REG - Unilever PLC Unilever NV. - First Half Year Results 2017 <Origin Href="QuoteRef">ULVR.L</Origin> <Origin Href="QuoteRef">UNc.AS</Origin> - Part 2
20/07/2017 07:06
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cash equivalents 5,016 3,382 3,119
Other financial assets 825 599 678
Non-current assets held for sale 52 206 197
16,598 13,884 15,253
Total assets 58,005 56,429 54,175
Current liabilities
Financial liabilities 5,081 5,450 5,759
Trade payables and other current liabilities 13,322 13,871 14,216
Current tax liabilities 992 844 974
Provisions 424 390 360
Current liabilities held for sale 1 1 1
19,820 20,556 21,310
Non-current liabilities
Financial liabilities 14,552 11,145 10,612
Non-current tax liabilities 116 120 114
Pensions and post-retirement healthcare liabilities:
Funded schemes in deficit 1,277 2,163 2,563
Unfunded schemes 1,619 1,704 1,677
Provisions 1,001 1,033 951
Deferred tax liabilities 2,053 2,061 1,542
Other non-current liabilities 749 667 300
21,367 18,893 17,759
Total liabilities 41,187 39,449 39,069
Equity
Shareholders' equity 16,203 16,354 14,484
Non-controlling interests 615 626 622
Total equity 16,818 16,980 15,106
Total liabilities and equity 58,005 56,429 54,175
CASH FLOW STATEMENT
(unaudited)
E million First Half
2017 2016
Net profit 3,317 2,710
Taxation 1,315 928
Share of net profit of joint ventures/associates and other income
from non-current investments and associates (75) (133)
Net finance costs 290 284
Operating profit 4,847 3,789
Depreciation, amortisation and impairment 763 681
Changes in working capital (1,436) (1,554)
Pensions and similar obligations less payments (794) (223)
Provisions less payments 68 32
Elimination of (profits)/losses on disposals (299) 117
Non-cash charge for share-based compensation 158 105
Other adjustments - 8
Cash flow from operating activities 3,307 2,955
Income tax paid (1,122) (1,136)
Net cash flow from operating activities 2,185 1,819
Interest received 104 55
Net capital expenditure (672) (759)
Other acquisitions and disposals 154 (92)
Other investing activities (46) 152
Net cash flow (used in)/from investing activities (460) (644)
Dividends paid on ordinary share capital (1,911) (1,768)
Interest and preference dividends paid (252) (290)
Change in financial liabilities 3,613 1,859
Repurchase of shares (1,071) -
Other movements on treasury stock (199) (260)
Other financing activities (42) (59)
Net cash flow (used in)/from financing activities 138 (518)
Net increase/(decrease) in cash and cash equivalents 1,863 657
Cash and cash equivalents at the beginning of the period 3,198 2,128
Effect of foreign exchange rate changes (201) 152
Cash and cash equivalents at the end of the period 4,860 2,937
NOTES TO THE FINANCIAL STATEMENTS
(unaudited)
1 ACCOUNTING INFORMATION AND POLICIES
The accounting policies and methods of computation are in compliance with IAS
34 'Interim Financial Reporting' as issued by the International Accounting
Standard Board (IASB) and as adopted by the EU; and except as set out below
are consistent with the year ended 31 December 2016. The condensed interim
financial statements are based on International Financial Reporting Standards
(IFRS) as adopted by the EU and IFRS as issued by the IASB. With effect from 1
January 2017 we have implemented amendments to IAS 7 'Statement of Cash
Flows'. The impact on the Group is not material.
After making appropriate enquiries, the Directors have a reasonable
expectation that the Group has adequate resources to continue in operational
existence for the foreseeable future. Accordingly, they continue to adopt the
going concern basis in preparing the half year financial statements.
The condensed interim financial statements are shown at current exchange
rates, while percentage year-on-year changes are shown at both current and
constant exchange rates to facilitate comparison. The income statement on page
11, the statement of comprehensive income on page 11, the statement of changes
in equity on page 12 and the cash flow statement on page 14 are translated at
exchange rates current in each period. The balance sheet on page 13 is
translated at period-end rates of exchange.
The condensed interim financial statements attached do not constitute the full
financial statements within the meaning of section 434 of the UK Companies Act
2006. The comparative figures for the financial year ended 31 December 2016
are not Unilever PLC's statutory accounts for that financial year. Those
accounts of Unilever for the year ended 31 December 2016 have been reported on
by the Group's auditor and delivered to the Registrar of Companies. The report
of the auditor on these accounts was (i) unqualified, (ii) did not include a
reference to any matters to which the auditor drew attention by way of
emphasis without qualifying their report, and (iii) did not contain a
statement under section 498 (2) or (3) of the UK Companies Act 2006.
Change in reporting of performance measures
Following our strategic review earlier this year, we announced that we would
be accelerating savings programmes and being more active in the development of
our portfolio, including exiting from our spreads business. This will mean
spending significant funds on restructuring costs. In order to provide a clear
picture of our performance against the objectives set out in the announcement
of the outcome of the review, where relevant, our non-GAAP measures will now
exclude restructuring costs as well as any other significant unusual items
within net profit but not operating profit.
Our non-GAAP measures have therefore changed from 'core operating profit',
'core operating margin', 'core earnings per share', 'core effective tax rate'
and 'constant core earnings per share' to 'underlying operating profit',
'underlying operating margin', 'underlying earnings per share', 'underlying
effective tax rate' and 'constant underlying earnings per share'
respectively.
Underlying operating profit and underlying operating margin exclude the impact
of business disposals, acquisition and disposal-related costs, restructuring
costs, impairments and other one-off items, which we collectively term
non-underlying items.
Underlying earnings per share, underlying effective tax rate and constant
underlying earnings per share exclude post-tax impact of non-underlying items
and post-tax impact of other significant unusual items within net profit but
not operating profit.
The definitions of underlying operating profit, underlying operating margin,
underlying earnings per share, underlying effective tax rate and constant
underlying earnings per share are provided on pages 8 and 9. Note 2 explains
non-underlying items for the first half year 2017 and 2016.
2 SIGNIFICANT ITEMS WITHIN THE INCOME STATEMENT
In our income statement reporting we disclose the total value of
non-underlying items that arise within operating profit. These are costs and
revenues relating to business disposals, acquisition and disposal related
costs, restructuring costs, impairments and other one-off items, which we
collectively term non-underlying items, due to their nature and/or frequency
of occurrence.
E million First Half
2017 2016
Acquisition and disposal related costs (69) (43)
Gain/(loss) on disposal of group companies 308 (101)
Restructuring costs (318) (258)
Impairments and other one-off items(a) - (16)
Non-underlying items before tax (79) (418)
Tax impact of non-underlying items (21) 114
Non-underlying items after tax (100) (304)
Attributable to:
Non-controlling interests (4) (4)
Shareholders' equity (96) (300)
(a) 2016 relates to foreign exchange losses arising from remeasurement of our
Argentinian business at a rate of 14 pesos per US dollar.
The following table shows the impact of non-underlying items on profit
attributable to shareholders.
E million First Half
2017 2016
Net profit attributable to shareholders' equity 3,110 2,512
Post tax impact of non-underlying items 96 300
Underlying profit attributable to shareholders' equity 3,206 2,812
3 SEGMENT INFORMATION - CATEGORIES
Second Quarter PersonalCare Home Care Home Care and Personal Care Foods Refreshment Foods and Refreshment Total
Turnover (E million)
2016 5,027 2,501 7,528 3,073 3,134 6,207 13,735
2017 5,340 2,688 8,028 3,148 3,230 6,378 14,406
Change (%) 6.3 7.5 6.7 2.4 3.0 2.8 4.9
Impact of:
Exchange rates (%) 2.0 2.3 2.1 1.2 (1.7) (0.3) 1.0
Acquisitions (%) 2.0 3.0 2.3 0.1 - 0.0 1.3
Disposals (%) (0.1) (0.4) (0.2) - (1.7) (0.9) (0.5)
Underlying sales growth (%) 2.2 2.5 2.3 1.2 6.7 3.9 3.0
Price (%) 2.5 2.4 2.5 2.5 4.8 3.7 3.0
Volume (%) (0.3) 0.1 (0.1) (1.3) 1.8 0.2 -
First Half PersonalCare Home Care Home Care and Personal Care Foods Refreshment Foods and Refreshment Total
Turnover (E million)
2016 9,822 4,950 14,772 6,169 5,342 11,511 26,283
2017 10,481 5,398 15,879 6,297 5,549 11,846 27,725
Change (%) 6.7 9.1 7.5 2.1 3.9 2.9 5.5
Impact of:
Exchange rates (%) 2.5 3.0 2.7 1.6 (1.1) 0.3 1.7
Acquisitions (%) 1.6 2.9 2.0 - - - 1.1
Disposals (%) (0.1) (0.4) (0.2) (0.2) (1.0) (0.6) (0.4)
Underlying sales growth (%) 2.6 3.3 2.8 0.6 6.1 3.1 3.0
Price (%) 2.6 2.5 2.6 2.4 4.9 3.5 3.0
Volume (%) - 0.8 0.3 (1.7) 1.2 (0.4) -
Operating profit (E million)
2016 1,640 476 2,116 1,048 625 1,673 3,789
2017 2,068 573 2,641 1,167 1,039 2,206 4,847
Underlying operating profit (E million)
2016 1,840 533 2,373 1,154 680 1,834 4,207
2017 2,207 643 2,850 1,242 834 2,076 4,926
Operating margin (%)
2016 16.7 9.6 14.3 17.0 11.7 14.5 14.4
2017 19.7 10.6 16.6 18.5 18.7 18.6 17.5
Underlying operating margin (%)
2016 18.7 10.8 16.1 18.7 12.7 15.9 16.0
2017 21.1 11.9 17.9 19.7 15.0 17.5 17.8
Turnover growth is made up of distinct individual growth components namely
underlying sales, currency impact, acquisitions and disposals. Turnover growth
is arrived at by multiplying these individual components on a compounded basis
as there is a currency impact on each of the other components. Accordingly,
turnover growth is more than just the sum of the individual components.
Underlying operating profit represents our measure of segment profit or loss
as it is the primary measure used for the purpose of making decisions about
allocating resources and assessing performance of segments. Underlying
operating margin is calculated as underlying operating profit divided by
turnover.
4 SEGMENT INFORMATION - GEOGRAPHICAL AREA
Second Quarter Asia /AMET /RUB TheAmericas Europe Total
Turnover (E million)
2016 5,817 4,302 3,616 13,735
2017 6,163 4,707 3,536 14,406
Change (%) 5.9 9.4 (2.2) 4.9
Impact of:
Exchange rates (%) 0.9 3.3 (1.7) 1.0
Acquisitions (%) 1.0 3.4 (0.9) 1.3
Disposals (%) (0.3) (1.2) - (0.5)
Underlying sales growth (%) 4.3 3.7 0.3 3.0
Price (%) 4.9 2.8 0.1 3.0
Volume (%) (0.6) 0.9 0.1 -
First Half Asia /AMET /RUB TheAmericas Europe Total
Turnover (E million)
2016 11,281 8,278 6,724 26,283
2017 12,085 9,077 6,563 27,725
Change (%) 7.1 9.7 (2.4) 5.5
Impact of:
Exchange rate (%) 1.2 5.0 (1.9) 1.7
Acquisitions (%) 0.5 2.7 0.3 1.1
Disposals (%) (0.3) (0.8) (0.0) (0.4)
Underlying sales growth (%) 5.5 2.5 (0.8) 3.0
Price (%) 4.8 3.1 (0.1) 3.0
Volume (%) 0.8 (0.6) (0.6) -
Operating profit (E million)
2016 1,668 999 1,122 3,789
2017 2,070 1,704 1,073 4,847
Underlying operating profit (E million)
2016 1,766 1,252 1,189 4,207
2017 2,211 1,538 1,177 4,926
Operating margin (%)
2016 14.8 12.1 16.7 14.4
2017 17.1 18.8 16.3 17.5
Underlying operating margin (%)
2016 15.7 15.1 17.7 16.0
2017 18.3 16.9 17.9 17.8
5 TAXATION
The effective tax rate for the first half was 28.9% compared to 26.0% in 2016.
The tax rate is calculated by dividing the tax charge by pre-tax profit
excluding the contribution of joint ventures and associates.
Tax effects of components of other comprehensive income were as follows:
E million First Half 2017 First Half 2016
Beforetax Tax(charge)/credit Aftertax Beforetax Tax(charge)/credit Aftertax
Fair value gains/(losses) on financial instruments 63 (12) 51 (76) 58 (18)
Remeasurements of defined benefit pension plans 751 (110) 641 (1,814) 458 (1,356)
Currency retranslation gains/(losses) (723) 29 (694) (140) - (140)
Other comprehensive income 91 (93) (2) (2,030) 516 (1,514)
6 COMBINED EARNINGS PER SHARE
The combined earnings per share calculations are based on the average number
of share units representing the combined ordinary shares of NV and PLC in
issue during the period, less the average number of shares held as treasury
stock.
In calculating diluted earnings per share and underlying earnings per share, a
number of adjustments are made to the number of shares which principally
includes the exercise of share options by employees.
Earnings per share for total operations for the six months were calculated as
follows:
2017 2016
Combined EPS - Basic
Net profit attributable to shareholders' equity (E million) 3,110 2,512
Average number of combined share units (millions of units) 2,834.4 2,841.1
Combined EPS - basic (E) 1.10 0.88
Combined EPS - Diluted
Net profit attributable to shareholders' equity (E million) 3,110 2,512
Adjusted average number of combined share units (millions of units) 2,845.7 2,853.5
Combined EPS - diluted (E) 1.09 0.88
Underlying EPS
Underlying profit attributable to shareholders' equity (see note 2) (E million) 3,206 2,812
Adjusted average number of combined share units (millions of units) 2,845.7 2,853.5
Underlying EPS - diluted (E) 1.13 0.99
In calculating underlying earnings per share, net profit attributable to
shareholders' equity is adjusted to eliminate the post-tax impact of
non-underlying items in operating profit and any other significant unusual
items within net profit but not operating profit.
During the period the following movements in shares have taken place:
Millions
Number of shares at 31 December 2016 (net of treasury stock) 2,839.7
Shares repurchased under the share buyback programme (27.5)
Net movement in shares under incentive schemes 0.3
Number of shares at 30 June 2017 2,812.5
7 ACQUISITIONS AND DISPOSALS
The Group completed the following business acquisitions and disposals in the
first six months of 2017.
Deal completion date Acquired/Disposed business
1 February 2017 Acquired Living Proof Inc., an innovative premium hair care business.
28 March 2017 Sold AdeS soy beverage business in Latin America to Coca Cola FEMSA and The Coca Cola Company.
1 May 2017 Acquired Sir Kensington, a premium condiments business.
The total consideration for acquisitions completed in the first half of 2017
was E304 million (first half of 2016: E40 million).
8 SHARE BUYBACK PROGRAMME
On 6 April 2017 Unilever announced a share buyback programme of E5 billion in
2017. At 30 June 2017 the group has repurchased 27,537,570 ordinary shares as
part of the programme for E1,368 million. Cash paid for the repurchase of
shares was E1,071 million and E297 million is shown within current financial
liabilities. These shares have not been cancelled and are recognised as
treasury shares with the cost reported within other reserves.
9 FINANCIAL INSTRUMENTS
The Group is exposed to the risks of changes in fair value of its financial
assets and liabilities. The following tables summarise the fair values and
carrying amounts of financial instruments and the fair value calculations by
category.
E million Fair value Carrying amount
As at 30 June2017 As at 31 December2016 As at 30 June2016 As at 30 June2017 As at 31 December2016 As at 30 June2016
Financial assets
Cash and cash equivalents 5,016 3,382 3,119 5,016 3,382 3,119
Held-to-maturity investments 152 142 138 152 142 138
Loans and receivables 304 398 344 304 398 344
Available-for-sale financial assets 655 509 544 655 509 544
Financial assets at fair value through profit and loss:
Derivatives 293 91 130 293 91 130
Other 106 132 124 106 132 124
6,526 4,654 4,399 6,526 4,654 4,399
Financial liabilities
Preference shares (125) (125) (129) (68) (68) (68)
Bank loans and overdrafts (829) (1,147) (1,181) (825) (1,146) (1,179)
Bonds and other loans (19,031) (15,844) (15,475) (18,353) (15,053) (14,308)
Finance lease creditors (153) (165) (175) (134) (143) (149)
Derivatives (253) (185) (144) (253) (185) (144)
Other financial liabilities - - (523) - - (523)
(20,391) (17,466) (17,627) (19,633) (16,595) (16,371)
E million Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
As at 30 June 2017 As at 31 December 2016 As at 30 June 2016
Assets at fair value
Other cash equivalents - 724 - - 90 - - 211 -
Available-for-sale financial assets 277 8 370 138 98 273 93 1 450
Financial assets at fair value
through profit or loss:
Derivatives(a) - 376 - - 226 - - 349 -
Other - 104 2 - 131 1 - 121 3
Liabilities at fair value
Derivatives(b) - (392) - - (331) - - (394) -
Contingent Consideration - - (413) - - (380) - - (102)
(a) Includes E83 million (December 2016: E135 million) derivatives, reported
within trade receivables, that hedge trading activities.
(b) Includes E(139) million (December 2016: E(146) million) derivatives,
reported within trade payables, that hedge trading activities.
There were no significant changes in classification of fair value of financial
assets and financial liabilities since 31 December 2016. There were also no
significant movements between the fair value hierarchy classifications since
31 December 2016.
The fair value of trade receivables and payables is considered to be equal to
the carrying amount of these items due to their short-term nature. The
instruments that have a fair value that is different from the carrying amount
are classified as Level 2.
Calculation of fair values
The fair values of the financial assets and liabilities are defined as the
price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date.
Methods and assumptions used to estimate the fair values are consistent with
those used in the year ended 31 December 2016.
10 DIVIDENDS
The Boards have determined to pay a quarterly interim dividend for Q2 2017 at
the following rates which are equivalent in value between the two companies at
the rate of exchange applied under the terms of the Equalisation Agreement:
Per Unilever N.V. ordinary share: E 0.3585
Per Unilever PLC ordinary share: £ 0.3183
Per Unilever N.V. New York share: US$ 0.4140
Per Unilever PLC American Depositary Receipt: US$ 0.4140
The quarterly interim dividends have been determined in euros and converted
into equivalent sterling and US dollar amounts using exchange rates issued by
WM/Reuters on 18 July 2017.
US dollar cheques for the quarterly interim dividend will be mailed on 6
September 2017 to holders of record at the close of business on 4 August 2017.
In the case of the NV New York shares, Netherlands withholding tax will be
deducted.
The quarterly dividend calendar for the remainder of 2017 will be as follows:
Announcement Date NV NY and PLC ADR ex-Dividend Date NV and PLC ex-Dividend Date Record Date Payment Date
Quarterly dividend - for Q2 2017 20 July 2017 2 August 2017 3 August 2017 4 August 2017 6 September 2017
Quarterly dividend - for Q3 2017 19 October 2017 1 November 2017 2 November 2017 3 November 2017 13 December 2017
11 EVENTS AFTER THE BALANCE SHEET DATE
There were no material post balance sheet events other than those mentioned
elsewhere in this report.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors declare that, to the best of their knowledge:
· this condensed set of interim financial statements, which have been
prepared in accordance with IAS 34 'Interim Financial Reporting', as issued by
the International Accounting Standard Board and endorsed and adopted by the EU
gives a true and fair view of the assets, liabilities, financial position and
profit or loss of Unilever; and
· the interim management report gives a fair review of the information
required pursuant to regulations 4.2.7 and 4.2.8 of the Disclosure and
Transparency Rules (DTR) issued by the UK Financial Conduct Authority and
section 5:25d (8)/(9) of the Dutch Act on Financial Supervision (Wet op het
financieel toezicht).
Unilever's Directors are listed in the Annual Report and Accounts for 2016,
with the exception of Professor Louise Fresco who retired as a Non-Executive
Director following the Unilever N.V. and Unilever PLC 2017 AGMs.
Details of all current Directors are available on our website at
www.unilever.com.
By order of the Board
Paul Polman Graeme Pitkethly
Chief Executive Officer Chief Financial Officer
20 July 2017
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