
We have published our accounts in two currencies,
Dutch guilders and pounds sterling. The effect of
exchange rate fluctuations over time may result in
the trends shown in the guilder accounts differing
significantly from those shown in the sterling accounts.
Foreign currency amounts are translated into the
published currency using annual average exchange rates
for results and cash flows. An exception to this was in
1997, when the profit on disposal of the speciality
chemicals businesses was translated at the rates
prevailing on 8 July 1997, and the discontinued
businesses’ results were translated at the average rates
up to the date of disposal. Year-end exchange rates are
used for the consolidated balance sheet, except for the
ordinary capital of NV which is translated at the rate
of £1 = Fl. 12 (see Control of Unilever on page 118).
The exchange rates used for the last five years were:
Fl. 1 to £1
0005111
Average rates Year-end rates
00001105111 05111
1995 Fl. 2.53 Fl. 2.49
1996 Fl. 2.62 Fl. 2.96
1997 Fl. 3.18 Fl. 3.34
1998 Fl. 3.29 Fl. 3.12
1999 Fl. 3.35 Fl. 3.55
In the following discussion we have used annual average
exchange rates to translate foreign currency amounts.
To eliminate the effect of exchange rate fluctuations,
we express our key year-on-year comparisons at
constant rates of exchange. This means using the
annual average rates for the previous year so that
year-on-year comparisons are the same in both guilders
and sterling.
Our results in a particular reporting currency (guilders or
sterling) are depressed in years in which the reporting
currency strengthens in relation to other currencies and
vice versa. The difference between the percentage
change calculated for each of the reporting currencies in
the table below and the percentage change at constant
exchange rates reflects the extent to which the reporting
currency has strengthened or weakened against the
weighted average of the underlying currencies. The
difference in the percentage change between the guilder
accounts and the sterling accounts reflects the
movement in the exchange rate between the two
currencies. Figures in 1996/1997 and the trend in
1997/1998 are impacted by the profit on disposal
of the speciality chemicals businesses.
The following table shows certain percentage increases/(decreases) in our Group results between years expressed in
guilders and sterling, and at constant exchange rates.
00000000000110000011
1996-1997 1997-1998 1998-1999
0000 0000 0000
Results Const. Results Const. Results Const.
Fl. £ Rates Fl. £ Rates Fl. £ Rates
% % % % % % % % %
0000011 1011 1011 011 1011 1011 011 1011 1011
Turnover 8 (11) (1) (6) (9) (2) 1 — 2
Operating profit 1 (17) (8) 28 24 34 (2) (4) (2)
Net profit 159 107 141 (41) (41) (38) (6) (7) (5)
00000000000110000011