Unilever Annual Report 2020

FY2020 Annual Report · Unilever

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This is a PDF version of the Unilever Annual Report and Accounts 2020 and
is an exact copy of the printed document provided to Unilever’s shareholders.

Certain sections of the Unilever Annual Report and Accounts 2020 have been
audited. These are on pages 112 to 167, and those parts noted as audited
within the Directors’ Remuneration Report on pages 90 to 99.

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these matters. Accordingly, the auditors accept no responsibility for any changes
that may have occurred to the financial statements since they were initially placed
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Purpose-led,
future-fit

Unilever Annual Report
and Accounts 2020

In this report

Strategic Report

How our Compass strategy is delivering value for our stakeholders

Introduction
2 At a glance
4 Chairman’s introduction
Chief Executive Officer’s
6
Q&A

Our strategy
8 Our strategy
12

Our business model

Our stakeholders
14 Stakeholder review
16 Our people
20 Consumers
24 Customers
26

Suppliers & business
partners

28 Planet & society
32 Shareholders

Performance review
34 Our performance
36 Financial review
44 Our risks
51

Sustainability deep-dives:
climate change and
plastic
Non-financial
information statement

Governance Report

Financial Statements

How we’re running a responsible
and effective business

Our full financial results and
notes for the year

61
70
72
74

Corporate Governance
Report of the Audit Committee
Report of the Corporate Responsibility Committee
Report of the Nominating and Corporate
Governance Committee
Directors’ Remuneration Report

104
Statement of Directors’ responsibilities
Independent Auditor’s Report
105
112 Consolidated financial statements
116
168
184
191
192
193

Notes to the consolidated financial statements
Unilever PLC Company Accounts and notes
Group Companies
Shareholder information
Index
Additional Information for US Listing Purposes

Online

You can find more information about Unilever online at

Unilever Annual Report and Accounts 2020

www.unilever.com

For further information on our sustainability performance

www.unilever.com/planet-and-society

The Unilever Annual Report and Accounts 2020 (and the
Additional Information for US Listing Purposes) along with
other relevant documents can be downloaded at

www.unilever.com/investor-relations/annual-report-and-
accounts

This document is made up of the Strategic Report, the Governance Report,
the Financial Statements and Notes, and Additional Information for
US Listing Purposes.

The Unilever Group consists of Unilever PLC (PLC) together with the companies
it controls. The terms ‘Unilever’, the ‘Group’, ‘we’, ‘our’ and ‘us’ refer to the
Unilever Group.

Our Strategic Report, pages 1 to 60, contains information about us, how we
create value and how we run our business. It includes our strategy, business
model and key performance indicators, as well as our approach to sustainability
and risk. The Strategic Report is only part of the Annual Report and Accounts
2020. The Strategic Report has been approved by the Board and signed on their
behalf by Ritva Sotamaa – Group Secretary.

Our Governance Report, pages 61 to 103, contains detailed corporate
governance information, our Committee reports and how we remunerate
our Directors.

Our Financial Statements and Notes are on pages 104 to 183.

Pages 1 to 192 constitute the Unilever Annual Report and Accounts 2020,
which we may also refer to as ‘this Annual Report and Accounts’ throughout
this document.

The Directors’ Report of PLC on pages 61 to 75, 104 (Statement of Directors’
responsibilities), 134 (Dividends on ordinary capital), 149 to 155 (Treasury Risk
Management), 176 (Post balance sheet events) and 190 (Branch disclosure) has
been approved by the PLC Board and signed on its behalf by Ritva Sotamaa –
Group Secretary.

Pages 193 to 203 are included as Additional Information for US Listing Purposes.

The events of 2020 have tested the world in ways
few anticipated. They also tested the resilience
of our business – our people, our operations,
our financial strength. While this has not been
an easy year, it’s made us a stronger business,
better prepared for a fast-changing world.

We believe that the world needs businesses like
Unilever more than ever. We have responded
with speed and agility to protect lives and
livelihoods, while growing our business. Driving
a progressive agenda on issues like climate,
social inequality and the future of work. And
serving consumers through our purposeful
brands, which are more relevant than ever.

Above all, this year has strengthened our
commitment to being the global leader in
sustainable business, and to showing that
our purpose-led, future-fit business model
delivers superior performance.

At a glance

As one of the world’s largest consumer goods
companies, we’re driven by our purpose to make
sustainable living commonplace.

A truly global business
Our brands are available in over 190 countries

58%

of turnover in
emerging markets

Around

25m

retail outlets in our
distribution chain

2.5bn

people use our
products every day(a)

Strong brands with purpose
Our 400+ brands help people feel good, look good
and get more out of life

Read more about our brands and consumers
on pages 20 to 23

14 of the top 50

consumer goods brands(b)

brands with turnover
of over €1 billion

Our financial highlights

Turnover

€51bn

2019: €52bn

2018: €51bn

Underlying operating
margin(c)

18.5%

2019: 19.1%

2018: 18.6%

Underlying sales
growth(c)

1.9%

2019: 2.9%

2018: 3.2%

Dividends paid

€4.3bn

2019: €4.2bn

2018: €4.1bn

Operating margin

Free cash flow(c)

16.4%

€7.7bn

2019: 16.8%

2018: 24.8%

2019: €6.1bn

2018: €5.4bn

(a) Based on a detailed study carried out in 2016.
(b) Based on market penetration and consumer interactions (Kantar Brand Footprint report).
(c) Free cash flow, underlying operating margin and underlying sales growth are non-GAAP measures. For further information about these measures, and the reasons why

we believe they are important for an understanding of the performance of the business, please refer to our commentary on non-GAAP measures on page 39.

Unilever Annual Report and Accounts 20203

Using our scale for good
We have an ambitious sustainability agenda
which is delivering significant impact

Read more about our people
on pages 16 to 19

Read more about the planet &
society on pages 28 to 31

50/50

gender balance in
management (female/male)(d)

149,000

employees

93%

of our leaders are local

100%

renewable grid
electricity globally

67%

of agricultural
raw materials
sustainably sourced

1.3bn

people helped to improve their
health and hygiene since 2010

Our three Divisions

Read more about our Divisions
on pages 20 to 23

Beauty & Personal Care

Foods & Refreshment

Home Care

What we stand for:
To be the most people- and planet-
positive beauty business in the world.

What we stand for:
To be a world-class force
for good in food.

What we stand for:
Making people’s homes a better
world, and our world a better home.

Our largest categories:
Deodorants, Hair care, Skin care,
Skin cleansing

Our largest categories:
Ice cream, Savoury,
Dressings, Tea

A selection of our brands:
Axe, Clear, Dove, Lifebuoy, Lux,
Pond’s, Rexona, Signal, Suave,
Sunsilk, TRESemmé, Vaseline

A selection of our brands:
Ben & Jerry’s, Breyers, Brooke Bond,
Heart (Wall’s), Hellmann’s, Knorr,
Lipton, Magnum, The Vegetarian
Butcher, Unilever Food Solutions

Our largest categories:
Fabric solutions,
Home and hygiene

A selection of our brands:
Cif, Dirt is Good (Omo, Persil),
Domestos, Seventh Generation,
Sunlight

€21.1bn turnover
41% of total turnover
52% of total operating profit

€19.1bn turnover
38% of total turnover
33% of total operating profit

€10.5bn turnover
21% of total turnover
15% of total operating profit

(d) Based on a total management population of 15,161 Unilever employees.

STRATEGIC REPORTUnilever Annual Report and Accounts 2020
4

Chairman’s introduction

Nils Andersen reflects on a challenging year and the
key actions taken to ensure Unilever remains resilient.

Covid-19 cast a dark shadow over the whole of 2020 and on
behalf of the Board let me start by saying that our thoughts
go out to all those who have suffered from the effects of this
terrible pandemic. Equally, we remain deeply thankful to
all those front-line workers – including in our own business
– who have worked tirelessly to help keep others safe and
our economies moving forward. Despite the inevitable
and widespread disruption to Unilever’s own business,
the Group responded with commendable resilience and
ingenuity, delivering a good set of results in very challenging
circumstances. Importantly, we also took the opportunity
last year to progress our strategic change agenda with
shareholders overwhelmingly supporting proposals to
simplify Unilever’s dual-headed legal structure.

Our performance

Given the need to manage the business dynamically in the
wake of the far-reaching effects of the coronavirus pandemic,
the Group took the prudent decision early in the year to
focus on volume-led competitive growth, and the delivery
of underlying operating profit and free cash flow, as the best
means of maximising value. The results confirm that those
objectives were met, with an improvement in underlying
operating profit when excluding currency impact, and strong
free cash flow. Responding quickly and decisively to events
– combined with a sharper focus on operational basics –
contributed significantly to the step-up in competitiveness,
with over 60% of the business now winning market share.

Unification

On 29 November 2020, Unilever completed the Unification
of its Group legal structure under a single parent company,
Unilever PLC. For the first time in its history, Unilever PLC
provides an equal voting basis per share for all shareholders
and now trades with one market capitalisation, one class
of shares and one global pool of liquidity, whilst also
maintaining the Group’s listings on the Amsterdam,
London and New York stock exchanges.

This was an important step for Unilever with shareholders
of both parent companies, Unilever PLC and Unilever NV,
voting over 99% in favour of Unification. We would like to thank
our shareholders for their strong support for our proposals.
There will be no changes to the operations, locations, activities
or staffing levels in either the Netherlands or the United
Kingdom as a result of Unification, but the changes will
provide greater flexibility for strategic portfolio change
and further strengthen governance. The headquarters of
Unilever’s Foods & Refreshment Division continues to be
based in Rotterdam and the Home Care and Beauty &
Personal Care Divisions continue to be headquartered
in the United Kingdom.

Remuneration

During the second half of 2020, we consulted on our proposed
new Directors’ Remuneration Policy which we propose to
change at the Annual General Meeting in 2021 when our
current policy comes to the end of its three year term.

Subject to shareholder approval, the key change we are
proposing to our Remuneration Policy is to replace the
current Management Co-Investment Plan (MCIP) with a new
Performance Share Plan (PSP) entirely delinked from the
annual bonus. The new Policy defers half of the Executive
Director’s annual bonus in shares for three years while the PSP
continues to require our Executive Directors to hold their long
term share awards for a minimum of five years before they can
be sold.

By enhancing the impact, traction and resilience of Unilever’s
incentives, the new Policy can help drive sustainable long-term
growth and enable the Compensation Committee to set
stretching but achievable performance targets over realistic
timeframes. Further information on our proposals can be
found in the Directors’ Remuneration Report on pages 76 to 103.

Corporate Governance

In December 2020, Unilever announced an intention to put
its climate transition action plan before shareholders and
seek an advisory vote on the company’s ambitious emissions
reduction targets and the plans to achieve them. The plan will
set out the company’s climate strategy to reduce emissions,
both within its own operations and through the value chain.
It will also explain how the company is managing risks and
meeting consumer needs and concerns connected with
climate change. It is the first time a major global company has
voluntarily committed to put its climate transition action plan
before a shareholder vote and we hope this increased level of
transparency and accountability will strengthen the dialogue
with our shareholders and encourage other companies to
follow suit.

A continuing focus for the Board during the year was our
engagement with Unilever’s workforce. Virtual meetings were
set up separately with employees, or alongside one of our
virtual Board meetings. These engagement sessions enable
the Non-Executive Directors to meet employees at all levels
of the organisation to discuss how they feel about issues
important to them through open discussion. The Covid-19
pandemic obviously dominated the way our employees
worked in 2020, and our Non-Executive Directors engaged
on a number of related topics, bringing their reflections
back into our Board discussions. Further information on
our engagement with Unilever’s employees can be found
on page 63. The Board also undertook a number of virtual
visits to Unilever markets during the year, gaining valuable
insights on these businesses and their contribution to
Unilever’s overall performance and strategy.

Unilever Annual Report and Accounts 20205

Vittorio Colao stepped down from the Board on 18 February
2021 following his appointment as Italy’s Minister for
Technological Innovation and Digital Transition. Vittorio
brought a high degree of knowledge and insight to us in
over five years on our Board and chaired our Compensation
Committee. I am pleased to confirm that Andrea Jung, already
a member of the Compensation Committee, has taken over
the role of Chair of that Committee.

Evaluation

Our Board evaluation in 2019 was externally facilitated and
the results were discussed at the January 2020 Board meeting.
I decided that for the 2020 Board evaluation process we
would conduct an internal exercise, the results of which were
discussed at the November 2020 Board meeting. The Board
continues to perform effectively with competent and engaged
members, and in its evaluation discussions the Board agreed,
in particular, to focus in 2021 on Unilever’s:
■ growth strategy
■ digitisation
■ channel strategy
■ leadership talent and succession

Further detail on the evaluation process this year, together
with the Board’s remit, operations and the topics the
Board regularly discusses and debates can be found
in the Governance section on page 62.

Looking ahead

Even though trading conditions will remain tough and we will
be living with the effects of Covid-19 for some time to come,
the Group has already shown it has the ability to withstand
shocks and to emerge stronger. With its powerful category and
brand portfolio, enviable position in the growth markets of
the future, and recognised leadership in sustainable business,
Unilever has some enduring and unrivalled strengths.
Combined with its strong leadership team and outstanding
workforce, I am confident that the Group is well-placed to go
on delivering competitive returns while meeting the needs
of its multiple – and highly valued – stakeholders.

Finally, on behalf of the Board, let me express our profound
appreciation to the 149,000 hardworking women and men
of Unilever – and the many more the company partners with
– for their impressive efforts and commitment during a most
difficult and challenging year.

The Group
responded with
commendable
resilience and
ingenuity,
delivering a good
set of results in
very challenging
circumstances.

Nils Andersen
Chairman

STRATEGIC REPORTUnilever Annual Report and Accounts 20206

Chief Executive Officer’s Q&A

Alan Jope answers questions on our performance,
the impact of the pandemic and the Unilever Compass.

How has the Covid-19 pandemic impacted Unilever?
The first and most painful thing to say is that the pandemic has
resulted in the loss of a number of Unilever colleagues across
the world. Our thoughts go out to their families and friends, and
indeed to all those whose lives have been impacted so tragically
by this pernicious disease.

The effect of the pandemic on Unilever’s business has been
significant. Widespread national lockdowns saw large parts of the
portfolio – including our €1.7 billion food service business – hit by
sudden and very dramatic falls in sales, in some cases by as much
as 70%. The ‘stay at home’ message also led to declines across
parts of our largest Division, Beauty & Personal Care, including in
deodorants and hair care. In other areas, like home and hygiene
and skin cleansing, there were surges in demand as consumers
sought out products capable of helping in the fight against
Covid-19. The in-home part of our Foods & Refreshment business
also experienced an uplift in sales as people rediscovered the joys
of home cooking. Across the year, we saw similarly unprecedented
swings in consumer demand across geographical markets, as well
as in the use of channels.

Responding to these sudden and dramatic fluctuations in demand
in the midst of a global pandemic has required a herculean effort
on the part of our teams, and especially from our supply chain and
field sales colleagues, who kept our products reaching the shelves
while having to observe strict safety protocols. I want to record my
appreciation – and my admiration – for all they did in 2020 to keep
our business moving forward.

While the effect of the pandemic on Unilever’s business has
been slightly lower overall growth than we would otherwise
have expected, I do believe we can look back on 2020 with pride,
given the extent to which we limited the impact.

Are there any trends – or changes in
consumer behaviour – that you expect
to endure once normality resumes?
There is much talk of a ‘new normal’ but in reality what I expect to
see is more of an acceleration – and a cementing – of changes that
were already underway. The move to online sales, for example,
is only going to increase further as a result of the experience we
have been through. That applies both to the so-called pure-play
eCommerce providers but also, very importantly, where physical
and digital channels combine (omnichannel), which is growing
rapidly. The 61% increase in our own online sales last year is
a powerful reflection of this trend .

I also expect the heightened awareness around home and
personal hygiene – and handwashing in particular – to be a lasting
phenomenon. And while we are all desperate for lockdowns to
end, our homes – and the pride we take in them – have become
an even more central feature of our lives, and I believe that will
continue. These are trends Unilever is well placed to help serve.

Our own research and consumer surveys suggest there has been a
marked increase in conscious consumption during the pandemic,
with people increasingly reaching for brands they know and trust,
ones they believe will contribute more broadly and purposefully
to our lives and the issues we face, including environmental
challenges like climate change and plastic pollution. I very
much hope – and expect – to see this trend deepen further
in the years ahead.

Working practices are also sure to change in the wake of the
pandemic. Here I would expect to see an even more rapid
escalation of trends already underway, and in particular a fast-
forwarding to more flexible, agile and people-centred approaches
to work. However, even though the traditional 9 to 5, five days a
week model looks increasingly outmoded, reports of the demise of
office-based working are exaggerated in my view. A strong culture
is the glue that binds any organisation together and that requires
its fair share of physical interaction in order to learn, collaborate,
swap ideas and stay attuned to the welfare and well-being
of others.

As you look back, how do you reflect on
Unilever’s business performance in 2020?
It was a good performance overall, achieved in some of the
most volatile and unpredictable conditions imaginable. The
performance reaffirmed the strength of our brands and the
resilience of our portfolio, as well as revealing a far higher ability
to respond with speed and agility, something I called out last
year as an area for improvement.

In any crisis it is important to move quickly to reset objectives in
line with changing market realities. We refocused the business on
competitive growth, and on delivering underlying operating profit
and free cash flow. I am pleased to say that we delivered on all
three. In terms of competitiveness, more than 50% of our business
won value market share last year; and the most recent readings
show that figure is now even higher at over 60%. There was an
improvement in underlying operating profit when excluding
currency impact, and we delivered record free cash flow of
€7.7 billion in the most volatile conditions.

Our underlying sales growth for the year was 1.9%, which
represents a good performance in such volatile and precarious
conditions. On the bottom line, underlying operating margin
was down 60bps to 18.5%, although this was largely a factor
of Covid-related costs and adverse product sales mix.

What were the highlights of 2020 for you?
The resolve, dedication and ingenuity of our people in the face
of unprecedented challenges – combined with their willingness
to pull together in a spirit of One Unilever – was undoubtedly
a highlight of the year. It made me even prouder to lead the
wonderful people of this great company. I can only thank them
for what they have achieved over the last year for Unilever and
for its many stakeholders.

Unilever Annual Report and Accounts 20207

Our performance
in 2020 reaffirmed
the strength of our
brands and the
resilience of our
portfolio .

Alan Jope
Chief Executive Officer

Thanks to their contribution, we have not only steered Unilever
successfully through the first phase of a pandemic, but we have
done so while simultaneously strengthening the company’s
portfolio and – with it – our ability to compete longer term. The
successful completion of the Horlicks acquisition, for example,
along with other acquisitions last year – including Liquid I.V.
and SmartyPants Vitamins – further boost our presence in the
fast-growing and strategically attractive segment of functional
nutrition and wellbeing.

equally ambitious, commitments around Climate and Nature and
on reducing plastics, both of which are covered in more detail in
other parts of this report (see pages 28 to 29).

More recently, we have given expression to the social dimension of
the Unilever Compass by setting out how we plan to use our scale
and influence to build a more equitable and inclusive society. This
includes ensuring we pay a living wage to everyone in our value
chain by 2030 and preparing our people for the future of work
through skills and flexible employment options.

At the same time, we were able to give the company greater
strategic flexibility to engage in even more transformative portfolio
moves – should it ever wish – by successfully completing the
Unification of the Group’s legal structure under a single parent
company, Unilever PLC. This complex undertaking has been a
long-held and much debated ambition. To see it come to fruition
on the strength of the overwhelming endorsement of shareholders
was certainly a highlight of 2020.

How will the new Compass strategy
strengthen Unilever?
At the heart of the Unilever Compass is a belief that sustainable
and purposeful business drives superior long-term performance.
That message is more relevant – and more resonant – today than
ever before. While Covid-19 has concentrated minds and efforts on
the immediate global health crisis, it has also reminded us of the
fragility of the world we all share with other big global challenges,
like climate change and inequality, becoming even more pressing.

By making solutions to these challenges the focus of our attention
– and the essence of our brand propositions – we connect even
more directly with the billions of people around the world we serve.
They want to see companies and brands step-up and actively
engage in addressing today’s most urgent and deep-seated social
and environmental challenges, not just pay them lip service.

The power and relevance of the Unilever Compass was captured
vividly last year in the launch of some major initiatives. Clean
Future, for example, commits us to replace all of the fossil
fuel-derived carbon in our cleaning and laundry products with
renewable or recycled carbon by 2030. And with Future Foods,
we have set an ambition to transform the global food system,
reduce food waste and accelerate the move to plant-based meat
and dairy alternatives. These industry-leading initiatives respond
directly to the wishes of consumers. They also build on earlier,

What are your priorities for 2021?
Despite encouraging developments on treatments and vaccines,
the Covid-19 pandemic is far from over. Our overriding priority
remains, therefore, to protect lives and livelihoods. We will do that
by focussing on the safety and well-being of our own people – and
the many we work with in the value chain – while also continuing
to play a prominent role in the wider relief effort, including in the
roll-out of global handwashing campaigns.

The economic toll from the pandemic will be deep and long-
lasting. We need to be prepared. We will continue therefore in
2021 to focus on competitive growth. This will be a key part of
our overall 4G approach of delivering consistent, profitable,
competitive and responsible growth. All four are needed to create
value.

A further priority is to ensure we retain the speed and agility
of response which characterised our performance in 2020. We
have a wonderful portfolio of on-trend, purpose-led brands,
many of which are directly helping people through the trials of
the pandemic and prolonged periods of lockdown. Taking those
brands to more places, more people and more quickly is a key
part of our plans for 2021.

Finally, in keeping with our vision and belief that responsible
and sustainable business drives superior performance, we will
continue to prioritise our multi-stakeholder business model,
sure in the knowledge that the best way to deliver steady,
compounded value creation for shareholders is to serve the
needs and interests of all of Unilever’s many stakeholders.

STRATEGIC REPORTUnilever Annual Report and Accounts 2020
8

Our strategy

A belief that sustainable business drives superior
performance lies at the heart of the Unilever Compass.

r o w

Com

nie

urp o s e g

h p
it
w
s
d
n
a

Our purpose
is to make
sustainable living
commonplace

p
o
s
e
l
a
s
t

Our vision is to be the global leader in
sustainable business. We will demonstrate
how our purpose-led, future-fit business
model drives superior performance,
consistently delivering financial results
in the top third of our industry.

ple with pur p o s

h riv e

e t

Our strategic choices and actions will help us fulfil our purpose and vision

Develop our portfolio into high growth spaces

Hygiene

Skin care

Prestige beauty

Functional nutrition

Plant-based foods

Win with our brands as a force for good, powered by purpose and innovation

Improve the health
of the planet

Improve people’s health,
confidence and wellbeing

Contribute to a fairer,
more socially
inclusive world

Win with differentiated
science and technology

Accelerate in USA, India, China and key growth markets

Build further scale in USA,
India and China

Leverage emerging
market strength

Lead in the channels of the future

Accelerate pure-play and
omnichannel eCommerce

Develop eB2B
business platforms

Drive category leadership
through shopper insight

Build a purpose-led, future-fit organisation and growth culture

Unlock capacity through agility
and digital transformation

Be a beacon for diversity, inclusion
and values-based leadership

Build capability through
lifelong learning

Operational Excellence through the 5 Growth Fundamentals

1
Purposeful
brands

2
Improved
penetration

3
Impactful
innovation

4
Design
for channel

5
Fuel
for growth

Unilever Annual Report and Accounts 2020

Our growth creates value through a multi-stakeholder model

Our people

See pages 16 to 19

Consumers

See pages 20 to 23

Customers

See pages 24 to 25

Suppliers &
business partners

See pages 26 to 27

Planet & society

See pages 28 to 31

Shareholders

See pages 32 to 33

Our Multi-year Financial Framework

Competitive
growth

Profit
growth

Cash
generation

Top 1/3
TSR

STRATEGIC REPORTUnilever Annual Report and Accounts 202010

Our strategy continued

Our Compass sustainability commitments
will help us deliver our purpose and vision.

Win with our brands as a force for good, powered by purpose and innovation

Improve the health of the planet

Improve people’s health, confidence and wellbeing

Climate
action

Protect and
regenerate nature

Waste-free
world

Positive
nutrition

Net zero emissions from
all our products from
sourcing to point of sale
by 2039

Deforestation-free supply
chain in palm oil, paper
and board, tea, soy and
cocoa by 2023

50% virgin plastic
reduction by 2025,
including an absolute
reduction of 100,000 tonnes

€1 billion annual sales from
plant-based meat and
dairy alternatives
by 2025-2027

Halve greenhouse gas
impact of our products
across the lifecycle by 2030

Help protect and
regenerate 1.5 million
hectares of land, forests
and oceans by 2030

25% recycled plastic
by 2025

Double the number
of products sold that deliver
positive nutrition by 2025

Zero emissions in our
operations by 2030

100% sustainable sourcing
of our key agricultural crops

Collect and process
more plastic than we
sell by 2025

Replace fossil-fuel derived
carbon with renewable
or recycled carbon in
all our cleaning and
laundry product
formulations by 2030

Communicate a carbon
footprint for every product
we sell

Empower farmers and
smallholders to protect
and regenerate farm
environments

Implement water
stewardship programmes
in 100 locations in water-
stressed areas by 2030

100% reusable, recyclable
or compostable plastic
packaging by 2025

Halve food waste in our
operations by 2025

100% of our ingredients will
be biodegradable by 2030

Maintain zero
waste to landfill
in our factories

Supported by our €1 billion Climate & Nature Fund

70% of our portfolio to meet
WHO-aligned nutritional
standards by 2022

95% of packaged ice cream
to contain no more than
22g total sugar per serving
by 2025

95% of packaged ice cream
to contain no more than
250 kcal per serving by 2025

85% of our Foods portfolio
to help consumers reduce
their salt intake to no more
than 5g per day by 2022

Respect human rights

Respect and promote human rights and the
effective implementation of the UN Guiding
Principles, and ensure compliance with
our Responsible Sourcing Policy

Our responsible business fundamentals

Business
integrity

Safety at

work

Employee
wellbeing

Product safety
and quality

Responsible
innovation

Unilever Annual Report and Accounts 2020Win with our brands as a force for good, powered by purpose and innovation

Improve people’s health, confidence and wellbeing

Contribute to a fairer, more socially inclusive world

Health and
wellbeing

Equity, diversity
and inclusion

Raise living
standards

Future
of work

See pages 17 to 31 for
more on our sustainability
commitments

Take action through our
brands to improve health
and wellbeing and advance
equity and inclusion,
reaching 1 billion people
per year by 2030. We will
focus on:

■ Gender equity

■ Race and ethnicity equity

■ Body confidence

and self-esteem

■ Mental wellbeing

■ Hand hygiene

■ Sanitation

■ Oral health

■ Skin health and healing

Achieve an equitable
and inclusive culture by
eliminating any bias and
discrimination in our
practices and policies

Ensure that everyone who
directly provides goods
and services to Unilever
will earn at least a living
wage or income by 2030

Help equip 10 million
young people with
essential skills by 2030

Help 5 million
small and medium-sized
enterprises grow their
business by 2025

Pioneer new models to
provide our employees
with flexible employment
options by 2030

Reskill or upskill our
employees with future-fit
skills by 2025

Accelerate diverse
representation at all
levels of leadership

5% of our workforce to be
made up of people with
disabilities by 2025

Spend €2 billion annually
with diverse businesses
worldwide by 2025

Increase representation
of diverse groups in our
advertising

Respect human rights

Respect and promote human rights and the

effective implementation of the UN Guiding

Principles, and ensure compliance with

our Responsible Sourcing Policy

Our responsible business fundamentals

Business

integrity

Safety at

work

Employee

wellbeing

Product safety

and quality

Responsible

innovation

Responsible advertising
and marketing

Safeguarding

data

Engaging with
stakeholders

Responsible
taxpayer

Committed to
transparency

STRATEGIC REPORTUnilever Annual Report and Accounts 202012

Our business model

We work to create sustained value for our
stakeholders through an adaptable and
resilient business model.

What we depend on...

Relationships

Purposeful people
Our 149,000 talented people give
their skills and time in Unilever
offices, factories, R&D laboratories
and tea estates all over the world –
increasingly working in more flexible
and agile ways.

Pages 16 to 19

Trusted suppliers
Around 56,000 supplier partners in
150 countries source materials and
provide critical services for us.

Pages 26 to 27

Committed partners
Our relationships with governments,
customers, NGOs and other
organisations around the world help
us to increase our impact beyond
what we could achieve on our own.

Pages 26 to 27

Resources

Input materials
We use thousands of tonnes of
agricultural raw materials, packaging
materials and chemicals for our
products.

Pages 29 and 140

Financial resources
Capital from our shareholders and
lenders allows us to invest for the
long term.

Pages 143 to 148

Intangible assets
400+ brands, R&D capabilities and
intellectual property such as patents
and trade marks, manufacturing
excellence, technological capabilities
and organisational design set us
apart.

Pages 134 to 136 and 173

Owned and leased assets
We occupy around 290 factories,
290 offices and 450 logistics
warehouses globally.
Pages 137 to 139

What we do...

Innovation
Our marketing and R&D teams
use these insights, plus the
best ideas and thinking from
specialists outside Unilever,
to develop our brands
and products. We spent
€800 million on R&D
in 2020.

Sourcing

Each year, we buy raw materials and

packaging materials worth

€19 billion to make our products,

and services worth €13 billion

(including media) to help

our business run.

Consumer insights
We track changing consumer
sentiment through our
36 People Data Centres
around the world,
combining social
listening with traditional
consumer research.

Consumer use
2.5 billion people use
our products every day
to feel good, look
good and get
more out of life.

Sales
We use many channels to
make our brands available
to consumers in over
190 countries wherever
and whenever they
shop. Our products
are available in
25 million retail
outlets.

Marketing
We’re the second-largest
advertiser in the world
based on media spend.
We create an increasing
amount of tailored digital
content ourselves to
connect with consumers
and make it easy to choose
a Unilever brand.

All underpinned by the management of our principal risks pages 46 to 50

Manufacturing

Our factories and third-

party manufacturers

turn materials into the

products we sell.

Logistics

A global network of logistics

warehouses deliver our

products to millions

of retail outlets.

Unilever Annual Report and Accounts 202013

Contributing
to the SDGs

What we do...

The value we create for...

Consumer insights

Innovation

We track changing consumer

Our marketing and R&D teams

sentiment through our

36 People Data Centres

around the world,

combining social

listening with traditional

consumer research.

use these insights, plus the

best ideas and thinking from

specialists outside Unilever,

to develop our brands

and products. We spent

€800 million on R&D

in 2020.

Sourcing
Each year, we buy raw materials and
packaging materials worth
€19 billion to make our products,
and services worth €13 billion
(including media) to help
our business run.

Manufacturing
Our factories and third-
party manufacturers
turn materials into the
products we sell.

Logistics
A global network of logistics
warehouses deliver our
products to millions
of retail outlets.

Consumer use

2.5 billion people use

our products every day

to feel good, look

good and get

more out of life.

Sales

We use many channels to

make our brands available

to consumers in over

190 countries wherever

and whenever they

shop. Our products

are available in

25 million retail

outlets.

Marketing

We’re the second-largest

advertiser in the world

based on media spend.

We create an increasing

amount of tailored digital

content ourselves to

connect with consumers

and make it easy to choose

a Unilever brand.

All underpinned by the management of our principal risks pages 46 to 50

Our people
We aim to reward people fairly for the
work they do, while helping them find
their purpose so they become the best
they can be at Unilever.

See pages 16 to 19

Consumers
We aim to provide superior-quality products
and purposeful brands that take action on
the issues that matter to people and planet.

See pages 20 to 23

Customers
We partner with large and small retailers
around the world to grow our business
and theirs.

See pages 24 to 25

Suppliers & business partners
We partner with thousands of suppliers
to help innovate our products and support
mutual and sustainable growth.

See pages 26 to 27

Planet & society
We aim to improve the health of the
planet while contributing to a fairer
and more socially inclusive world.

See pages 28 to 31

Shareholders
We aim to deliver consistent, competitive,
profitable and responsible growth.

See pages 32 to 33

STRATEGIC REPORTUnilever Annual Report and Accounts 202014

Stakeholder review

The Unilever Compass and our business model are designed to
create value for our stakeholders. Understanding their changing
needs helps us to make informed strategic decisions.

Our multi-stakeholder model in action

We’ve identified six stakeholder groups critical to our future success: our people, consumers, customers, suppliers & business partners, planet &
society, and shareholders. The stakeholder reviews on pages 14 to 33 explain how we’ve worked to create value for each of our stakeholders
in 2020, as well as how our business benefits from these vital relationships.

The Governance of Unilever sets out the roles and responsibilities of the Board and, with the exception of specified Board responsibilities, delegates
the running of Unilever to the CEO. The CFO also has certain powers in relation to financial matters set out within the Governance of Unilever. The CEO
heads the Unilever Leadership Executive (ULE) which comprises the CFO, the Group Secretary and the most senior management of Unilever as set out
on pages 66 to 67. The Board provides guidance and advice to the CEO and the ULE on multiple issues throughout the year. The table below highlights
key Board considerations and outcomes and also where relevant the key considerations and outcomes of the ULE in line with their duties and the
Board Rules outlined in the Governance of Unilever.

Section 172

Under Section 172 of the UK Companies Act 2006 (‘Section 172’) directors must act in the way that they consider, in good faith, would be most likely
to promote the success of their company. In doing so, our Directors must have regard to stakeholders and the other matters set out in Section 172.
Pages 14 and 15 comprise our Section 172 statement, which describes how the Directors have had regard to these matters when performing their
duty. In light of our purpose to make sustainable living commonplace and the Unilever Compass strategy to drive superior performance as set out
on pages 8 to 9, our Directors take steps to understand the needs and priorities of each stakeholder group and do so via a number of mediums,
including by direct engagement or via their delegated committees and forums. The relevance of each stakeholder may change depending on
the matter at hand. In line with the UK Companies Act 2006, below we provide a high-level summary of the concerns of our stakeholders and
how our Directors and ULE engaged with them and had regard to their interests when setting Unilever’s strategy and taking decisions concerning
the business.

How we engaged in 2020

Board and ULE considerations
and outcomes in 2020

Stakeholder

Our people

We stepped up
our engagement
with employees
significantly to help
our people through
the pandemic.

For more see
pages 16 to 19

Interests and concerns
in 2020

Covid-19 has been the overriding
concern for our people during the
year as the pandemic impacted
virtually every part of their lives,
especially working arrangements.
Through our engagement, we also
consistently see that concerns
such as career opportunities,
wellbeing, purpose, sustainability
and being a more simple and
agile business remain important
for our people.

This year our annual UniVoice survey
focused on our office-based employees,
and more than 42,000 people responded
(see pages 16, 17 and 18 for results).
We continued to run monthly UniPulse
surveys throughout the year for more
instant feedback. Covid-19 accelerated
a widescale use of new digital platforms.
We held a bi-weekly ‘Your Call’ with our
CEO and ULE which gave people direct
access to our leadership team in rotating
guest slots, including our Chairman.
We consulted with our people on a
new Future Reward Framework through
multiple employee focus groups and
surveys, as well as consultation with the
European Works Council and other local
employee representation bodies.

Consumers

Changes in consumer
behaviour have
accelerated, leading
to new insights about
the ways people shop
and buy our products.

For more see
pages 20 to 23

The pandemic has impacted
consumer spending habits,
particularly for discretionary
purchases. This has led to a
back-to-basics approach to
consumption, with value for
money and quality remaining key
concerns, alongside sustainability
as consumers have become
more mindful of the impact of
their spending decisions on
the world. Health and wellness
concerns also increased as people
looked to protect themselves
from the physical and mental
consequences of the pandemic.

We have many direct and indirect
touchpoints with our consumers. Our
People Data Centres combine social
listening with traditional consumer
research while our Consumer Carelines
give us rich insights into the experiences
of consumers when using our products
– during 2020 we had around 2.5 million
interactions through calls, emails,
letters, social media and webchats. We
also consulted with almost 1.8 million
consumers this year through regular
surveys using partners like Kantar, Nielsen
and Ipsos. These insights help to inform
our understanding of consumer trends,
including those likely to continue in a post-
Covid world.

Our Board engaged directly with
employees throughout the year on
issues of concern such as working in
factories and at home through the
pandemic, the new starter onboarding
process and learning opportunities.
These perspectives were taken into
consideration in decision making (see
page 63 for more details). The Board’s
Corporate Responsibility Committee
looked at a range of people-related
issues in the year, including safety and
our Code of Business Principles (see
page 18). As part of the Unification
of our legal structure, and after
engaging with the Dutch Central
Works Council and the European
Works Council, the Board agreed to
provide a guarantee to Unilever APF,
the Dutch Pension Fund, to safeguard
the pensions of Dutch employees.

Our Board and ULE members are
regularly informed of consumer trends
and consider these when making
decisions. For example, during a
strategy focused Board meeting in
October, the Board discussed how to
ensure our divisional portfolios remain
attractive and differentiated, the
growing importance of eCommerce
and large retailer omnichannel
partnerships. The ULE considered
a range of 3-5 year scenarios in the
early months of the pandemic to
understand how consumer trends
might change, how to best prepare
for a global recession, and where
growth opportunities might be. The
work informed Unilever’s portfolio and
investment strategies by helping
to identify growth opportunities.

Unilever Annual Report and Accounts 2020

Stakeholder

Interests and concerns
in 2020

How we engaged in 2020

Customers

This year eCommerce
exploded, as shifting
shopping behaviours
affected retailers of
all types.

For more see
pages 24 to 25

Suppliers &
business partners

We worked closely
with suppliers and
partners to overcome
unexpected challenges.

For more see
pages 26 to 27

Planet & society

People all over the
world are speaking
up and demanding
that business does
more for the planet
and society.

For more see
pages 28 to 31

Shareholders

In this eventful year,
it’s been even more
important to keep
our shareholders
closely informed
about our business.

For more see
pages 32 to 33

Covid-19 has focused all
our customers on the role of
eCommerce. Our retail partners
are working to become more
competitive in a world where
shoppers move seamlessly between
online and offline channels – and
particularly to bring shoppers back
into stores. In emerging markets,
the small retailers we partner
with are increasingly embracing
eCommerce and looking to us for
digital solutions, for example, to
speed up the restocking of products.

Our larger retail partners have direct
channels into us. We actively manage
these relationships through our Customer
Development team. At the start of the
pandemic, we used customer and
shopper insights from China and Italy to
help customers in other markets build
a response plan and take appropriate
actions. We also used our supply chain
expertise to help our customers forecast
and keep high-demand products in stock.
When lockdowns were lifted, we worked on
projects with our customers to help bring
shoppers back into stores – driving growth
and expansion across multiple channels.

This year has been challenging for
our suppliers and partners. Huge
fluctuations in demand during the
pandemic affected cash flow for
many suppliers. Border restrictions
hampered logistics; and new
government regulations to protect
employees and ensure safe
working environments demanded
new ways of working, often at very
short notice. Our suppliers are also
looking for simpler ways to engage
with us, faster decisions and
clearer feedback through fewer
touchpoints.

We communicated more frequently
with our high-risk material suppliers this
year, often daily. We built a Covid-19
information site for suppliers to share
protocols and useful information to
help keep them running safely. We ran
workshops and webinars with key partners
(including third-party manufacturers)
to explain our new factory tier system
based on country risk levels, as well as the
protocols in place for site cleaning and
employee safety. In May, we ran a ‘Your
Call’ with our CEO and Chief Procurement
Officer and our top 300 suppliers to share
information and thank them.

Despite Covid-19, concern for
the environment shows no sign
of waning. NGOs continue to
campaign to reduce the impact of
plastic packaging and products
on the environment as well as
for stronger action on climate
change, while vocal and influential
activist citizens demand more
from companies on these same
issues. People increasingly want
to know where the products they
buy come from, what’s in them,
how they’ll affect the environment
and whether they’ve been tested
on animals. Concerns around
poverty, inequality and jobs have
been heightened by the economic
uncertainty. Racial discrimination
and social injustice has also come
more to the fore following the Black
Lives Matter protests.

As part of our materiality process, we
analyse insights from stakeholders to
make sure we’re focusing on the most
important sustainability issues – see our
website for more. We focus our external
advocacy on the social, environmental
and economic issues most important to
Unilever, with ULE members leading our
engagement in the areas most relevant
to their field of responsibility. Our Chief
Supply Chain Officer, for example, is
part of the World Economic Forum (WEF)
community focused on supply chains.
Our CFO is Vice Chair of the Task Force
on Climate-related Financial Disclosures
(TCFD). And our CEO is a board member of
the Consumer Goods Forum and Focusing
Capital on the Long Term (FCLT Global).
Vice Chair of the World Business Council for
Sustainable Development (WBCSD) and a
member of the WEF International Business
Council.

As well as their ongoing interest
in our strategy and business
performance, our shareholders
were interested in our priorities
during the Covid-19 pandemic and
the potential impact of this on our
business. Shareholders were also
interested in the Unification of our
legal structure. And they continued
to be focused on our approach to
sustainability, including specific
issues such as plastic waste, as
well as our sustainability targets
and reporting. The Board’s decision
to maintain our dividend, as part
of our multi-stakeholder response
to Covid-19, was welcomed by
shareholders.

We speak directly to shareholders
through quarterly results broadcasts
and conference presentations, as well
as through meetings and calls about
aspects of business performance and
consumer trends. Senior leaders and our
Board speak directly to shareholders
on a broad range of issues. This year, in
addition to the CEO and CFO presenting
at investor conferences, our Chief Supply
Chain Officer and Chief R&D Officer
held a joint presentation on our supply
chain and research and development
activities. We also engaged in extensive
dialogue on our Unification proposals
ahead of the shareholder votes, consulted
on our Remuneration Policy proposals
and held a webcast on our approach to
climate action. Due to the pandemic, all
shareholder engagement was virtual
from March.

Board and ULE considerations
and outcomes in 2020

Our Board and ULE held various
discussions around our customer
development strategy. The ULE agreed
to offer cash flow relief to our smallest
and most vulnerable customers and
suppliers. They also discussed the
ongoing digitisation of our customer
experience including opportunities
to use digital solutions to help
independent stores in our top markets
manage demand and supply, payments
and the overall customer relationship.
The ULE approved increased investment
in shopper and customer insights to
create further value for customers.

In addition to the cash flow relief
noted above, the ULE agreed to a
number of interventions to support
our suppliers during the pandemic
including three months’ salary
protection for third-party employees,
such as cleaners and security staff.
The ULE were also briefed monthly on
supply chain developments.

In December 2020, the Board agreed
to put Unilever’s climate transition
action plan before shareholders and
seek a non-binding advisory vote on
our ambitious emissions reduction
targets and the plans to achieve them.
The Board’s Corporate Responsibility
Committee (CRC) covered a wide range
of sustainability topics (see pages 72
to 73). Responsibility for managing
sustainability issues day-to-day rests
with the ULE. This year, they worked
to develop the Unilever Compass
strategy as well as our climate and
nature, and social goals. Diversity and
inclusion was also a focus this year and
a standing item on the ULE agenda.
The Sustainability Advisory Council,
comprising seven external experts,
continues to act as a sounding board for
the Board, providing strategic steer on
key sustainability issues (see page 73).

Shareholder feedback forms part of
Board conversations. As he took up his
role, our Chairman engaged directly
with a number of shareholders; and after
each quarterly market update, our CEO
shares feedback from investors with the
Board. Shareholder consultation on the
Unification proposals took place ahead
of the Extraordinary General Meetings,
involving our Chairman, CEO and CFO.
The Unification proposals received the
overwhelming support of shareholders.
As part of our Directors’ Remuneration
Policy renewal planned for the 2021
AGM, the Chair of the Compensation
Committee entered into more than 30
conversations with shareholders and
proxy advisors. Feedback was discussed
in the Compensation Committee and
the Board. Subsequently, a letter was
written to shareholders explaining how
this feedback was taken into account
before finalising the new Directors’
Remuneration Policy (pages 79 to 103).

STRATEGIC REPORTUnilever Annual Report and Accounts 2020

Our people

When we take care of our people, our people
take care of the business.

2020 was an unusually challenging year for our people. We
were all affected by the pandemic in different ways. But even
as lockdowns hit across the world, the tremendous efforts of
people all around Unilever enabled us to continue to work
quickly and safely, whether on the factory floor, on a tea estate
or from a home office. We quickly tested and scaled up new
ways of working – rethinking and reshaping our business for
an uncertain future. And despite all the uncertainty, our people
were more engaged, with engagement scores rising by 6% to
83% – well above industry benchmarks.

As well as the many ways in which we worked with speed and
agility to respond to the unexpected this year, we continued to
prepare our people for the future of work and nurture a culture
in which our people can thrive.

of the organisation. As well as Flex, we’re using an external
marketplace to quickly access skilled labour from companies
in sectors facing low demand, such as aviation and hospitality.

We’re also increasingly embedding ‘Agile’ ways of working.
Guided by our internal coaches and our new Agile Centre of
Excellence, teams at all levels of our business are adopting
new practices, including our ULE. These practices are helping
us make better and faster decisions, innovate at pace and
adjust quickly to changing consumer demand. A 10% jump
in our October UniVoice scores on our speed of response
indicates that we are making progress, although with this
score still at 60%, there’s much to be done. In response,
we’re simplifying everyday processes, prioritising and using
technology to improve speed and efficiency.

Going above and beyond

Protecting wellbeing

Consumers all around the world were relying on us to produce
the household necessities they needed most, so it was
essential that we kept our factories and distribution centres
operating. We are grateful to the tens of thousands of people
within the company who made this happen – and who did so
with a safety-first mindset.

Even though our UniVoice survey in October showed a 9%
increase (to 82%) in people who feel Unilever cares about their
wellbeing, we know we need to do more to support our people
to ensure their physical and mental wellbeing. We also know
that people are working longer hours and coping with more
distractions at home.

Working safely and at speed

In the midst of Covid-19, we concentrated on business
continuity, making it safe for essential staff, such as factory
workers and sales teams, to return to work. We did so with
extremely strict protocols to protect everyone’s physical and
psychological safety, such as protective equipment, distancing
regulations and frequent health checks, including on people’s
mental health.

In March, we closed all Unilever offices and some
67,000 people began to work from home. Overnight our
communications became 100% digital. Even with remote
working systems in place, this was not without its challenges.
Each person needed the right equipment and systems to
perform their roles, and we rolled out global guidelines on
working from home. We saw no decrease in collaboration and
productivity from March to June – in fact, this rose significantly,
with 20% more time spent working together internally and 19%
more time in virtual external meetings.

Becoming more agile

This year has highlighted our agility in many ways, most
notably in our response to Covid-19. In just three months,
we moved over 9,000 people from business areas that were
slowing, such as our out-of-home food business, to teams
experiencing high demand like those producing personal
hygiene products. More than 20,000 of our people used Flex,
our internal digital talent marketplace, to match their skills
and capacity with business-critical demand in other areas

This year, more of our people used our employee assistance
programmes, available to every single Unilever employee and
in many instances their family, with a particular increase in
family members engaging with our mental health support.
Our online employee support also rose by a third in the year.
We started gathering insights weekly through online and SMS
health checks to help us quickly identify any areas of concern,
such as domestic abuse or burnout. We responded to the rise
in reported domestic abuse during lockdowns by giving people
specific training in how to handle this.

Our people have been our
absolute priority throughout
2020, and because of them
we’ve been able to meet
the needs of consumers and
grow our business.

Leena Nair
Chief HR Officer

Unilever Annual Report and Accounts 202017

93%

of our people are proud
to work at Unilever (based
on our 2020 UniVoice survey)

A year of learning

One important way we’re boosting our capability is by
becoming a more digital business. We’re hiring more people
with digital backgrounds and investing heavily in developing
key skills such as agile working and data analytics in all
areas of our business. The Citizen Data Scientist programme
we launched in 2019, for example, has qualified more than
6,000 people in our procurement, planning, logistics and
manufacturing teams in digital skills.

We also focused on giving people tools to cope with stress by
strengthening our focus on wellbeing – working closely with
local representatives to amplify and accelerate initiatives
already in place. In 2020, this included building a company-
wide mindfulness movement by training people to deliver
mindfulness sessions around the world, holding our first
Global Mindfulness Day in October, and taking our leaders
through an extensive mindfulness training programme. And
in a wider focus on mental health across the business, we‘re
building a network of mental health champions, with more
than 1,600 in place by the end of 2020, including a group of
mental health trainers.

We refocused our learning activities in 2020 to make sure
our people have the skills to fulfil critical business functions,
such as supplying essential goods and adjusting to shifts in
consumer demand. We also prioritised helping people adjust
to the fallout of Covid-19: promoting remote working skills,
supporting our leadership, and helping people deal with
issues around mental wellbeing and personal resilience, for
example. The numbers of people accessing learning materials
during the year soared. Users of our online learning platform
Degreed were up 150% on the previous year, and our UniVoice
survey showed that 82% of our office employees felt well
prepared to do their job.

Safety at work

Focused on employability

As well as ensuring Covid-safe work environments during the
global pandemic, this year we continued to focus on ensuring
the safety of our people and contractors in everyday work
situations – from the use of mechanical equipment to road
safety. In 2020, our Total Recordable Frequency Rate (TRFR)
improved to 0.63 accidents per million hours worked from
0.76 (1 October 2019 to 30 September 2020), in part due to a
reduction in non-manufacturing accidents on Unilever sites
due to the increase in homeworking.

Sadly, during this same period, two contractors and one
employee lost their lives. A contractor died in a lightning strike at
one of our tea estates in Tanzania; and a contractor in Romania
was killed on a construction site at a newly acquired business.
One of our factory employees in India died in a road accident
stepping out of a shuttle bus on his way home. When fatalities
occur, our policy is to have a global stand-down across our
operations to pay our respects and reflect on the learnings. We’ve
put in place several new measures around field safety during
thunderstorms, safe travel on buses and construction safety.

Preparing for the future of work

Agile methods are just one aspect of how we’re working in
new and better ways to become more fit for the future. Our
extensive online learning programmes not only enable our
people to upskill and reskill for their roles at Unilever, but are
helping them prepare for the changing landscape of work.

This focus on learning is a key part of our ambition to make
sure all of our people can reskill, upskill, work more flexibly
and otherwise adapt to the changing world of work. We are
determined to help everyone at Unilever stay employable.
For example, we’re pioneering new employment models,
extending our 2019 UK flexible working pilot to ten more
countries during the year. Offering the benefits of employment
with more flexible contracts will help us attract and keep
people with varying personal circumstances, both enhancing
our talent pool and making us a more inclusive employer.

We’re also continuing the work we began with the European
Works Council in 2019 on a Framework for the Future of Work.
With many factory and office workers in trade unions or covered
by collective bargaining agreements we are working with the
employee representatives to bring this framework to life. The
comprehensive toolkit helps people proactively reskill for new
ways of working, as we adapt our business to the efficiencies
created by automation and in response to shifts in consumer
demand. While we paused many of our supply chain change
programmes this year in response to Covid-19, we have now
restarted these – with minimising redundancies and helping
people shift to new types of work central to our approach.

STRATEGIC REPORTUnilever Annual Report and Accounts 202018

Our people continued

As we continue to transform Unilever, our people will create
future-fit plans to link their individual purpose with their
career ambitions. Furthermore, we commit to reskill or upskill
employees to ensure that by 2025 they have future-fit skills
for roles inside Unilever or beyond. We recognise that job
prospects today are limited for those without the right skills,
particularly young people. That’s why we’ve also committed
to help equip 10 million young people with essential skills to
prepare them for job opportunities by 2030.

Managing talent

This year, due to Covid-19, we made the hard decision from
June onwards to pause all salary increases, promotions and
external appointments until 2021– with the exception of a
limited number of business-critical roles. This was primarily to
protect both our people and our business at a volatile time.
Due to the uncertain economic outlook, our voluntary turnover
this year was lower at 5%.

Despite our recruitment freeze in 2020, we continued to
strengthen our employer brand through targeted digital
communication to highlight the benefits of working for
Unilever. The fact that we’re the number one FMCG graduate
employer of choice in 54 countries, and have the most
followers in our industry on LinkedIn confirms the power of our
purpose-led vision and culture.

Nurturing our culture

Much of our strength as a business lies in our shared values
and culture. In 2020, leaders all around our business worked
hard to set the right tone and support our people. Every
two weeks, our CEO and ULE members held a global virtual
townhall, where they answered questions from our people on
issues such as our Covid-19 response, the rapidly changing
external context, our strategy and our quarterly results
to ensure common awareness of the factors affecting our
performance. This openness was mirrored at local leader-
led virtual townhall meetings, and this kind of transparency
is making a difference to our people. Our October UniVoice
survey showed the most ever pride in working at Unilever
(93%), with trust in senior management up by 8% at 80%.

We work hard to help our people live their purpose and put
our people first. More than 5,000 people were given virtual
instructor-led leadership training in the year, 1,800 senior
leaders were supported with training for leading in a crisis,
and at least 50,000 pieces of leadership learning content
were consumed through our online Leadership Gym.

This year, we also simplified our performance targets and
began to move to a more flexible way of setting individual
goals and checking performance during the year – another
example of a more agile way of working.

In focus:

Future of the office

Covid-19 forced the transition to home working
– for Unilever and businesses everywhere.
Having 67,000 office-based people working
from home this year has shown at scale that
distributed and remote ways of working can
work. With an eye on the longer-term effects
of productivity, fatigue and culture, we’re
developing a flexible approach to working
that allows our office-based people to do
their best work from the most effective place –
wherever that is.

Working with integrity

Our focus at Unilever is very much on growth in line with our
values, not on growth at any cost. So we refreshed our Code
of Business Principles this year to include the provision of a
living wage to our employees, ethical data use, transparency
and a greater focus on safety and mental wellbeing. Our
data around Code breaches provides increasing insights into
exactly what the issues are, and where – and we’re focusing
on understanding how to prevent behaviours that lead to
breaches. We’re training our people to prevent accidental
compliance breaches, and our 24/7 Speak Up platform
continues to be our main mechanism for reporting concerns
around business integrity. Our ongoing commitment and
zero tolerance to bribery is supported through our annual
Countering Corruption mandatory training and initiatives on
the ground delivered to all employees. We’ve been working
to simplify and improve the whistleblowing process for users
– this year, we received 1,357 reports, closed 1,434 reports
(including some from prior years) and confirmed 723 reports
as breaches, which led to 338 people leaving the business.
See page 44 for how we manage business integrity risks.

See our website for more on business integrity

Unilever Annual Report and Accounts 2020
19

Open to all

Making Unilever a completely inclusive place to work will make
us a stronger, better business. Our priority is to ensure that the
diversity of our people reflects the societies in which we live
and work. So we take a holistic approach – making sure people
feel welcome and are treated fairly at Unilever, regardless of
their race, gender, gender identity, age, sexual orientation,
religion or experience and recognising the importance of
self-identification, given the broad circumstances under which
discrimination can happen. This year, the Black Lives Matter
movement shone a light on racial discrimination and social
injustice, and we strengthened our focus on race, alongside
gender, disability and LGBTQI+. There are many facets to
how we’re pushing to become a more diverse organisation:
leadership, training and awareness-raising, more refined
employee data, recruitment and talent management,
to name a few.

A beacon for diversity

We believe in a diverse yet cohesive approach to the
complexity of true inclusion. While our vision and policies
around diversity and inclusion are global, our local leaders
create their own roadmaps for applying them. We badge our
many business-wide inclusion programmes as #Unstereotype
the workplace. In 2020, we started an inclusive leaders training
programme. We aim to have more than 500 leaders complete
the course by the middle of 2021. Each month, we report to
the ULE on our progress towards inclusion, and our Global
Diversity Board reviews progress three times a year. We have
nearly 200 diversity and inclusion champions around the
world who help us develop and deliver our programmes.
This year, we strengthened our leadership focus on equity,
diversity and inclusion, and established a racial and ethnic
equity taskforce. This will help us deliver our racial and ethnic
equity strategy, starting with the diversity of our leadership
in countries with a history of racial discrimination, such as
the US, UK, South Africa and Brazil.

In recent years, we’ve made good progress in our journey
towards gender equality, hitting our gender balance target at
management level one year early and maintaining it at 50% in
2020. This year, we launched a new coaching programme run
online by specialist INSEAD coaches to help women leaders
progress their careers. We now offer paid paternity leave
in all of our workplaces.

We’re committed to gender equality and fairness in the
workplace, based on equal pay for equal work and achieving
greater gender balance. Pay and overall reward is gender
neutral, with any differences between employees in similar
jobs reflecting performance and skill. Gender pay gaps can
develop where there is a representational imbalance between
genders. Our Framework for Fair Compensation has been
instrumental in helping us review the average pay differences
between genders at both a country level, and at each work
level within each country. We continue to improve our gender
balance, and relevant gender pay gaps, at various levels
and in various countries throughout the business. While
there is more to do on gender balance, our efforts are being
recognised. We’re proud to have won a prestigious Catalyst
Award for our initiatives to create a gender-balanced and
inclusive culture that breaks down stereotypes. We were also
listed in Bloomberg’s 2020 Gender-Equality Index.

As part of our Framework for Fair Compensation, we are
committed to pay a living wage to all our direct employees.
At the end of 2020, 100% of Unilever’s direct employees
globally were paid at or above a certified living wage level.

In 2018, we committed to improve the representation of people
with disabilities in our business. This year, we asked our office-
based employees to declare any disabilities. We plan to survey
our factory-based employees in 2021 to get a more complete
picture of disability across our business.

We want to make sure that people’s experience of Unilever
is fair for everyone and that we’re fully including members
of LGBTQI+ communities. This year, our CEO signed the
Declaration of Amsterdam to reinforce our commitment
to LGBTQI+ inclusion.

Gender statistics

Board

Unilever Leadership Executive (ULE)

Senior management (reporting to ULE)

Management

Total workforce

Female

(42%)

(31%)

(22%)

7,636

(50%)

51,967

(35%)

2020

Male

(58%)

(69%)

(78%)

7,525

(50%)

96,982

(65%)

Female

(38%)

(33%)

(20%)

7,620

(51%)

53,469

(36%)

2019

Male

(62%)

(67%)

(80%)

7,408

(49%)

96,398

(64%)

Note: Employees who are statutory directors of the corporate entities included in this Annual Report and Accounts: 464 (67%) males and 225 (33%) females (see pages 185 to
191).

STRATEGIC REPORTUnilever Annual Report and Accounts 202020

Consumers

People’s concerns around hygiene and health, as well
as the planet, continued to grow during the year.

Living differently

Beauty & Personal Care

As the pandemic took hold around the world during the year,
many people changed how they lived, worked and shopped.
Almost overnight, people’s immediate personal concerns –
health, hygiene and wellbeing – became a priority as people
sought to protect themselves and their families from Covid-19.
With countries going into lockdown and people increasingly
staying at home, daily habits changed dramatically: from
eating out to eating at home, from shopping in stores to
shopping online, and from working in offices to working
from home.

At the same time, consumers’ desire for health and wellness
products continued to grow as people sought to protect their
health. During the year, we acquired SmartyPants Vitamins
and Liquid I.V. to build out our portfolio of brands in functional
nutrition, health and wellbeing.

While the immediate focus for many was on dealing with
the impact of Covid-19, concerns around waste, plastic and
climate change were not diminished by the pandemic – if
anything they became stronger. People continued to look for
convenient and effective natural, eco-friendly and chemical-
free products.

Our three Divisions worked to meet these changing
consumer needs in a variety of ways in 2020: through
product innovations, shifting to new distribution channels
and connecting with consumers through their brands’
purpose-focused activities – often going the extra mile
to do this in trying conditions.

Putting purpose at the
heart of all our brands is
not only the right thing
to do, we know it drives
superior performance
and growth.

Sunny Jain
President, Beauty & Personal Care

We aim to be the most people- and planet-positive beauty
business in the world.

As lockdowns affected the beauty industry more widely, they
also changed consumers’ personal care habits at home. In
particular, we saw declines in the use of deodorants and hair
care products. During much of the year, we focused on giving
people the products they needed to stay well, particularly in
terms of personal hygiene.

When the pandemic started, we did not have a significant
hand hygiene portfolio available in key regions like Europe
and North-America to support consumers and meet their
needs. We worked to build this as fast as we could. This meant
expanding our hygiene offerings significantly through our big
brands. Lifebuoy, one of the world’s biggest soap brands, was
introduced into 58 new markets. And during the year it became
Unilever’s latest billion-euro brand. Vaseline also expanded
production of antibacterial hand creams to 18 markets.

Our brands also responded to Covid-19 through product
donations, innovations, and communications supporting
people’s hygiene and wellbeing. Lifebuoy, for example,
donated more than 30 million bars of soap to refugees and
other vulnerable people around the world, achieved over
60 billion impressions through their TikTok ‘do the Lifebuoy’
handwashing videos and launched a new campaign ‘H is for
handwashing’ when teaching the alphabet to children. In
hair care, Clear launched a 14-day programme to help boost
people’s resilience during lockdown, and antiperspirant brand
Rexona launched a campaign to inspire millions of people
in 35 countries to ‘move more at home’. Dove, through its
Courage is Beautiful campaign, and our Pepsodent and Signal
oral care brands acknowledged the sacrifices of frontline
workers such as health professionals.

With hair salons, spas and specialist stores temporarily closed,
we shifted our focus to helping people look after themselves
at home. Our All Things Hair website shared advice for how
to create hairstyles at home, and Lux launched a lockdown
campaign. With people shopping much more online, we
shifted the focus of our Prestige Beauty brands towards
eCommerce while Dermalogica introduced one-to-one virtual
skin consultations.

People positive

Our brands continue to drive for a more inclusive vision of
beauty. Dove’s campaign with partners for the CROWN Act
(Creating a Respectful and Open World for Natural Hair)
prohibiting discrimination based on hair texture and style,
became law in seven US states and in September, the U.S.
House of Representatives passed the bill at the federal level.
Shea Moisture created a $1 million fund to support small
businesses and entrepreneurs of colour. Through its Equitable

Unilever Annual Report and Accounts 2020
21

Skincare for All programme, Vaseline is working to improve
skincare for Black and Latinx communities in the US by
partnering with Medscape and Direct Relief to train medical
professionals to better treat, diagnose and care for skin of
colour. We also introduced a new brand, MELÉ, in the US,
co-created with dermatologists of colour for melanin-rich skin.

In South Africa, we have established an expert-led advisory
board to help us develop programmes to support Black
hairstylists and salon owners as one of a set of actions we
are committed to including internal training on unconscious
bias. During the year, we also announced our intention to
build a more inclusive global skincare portfolio and committed
to remove language such as ‘fair/fairness’, ‘white/whitening’
and ‘light/lightening’ from all our communications and
packaging. As part of this move, we changed the name of our
Fair & Lovely brand, sold across Asia, to Glow & Lovely which
launched in September.

Our brands have also continued to work towards improving
the health and wellbeing of millions around the world – see
page 31 to read how.

Planet positive

While Covid-19 has focused attention this year on health
and hygiene, issues like climate change and plastic are still
extremely important – both to us and to consumers. We’re
continuing on our journey to use less, better or no plastic (see
pages 58 to 59 for more). For instance, Dove has introduced
100% recycled plastic bottles in North America and Europe
across all ranges. We’re also making more of our brands
available through refill stations, exploring through pilot
projects how to make refilling our products easy and desirable.
For example, we now have partnerships in Indonesia and
Mexico, where Walmart customers can refill aluminium bottles
with our Sedal shampoos.

We continue to advocate for a global ban on animal testing
for cosmetics working with partners and we welcomed China’s
decision to allow more cosmetics to be imported without
a requirement for animal testing in 2021. We are now also
asking for the EU to update its chemicals regulations to take a
more progressive approach and allow the use of non-animal
testing approaches to support the safety of chemicals. 23 of
our beauty and personal care brands including Dove, Simple,

In focus:

Lifebuoy acts fast

To help people protect against Covid-19, our
biggest handwashing brand threw its weight
behind new global advertising and social
media campaigns encouraging better hygiene
through handwashing. As well as producing 600
times more hand sanitiser in the year, Lifebuoy
brought out eight new products, including
masks, sanitisers and hand & surface spray,
and expanded into 58 new markets.

new markets for Lifebuoy

Suave and Sunsilk have certified approval from animal-
protection organisation People for the Ethical Treatment of
Animals (PETA). And this year our largest brand in Russia,
Chistaya Linia, and our toothpaste brand Zendium, both
received PETA approval.

Foods & Refreshment

We’re on a mission to be a world-class force for good in food.

Our ambition to give everyone access to good food and
to improve the health of both people and planet took on
new meaning this year, with the pandemic spotlighting the
need for radical improvements to our food system. We saw
many people cooking at home, stocking up and wanting to
make food last longer, and looking to buy more for less as
economies went through challenging times.

Healthy eating in

In response to people’s growing concerns about health and
immunity, we launched products with a focus on both taste
and goodness: for example, Lipton Heart Health in the US,
and Pukka’s natural solutions and immunity tea selection
box. Through our acquisition of GSK’s Consumer Healthcare
business in South Asia, we offered 150,000 packs of Horlicks
with immunity-boosting zinc for free to Indian hospitals in
major cities and expanded distribution of Horlicks and Boost
ranges – products catering for child and toddler nutrition,
women’s wellbeing and adult wellness backed by strong
research.

We adapted during the year to people’s changing preferences
and the shift from eating out – which significantly impacted
our foodservice business Unilever Foods Solutions – to buying
more food to cook and eat at home. Our supply chain worked
quickly to keep stores stocked with cupboard staples, such as
home cooking ingredients, soups and pasta, despite massive
challenges due to lockdown restrictions and border closures.
While people bought less ice cream to eat on the go, they
bought more for their homes: sales of take-home Magnum
and Ben & Jerry’s jumped by 25%, for example. This was
helped by the continued growth of Ice Cream Now, our fast
delivery service through a host of online delivery companies,
which is now available in close to 40 countries.

STRATEGIC REPORTUnilever Annual Report and Accounts 2020
22

Consumers continued

Every day, millions of people
enjoy our foods, tea and ice
creams. It is our responsibility
to make it easier for people to
eat healthy, tasty and more
sustainable foods.

Hanneke Faber
President, Foods & Refreshment

More plant-based options

In all our Foods & Refreshment categories, we’re offering more
plant-based foods. The Vegetarian Butcher continues to reach
more consumers, thanks to its expanding partnership with
Burger King, most recently in China and Latin America, and a
successful roll-out across stores in Europe. Despite the decline
in people eating out, our professional foodservices division –
Unilever Food Solutions – launched Pushing Plants Forward,
a global platform to help chefs meet rising demand for plant-
based dishes. With our biggest brands like Knorr leading the
way with its 50 Future Foods campaign, we’re investing heavily
in developing new plant-based protein sources and foods
at our Hive Foods Innovation Centre in the Netherlands. This
includes a new partnership with biotech start-up Algenuity to
explore using nutrient-rich microalgae to enhance the protein
and fibre of plant-based foods.

Our plant-based innovations are increasingly being
recognised. Nielsen named Hellmann’s vegan mayonnaise
and Ben & Jerry’s non-dairy ice creams as two of its 2020 top
25 breakthrough innovations in Europe. Unilever was again
named by investor network FAIRR as a pioneer in its benchmark
of the best prepared companies for the shift towards plant-
based proteins, coming top out of manufacturers and second
overall. And The Vegetarian Butcher’s Chickened Out Burger
won a Vegan Food Award from animal rights organisation PETA.

See our website for more on plant-based foods

Every brand a movement

Our brands continued their work to inspire better eating
and nutrition. Alongside the work of global names like Knorr
and Hellmann’s, local brands like Indonesia’s Bango and
South Africa’s Robertsons have inspired home cooks by
sharing recipes through food websites, as well as through
specific campaigns. Continuing its fight against food waste,
Hellmann’s began a Stay-In(spired) campaign to help people
make good use of cupboard staples and leftovers – sharing
recipes as well as videos from customers across its social
channels. This year, we committed to halving the food loss
and waste in our global operations by 2025 as part of the
Champions 12.3 initiative, a coalition of partners working
together to reduce food waste.

Our brands continue to take action on plastic – see pages 58
to 59 for more. Hellmann’s became the first dressings brand in
the US to switch to 100% recycled bottles and jars. And Bango,
Indonesia’s leading soy sauce, also moved to 100% recycled
plastic. We’re learning there are no easy solutions especially
when it comes to the flexible packaging (sachets and pouches)
for our Knorr products. This is a technical challenge made
more difficult by the differences between individual markets on
collection, sorting, recycling and regulation. We are committed
to finding a solution and plan to accelerate our efforts in 2021.

The work of our brands reaches beyond food and nutrition
to broader wellbeing, inclusion and sustainability causes.
Brands like Ben & Jerry’s continued to fight for radical change
beyond food and nutrition, such as racial justice, refugee and
voting rights, and climate action. Tea brands Brooke Bond,
PG Tips and Lipton continued to campaign for more inclusion
and human connections. And reflecting its commitment
to sustainability and inclusion, our premium tea brand T2
became a certified B Corporation in February 2020.

A better system from farm to fork

Around two billion people are overweight, while almost 690
million go to bed hungry – and a third of all food is lost or
wasted. So we’re using our size and reach to encourage the
wider food chain to become healthier and more sustainable,
faster. We’re leading by example, with full nutrition labelling
on almost all of our products to help people make healthier
choices. And we’re working behind the scenes with industry
partners and others to make it easier for people all over the
world to get nutritious and delicious food that doesn’t damage
the planet. For example, we worked with the World Economic
Forum and other partners to convene a virtual two-day event
to bring together business with academics, youth, civil society
and government to discuss ways to accelerate action ahead
of the UN Foods Systems Summit in 2021.

See our website for more on transforming the food system

In focus:

Future foods inspired by Knorr

In line with its purpose to inspire people to put
new foods on their plates for a greener food
future, Knorr aims to launch a number of new
products based on Future 50 foods over the
next two years. This year, the brand also shared
plant-based recipes through its Cook with Knorr
series and #CheatOnMeat campaign. Working
with local chefs and foodservice partners, Knorr
offered live-streamed cook-alongs for people
cooking more at home during lockdowns.

Unilever Annual Report and Accounts 2020

As part of Clean Future, we’re also working to make our
sustainable products more affordable. Our ultra-concentrated
dilutable laundry detergents in Brazil, Argentina and Uruguay
deliver the powerful clean our consumer expects, are
packaged in small bottles made with recycled plastic and cost
less than undiluted detergents. This year we also brought out
a new range of affordable laundry capsules in China, a new
brand of value cleaning products called Sahaja in Indonesia,
and reintroduced Vim budget cleaners in Turkey.

Essential pandemic support

We acted quickly this year to meet heightened consumer
needs for disinfection of surfaces, dishes and laundry, even
in places where the supply chain was severely challenged.
In China, we fast-tracked the launch of Domestos bleach,
brought out a new range of surface disinfectant called
Botanicals Hygiene and added hand dishwashing and surface
cleaners to our existing Omo laundry range. In Italy, Lysoform
rolled out a new medical hygiene range whilst Indonesia saw
the launch of Wipol disinfectant spray. We also launched new
antibacterial laundry detergents in Brazil, sanitising Comfort
fabric conditioners in South East Asia, and Persil laundry
sanitiser in the UK. Our disinfecting products are available in
55 countries.

Our professional products range also helped the hospitality
industry in over 40 markets ramp up cleaning standards to
reassure customers. Our air purifying brand, Blueair, which
enjoyed strong growth in 2020, launched HealthProtect,
with proprietary Germshield technology which helps protect
against viruses and bacteria 24/7. Blueair also donated air
purifiers to schools, day care centres and children’s hospitals.

To counter the initial confusion and misinformation around
how people could best protect themselves from Covid-19, our
brands supported public health messages around the world.
Domestos, for example, worked with leading hygiene experts
to inform people in how to safely and effectively use any
bleach at home.

As an industry we must
break our dependence
on fossil fuels, including
as a raw material in our
products.

Peter ter Kulve
President, Home Care

Home Care

Making people’s homes a better world, and our world
a better home.

With Covid-19 highlighting the importance of home for
many, our purpose became even more relevant in 2020. As
people stayed in to avoid infection and workplace hygiene
became essential to employees returning, demand for our
cleaning and disinfecting products jumped, and stayed high
throughout 2020. Facing challenges like border restrictions
and factory closures, we focused on making more of our most
high-demand products using an expanded global network
of manufacturing partners. We still have work to do, however,
to get more of our hygiene products, such as disinfecting
surface cleaners, to more people who need them. By rolling
out our disinfecting products to new markets and developing
new products under brands like Domestos and Lifebuoy,
we’re helping more people keep their homes clean and safe.

Towards a Clean Future

We know that consumers want sustainable products that
perform just as well as conventional ones. So in September,
we announced Clean Future, our ambitious blueprint for
reinventing our cleaning and laundry products to give people
affordable, high-performing products that are kinder to both
them and the environment.

We’re investing €1 billion over ten years in researching and
developing new technologies to reduce the carbon footprint,
plastic waste and water use, and increase the biodegradable
and sustainable ingredients associated with our products.
For example, we’ll be replacing the crude oil and other fossil
fuels used to make some of our chemicals with renewable and
recycled carbon. We’ll achieve all of this through partnerships
and cutting-edge innovation – applying the latest science and
biotechnology at scale to create cleaner, more sustainable
products that clean, remove stains and disinfect at least as
well as conventional products.

Clean Future is already alive in many of our products. Seventh
Generation, our leading eco-friendly brand, enjoyed strong
demand in 2020. Our biggest brand, Dirt is Good (Persil/Omo), is
being relaunched across the world with a formula that contains
plant-based stain removers and bottles made with recycled
plastic. Our Sun machine dishwash range in France now
contains 70% natural ingredients and is eco-labelled. Sunlight
hand-dishwashing liquid in Vietnam and Chile contains a new
renewable and biodegradable cleaning ingredient developed
with Evonik Industries. Cif ecorefill, which saved 170 tonnes of
plastic in the UK by encouraging people to reuse their spray
bottles, is now available in other European countries. In India,
some of our laundry powders contain soda ash made from
carbon emissions captured from a nearby plant.

Consumers not only want products that are more sustainable but
also more convenient and simpler to use. Our laundry capsules
continue to increase in popularity, with a strong acceleration of
our capsules business in Europe. Easy to use formats, such as our
Cif and Domestos cleaning sprays and wipes, were chosen by
more consumers who were trying to cut down the time of more
frequent cleaning and were rolled out in more markets.

STRATEGIC REPORTUnilever Annual Report and Accounts 2020
24

Customers

We’re supporting our many customers, from global
eCommerce marketplaces to small family-owned stores, as
they adapt to people’s rapidly changing ways of shopping.

We sell our products through approximately 25 million retail
outlets, in over 190 countries. Our customers are diverse:
from large traditional ‘bricks and mortar’ store partners (the
largest group in terms of sales) to online-only retailers, small
family-owned shops and value retailers. As the route to reach
consumers, our customers are critical to our business success
– and our primary aim is to help them grow sustainably
alongside Unilever. With the impact of Covid-19 affecting
retailers of all types in unexpected and often very challenging
ways, we worked closely with our customers this year to
navigate the challenges and opportunities of 2020.

Adjusting to the changing world of shopping

People’s behaviour changed everywhere in response to
Covid-19, and this created a surge in demand in some product
categories which suppliers did their best to keep pace with.
As retailers of all types worked to keep stocks of household
necessities such as hygiene and cleaning items, we supported
them in a variety of ways. In March, Unilever offered cash flow
relief to our smallest and most vulnerable customers and
suppliers. We also acted quickly to bring in new protective
protocols when visiting customers during the months of
lockdown, so that we could continue to deliver products and
keep shelves stocked. This sometimes meant finding new
ways to get products to consumers. Unilever International,
our market expansion arm which finds new categories,
partnerships and channels, built new alliances with delivery
firms like Uber as well as governments, institutions and
NGOs to increase the availability of our hygiene projects. In
Indonesia, we started a home delivery platform and fulfilled
orders from eCommerce warehouses such as Shopee, Lazada,

eCommerce not only helps
our brands reach more
people, it also gives us the
opportunity to bring their
unique purpose to life.
Keith Higgins
Chief Customer Development Officer

Blibli and even small family-run stores. And we helped
customers keep up with surges in demand for essential
items – for example, by launching Lifebuoy hand sanitisers
in 58 new markets.

With the supply chain under pressure, to help customers
get key products quickly into the hands of consumers, we
also simplified our range to focus on top-selling brands. In
accelerating so many trends, Covid-19 has presented a unique
opportunity to strategically reposition our portfolio to become
more future-fit – for example, by making space for more
affordable products to meet people’s needs in the recession.
We’re working closely with customers across multiple channels
and value retailers Aldi and Lidl to deliver products designed
and priced to meet shopper preferences.

Listening to our customers has never been more important.
This year we joined the Advantage Group Survey who
conducted a survey of our biggest customers across 28
markets. A consistent theme was that our customers
increasingly recognise us for being strategically aligned with
them, particularly around sustainability initiatives. However,
we also hear that we need to improve our processes to ensure
that more orders get delivered on time and in full to our
customers, as well as offering more shopper insights to help
drive category growth and sales. In response, we’ve launched
a programme to improve our service levels.

e-everything

During the lockdowns in 2020, a large part of people’s lives
moved online – learning, socialising and most certainly
shopping. This increase in online shopping, referred to as
eCommerce penetration, grew in the US in just eight weeks
by more than it had over the last ten years. Our eCommerce
sales grew 61% in 2020, representing 9% of total Unilever sales
at the end of the year.

As shoppers increasingly use technology for their purchases
and as certain categories such as health and beauty shift
online, many of our customers are looking for the right mix
of channels to serve their shoppers. As people’s shopping
habits changed, many of our large retail partners saw a
dramatic fall in store shopper traffic in 2020. We supported
their efforts to generate more online sales. For example,
we’re working closely with health and beauty customers,
such as Superdrug and other AS Watson brands, to find the
right channel mix and to bring shoppers safely back into
stores. We’re also designing products for online shopping
and delivery – in 2020, we launched more than 600 new
products across 18 markets that were designed for the
Amazon shopping experience.

Unilever Annual Report and Accounts 202025

and representatives on the ground to do more valuable work
like helping customers manage our product ranges and
helping them serve their shoppers better.

In Brazil, for example, small retailers are scaling their
businesses using our Compra Agora app. In Indonesia, we’ve
partnered with eCommerce and delivery platform Gojek
to launch GoToko, a digital marketplace platform offering
comprehensive product ranges (including Unilever brands) at
competitive prices. In India, we have expanded the footprint
of our Shikhar eB2B platform for Unilever products to over
300,000 stores. And we’ve been partnering with Alibaba
since 2016 on an eB2B platform for online ordering and
payments that reached over 100,000 small family-owned
stores this year. We’re also continuing to work with financial
providers like Mastercard to give smaller retailers access to
credit in countries such as India and Kenya – see pages 30 to
31 for more on how we’re creating economic opportunities
throughout our retail value chain.

Selling with purpose

As consumers’ desire for sustainable brands continues to
build, so too does our work with customers to help them meet
this need in a variety of ways. We’re working with Amazon, for
example, to help shoppers find sustainable brands such as
Cif, Dove and Seventh Generation (see bottom left for more).
In China, we developed a smart plastic recycling process with
Alibaba, involving a pilot of AI-enabled deposit machines to
improve efficiency. We launched an in-store refill trial with
Asda in the UK, where customers can use touchless refill
stations to buy and top up on home care and personal hygiene
products, as well as teabags. And we kicked off the Recycled
for the Planet initiative with Woolworths in Australia – an
interactive shop that helps consumers to think and act more
sustainably. For more on how we’re keeping plastic out
of the environment, see pages 29 and 58 to 59.

We also partner with our customers on programmes to benefit
their communities. In the Philippines, for example, we joined
forces with online retailer Lazada to support UNICEF in five
countries to raise money for children’s education programmes
and partnered with Shopee to help small business owners
affected by the pandemic. In the UK, our Pride 2020 range of
products for Superdrug helped us raise money as part of a
high-visibility Take Pride in You campaign in stores and online
to support the LGBTQI+ community.

Giving our customers an edge

The digitisation of shopping also brings new opportunities to
understand shoppers’ preferences and to help our customers
meet them. We’ve renewed our focus on shopper insights
to give our customers an edge, expanding the focus of our
People Data Centres from helping our brands connect with
consumers to helping our customers serve their shoppers
better. We’re sharing increasingly sophisticated insights
with customers around shopper preferences and behaviours
gained through social listening and other tools. This is helping
our larger customers make data-driven decisions about how
and where best to bring value to shoppers. We partnered with
Walmart in the US, for example, to co-create and launch a new
bath product range based on insights around people needing
‘me time’ at home during lockdown.

We also worked with our customer partners to find new sources
of talent and innovation. We launched a new digital incubator
with Alibaba in China that will bring together entrepreneurs,
innovators and tech start-ups to create new Beauty & Personal
Care brands for a flagship store hosted online. Not only should
this lead to better and faster innovation, it will also create
a pathway for small and medium-sized entrepreneurs to
develop exciting new brands.

Digitising our customer experience

The events of 2020 also fast-forwarded the shift towards
digital ordering and fulfilment, particularly for smaller stores
which, in many places, were badly affected by a lack of sales
and delivery staff at the height of the pandemic. The online
ordering from our small retailer servicing apps and web stores
skyrocketed – from roughly 350,000 stores at the end of 2019
to an additional 115,000 stores ordering online each month in
2020. By the end of the year, more than 1.4 million stores had
moved to our digital small retailer servicing solutions that help
in checking inventory and promotions, ordering products and
making payments for products purchased. For our customers
of all sizes, this shift to digital frees up our sales distributors

In focus:

Making sustainability the
easy choice with Amazon

In September, Amazon announced its new
Climate Pledge Friendly filter which identifies
more than 25,000 products across a range of
categories that meet certain sustainability
certifications. This helps online shoppers
find products with a lower environmental
footprint, such as our Cif, Dove and Seventh
Generation brands.

We’re also developing more products that
qualify for Amazon’s ‘compact by design’
certification – lighter items that use less water
and packaging, so need less energy to deliver
and to use.

STRATEGIC REPORTUnilever Annual Report and Accounts 2020

Suppliers & business partners

In supporting the resilience and growth of our suppliers
and partners around the world, we’re helping our
business succeed.

Our supplier ecosystem involves millions of people around the
world – from large multinationals to small local producers.
We also work with a wide range of business partners,
including industry peers, universities and joint ventures to
help unlock growth and solve issues for the benefit of our
stakeholders. Without our suppliers and partners we can’t run
our business. And it’s through our direct suppliers, who provide
us with goods and services such as raw materials, logistics,
advertising, professional services and much more, that we can
most influence change and help our business grow. We partner
with around 56,000 suppliers to innovate our products and
support mutual and sustainable growth.

An agile pandemic response

The events of 2020 highlighted the strength and agility of our
supplier partnerships. By supporting each other during the
pandemic, we were able to maintain business continuity in the
face of workforce shortages, closed borders and unanticipated
surges and drops in demand for product categories. In March,
we offered cash flow relief to our smallest and most vulnerable
customers and suppliers to help them cope with financial
liabilities and maintain livelihoods. We protected employment
by, for example, continuing to pay service suppliers – such as
cleaners – for three months despite offices being closed. We
helped to keep our suppliers functioning by providing them
with PPE and creating a supplier webpage with information on
hygiene protocols and guidelines for safe practices in light of
Covid-19. And we worked side by side with our supply partners
to respond to the worldwide need for medical supplies –
sourcing 250,000 Covid testing kits, 600 ventilators and millions
of masks for places where they were most needed.

Covid-19 has shown both
the vulnerabilities and
tremendous value of our
suppliers and partners.
We believe our strong
partnerships pave the way
to a green recovery and to
a more resilient and agile
supply chain.

Marc Engel
Chief Supply Chain Officer

Our suppliers provided critical operational support as we
responded to extraordinary surges in demand – increasing
production volumes as much as 500 times for some
personal hygiene products such as hand sanitiser. To meet
the spike in demand, we adapted seven Unilever sites and
added 54 new third-party manufacturing partners over
four months – and worked with PaKLab, one of our existing
third-party manufacturers, to develop and produce a new
sanitising product for Suave. And we formed cross-industry
collaborations to get essential goods to vulnerable areas at
speed. For example, we provided 270,000 bottles of surface
cleaner to hospitals and neighbourhoods in São Paulo, Brazil,
involving Heineken donating the alcohol, partners ALPLA,
WestRock and Alemolde producing packaging, and third-party
manufacturers producing the cleaner itself.

With borders shut due to lockdown in many of our markets,
we also joined forces with suppliers to call on governments to
open borders for essential goods such as food, hygiene and
cleaning products. Our strong relationships with suppliers all
over the world meant that we were able to quickly shift our
procurement of essential materials in response to temporary
sourcing issues in some countries.

The speed and agility of our supply chain does not come
at the expense of safety or product quality. Our long-
established Safety & Environmental Assurance Centre (SEAC)
works with teams across the business to ensure the safety
and environmental sustainability of our products, and the
processes used to manufacture them. We have responded to
the challenge of Covid-19 by introducing more effective ways
of working. We have introduced Quality Expertise ‘support
centres’ to provide rapid responses to questions and launched
a new digital quality platform to improve the way we collect
and manage critical product safety data. And we also continue
to closely monitor consumer feedback to ensure that we
respond quickly to any emerging issues.

Partnering with purpose

The support of our direct suppliers, who are the gateway to
the millions of people in our wider supply chain, is critical
to our progress towards key aims such as reducing carbon
emissions, stopping deforestation and improving diversity
and inclusion. We can only achieve our ambitious goals by
bringing our supply partners with us – in doing so, we believe
we’re positioning both our business and theirs for growth.
Our relaunched Partner for Purpose programme aims to
create an open, inclusive ecosystem of supply partners to
deliver our innovation, growth and sustainability priorities.
As we challenge our existing suppliers to make the necessary
changes to step towards our goals, we also support them as
they innovate for a better future.

Unilever Annual Report and Accounts 202027

56,000

direct suppliers in 150 countries

Making our supply chain more diverse

Creating a diverse supply chain, not only reduces risk but can
also unlock innovation and agility within businesses. We’re
aiming to spend €2 billion annually by 2025 with suppliers
that are majority-owned, managed and controlled by women,
racial or ethnic minorities, LGBTQI+ or people with disabilities.
We want our supplier base to reflect the diversity of our
consumers – and, with this in mind, are expanding our supplier
diversity programmes in North America and South Africa into
other regions around the world and building on their successes
and learnings.

Our well-established North American programme, for
example, identifies opportunities to partner with under-
represented groups in businesses. Through initiatives like
making sure every tender process includes at least one diverse
supplier, our North American business has more than doubled
its spend with diverse suppliers since 2017 and was shortlisted
for a World Procurement Supplier Diversity & Inclusion award
in 2020.

See our website for more on inclusion and diversity

Intelligent growth

The need to react quickly to the unexpected, particularly
during the early stages of the pandemic, highlighted the
increasing importance of technology for an agile and future-
fit supplier ecosystem. As we worked alongside suppliers to
respond to the surges and falls in demand across different
product categories, the value of data insights, smarter
sourcing and more real-time visibility of goods and logistics
became very clear. This is a critical focus for us – we’re using
increasingly sophisticated digital tools to identify new
potential innovation partners, bring new suppliers on board,
audit suppliers virtually, and monitor logistics and supply risk
in real time.

Protecting climate and nature

We announced new goals to achieve net zero carbon
emissions from all our products, from sourcing to point of sale,
by 2039 and to eliminate deforestation from our supply chain
by 2023. Influencing our suppliers and supporting them to
make positive changes is key to achieving these goals. After
all, the vast majority are emissions from our supply chain
or consumers using our products. This is why we’re asking
existing suppliers to adopt targets to cut emissions, and why
we’re prioritising partnerships with new suppliers who already
have science-based emissions targets in place. We’re also
supporting suppliers through, for example, the new 1.5°C
Supply Chain Leaders initiative. See page 28 for more on
how we’re working with suppliers towards our climate and
nature goals.

Sustainable sourcing is a cornerstone of our approach to drive
sustainability throughout our supply chain, from the largest
commodity suppliers to smallholder farmers. It involves raising
the standard of agricultural practices to drive social, economic
and environmental improvements, often through third-party
certification. In 2010, we set a target to source all our raw
materials sustainably – and in 2020, 67% of our agricultural
raw materials were sustainably sourced compared to 14%
in 2010. To maximise our impact, we focused on sustainably
sourcing the 12 key crops and commodities – such as palm oil,
paper and board, soy, sugar and tea – that make up around
two-thirds of our agricultural raw materials. 92% of these key
ingredients, including 99.6% of our palm oil, were sustainably
sourced in 2020.

Our innovation partners are helping us develop more planet-
friendly products and ingredients. For example, we’re working
with Evonik on biodegradable cleaning ingredients and with
SABIC to develop recycled plastic ice cream tubs for Magnum,
rolling out 7 million across Europe in 2020. In our Home Care
division, for example, we’re starting to model the impact
of different product ingredients on carbon emissions to
understand how to reduce our footprint most quickly.

See our website for more on sustainable sourcing

In focus:

Technology for transparency

To improve the visibility and traceability of our
commodity supply chains, we’re using satellite
imagery, geolocation data, blockchain and
AI. We’re part of Global Forest Watch, a group
of companies developing radar technology
to detect deforestation more quickly and
accurately. In 2020, we began working with US
geospatial analytics specialist Orbital Insight
to get data around the ‘first mile’ in our supply
chains. Working with Google Cloud, we then
refine this data to get accurate images of
the forests, biodiversity and water cycles that
intersect our supply chain.

STRATEGIC REPORTUnilever Annual Report and Accounts 2020
28

Planet & society

Without natural resources and the millions of
people who source, make and sell our products,
our business simply can’t grow.

The interconnection between a healthy natural world and a
thriving society was thrown into sharp relief in 2020. By protecting
nature and improving health and livelihoods, we will have a
positive impact on the planet, on people and, ultimately, on our
own business.

Tackling climate change and social inequality have long been at
the heart of our sustainability agenda. But more of the same isn’t
going to bring emissions down in line with the Paris Agreement,
or end poverty. That’s why we’ve set ambitious new targets for
improving the health of the planet and contributing to a fairer
and more socially inclusive world, with aggressive timelines. And
we’re encouraging others – such as our suppliers and industry
peers – to take bold steps, since only through working together
can we make sustainable living commonplace.

Improving the health of the planet

The damaging effects of climate change and nature loss are
becoming more obvious each year. As a large global company
with a vision to be the leader in sustainable business, we have
an opportunity to not just reduce our impact on the environment
but to also have a more positive one. With this in mind, we set
new targets to replace the Unilever Sustainable Living Plan (USLP)
goals which concluded in 2020. While we have made notable
progress in areas we control, such as our own manufacturing,
we didn’t achieve as much as we hoped on some of the key
environmental issues that involve our suppliers or consumers.
For example, we fell short of our water target that involved
reductions during consumer use. So we’re building on what we’ve
learnt and widening our influence. See page 34 for details of our
performance.

Net zero emissions

There’s no doubt that the world needs to decarbonise, and
quickly. We intend to lead this transformation and this year
announced a new target to achieve net zero emissions from
sourcing to point of sale, by 2039. This means removing as
much carbon from our operations and supply chain as we can,
and only offsetting the remaining emissions as a last resort. In
our own manufacturing operations, we’ve reduced CO2 from
energy per tonne of production by 75% compared to 2008 and
are finding ways to replace fossil fuel energy with renewable
energy – 2020 was our first full calendar year that we operated
our factories with 100% renewable grid electricity. As a result, our
Scope 2 emissions fell by 61% versus last year. And this year, 52%
of our total energy use in manufacturing was generated from
renewable resources. Across our operations, we have reduced
Scope 1 and 2 emissions from energy and refrigerant use by 60%
since 2015, mainly due to our accelerated use of renewables
and the phasing out of coal from our energy mix, which is now
restricted to a small number of factories. We remain committed
to fully eliminating coal.

We have a responsibility
to help tackle the climate
crisis: as a business, and
through direct action by
our brands.

Alan Jope
Chief Executive Officer

Emissions from our operations are only a small part of our overall
footprint. Progress against our target to halve the greenhouse
gas impact of our products across the lifecycle has been slower
than expected. Since 2010, our greenhouse impact per consumer
use has reduced by 10% (against a restated baseline, see page
56 for more). We are making good progress particularly in Foods
& Refreshment and Home Care where we have reduced per
consumer greenhouse gas emissions since 2010 by 30% and 37%
respectively. The per consumer use greenhouse impact of our
Beauty & Personal Care Division has increased by 10% over the
same period, driven primarily by the acquisition of brands with
high greenhouse gas emissions associated with consumer hot
water use, including hair and bath/shower products.

We’re working beyond Unilever to get our suppliers on board as
we work towards decarbonisation (see page 27). The size and
scale of our 400+ brands – their production, use and influence
– are some of our strongest levers in our fight against climate
change. A focus on planet and people is at the core of each
division’s strategy – see pages 20 to 21 for more. Our brands
will invest, partner and innovate through our new €1 billion
Climate & Nature Fund over the next ten years to remove carbon
emissions from the making and use of our products and from
the environment. To support consumers who want to lead lower
carbon lives, we have also committed to communicate the
carbon footprint of every product we sell.

In September we also announced a transformational Clean
Future programme for our cleaning and laundry products that
will invest an additional €1 billion over the next ten years to
remove all fossil-fuel derived carbon from products by moving
to 100% renewable or recycled carbon. See page 23 for more.

To help the world move faster towards decarbonisation, we’ve
joined the 1.5°C Supply Chain Leaders initiative and endorsed
a new SME Climate Hub launched in September. Through this
platform, we’ll work with other leading multinationals to help
small and medium-sized organisations – both in our supply chain
and beyond – put climate strategies into place to reach net zero
emissions by 2050.

We continue to report in line with the recommendations of the Task
Force on Climate-related Financial Disclosures – see pages 51 to 57
for more. In 2021, we will publish our climate transition action plan

Unilever Annual Report and Accounts 2020
29

and seek a non-binding advisory vote from shareholders on our
emissions reduction targets and our plans to achieve them.

See our website for more on climate action

A waste-free world

We’re working to reduce plastic pollution through targets
focused on an absolute reduction, using more recycled and
less virgin plastic, improving the recyclability of our plastic and
collecting more plastic than we sell. These build on the progress
we’ve made towards our long-held commitment to send zero
non-hazardous waste to landfill from our factories, which we
maintained again in 2020. Hazardous waste from our factories
increased by 23% due to the classification of personal protective
equipment in many countries as hazardous, coupled with the
closure of waste handling sites. We have made solid year-on-year
progress towards our target to halve the waste associated with
the disposal of our products – by the end of 2020 we had reduced
this by 34%.

The pandemic has brought new challenges in tackling plastic
pollution. It is imperative we, and the rest of industry, stay the
course. In many cases our brands are stepping up their efforts.
Dove has launched new 100% recycled plastic bottles in North
America and Europe, Magnum introduced 7 million ice cream
tubs made from food-grade recycled plastic, and laundry brand
Seventh Generation now has a zero-plastic range.

This isn’t a problem we can solve alone. We are working across
our value chain on key issues such as packaging design,
collection and new business models. In India, for example, we’re
working with the United Nations Development Programme to
protect the livelihoods of informal waste collectors and to collect,
segregate and recycle plastic packaging. Our CEO co-sponsors
the Consumer Goods Forum Plastic Waste Coalition of Action.
In March, we signed the European Plastics Pact to accelerate
progress towards the reuse and repurposing of plastic. In June,
we renewed our strategic partnership with the Ellen MacArthur
Foundation, and in October, we signed a manifesto supporting
a UN treaty to eliminate plastic pollution from oceans by 2040.
See pages 58 to 59 for more about our work on plastic.

See our website for more on plastic

In focus:

Brands taking a stand
on climate

Our brands are working in a variety of ways to
help us move towards our climate commitments.
Laundry brand Seventh Generation is investing
in initiatives to reduce its carbon emissions.
Foods & Refreshment brands like Knorr and more
recent acquisitions like The Vegetarian Butcher
are working to lower emissions by inspiring more
plant-based eating. And Love Beauty and Planet
is giving $40 (per tonne of carbon) to a carbon tax
fund supporting programmes reducing carbon
emissions and landfill waste.

€1bn

Climate & Nature Fund announced
in June 2020

Protecting and regenerating nature

With an agricultural footprint of more than 3 million hectares,
we have a responsibility to preserve land for future generations.
We’re aiming to achieve this through sustainable sourcing
of our key commodities, regenerative agriculture practices
and a deforestation-free supply chain, enabled by greater
transparency.

We’ve been at the forefront of efforts to tackle commodity-driven
deforestation over the last decade. This year, we announced our
aim to reach a deforestation-free supply chain by 2023, following
on from the original Consumer Goods Forum industry target of
zero net deforestation by 2020. To achieve this, we’re focusing our
efforts on crops with a high risk: palm oil, soy, paper and board,
tea and cocoa. We introduced a new sourcing policy for these
materials that clearly lays out our requirements and expectations
of our suppliers. We are making progress, particularly with palm
oil and soy suppliers. Working with fewer palm oil mills, for
example, allows us to better manage traceability and risk. So
we’re refining our palm oil mill network from 1,600 to 500 mills by
2023. See page 27 for how we’re using technology to improve the
transparency of our supply chain.

While sustainable sourcing and ensuring a deforestation-free
supply chain is critical, lasting improvements to the soil and
ecosystems we depend on simply won’t happen without more
regenerative agricultural practices. To this end, we plan to launch
new Regenerative Agriculture Principles in 2021. We’ll use these
to set up best practice pilot projects with suppliers to support
improvements in soil health, biodiversity, water quality and
climate resilience.

Consumers want confidence that the products they’re buying
come from suppliers with high environmental and social
standards – and being transparent about our supply chain is key
to this. We publish lists of our direct suppliers for soy, tea, paper
and board – as well as both direct and indirect suppliers for palm
(refineries, crushing facilities and mills) and cocoa (cooperatives).
We also report publicly on the issues we face with palm oil
suppliers so that others can see and act on these insights. This
year we suspended 158 palm oil suppliers due to grievances for
non-compliance against our palm oil sourcing policy.

Bringing smallholders and farmers on this journey with us is
crucial – not just to protect the land and water and ensure the
quality of our products, but also to improve social equity and
the livelihoods of millions. Since 2011, across all our smallholder
programmes, we’ve helped over 832,000 smallholder farmers
access initiatives aiming to improve their agricultural practices.
And we’re extending our support to help smallholders to diversify
their incomes and tackle climate change.

See our website for more on protecting nature

STRATEGIC REPORTUnilever Annual Report and Accounts 202030

Planet & society continued

Protecting water

Access to safe water is a basic human right. It’s become even
more critical this year, with the importance of good hygiene in
protecting against Covid-19. And water scarcity and climate
change are, of course, inextricably linked. While we fell some
way short of our 2020 targets for water connected to the
consumer use of our products, we made good progress in
reducing the water used in manufacturing, cutting this by 49%
since 2008 and hitting our 2020 target two years early. We’re
continuing to produce and promote products that use less water.
And to protect aquatic ecosystems, we’re developing more
biodegradable products and are aiming to make our product
formulations biodegradable by 2030.

We also work to promote good water management, particularly
in water-stressed areas. This year, we announced that we’ll aim
to establish water stewardship programmes around 100 sites
in water stressed areas by 2030 and have joined the Alliance for
Water Stewardship. We’ll build on our success in managing water
in our factories to embed good community water management
practices in water-stressed countries using what we’ve learned
from our Prabhat water stewardship programme in India, which
since 2013 has conserved over 50 billion litres of water so far.
And, as part of the 2030 Water Resources Group hosted by the
World Bank, we’re also working with governments and other
stakeholders to improve water resilience across India, Brazil,
South Africa, Vietnam and Bangladesh.

See our website for more on water stewardship

A fairer and more inclusive world

Our business relies on the millions of people who work in our
value chain – including farmers, factory workers, small shop
owners, waste recyclers and others. We can only create widescale
change by giving people opportunities to improve their
livelihoods. So we work to improve people’s health, confidence
and wellbeing; to create opportunities for all; and to respect and
promote human rights.

This year was hard for many in our value chain, but it reinforced
the importance of collaborating with others. We continued to
work to eradicate forced labour, particularly in the palm oil
industry, including through the Consumer Goods Forum – and to
push for fair opportunities and access to rights for all through the
Business for Inclusive Growth (B4IG) coalition.

Promoting human rights

we remain committed to increasing supplier compliance. We plan
to relaunch our RSP in 2021 with an expanded focus on climate
and nature. We’re also rolling this out to our suppliers beyond tier
1 (those that directly invoice us), preparing them for our future
requirements and encouraging the embedding of rights into
more flexible employment models such as the gig economy.

We work with third parties to remediate and improve any poor
practices identified through screening or auditing. During
2020, we launched a virtual auditing programme to continue
monitoring human rights in our extended supply chain. Those
who are unwilling or unable to comply with the RSP – or the
Responsible Business Partner Policy which applies to partners
who are not suppliers – are subject to delisting.

While there’s still much to be done, we are moving in the right
direction – as shown by our joint first ranking in the Corporate
Human Rights Benchmark and first ranking in agricultural
products industry.

See our website for more on human rights

Raising living standards

Paying all workers fairly for the work they do is a fundamental
human right. In January 2021, we announced a goal that
everyone who directly provides goods and services to Unilever
will earn at least a living wage or a living income by 2030.
We will specifically focus on the most vulnerable workers in
manufacturing and agriculture, working with stakeholders
to raise living standards through supplier selection practices,
collaboration and advocacy wherever we operate.

We have been working to improve the incomes of small-scale
retailers in our distribution network for a number of years. While
we missed our original target to reach 5 million small retailers,
in 2021 we set a new goal building on the lessons we learned
to help 5 million small and medium-sized enterprises in our
retail value chain grow their business through access to finance,
technology and digital skills by 2025.

See our website for more on raising living standards

Opportunities for all

To be a truly inclusive business, we need to make sure women,
especially women from under-represented groups, have the
same access as men to opportunities. We continue to invest
in women’s livelihoods to benefit families and communities, and
to grow our business.

Respecting and promoting human rights is a non-negotiable part
of working with Unilever. Safe working conditions became even
more critical in 2020, particularly for frontline factory workers in
our own operations and extended supply chain who were critical
in meeting changes in demand due to Covid-19.

We’re continuing to roll out our Responsible Sourcing Policy (RSP),
which sets standards on human and labour rights, to all Unilever
suppliers – in 2020, 83% of our procurement spend was through
suppliers meeting these requirements. While this falls short of our
2020 target, partly due to slower progress during the pandemic,

A number of our brands, including Sunsilk, TRESemmé, Radiant
and Glow & Lovely have developed their brand purpose around
skills and confidence-building, particularly focused on women.
Glow & Lovely continued to offer scholarships, education and
training to Indian women. And our Sunlight dishwashing brand
continued its work in Indonesia with UN Women, through the
WeLearn online learning platform for women entrepreneurs.
Through their efforts, we’ve enabled over 2.6 million women to
access initiatives aiming to develop their skills – short of our
5 million goal.

Unilever Annual Report and Accounts 202031

Many of the small shops who sell our products are run by
women – and, building on initiatives like our Shakti programme,
we’re now offering interest-free credit for small shop owners.
Our Jaza Duka partnership with Mastercard has helped 20,000
shop owners in Kenya, many of whom are women, access credit
through a digital platform.

Our brands are also taking decisive actions to tackle racial
discrimination and social injustice. In the US, our brands rallied
around a Unilever-led United For America campaign to help
the hardest-hit US communities in the wake of the Covid-19
pandemic. This included a United For America X Luminary
Fellowship Program, rolled out across several cities, to help
women-owned businesses adapt and keep people employed.
80% of the fellowships will go to businesses owned by women of
colour. SheaMoisture expanded its support for Black women in
the US, announcing a fund for activists promoting social change.

The size of our supply chain gives us the chance to have a
significant impact on the lives of under-represented groups
through our spending decisions. See page 27 for more on our
new diverse supplier commitment. As the world’s second largest
advertiser based on our media spend, we can also challenge
stereotypes through our advertising. That’s why we have
committed to increase the number of advertisements that
feature diverse groups of people.

See our website for more on inclusion and diversity

Better health and hygiene

Since 2010, Lifebuoy and Domestos have worked extensively to
improve hygiene and sanitation for millions of people around
the world. Lifebuoy has reached over 1 billion people with its
handwashing campaigns – and Domestos, working with UNICEF,
has helped more than 29 million people access better sanitation
and hygiene (2012 to 2020). This year, we also committed €100
million for donations of soap, sanitiser, bleach and food to
help those affected by the pandemic. With the UK’s Foreign,
Commonwealth & Development Office, we launched a global
handwashing campaign aimed at reaching one billion people,
including the donation of over 20 million hygiene products for
those with poor sanitation or health systems.

See our website for more on health and wellbeing

Healthier eating

Through our biggest food brands like Knorr and Hellmann’s, we
continued to promote healthy and affordable diets. We achieved
our ambition of doubling the proportion of products meeting
the Highest Nutritional Standards (based on globally recognised
dietary recommendations), now at 61% of our Foods portfolio.
We also continued to reduce the sugar and salt in our products.
To continue to raise our ambition levels, a new commitment
was agreed to double the number of products sold with
micronutrients as well as nutritious ingredients like vegetables,
fruit and beans. And we’re adding more plant-based products
across our Foods portfolio – we aim to achieve annual sales of
€1 billion in plant-based meat and dairy alternatives over the
next five to seven years. See page 22 for more.

Our Compass strategy puts
sustainability at the heart
of our business. We’re
setting out to prove that
sustainability not only
benefits people and planet,
but that it also drives superior
business performance.

Rebecca Marmot
Chief Sustainability Officer

Fortifying our most popular and affordable products is another
key area of focus. In 2020, we hit the milestone of providing
100 billion servings of food containing the key micronutrients
iron, iodine, zinc and vitamins A and D – halfway to our goal
of 200 billion by 2022. Our 2020 acquisition of GSK’s Consumer
Healthcare business in South Asia gives us important new
products aimed at improving child nutrition and women’s
wellbeing, such as the Horlicks range. In recognition of our
commitment to nutrition, Hindustan Unilever Limited was ranked
joint first in the Access to Nutrition India Spotlight Index 2020.

Our Foods & Refreshment brands continued to encourage
nutritious choices through clear labelling, balanced portions and
nutritious cooking campaigns, which also supported the many
people cooking more at home during the pandemic – see page
21 for more.

See our website for more on improving nutrition

Sustainability rating

Performance in 2020

S&P Dow Jones Sustainability Index
Sector: Personal Products

Score: 90/100 – Industry Leader
‘Gold Status’

CDP
Sector: All sectors

GlobeScan Sustainability
Leaders Survey
Sector: All sectors

S&P Global Ratings
Sector: Consumer Products

Climate score: A (A List)
Water score: A (A List)
Palm oil score: A-
Soy score: A-
Timber score: A-

Ranked 1st overall

ESG score: 89/100

Sustainalytics
Sector: Personal Products

ESG risk rating: Medium
ESG management score: Strong

STRATEGIC REPORTUnilever Annual Report and Accounts 2020
32

Shareholders

In a volatile and unpredictable year, we have demonstrated
our resilience and agility while delivering a step-up in
competitive performance.

Our turnover decreased by 2.4%, primarily driven by a negative
currency impact of 5.4%, with a positive impact of 1.2% from
acquisitions net of disposals. Our eCommerce sales grew
by 61% as we captured demand in online channels – and is
now 9% of Unilever’s sales. See pages 36 to 37 for more on
Divisional, category and market performance.

Our strategic choices for future success

In early 2021, we set out in detail the Unilever Compass
strategy to deliver our vision. It guides our decisions and
actions in five key areas: portfolio, brands, markets, channels
and culture. All of this is underpinned by our focus on creating
value through our multi-year financial framework.

1. Developing our portfolio into high growth spaces

We hold clear global leadership positions in six categories;
and in a seventh, we lead in terms of volume sold but not yet
value. More than 50% of our global turnover comes from our
13 biggest brands, each generating more than €1 billion of
sales in 2020.

We’re building on this by continuing to evolve our portfolio in
higher growth areas such as hygiene, prestige beauty, plant-
based foods and functional nutrition – this will continue to
influence the choices we make for organic investment as well
as acquisitions and disposals. In 2020, we continued to expand
our portfolio in functional nutrition through the acquisition of
iconic health food drinks brands Horlicks and Boost as well as
SmartyPants Vitamins and Liquid I.V. (see page 20 for more).

During the year, we also conducted a strategic review of our
global tea business – which includes brands such as Lipton,
Brooke Bond and PG Tips – concluding that we would separate
out the tea business as we evolve our portfolio (with the
exception of our business in India and Indonesia and the
partnership interests in the ready-to-drink tea joint ventures).

This year, we drew on our market agility and our five growth
fundamentals to navigate the uncertainty and volatility of the
Covid-19 pandemic. Our immediate response to the impact of
Covid-19 was to focus on protecting our people, safeguarding
supply, responding to new patterns of demand, supporting
our communities, and preserving our cash and balance
sheet strength.

We demonstrated the resilience of our business in 2020 and
unlocked new levels of agility in responding to unprecedented
fluctuations in consumer demand and channel dynamics.
Our focus on operational excellence and the fundamentals
of growth delivered an improvement in competitiveness.
And we continued to strengthen our business by unifying our
dual-headed legal structure, which will give us more strategic
flexibility for portfolio evolution, remove complexity and
further strengthen our corporate governance.

Our performance in 2020

In the early days of the pandemic, we decided the best way
to manage our business was to refocus on competitive growth
and delivering underlying operating profit and free cash flow.
We’ve performed well against these objectives – with more
than 60% of our business winning market share in the last
quarter in the markets that we measure.

Our 2020 profitability was healthy, despite the additional
Covid-19 costs. Underlying operating profit of €9.4 billion
declined by 5.8% but rose by 0.7% at constant exchange rates.
Underlying operating margin fell by 60bps driven by gross
margin which declined by 50bps. This includes a negative
impact of 90bps from Covid-19, reflecting additional costs
in adapting our supply chain and adverse mix.

Meanwhile, our focus on protecting cash and keeping our
operations running efficiently led to €7.7 billion of free cash
flow. This increase of €1.5 billion was driven by favourable
movements in working capital, as we increased our focus
on payments from our customers (receivables) and rephased
our capital expenditure in light of Covid-19.

We grew underlying sales by 1.9% in 2020, with volumes
growing 1.6% and 0.3% from price. Category and demand
patterns varied throughout the year and by market, driven by
the differing status of lock-down restrictions.

1.9%

underlying sales growth in 2020

Unilever Annual Report and Accounts 202033

€7.7bn

free cash flow in 2020

4. Leading in the channels of the future

We’re designing for growth channels like eCommerce through
focused channel teams working to make sure we have the right
portfolio and execution with strategies based on deep shopper
insights. Our eCommerce focused innovations include smart
packaging solutions designed for home delivery.

The right portfolio for eCommerce must be supported by
operations built for this channel, from demand-anticipating
algorithms to fast order fulfilment, and we’re becoming
more agile throughout our supply chain and operations. The
explosion of eCommerce is also transforming the decades-
old distributive trade and bringing new opportunities for our
eB2B programmes. See the customers, suppliers and business
partners review on pages 26 to 27 for more.

5. Building a purpose-led, future-fit organisation and
growth culture

Our people are key to delivering our strategy, so we’re focusing
on our capacity, capability and culture. Agile ways of working
and digital transformation are allowing us to find new
capacity and refocus our people on the highest value work.
We’re equipping our employees with the skills they’ll need to
adapt to a changing world of work and to continue to grow our
business. See pages 16 to 19 for more on our people.

We’re continuing to unlock fuel for growth through our
established savings programmes like 5S (a holistic programme
covering pricing, product sourcing and product design) and
zero-based budgeting, as well as our organisational change
programmes.

In 2021 and beyond, we will continue to demonstrate how
sustainable business drives superior performance – building
on our strengths that position us well for the consumer and
demographic trends of the future, and delivering on our strategic
choices to create long-term value for all our stakeholders.

2. Winning with our brands as a force for good,
powered by purpose and innovation

We have a long track record as a leader in sustainability. We’re
continuing to lead the way in sustainable business – ramping
up our commitments on climate, nature and creating a fairer
world (see pages 10 to 11 for more). We’re embedding these
commitments at the heart of our divisional, category and
brand agendas.

Our purposeful brands are key to delivering our sustainability
ambitions and they are starting to cut through. Consumers
now see 60% of our brands as more purposeful, taking
meaningful, tangible action on issues that they care deeply
about. We’re innovating to ensure our brands also excel
through their quality and efficacy. See the consumer review
on pages 20 to 23 for more examples of brands with purpose
and innovation.

3. Accelerating in the USA, India, China and key growth
markets

We have strong brand and category positions in major markets
such as the US and China and a market leadership position in
India – together these three countries represent nearly 35% of
our turnover today and are forecast to account for over half of
global GDP growth by 2030. Beyond these three key markets
lies much opportunity in key growth markets of the future – for
example our strong operating businesses in Brazil, Indonesia,
Philippines, Thailand and Mexico, each deliver more than
€1 billion in sales every year – and we’re continuing to build
on our unrivalled route-to-market strength in these and other
expanding markets.

In focus:

Our multi-year financial
framework

We will deliver long-term value creation by
continuing to evolve our portfolio and driving
earnings growth, a strong cash flow and a
growing dividend. We expect to do this through:
■ Underlying sales growth ahead of our markets,

delivering USG in the range of 3% to 5%
■ Profit growth ahead of sales growth, on a

comparable basis

■ Sustained strong cash flow over the long term
■ Savings of €2 billion per year from our

well-established Fuel for Growth savings
programmes

■ Restructuring investment of around €1 billion

for 2021 and 2022; lower thereafter

■ ROIC in the mid-to-high teens
■ Net debt to underlying EBITDA at around 2x

STRATEGIC REPORTUnilever Annual Report and Accounts 2020

Our performance

We measure our success by tracking both non-financial
and financial key performance indicators.

Non-financial performance

Target

2020

2019

2018

Improving health & wellbeing

Health & hygiene Target: By 2020 we will help more than a billion people
to improve their health and hygiene. This will help reduce the incidence of
life-threatening diseases like diarrhoea(a)

1 billion

On ground
reach:
625 million

TV reach:
715 million

On ground
reach:
615 million

TV reach:
710 million

On ground
reach:
570 million

TV reach:
670 million

Nutrition Target: By 2020 we will double (i.e. up to 60%) the proportion of our
portfolio that meets the Highest Nutritional Standards, based on globally
recognised dietary guidelines

Reducing environmental impact

Greenhouse gases Target: Halve the greenhouse gas impact of our products
across the lifecycle (from the sourcing of the raw materials to the greenhouse gas
emissions linked to people using our products) by 2030 (greenhouse gas impact
per consumer use; 2010 baseline)(c)(d)

Target: By 2020 CO2 emissions from energy from our factories will be at or below
2008 levels (≤145.92) despite significantly higher volumes (reduction in CO2 from
energy in kg per tonne of production since 2008)*

60%

61%†

56%◊

48%

(50%)

(10%)

(8%)(b)◊

(3%)(b)

≤145.92

36.94†

50.76◊

Δ
70.46

Water Target: Halve the water associated with the consumer use of our products
by 2020 (water impact per consumer use; 2010 baseline)(c)

(50%)

Target: By 2020 water abstraction by our global factory network will be at or
below 2008 levels (≤2.97) despite significantly higher volumes (reduction in water
abstraction in m³ per tonne of production since 2008)*

Waste Target: Halve the waste associated with the disposal of our products
by 2020 (waste impact per consumer use; 2010 baseline)(c)

Target: By 2020 total waste sent for disposal will be at or below 2008 levels (≤7.91)
despite significantly higher volumes (reduction in total waste in kg per tonne of
production since 2008)*

≤2.97

(50%)

≤7.91

Sustainable sourcing Target: By 2020 we will source 100% of our agricultural raw
materials sustainably (% of tonnes purchased)

100%

Enhancing livelihoods

Fairness in the workplace Target: By 2020 we will advance human rights across
our operations and extended supply chain, by:

•

Sourcing 100% of procurement spend from suppliers meeting the mandatory
requirements of the Responsible Sourcing Policy (% of spend of suppliers
meeting the Policy)

Reducing workplace injuries and accidents by 50%, from 2.10 accidents per
1 million hours worked in 2008 (reduction in Total Recordable Frequency Rate
of workplace accidents per million hours worked since 2008)*

100%

1.05

Opportunities for women Target: By 2020 we will empower 5 million women, by:

1.52†

(34%)†

0.34†

67%

83%†

0.63†

1%◊

1.58◊

(2%)

Δ
1.67

(32%)

(31%)

0.30◊

62%◊

70%

0.76(f)◊

(e)

0.23

56%

Δ
61%

Δ
0.69

•

Promoting safety for women in communities where we operate (number of
women)

• Enhancing access to training and skills (number of women)
• Expanding opportunities in our value chain (number of women)

5 million

2.63 million(g)†

2.34 million

Δ
1.85 million

•

Building a gender-balanced organisation with a focus on management
(% of managers that are women)*

50%

†
50%

51%

Δ
49%

Inclusive business Target: By 2020 we will have a positive impact on the lives of
5.5 million people by:

•

Enabling 5 million small-scale retailers to access initiatives aiming to improve
their income (number of small-scale retailers since 2015)

Enabling 500,000 smallholder farmers to access initiatives aiming to improve
their agricultural practices (number of smallholder farmers since 2011)

5 million

1.83 million(g)†

1.81 million◊

1.73 million

0.50 million 0.83 million(g)†

0.79 million◊

0.75 million

* Key Non-Financial Indicators.
†
PwC assured in 2020. For details and 2020 basis of preparation see www.unilever.com/investor-relations/annual-report-and-accounts
◊
PwC assured in 2019. For details and 2019 basis of preparation see www.unilever.com/planet-and-society/sustainability-reporting-centre/reporting-archive
Δ PwC assured in 2018. For details and 2018 basis of preparation see www.unilever.com/planet-and-society/sustainability-reporting-centre/reporting-archive
(a)

The number of people reached through TV advertisements and programmes aimed at encouraging health and hygiene behaviour change (‘TV reach’) includes Signal,
Dove and Lifebuoy.

(b) We have restated the change in our GHG emissions ‘per consumer use’ for prior years as a result of incorporating new data relating to the usage of our products, which

changed the estimated GHG emissions in our 2010 baseline. See page 56 for more information.

(c) Brackets around our GHG, waste and water footprints indicate that we have reduced our footprints by the numbers quoted.
(d) Target approved by the Science Based Targets initiative.
(e) Restated from 0.20 kg/tonne of production due to a classification error during the data reporting process.
(f)

2019 Total Recordable Frequency Rate (TRFR) included for the first time all acquisitions which operate as decentralised business units, as we now have processes in
place to collect the data. Had we included these acquisitions in 2018, our reported TRFR would have been approximately 6% higher.
(g) Around 592,000 women have accessed initiatives under both the Inclusive business and the Opportunities for women pillars in 2020.

Unilever Annual Report and Accounts 2020
35

Financial performance

Group

Turnover growth
Turnover growth averaged (0.9)% over five years

Underlying sales growth*
Underlying sales growth averaged 2.9% over five years

Underlying volume growth*
Underlying volume growth averaged 1.3% over five years

Operating margin

Underlying operating margin*

Free cash flow*

Cash flow from operating activities

2020

2019

2018

(2.4%)

1.9%

1.6%

16.4%

18.5%

2.0%

2.9%

1.2%

16.8%

19.1%

(5.1%)

3.2%

1.9%

24.8%

18.6%

€7.7 billion

€6.1 billion

€5.4 billion

€10.9 billion

€10.6 billion

€9.6 billion

Net cash flow (used in)/from investing activities

(€1.5) billion

(€2.2) billion

€4.6 billion

Net cash flow (used in)/from financing activities

(€5.8) billion

(€4.7) billion

(€12.1) billion

Divisions

Beauty & Personal Care

Turnover

Turnover growth

Underlying sales growth

Operating margin

Underlying operating margin

Foods & Refreshment

Turnover

Turnover growth

Underlying sales growth

Operating margin

Underlying operating margin

Home Care

Turnover

Turnover growth

Underlying sales growth

Operating margin

Underlying operating margin

* Key Financial Indicators.

€21.1 billion

€21.9 billion

€20.6 billion

(3.4%)

1.2%

20.4%

21.7%

6.0%

2.6%

20.7%

22.7%

(0.3%)

3.4%

20.2%

22.0%

€19.1 billion

€19.3 billion

€20.2 billion

(0.8%)

1.3%

14.4%

17.0%

(4.6%)

1.5%

14.6%

17.5%

(9.9%)

2.2%

36.0%

17.7%

€10.5 billion

€10.8 billion

€10.1 billion

(3.4%)

4.5%

11.9%

14.5%

6.9%

6.1%

12.7%

14.8%

(4.2%)

4.7%

11.7%

13.3%

Underlying sales growth, underlying volume growth, underlying operating margin and free cash flow are non-GAAP measures. For further information about these
measures, and the reasons why we believe they are important for an understanding of the performance of the business, please refer to our commentary on non-GAAP
measures on pages 39 to 43.

STRATEGIC REPORTUnilever Annual Report and Accounts 202036

Financial review

2020 performance

The Group generated turnover of €50.7 billion, operating
profit of €8.3 billion, net profit of €6.1 billion and free cash flow
of €7.7 billion.

Turnover declined by 2.4%. This included an unfavourable
currency impact of 5.4% driven by weakening of currencies
in our key markets such as Brazil, Argentina and India.
Underlying sales growth contributed 1.9% to turnover. Covid-19
had a significant impact on consumer behaviour and on
the performance of a number of our categories. There was
growth in hand and home hygiene, laundry products and in-
home food and refreshment. However sales in personal care
except for hygiene products were adversely impacted. Food
solutions and out of home ice cream sales declined, impacted
by channel closures. Overall acquisition and disposal
activities made a positive contribution of 1.2% to turnover
mainly from the health food drinks portfolio acquired from
GlaxoSmithKline. This included brands such as Horlicks and
Boost. This acquisition along with the acquisitions of Liquid
IV and SmartyPants Vitamins in the USA, increased Unilever’s
presence in functional nutrition. More details on acquisitions
and disposals are in note 21 on pages 162 to 165.

Emerging markets underlying sales grew by 1.2%. In China and
India sales were severely impacted by strict lockdowns at the
beginning of the year but returned to growth in the second
half. Latin America grew mid-single digit and Indonesia grew
slightly. Developed markets underlying sales grew by 2.9%
led by a strong performance in North America in-home foods.
Europe declined by 1.0% for the full year due to a continued
deflationary retail environment and a decline in out of home

ice cream, but returned to growth in the final quarter. Globally,
eCommerce grew by 61% during the year and now accounts for
9% of Unilever sales.

Operating profit was €8.3 billion which included €1.1 billion
of non-underlying items, primarily restructuring costs.
Restructuring costs are comprised of supply chain optimisation
projects to improve gross margin and improve network agility,
and organisational change projects to reduce overheads.
The Supply Chain investments were concentrated in the
manufacturing and logistics networks, particularly in Europe
and the Americas.

Underlying operating profit was €9.4 billion, a decrease of
5.8%. This included an unfavourable currency impact of 6.5%.
Underlying operating margin decreased by 60bps. Gross
margin decreased by 50bps which included a negative impact
of 90bps from the additional costs needed to adapt and run
our supply chain plus an adverse product mix impact as a
result of changes in consumer behaviour relating to Covid-19.
Brand and marketing investment as a percentage of turnover
was flat year on year. While investment was conserved in
the first half during the early lockdown periods, we invested
strongly behind our brands in the second half. Overheads
increased by 10bps reflecting an adverse currency impact.

Free cash flow was €7.7 billion in 2020 compared to €6.1 billion
in the prior year. The improvement was led by favourable
working capital movements as well as lower capital expenditure
following re-phased investment to preserve cash and supply
flexibility in light of Covid-19.

Highlights for the year ended

Beauty & Personal Care

Foods & Refreshment

Home Care

2020

2019

2020

2019

2020

2019

2020

Group

2019

Turnover (€ million)

21,124

21,868

19,140

19,287

10,460

10,825

50,724

51,980

Underlying sales growth (%)

Underlying volume growth (%)

Underlying price growth (%)

Operating profit (€ million)

Underlying operating profit (€ million)

Operating margin (%)

Underlying operating margin (%)

Return on assets (%)

Free cash flow (€ million)

1.2

–

4,311

4,591

20.4

21.7

140

2.6

1.7

0.9

4,520

4,960

20.7

22.7

124

1.3

0.1

1.1

2,749

3,257

14.4

17.0

1.5

(0.2)

1.7

2,811

3,382

14.6

17.5

4.5

5.1

(0.6)

1,243

1,519

11.9

14.5

129

6.1

2.9

3.1

1,377

1,605

12.7

14.8

1.9

1.6

0.3

8,303

9,367

16.4

18.5

102

2.9

1.2

1.6

8,708

9,947

16.8

19.1

7,671

6,132

Unilever Annual Report and Accounts 202037

Underlying operating profit decreased by €125 million. This
was due to a €35 million impact from the decline in turnover
and €90 million from increased costs related to Covid-19,
an adverse product mix impact and higher commodity costs
in the second half of the year. Non-underlying items were
€508 million primarily related to restructuring and were
€63m lower than prior year. Operating profit decreased
by €62 million.

Home Care

Turnover declined by 3.4% including an unfavourable currency
impact of 7.5% partially offset by underlying sales growth of 4.5%.

Our home and hygiene brands delivered high-teens volume-led
growth as we responded to increased demand for products with
germ-killing and antibacterial benefits. Domestos grew by over
25% as we launched the brand in China and introduced spray
and wipe formats. Our living hygiene range of local brands grew
over 50%, led by Lysoform’s educational campaigns in Italy. Within
the fabric category, fabric solutions declined slightly, driven by
lower consumer prices as we passed on some of the benefits of
reduced commodity costs in the second half of the year. Capsules
and liquids continued to grow. Low-single digit growth in fabric
sensations was led by Indonesia and by Turkey, where our
relaunched Snuggle (Yumos) brand performed well.

Underlying operating profit decreased by €86 million. This was
due to a €54 million impact from the decline in turnover and
€32 million from increased brand and marketing investment as
we invested strongly behind our brands in the second half of the
year. Overheads and gross margin improved, helped by lower
material costs, despite Covid-19 related costs and negative price.
Non-underlying items were €276 million, €48 million higher than
prior year due to higher restructuring costs. Operating profit
decreased by €134 million.

Divisional review

Beauty & Personal Care

Turnover declined by 3.4% including an unfavourable currency
impact of 5.4%. Underlying sales growth was 1.2% and there
was a positive contribution of 0.9% from acquisition and
disposal activities.

Skin cleansing saw mid-teens volume-led growth which was
driven by the important role of hand hygiene in combatting
the spread of Covid-19. Our Lifebuoy hygiene brand grew by
over 50%, launching ‘H is for Handwashing’, an educational
campaign to teach children the importance of handwashing
with soap. Lockdowns and restricted living in our markets
led to lower demand for skin care, deodorants and hair care,
which each saw volume and price declines. Skin care declined
high-single digit and deodorants declined mid-single digit. In
hair care, growth in wash and care partially offset a decline in
styling products, leading to a low-single digit decline overall.
Oral care grew with price growth more than offsetting negative
volumes driven by supply disruption related to lockdowns in
key markets. Our Prestige Beauty business was impacted by
health and beauty salon and retail closures, and declined low
single digit. Prestige eCommerce performed strongly and over
50% of Prestige Beauty sales are now through eCommerce.

Underlying operating profit decreased by €369 million. This
was due to a €169 million impact from the decline in turnover
and €200 million from increased costs related to Covid-19 and
an adverse product mix impact partially offset by a reduction
in brand and marketing investment, as we conserved spend
during lockdown periods, before significantly stepping up
investment in the second half. Non-underlying items were
€280 million, €160 million lower than prior year due to lower
restructuring costs. Operating profit decreased by €209 million.

Foods & Refreshment

Turnover declined by 0.8% including an unfavourable
currency impact of 4.2%. Underlying sales growth was 1.3%
and there was a positive contribution of 2.3% from acquisitions
and disposals.

Our retail foods business grew double digit, as restricted living
led to more in-home eating occasions. Hellmann’s grew high-
single digit, supported by its Stay In(spired) campaign, and
our plant-based brand The Vegetarian Butcher grew by over
70%. Food solutions declined by 30% as out of home channels
remained closed for much of the year. Despite significant
decline in the out of home business due to channel closures,
ice cream grew slightly overall as we rapidly shifted resources
towards the in-home business. Ben and Jerry’s performed
strongly, teaming up with Netflix on its new ‘Netflix and
Chill’d’ variant. Tea grew low single digit.

STRATEGIC REPORTUnilever Annual Report and Accounts 202038

Financial review continued

Cash flow

Cash flow from operating activities increased by €0.3 billion
primarily as a result of a €0.7 billion favourable working capital
movement, partially offset by a decrease in operating profit
of €0.4 billion. The working capital movement was driven by a
focus on receivables with a cash inflow of €1.1 billion as well as
a cash inflow from payables, partially offset by a cash outflow
for inventories of €0.6 billion due to additional safety stock of
high priority products and raw materials during the Coivid-19
pandemic.

Operating profit

Depreciation, amortisation and impairment

Changes in working capital

Pensions and similar obligations less payments

Provisions less payments

Elimination of (profits)/losses on disposals

Non-cash charge for share-based
compensation

Other adjustments

€ million
2020

€ million
2019

8,303

2,018

680

(182)

(53)

108

(1)

8,708

1,982

(9)

(260)

151

Cash flow from operating activities

10,933

10,641

Income tax paid

Net capital expenditure

Net interest and preference dividends paid

Free cash flow*

(1,875)

(932)

(455)

7,671

Net cash flow (used in)/from investing activities

(1,481)

Net cash flow (used in)/from financing activities

(5,804)

(2,532)

(1,429)

(548)

6,132

(2,237)

(4,667)

Certain measures used in our reporting are not defined under IFRS. For further
information about these measures, please refer to the commentary on non-
GAAP measures on pages 39 to 43.

currency impact of €2.5 billion. The Main Horlicks Acquisition was
the primary driver of the increase in goodwill and intangible
assets. Total consideration paid was €5,294 million of which
€449 million was paid in cash and €4,845 million paid in shares
of Hindustan Unilever Limited. Intangible assets and goodwill
arising from this acquisition were €3.3 billion and €2.0 billion
respectively. See note 21 on page 162 to 165 for more.

Other non-current assets decreased by €0.8 billion as
a result of re-phased capital expenditure investment and the
impact of currency. Current assets decreased by €0.3 billion driven
by the €1.8 billion decrease in trade and other current receivables
offset by an increase in cash and cash equivalents of €1.4 billion
due to stronger than expected cash delivery and additional bond
issuance to build up cash ahead of 2021 bond maturities.

Non-controlling interest increased by €1.7 billion relating to the
Main Horlicks Acquisition which was partly settled through the
issue of new shares of Hindustan Unilever to GlaxoSmithKline.

Movement in net pension liability/asset

The table below shows the movement in net pension liability/
asset during the year. Pension assets net of liabilities were
in surplus of €0.3 billion at the end of 2020 compared with
a deficit of €0.2 billion at the end of 2019. Strong positive
investment performance was offset by an increase in liabilities
as interest rates fell. There were refinements in assumption
methodologies to reflect changes being made more generally
by corporates and their advisers in setting discount rates and
future inflation rates, specifically in the UK, which resulted in
a €0.9 billion lower liability.

Income tax paid decreased by €0.7 billion compared to the prior
year partly due to the Spreads disposal in the prior year and the
impact of currency.

1 January

Current service cost

Employee contributions

Net cash flow used in investing activities was €1.5 billion compared
to €2.2 billion in the prior year. Capital expenditure decreased
following re-phased investment to preserve cash and supply
flexibility in light of Covid-19.

Net out flow from financing activities was €5.8 billion compared to
€4.7 billion in the prior year. In 2020 borrowings net of repayments
was €1.1 billion higher than in the prior year.

Actual return on plan assets (excluding interest)

Net interest cost

Actuarial loss

Employer contributions

Currency retranslation

Other movements(a)

31 December

€ million
2020

(196)

(223)

1,494

(9)

(1,246)

398

(26)

287

Balance sheet

Goodwill and intangible assets

Other non-current assets

Current assets

Total assets

Current liabilities

Non-current liabilities

Total liabilities

Shareholders’ equity

Non-controlling interest

Total equity

Total liabilities and equity

(a) Other movements relate to special termination benefits, changes in asset ceiling,
past service costs including losses/(gains) on curtailment, settlements and other
immaterial movements. For more details see note 4B on pages 123 to 129.

€ million
2020

€ million
2019

Finance and liquidity

34,941

16,561

16,157

67,659

20,592

29,412

50,004

15,266

2,389

17,655

67,659

31,029

17,347

16,430

64,806

20,978

29,942

50,920

13,192

694

13,886

64,806

Approximately €3.0 billion (or 54%) of the Group’s cash and
cash equivalents are held in the parent and central finance
companies, for maximum flexibility. These companies provide
loans to our subsidiaries that are also funded through retained
earnings and third party borrowings. We maintain access to
global debt markets through an infrastructure of short and
long-term debt programmes. We make use of plain vanilla
derivatives, such as interest rate swaps and foreign exchange
contracts, to help mitigate risks. More detail is provided
in notes 16, 16A, 16B and 16C on pages 149 to 155. The
remaining €2.5 billion (or 46%) of the Group’s cash and cash
equivalents are held in foreign subsidiaries which repatriate
distributable reserves on a regular basis. For most countries,
this is done through dividends which are in some cases subject
to withholding or distribution tax. This balance includes €98
million (2019: €146 million, 2018: €154 million) of cash that is

Goodwill and intangible assets were €34.9 billion, an increase
of €3.9 billion compared to the prior year mainly as a result of
acquisitions which contributed €6.6 billion, partially offset by a

Unilever Annual Report and Accounts 202039

held in a few countries where we face cross-border foreign
exchange controls and/or other legal restrictions that inhibit
our ability to make these balances available in any means for
general use by the wider business. The cash will generally be
invested or held in the relevant country and, given the other
capital resources available to the Group, does not significantly
affect the ability of the Group to meet its cash obligations. We
closely monitor all our exposures and counter-party limits.
Unilever has committed credit facilities in place for general
corporate purposes. The undrawn bilateral committed credit
facilities in place on 31 December 2020 were $7,965 million.

Contractual obligations at 31 December 2020

€ million
Due
within
1 year

€ million
Due in
1-3
years

€ million
Due in
3-5
years

€ million
Due in
over
5 years

€ million
2020

Bonds

22,902

1,639

4,690

4,988

11,585

reconciliations to relevant GAAP measures.

Explanation and reconciliation
of non-GAAP measures

Unilever uses ‘constant rate’ and ‘underlying’ measures
primarily for internal performance analysis and targeting
purposes. We present certain items, percentages and
movements, using constant exchange rates, which exclude
the impact of fluctuations in foreign currency exchange rates.
We calculate constant currency values by translating both the
current and the prior period local currency amounts using the
prior year average exchange rates into euro, except for the local
currency of entities that operate in hyperinflationary economies.
These currencies are translated into euros using the prior year
closing exchange rate before the application of IAS 29.

The table below shows exchange rate movements in our
key markets.

Commercial paper,
bank and other loans

Interest on financial
liabilities

Lease liabilities

Other lease
commitments

Purchase obligations(a)

Other long-term
commitments

3,235

2,098

158

400

1,156

Other financial liabilities

236

2,280

2,271

–

429

442

343

501

117

755

644

493

616

421

147

1,435

591

–

Brazilian real (€1 = BRL)

Chinese yuan (€1 = CNY)

Indian rupee (€1 = INR)

Indonesia rupiah (€1 = IDR)

Philippine peso (€ 1 = PHP)

UK pound sterling (€1 = GBP)

US dollar (€1 = US$)

Annual
average
rate in 2020

Annual
average
rate in 2019

5.781

7.862

84.100

16557

56.447

0.888

1.135

4.367

7.725

78.812

15863

58.112

0.880

1.120

Total

32,465

5,811

6,738

6,277

13,639

(a) For raw and packaging materials and finished goods.

Further details are set out in the following notes to the
consolidated financial statements: note 10 on pages 137 to
139, note 15C on page 147 and 148, and note 20 on page
161. Unilever is satisfied that its financing arrangements are
adequate to meet its working capital needs for the foreseeable
future. In relation to the facilities available to the Group,
borrowing requirements do not fluctuate materially during the
year and are not seasonal.

Guaranteed US debt securities

At 31 December 2020 the Group had in issue US$11.5 billion
(2019: US$12.35 billion; 2018: US$12.5 billion) bonds in
connection with a US shelf registration. See page 203 for more
information on these bonds and related commentary on
guarantor information.

Non-GAAP measures

Certain discussions and analyses set out in this Annual Report
and Accounts (and the Additional Information for US Listing
Purposes) include measures which are not defined by generally
accepted accounting principles (GAAP) such as IFRS. We believe
this information, along with comparable GAAP measurements,
is useful to investors because it provides a basis for measuring
our operating performance, and our ability to retire debt
and invest in new business opportunities. Our management
uses these financial measures, along with the most directly
comparable GAAP financial measures, in evaluating our
operating performance and value creation. Non-GAAP financial
measures should not be considered in isolation from, or as a
substitute for, financial information presented in compliance
with GAAP. Wherever appropriate and practical, we provide

In the following sections we set out our definitions of the
following non-GAAP measures and provide reconciliations
to relevant GAAP measures:
■ underlying sales growth;
■ underlying volume growth;
■ underlying price growth;
■ non-underlying items;
■ underlying earnings per share;
■ underlying operating profit and underlying operating

margin;

■ underlying effective tax rate;
■ constant underlying earnings per share;
■ free cash flow;
■ return on assets;
■ net debt; and
■ return on invested capital.

Underlying sales growth

Underlying Sales Growth (USG) refers to the increase in
turnover for the period, excluding any change in turnover
resulting from acquisitions, disposals, changes in currency and
price growth in excess of 26% in hyperinflationary economies.
Inflation of 26% per year compounded over three years is
one of the key indicators within IAS 29 to assess whether
an economy is deemed to be hyperinflationary. We believe
this measure provides valuable additional information on
the underlying sales performance of the business and is a
key measure used internally. The impact of acquisitions and
disposals is excluded from USG for a period of 12 calendar
months from the applicable closing date. Turnover from
acquired brands that are launched in countries where they
were not previously sold is included in USG as such turnover
is more attributable to our existing sales and distribution
network than the acquisition itself.

STRATEGIC REPORTUnilever Annual Report and Accounts 202040

Financial review continued

The reconciliation of changes in the GAAP measure of turnover to USG is as follows:

2020 vs 2019 (%)

Turnover growth(a)

Effect of acquisitions

Effect of disposals

Effect of currency-related items,

of which:

Exchange rate changes

Extreme price growth in hyperinflationary markets(b)

Underlying sales growth(b)

2019 vs 2018 (%)

Turnover growth(a)

Effect of acquisitions

Effect of disposals

Effect of currency-related items,

of which:

Exchange rate changes

Extreme price growth in hyperinflationary markets(b)

Underlying sales growth(b)

2018 vs 2017 (%)

Turnover growth(a)

Effect of acquisitions

Effect of disposals

Effect of currency-related items,

of which:

Exchange rate changes

Extreme price growth in hyperinflationary markets(b)

Underlying sales growth(b)

Beauty &
Personal Care

Foods &
Refreshment

Home
Care

Total
Group

(3.4)

0.9

(5.4)

(5.6)

0.2

1.2

6.0

0.9

2.4

1.7

0.6

2.6

(0.3)

3.9

–

(7.2)

(8.1)

1.0

3.4

(0.8)

2.7

(0.4)

(4.2)

(4.6)

0.5

1.3

(4.6)

0.6

(7.5)

1.0

(3.5)

4.7

1.5

(9.9)

0.8

(7.2)

(5.8)

(47.7)

79.1

2.2

(3.4)

0.2

(0.2)

(7.5)

(7.8)

0.3

4.5

6.9

0.3

0.4

(0.3)

0.7

6.1

(4.2)

0.5

(0.2)

(8.8)

(9.1)

0.4

4.7

(2.4)

1.4

(0.2)

(5.4)

(5.7)

0.3

1.9

2.0

0.7

(3.0)

1.5

(0.7)

2.2

2.9

(5.1)

2.0

(3.0)

(7.0)

(29.4)

31.7

3.2

(a) 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.

(b) Underlying price growth in excess of 26% per year in hyperinflationary economies has been excluded when calculating the underlying sales growth in the tables above,

and an equal and opposite amount is shown as extreme price growth in hyperinflationary markets.

Underlying price growth

Underlying price growth (UPG) is part of USG and means, for
the applicable period, the increase in turnover attributable to
changes in prices during the period. UPG therefore excludes
the impact to USG due to (i) the volume of products sold;
and (ii) the composition of products sold during the period.
In determining changes in price we exclude the impact of
price growth in excess of 26% per year in hyperinflationary
economies as explained in USG above.

Underlying volume growth

Underlying volume growth (UVG) is part of USG and means,
for the applicable period, the increase in turnover in such
period calculated as the sum of (i) the increase in turnover
attributable to the volume of products sold; and (ii) the
increase in turnover attributable to the composition of
products sold during such period. UVG therefore excludes
any impact on USG due to changes in prices.

The relationship between USG, UVG and UPG is set out below:

Underlying volume growth (%)

Underlying price growth (%)

Underlying sales growth (%)

2020 vs
2019

2019 vs
2018

2018 vs
2017

1.6

0.3

1.9

1.2

1.6

2.9

1.9

1.2

3.2

Refer to page 36 for the relationship between USG, UVG and
UPG for each of the divisions.

Non-underlying items

Several non-GAAP measures are adjusted to exclude items
defined as non-underlying due to their nature and/or frequency
of occurrence.
■ Non-underlying items within operating profit are: gains
or losses on business disposals, acquisition and disposal
related costs, restructuring costs, impairments and other
items within operating profit classified here due to their
nature and frequency.

■ Non-underlying items not in operating profit but within

net profit are: net monetary gain/(loss) arising from
hyperinflationary economies and significant and unusual
items in net finance cost, share of profit/(loss) of joint
ventures and associates and taxation.

■ Non-underlying items are both non-underlying items within

operating profit and those non-underlying items not in
operating profit but within net profit.

Refer to note 3 for details of non-underlying items.

Unilever Annual Report and Accounts 202041

€ million
2020

€ million
2019

1,923

2,263

Underlying operating profit and underlying
operating margin

This is shown in the table:

Underlying operating profit and underlying operating margin
mean operating profit and operating margin before the impact of
non-underlying items within operating profit. Underlying operating
profit represents our measure of segment profit or loss as it is the
primary measure used for making decisions about allocating
resources and assessing performance of the segments.

The Group reconciliation of operating profit to underlying
operating profit is as follows:

Operating profit

8,303

8,708

12,639

€ million
2020

€ million
2019

€ million
2018

Non-underlying items within
operating profit (see note 3)

Underlying operating profit

Turnover

Operating margin

Underlying operating margin

1,064

9,367

1,239

9,947

(3,176)

9,463

50,724

51,980

50,982

16.4%

18.5%

16.8%

19.1%

24.8%

18.6%

Further details of non-underlying items can be found in note 3
on page 121 of the consolidated financial statements.

Refer to note 2 on page 119 for the reconciliation of operating
profit to underlying operating profit by Division. For each
Division operating margin is computed as operating profit
divided by turnover and underlying operating margin is
computed as underlying operating profit divided by turnover.

Underlying earnings per share

Underlying earnings per share (underlying EPS) is calculated
as underlying profit attributable to shareholders’ equity
divided by the diluted average number of ordinary shares.
In calculating underlying profit attributable to shareholders’
equity, net profit attributable to shareholders’ equity is
adjusted to eliminate the post-tax impact of non-underlying
items. This measure reflects the underlying earnings for each
share unit of the Group. Refer to note 7 for reconciliation of net
profit attributable to shareholders’ equity to underlying profit
attributable to shareholders equity.

Underlying effective tax rate

The underlying effective tax rate is calculated by dividing
taxation excluding the tax impact of non-underlying items by
profit before tax excluding the impact of non-underlying items
and share of net profit/(loss) of joint ventures and associates.
This measure reflects the underlying tax rate in relation to
profit before tax excluding non-underlying items before tax
and share of net (profit)/loss of joint ventures and associates.

Tax impact on non-underlying items within operating profit is
the sum of the tax on each non-underlying item, based on the
applicable country tax rates and tax treatment.

Taxation

Tax impact of:

Non-underlying items within operating profit(a)

272

309

Non-underlying items not in operating profit
but within net profit(a)

Taxation before tax impact of non-underlying

Profit before taxation

Non-underlying items within operating profit
before tax(a)

Non-underlying items not in operating profit
but within net profit before tax(b)

Share of net (profit)/loss of joint ventures
and associates

Profit before tax excluding non-underlying
items before tax and share of net profit/(loss)
of joint ventures and associates

Underlying effective tax rate

(146)

(196)

2,049

7,996

2,376

8,289

1,064

1,239

(32)

(175)

(176)

8,921

9,320

23.0%

25.5%

(a) Refer to note 3 for further details on these items.
(b) 2019 excludes €3 million gain on disposal of spreads business by the joint

venture in Portugal which is included in the share of net profit/(loss) of joint
ventures and associates line. Including the gain, total non-underlying items not
in operating profit but within net profit before tax in 2019 was €35 million. See
note 3.

Constant underlying earnings per share

Constant underlying earnings per share (constant underlying
EPS) is calculated as underlying profit attributable to
shareholders’ equity at constant exchange rates and excluding
the impact of both translational hedges and price growth in
excess of 26% per year in hyperinflationary economies divided
by the diluted average number of ordinary share units. This
measure reflects the underlying earnings for each ordinary
share unit of the Group in constant exchange rates.

The reconciliation of underlying profit attributable to
shareholders’ equity to constant underlying earnings
attributable to shareholders’ equity and the calculation
of constant underlying EPS is as follows:

Underlying profit attributable to
shareholders’ equity(a)

Impact of translation from current to constant
exchange rates and translational hedges

Impact of price growth in excess of 26% per
year in hyperinflationary economies(b)

Constant underlying earnings attributable to
shareholders’ equity

Diluted average number of share
units (millions of units)

Constant underlying EPS (€)

(a) See note 7.
(b) See pages 39 and 40 for further details.

€ million
2020

€ million
2019

6,532

6,688

472

(31)

6,973

6,690

2,629.8

2,626.7

2.65

2.55

STRATEGIC REPORTUnilever Annual Report and Accounts 202042

Financial review continued

Free cash flow

Return on invested capital

Free cash flow (FCF) is defined as cash flow from operating
activities, less income taxes paid, net capital expenditure and
net interest payments. It does not represent residual cash flows
entirely available for discretionary purposes; for example, the
repayment of principal amounts borrowed is not deducted
from FCF. FCF reflects an additional way of viewing our liquidity
that we believe is useful to investors because it represents
cash flows that could be used for distribution of dividends,
repayment of debt or to fund our strategic initiatives, including
acquisitions, if any.

Return on invested capital (ROIC) is a measure of the return
generated on capital invested by the Group. The measure
provides a guide rail for long-term value creation and
encourages compounding reinvestment within the business
and discipline around acquisitions with low returns and long
payback. ROIC is calculated as underlying operating profit
after tax divided by the annual average of: goodwill, intangible
assets, property, plant and equipment, net assets held for
sale, inventories, trade and other current receivables, and
trade payables and other current liabilities.

The reconciliation of cash flow from operating activities to FCF
is as follows:

€ million
2020

€ million
2019

€ million
2018

Cash flow from operating activities

10,933

10,641

(1,875)

(932)

(455)

7,671

(2,532)

(1,429)

(548)

6,132

9,612

(2,294)

(1,424)

(461)

5,433

Operating profit

Non-underlying items within operating profit
(see note 3)

Underlying operating profit before tax

€ million
2020

€ million
2019

8,303

8,708

1,064

9,367

1,239

9,947

Tax on underlying operating profit(a)

(2,154)

(2,536)

Underlying operating profit after tax

Goodwill

Intangible assets

(1,481)

(2,237)

4,644

Property, plant and equipment

Net assets held for sale

(5,804)

(4,667)

(12,113)

Inventories

Trade and other current receivables

7,213

18,942

15,999

10,558

4,462

4,939

7,411

18,067

12,962

12,062

4,164

6,695

Income tax paid

Net capital expenditure

Net interest payments

Free cash flow

Net cash flow (used in)/from
investing activities

Net cash flow (used in)/from
financing activities

Net debt

Trade payables and other current liabilities

(14,132)

(14,768)

Period-end invested capital

Average invested capital for the period

40,795

40,029

39,263

38,639

Return on average invested capital

18.0%

19.2%

(a) Tax on underlying operating profit is calculated as underlying operating profit
before tax multiplied by underlying effective tax rate of 23.0% (2019: 25.5%)
which is shown on page 41.

Net debt is a measure that provides valuable additional
information on the summary presentation of the Group’s net
financial liabilities and is a measure in common use elsewhere.

Net debt is defined as the excess of total financial liabilities,
excluding trade payables and other current liabilities, over
cash, cash equivalents and other current financial assets,
excluding trade and other current receivables, and non-current
financial asset derivatives that relate to financial liabilities.

Total financial liabilities

Current financial liabilities

Non-current financial liabilities

Cash and cash equivalents as per balance
sheet

Cash and cash equivalents as per cash flow
statement

Add bank overdrafts deducted therein

Other current financial assets

Non-current financial assets derivatives that
relate to financial liabilities

€ million
2020

€ million
2019

(27,305)

(28,257)

(4,461)

(4,691)

(22,844)

(23,566)

5,548

4,185

5,475

4,116

808

907

114

Net debt

(20,928)

(23,051)

Unilever Annual Report and Accounts 202043

Return on assets

Return on assets is a measure of the return generated on assets for each division. This measure provides additional insight on
the performance of the divisions and assists in formulating long-term strategies with respect to allocation of capital across
divisions. Division return on assets is calculated as underlying operating profit after tax for the division divided by the annual
average of: property, plant and equipment, net assets held for sale (excluding goodwill and intangibles), inventories, trade and
other current receivables, and trade payables and other current liabilities for each division. The annual average is computed by
adding the amounts at the beginning and the end of the calendar year and dividing by two.

2020

Underlying operating profit before tax

Tax on underlying operating profit

Underlying operating profit after tax

Property plant and equipment

Net assets held for sale

Inventories

Trade and other receivables

Trade payables and other current liabilities

Period end assets (net)

Average assets for the period (net)

Division return on assets

2019

Underlying operating profit before tax

Tax on underlying operating profit

Underlying operating profit after tax

Property plant and equipment

Net assets held for sale

Inventories

Trade and other receivables

Trade payables and other current liabilities

Period end assets (net)

Average assets for the period (net)

Division return on assets

Other information

€ million
Beauty &
Personal Care

€ million
Foods &
Refreshment

€ million
Home
Care

4,591

(1,057)

3,534

3,763

1,817

2,057

3,257

(748)

2,509

4,895

1,894

1,864

1,519

(349)

1,170

1,900

751

1,018

€ million

Total

9,367

(2,154)

7,213

10,558

4,462

4,939

(5,649)

(5,428)

(3,055)

(14,132)

1,990

2,523

3,235

3,614

629

906

5,854

7,043

140%

69%

129%

102%

4,960

(1,265)

3,695

4,382

1,793

2,817

3,382

(862)

2,520

5,336

1,698

2,484

1,605

(409)

1,196

2,344

673

1,394

9,947

(2,536)

7,411

12,062

4,164

6,695

(5,941)

(5,588)

(3,239)

(14,768)

3,056

2,985

3,993

4,146

1,182

1,204

8,231

8,335

124%

61%

99%

89%

Accounting standards and critical accounting policies

The consolidated financial statements have been prepared in accordance with IFRS as adopted by the EU and IFRS as issued by
the International Accounting Standards Board. The accounting policies are consistent with those applied in 2019 except for the
recent accounting developments as set out in note 1 on pages 116 to 118. The critical accounting estimates and judgements and
those that are most significant in connection with our financial reporting are set out in note 1 on pages 116 to 118.

Auditor’s report

The Independent Auditor’s Report issued by KPMG LLP on the consolidated results of the Group, as set out in the financial
statements, was unqualified and contained no exceptions or emphasis of matter. For more details see pages 105 to 111.

2019 financial review

The financial review for the year ended 31 December 2019 can be found on pages 24 to 32 of our Annual Report and Accounts on
Form 20-F filed with the United States Securities and Exchange Commission on 9 March 2020.

STRATEGIC REPORTUnilever Annual Report and Accounts 2020
44

Our risks

Our risk appetite and approach
to risk management
Risk management is integral to Unilever’s strategy and to the
achievement of Unilever’s long-term goals. Our success as an
organisation depends on our ability to identify and exploit the
opportunities generated by our business and the markets we
are in. In doing this we take an embedded approach to risk
management which puts risk and opportunity assessment at the
core of the Board agenda, which is where we believe it should be.

Unilever’s appetite for risk is driven by the following:
■ Our growth should be consistent, competitive, profitable and

responsible.

■ Our actions on issues such as plastic and climate change must
reflect their urgency, and not be constrained by the uncertainty
of potential impacts.

■ Our behaviours must be in line with our Code of Business

Principles and Code Policies.

■ Our ambition to continuously improve our operational

efficiency and effectiveness.

■ Our aim to maintain a single A credit rating on a long-term

basis.

Our approach to risk management is designed to provide
reasonable, but not absolute, assurance that our assets are
safeguarded, the risks facing the business are being assessed
and mitigated, and all information that may be required to be
disclosed is reported to Unilever’s senior management including,
where appropriate, the CEO and CFO.

Our overall risk appetite and approach to risk management has
not changed as a result of the Covid-19 pandemic. However,
the Covid-19 pandemic has increased the potential impact
and likelihood of certain of our principal risks, see pages 46 to 50
for further details.

Organisation
The Board has overall accountability for the management of risk
and for reviewing the effectiveness of Unilever’s risk management
and internal control systems. The Board has established a clear
organisational structure with well-defined accountabilities
for the principal risks that Unilever faces in the short, medium
and long term. This organisational structure and distribution of
accountabilities and responsibilities ensure that every country in
which we operate has specific resources and processes for risk
reviews and risk mitigation. This is supported by the ULE, which
takes active responsibility for focusing on the principal areas
of risk to Unilever. The Board regularly review these risk areas,
including consideration of environmental, social and governance
matters, and retain responsibility for determining the nature and
extent of the significant risks that Unilever is prepared to take to
achieve its strategic objectives.

Foundation and principles
Unilever’s approach to doing business is framed by our Purpose
and values (see pages 10 and 11). Our Code of Business
Principles sets out the standards of behaviour that we expect all
employees to adhere to. Day-to-day responsibility for ensuring
these principles are applied rests with senior management
across divisions, geographies and functions. A network of
Business Integrity Officers and Committees supports the activities
necessary to communicate the Code, deliver training, maintain
processes and procedures (including support lines) to report
and respond to alleged breaches, and to capture and
communicate learnings.

We have a framework of Code Policies that underpins the Code
of Business Principles and sets out the non-negotiable standards
of behaviour expected from all our employees.

For each of our principal risks we have a risk management
framework detailing the controls we have in place and who is
responsible for managing both the overall risk and the individual
controls mitigating that risk. Unilever’s functional standards
define mandatory requirements across a range of specialist
areas such as health and safety, accounting and reporting and
financial risk management and are key controls in mitigating
these risks.

Our assessment of risk considers both short- and long-term risks,
including how these risks are changing, together with emerging
risk areas. These are reviewed on an ongoing basis, and formally
by senior management and the Board at least once a year.

Given the significant change in the operating environment as a
result of Covid-19 and to ensure the implications on our principal
risks were clearly understood and the appropriate mitigation
plans were put in place, an additional formal review of our risks
was undertaken by senior management and the Board this year.

Processes
Unilever operates a wide range of processes and activities across
all its operations covering strategy, planning, execution and
performance management. Risk management is integrated into
every stage.

Assurance and re-assurance
Assurance on compliance with the Code of Business Principles
and all of our Code Policies is obtained annually from Unilever
management via a formal Code declaration. In addition, there
are specialist awareness and training programmes which are
run throughout the year and vary depending on the business
priorities. These specialist compliance programmes supplement
the Code declaration. Our Corporate Audit function plays a
vital role in providing to both management and the Board an
objective and independent review of the effectiveness of risk
management and internal control systems throughout Unilever.

Board assessment of compliance with the risk
management frameworks
The Board, advised by the Committees where appropriate,
regularly review the significant risks and decisions that could
have a material impact on Unilever. These reviews consider the
level of risk that Unilever is prepared to take in pursuit of the
business strategy and the effectiveness of the management
controls in place to mitigate the risk exposure. Since March 2020
these have all taken into consideration the impact of Covid-19
on the risks and decisions being undertaken.

The Board, through the Audit Committee, have reviewed the
assessment of risks, internal controls and disclosure controls
and procedures in operation within Unilever. They have also
considered the effectiveness of any remedial actions taken
for the year covered by this Annual Report and Accounts and
up to the date of its approval by the Board.

Details of the activities of the Audit Committee in relation to this
can be found in the Report of the Audit Committee on pages 70
to 71.

Further statements on compliance with the specific risk
management and control requirements in the UK Corporate
Governance Code and the US Securities Exchange Act (1934)
and the Sarbanes-Oxley (2002) Act can be found on page 69.

Unilever Annual Report and Accounts 202045

Viability statement
The Directors have reviewed the long-term prospects of the
Group in order to assess its viability. This review incorporated
the activities and key risks of the Group together with the factors
likely to affect the Group’s future development, performance,
financial position, cash flows, liquidity position and borrowing
facilities as described on pages 1 to 43. These factors have also
been carefully assessed in light of the Covid-19 pandemic. In
addition, we describe in notes 15 to 18 on pages 143 to 160 the
Group’s objectives, policies and processes for managing its
capital, its financial risk management objectives, details of its
financial instruments and hedging activities, and its exposures
to credit and liquidity risk.

Assessment
In order to report on the long-term viability of the Group,
the Directors reviewed the overall funding capacity and
headroom available to withstand severe events and carried
out a robust assessment of the principal risks facing the Group,
including those that would threaten its business model, future
performance, solvency or liquidity. This assessment also included
reviewing and understanding the mitigation factors in respect of
each principal risk. The potential financial impact of the Covid-19
pandemic on both our overall funding capacity and our principal
risks has also been considered given the wide range of potential
outcomes. The risks and mitigating factors are summarised on
pages 46 to 50.

The viability assessment has three parts:
■ First, the Directors considered the period over which they have

a reasonable expectation that the Group will continue to
operate and meet its liabilities;

■ Second, they considered the current debt facilities and debt head
room over the viability period, assuming that any debt maturing
can be re-financed at commercially acceptable terms; and

■ Third, they considered the potential impact of severe but
plausible scenarios over this period which included the
potential ramifications that Covid-19 could have across the
different areas of the Group, including:
■ assessing scenarios for each individual principal risk, for

example the termination of our relationships with the three
largest global customers; the loss of all material litigation
cases; a major IT data breach, reputational damage from
not progressing against our plastic packaging commitments,
and the lost cost and growth opportunities from not keeping
up with technological changes;

■ assessing extreme scenarios that could arise specifically
from the significant impact of Covid-19 on the macro
economic conditions in which the Group is operating for an
extended period of time, for example the collapse of the
Group’s out-of-home business; and

■ assessing scenarios that involve more than one principal
risk, including the following multi-risk scenarios, including
assumptions on how the impact of Covid-19 could
exacerbate the negative consequences of more than
one principal risk:

Multi-risk scenarios modelled

Level of severity reviewed

Link to principal risk

Contamination issue with one of our products leading to
lower sales of products of this brand and the temporary
closure of our largest sourcing unit.

A fine equal to 1% of Group turnover was
considered along with damage to our largest
brand and disruption to supply chain.

■ Safe and high-quality products
■ Brand preference
■ Supply chain

Major global incident affecting one or more of the
Group’s key locations resulting in an outage for a year
in a key sourcing unit and significant water shortages in
our key developing markets.

The complete loss of all of our turnover in our
largest geographic market was considered along
with destruction of a key sourcing unit and reduced
demand for our products that require water.

■ Economic and political instability
■ Supply chain
■ Climate change

Lack of progress against our plastic packaging
ambitions and the loss of our three largest customers.

Significant reputational damage was
considered with the impact of losing our
three key customers.

■ Plastic packaging
■ Brand preference
■ Customer

Collapse of the global out-of-home business as a result
of Covid-19, combined with liquidity issues arising from
a deterioration in the financial markets.

The complete closure of our foods and ice
cream out of home business combined with
the withdrawal of our standby facility.

■ Treasury and tax
■ Economic and political instability

Findings
■ Firstly, a three-year period is considered appropriate for this
viability assessment because it is the period covered by the
strategic plan and it enables a high level of confidence in
assessing viability, even in extreme adverse events, due to a
number of factors such as:
■ the Group has considerable financial resources together with
established business relationships with many customers and
suppliers in countries throughout the world;

■ high cash generation by the Group’s operations and access

to the external debt markets;

■ flexibility of cash outflow with respect to significant

marketing programmes and capital expenditure projects
which usually have a two to three year horizon; and

■ the Group’s diverse product and geographical activities

which are impacted by continuously evolving technology
and innovation.

■ Secondly, the Group’s debt headroom and funding profile

has been assessed and further challenged in light of
expected impacts of Covid-19. None of the future outlooks
considered resulted in significant liquidity headroom issues,
primarily because:

■ the Group has a healthy balance of short-term and

long-term debt programmes, with repayment profiles
ensuring short-term commercial paper maturities do not
exceed €0.5 billion in any given week and long-term debt
maturities do not exceed €4 billion in any given year; and
■ the Group has $7.965 billion of committed credit facilities
with a maturity of 364 days which are used as back up for
our commercial paper programmes.

■ Thirdly, for each of our 14 principal risks, worst case plausible
scenarios have been assessed together with multiple-risk
scenarios. None of the scenarios reviewed, which have been
adjusted for the expected long-term economic downturn
arising from the impact of Covid-19, either individually or in
aggregate would cause Unilever to cease to be viable.

Conclusion
On the basis described above, the Directors have a reasonable
expectation that the Group will be able to continue in operation
and meet its liabilities as they fall due over the three-year period
of their assessment.

STRATEGIC REPORTUnilever Annual Report and Accounts 202046

Our risks continued

Principal risks
Our business is subject to risks and uncertainties. On the
following pages we have identified the risks that we regard as
the most relevant to our business. These are the risks that we
see as most material to Unilever’s business and performance
at this time. There may be other risks that could emerge in the
future. Our principal risks include risks that could impact our
business in the short-term (i.e. the next two years), medium
term (i.e. the next three to ten years) or over the longer term
(i.e. beyond ten years).

Our principal risks have not changed this year. Albeit the
Covid-19 pandemic has increased the potential impact and
likelihood of certain of these risks and much focus has been
given to managing these risks during the year to mitigate the
increased level of the inherent risk. We identified the following
areas as the ones with the most impact on our risk profile:
■ Safety and wellbeing of our employees: this is vital and

we acted quickly to take relevant actions such as working
from home, global restrictions on travel and the provision
of protective equipment for factory workers and changes in
working practices to facilitate social distancing. The safety
of those who continue to operate in our workplaces as well
as the mental and physical wellbeing of employees facing
an extended period of working from home continues to be
of paramount importance. We also have stringent return to
office criteria and revised hygiene protocols to ensure a safe
return to the office when possible;

■ Continuity of supply: maintaining manufacturing operations
whilst adhering to changing local regulations and meeting
enhanced health and safety standards has proven possible
but has required significant management. In addition,
ensuring the operation of a global logistics network for
both input materials and finished goods has presented
challenges and requires continuous focus and flexibility;

■ Product relevance: we have seen significant shifts in

demand across different product categories and increased
volatility in demand as consumer behaviour changes as the
pandemic evolves. Further changes are likely as we enter a
global recession;

■ Channel capabilities: social distancing requirements and the
restrictions on many individuals’ movements has driven a
rapid increase in on online shopping and thus we are having
to develop our capabilities in this area rapidly; and

■ IT availability, capability and resilience: given the change
in ways of working there is an increased reliance on our
systems thus keeping the IT infrastructure operating
effectively and having the ability to resolve issues remotely
is critical. This is particularly complex given our reliance on a
variety of third parties in this space.

As Covid-19 has rather overshadowed the external environment
this year we have not identified any other factors that have had
a significant impact on the level of risk associated with each
of our principal risks. However, while Covid-19 has significantly
impacted the business this year, it also has the characteristics
of an emerging risk and it is difficult for us to predict how things
will unfold in 2021, both with respect to the short and long-term
implications for our business.

We set out below certain mitigating actions that we believe
help us to manage our principal risks. However, we may not
be successful in deploying some or all of these mitigating
actions. If the circumstances in these risks occur or are not
successfully mitigated, our cash flow, operating results,
financial position, business and reputation could be materially
adversely affected. In addition, risks and uncertainties could
cause actual results to vary from those described, which may
include forward-looking statements, or could impact on our
ability to meet our targets or be detrimental to our profitability
or reputation.

Risk

Risk description

Management of risk

Level of risk

Brand
preference

Our success depends on the value and relevance of
our brands and products to consumers around the
world and on our ability to innovate and remain
competitive.

Consumer tastes, preferences and behaviours are
changing more rapidly than ever before. We see
a growing trend for consumers preferring brands
which both meet their functional needs and have
an explicit social purpose.

Technological change is disrupting our traditional
brand communication models. Our ability to develop
and deploy the right communication, both in terms
of messaging content and medium is critical to the
continued strength of our brands.

We are dependent on creating innovative products
that continue to meet the needs of our consumers and
getting these new products to market with speed.

The Covid-19 pandemic has driven significant changes
in consumer habits and demand which is requiring a
continuing and rapid evolution of our brands.

Increase

We monitor external market trends and collate
consumer, customer and shopper insights in order to
develop category and brand strategies. We invest in
markets and segments where we have built, or are
confident that we can build, competitive advantage.

Our brand communication strategies are designed
to optimise digital communication opportunities. We
develop and customise brand messaging content
specifically for each of our chosen communication
channels (both traditional and digital) to ensure that
our brand messages reach our target consumers.
Brand teams are driving social purpose into their
brand’s proposition and communication.

Our Research and Development function actively
searches for ways in which to translate the trends in
consumer preference and taste into new technologies
for incorporation into future products.

Our innovation management process converts category
strategies into projects which deliver new products
to market. We develop product ideas both in house
and with selected partners to enable us to respond
to rapidly changing consumer trends with speed.

Portfolio
management

Unilever’s strategic investment choices will affect
the long-term growth and profits of our business.

Unilever’s growth and profitability are determined by
our portfolio of divisions, geographies and channels
and how these evolve over time. If Unilever does not
make optimal strategic investment decisions, then
opportunities for growth and improved margin could
be missed.

Our strategy and our business plans are designed
to ensure that resources are prioritised towards
those categories and markets having the greatest
long-term potential for Unilever. Our acquisition and
disposal activity is driven by our portfolio strategy
with a clear, defined evaluation process.

No change

Unilever Annual Report and Accounts 202047

Risk

Risk description

Management of risk

Level of risk

Climate
change

Climate change and governmental actions to
reduce such changes may disrupt our operations
and/or reduce consumer demand for our products.

Climate change is occurring around the world which
may impact our business in various ways. It could lead
to water shortages which would reduce demand for
those of our products that require a significant amount
of water during consumer use. It could also lead to
an increase in raw material and packaging prices or
reduced availability. Governments may take action
to reduce climate change such as the introduction of
a carbon tax or zero net deforestation requirements
which could impact our business through higher costs
or reduced flexibility of operations.

Increased frequency of extreme weather (storms and
floods) could cause increased incidence of disruption
to our manufacturing and distribution network. Climate
change could result therefore in making products less
affordable or less available for our consumers resulting
in reduced growth and profitability.

No change

As part of our sustainability targets we monitor climate
change and are responding by ensuring we reduce
the carbon intensity of operations and by developing
products with a lower carbon footprint or that require
less water during consumer use.

We aim to minimise our contribution to climate
change by committing to emission reduction targets.
We have developed roadmaps for our two Science
Based Target initiative approved commitments: to
achieve zero emissions in our operations by 2030 and
to halve the greenhouse gas impact of our products
across the lifecycle by 2030. In 2021, we will publish
our climate transition action plan which will provide
further details on how we will achieve our net zero
emissions by 2039 target.

We monitor trends in raw material availability and
pricing due to short-term weather impacts, and
proactively reformulate our products where appropriate
to ensure continued availability of input materials.

We monitor governmental developments around
actions to combat climate change and take
proactive action to minimise the impact on our
operations. We also advocate for changes to public
policy frameworks that will enable accelerated
decarbonisation, in line with the upper level of
ambition of the Paris Agreement on Climate Change.

Plastic
packaging

We use a significant amount of plastic to package
our products. A reduction in the amount of virgin
plastic we use, the use of recycled plastic and an
increase in the recyclability of our packaging are
critical to our future success.

We are committed to reducing the amount of post-
consumer plastic packaging waste going to landfill.
We have committed to ensuring 100% of our plastic
packaging is reusable, recyclable or compostable
by 2025.

No change

Both consumer and customer responses to the
environmental impact of plastic waste and emerging
regulation by governments to tax or ban the use of
certain plastics requires us to find solutions to reduce
the amount of plastic we use; increase recycling
post-consumer use; and to source recycled plastic for
use in our packaging. We are also dependent on the
work of our industry partners to create and improve
recycling infrastructures throughout the world.

Not only is there a risk around finding appropriate
replacement materials, due to high demand
the cost of recycled plastic or other alternative
packaging materials could significantly increase
in the foreseeable future and this could impact our
business performance. We could also be exposed
to higher costs as a result of taxes or fines if we are
unable to comply with plastic regulations which
would again impact our profitability and reputation.

We aim to halve our use of virgin plastic by both
reducing usage and accelerating use of recycled
plastic. This requires us to redesign products by
considering multiple-use packs, wider use of refills,
recycling and using post-consumer recycled materials
in innovative ways. We are working on innovative
solutions through new business models.

We aim to collect and process more plastic packaging
than we sell, enabled through driving systematic
change in circular thinking at an industry level
working with partners such as the Ellen MacArthur
Foundation. We are also working with governments,
industry partners, suppliers and consumers to raise
awareness and find solutions to improve the recycling
infrastructure for plastics. We are helping consumers
to understand disposal methods and supporting
collection schemes and facilities.

Customer

Successful customer relationships are vital to our
business and continued growth.

Maintaining strong relationships with our existing
customers and building relationships with new
customers who have built new technology-enabled
business models to serve changing shopper habits are
necessary to ensure our brands are well presented to
our consumers and available for purchase at all times.

The strength of our customer relationships also
affects our ability to obtain pricing and competitive
trade terms. Failure to maintain strong relationships
with customers could negatively impact our terms
of business with affected customers and reduce the
availability of our products to consumers.

The Covid-19 pandemic has driven a rapid increase in
online shopping which means we need to accelerate
development of eCommerce capabilities.

Increase

We build and maintain trading relationships across
a broad spectrum of channels ranging from centrally
managed multinational customers through to small
traders accessed via distributors in many developing
countries. We identify changing shopper habits and
build relationships with new customers, such as those
serving the eCommerce channel.

We develop joint business plans with our key
customers that include detailed investment plans
and customer service objectives and we regularly
monitor progress.

We have developed capabilities for customer sales
and outlet design which enable us to find new ways
to improve customer performance and enhance our
customer relationships. We invest in technology to
optimise order and stock management processes for
our distributive trade customers.

STRATEGIC REPORTUnilever Annual Report and Accounts 202048

Our risks continued

Risk

Talent

Risk description

Management of risk

Level of risk

A skilled workforce and agile ways of working are
essential for the continued success of our business.

With the rapidly changing nature of work and skills,
there is a risk that our workforce is not equipped with
the skills required for the new environment.

Our ability to attract, develop and retain a diverse
range of skilled people is critical if we are to compete
and grow effectively. This is especially true in our key
emerging markets where there can be a high level of
competition for a limited talent pool.

We have an integrated management development
process which includes regular performance reviews
underpinned by a common set of leadership
behaviours, skills and competencies. We have
development plans to upskill and reskill employees
for future roles and will bring in flexible talent to
access new skills.

We have targeted programmes to attract and retain
top talent and we actively monitor our performance
in retaining a diverse talent pool within Unilever.

Increase

The loss of management or other key personnel or
the inability to identify, attract and retain qualified
personnel could make it difficult to manage the
business and could adversely affect operations and
financial results.

The wellbeing of our employees is vital to the success
of our business. Covid-19 has had a significant impact
on their wellbeing, therefore helping our employees
manage the impact of Covid-19 on their lives and their
ability to work effectively requires continued focus.

We regularly review our ways of working to drive
speed and simplicity through our business in order to
remain agile and responsive to marketplace trends.
We are moving to agile ways of working to unlock
internal capacity and prioritise work based on growth
and impact.

Supply chain Our business depends on purchasing materials,

efficient manufacturing and the timely distribution
of products to our customers.

Our supply chain network is exposed to potentially
adverse events such as physical disruptions,
environmental and industrial accidents, trade
restrictions or disruptions at a key supplier,
which could impact our ability to deliver orders
to our customers.

Covid-19 is an adverse event that has challenged
and continues to challenge the continuity of our
supply chain. Maintaining manufacturing and
logistics operations whilst adhering to changing local
regulations and meeting enhanced health and safety
standards requires continued focus and flexibility.

The cost of our products can be significantly affected
by the cost of the underlying commodities and
materials from which they are made. Fluctuations
in these costs cannot always be passed on to the
consumer through pricing.

Safe and
high-quality
products

The quality and safety of our products are of
paramount importance for our brands and our
reputation.

The risk that raw materials are accidentally or
maliciously contaminated throughout the supply
chain or that other product defects occur due to
human error, equipment failure or other factors
cannot be excluded.

Labelling errors can have potentially serious
consequences for both consumer safety and brand
reputation. Therefore on-pack labelling needs to
provide clear and accurate ingredient information in
order that consumers can make informed decisions
regarding the products they buy.

Increase

No change

We have contingency plans designed to enable us
to secure alternative key material supplies at short
notice, to transfer or share production between
manufacturing sites and to use substitute materials
in our product formulations and recipes.

We have policies and procedures designed to ensure
the health and safety of our employees and the
products in our facilities, and to deal with major
incidents including business continuity and disaster
recovery.

Commodity price risk is actively managed through
forward buying of traded commodities and other
hedging mechanisms. Trends are monitored and
modelled regularly and integrated into our
forecasting process.

Our product quality processes and controls are
comprehensive, from product design to customer
shelf. They are verified annually and regularly
monitored through performance indicators that
drive improvement activities. Our key suppliers are
externally certified and the quality of material received
is regularly monitored to ensure that it meets the
rigorous quality standards that our products require.

In the event of an incident relating to the safety of
our consumers or the quality of our products, incident
management teams are activated in the affected
markets under the direction of our product quality,
science and communications experts, to ensure timely
and effective marketplace action.

We have processes in place to ensure that the data
used to generate on-pack labelling is compliant with
applicable regulations and with relevant Unilever
labelling policies in order to provide the clarity and
transparency needed for consumers.

Unilever Annual Report and Accounts 202049

Risk

Risk description

Management of risk

Level of risk

Systems and
information

Unilever’s operations are increasingly dependent on
IT systems and the management of information.

The cyber-attack threat of unauthorised access
and misuse of sensitive information or disruption
to operations continues to increase. Such an attack
could inhibit our business operations in a number of
ways, including disruption to sales, production and
cash flows, ultimately impacting our results.

In addition, increasing digital interactions with
customers, suppliers and consumers place ever
greater emphasis on the need for secure and
reliable IT systems and infrastructure and careful
management of the information that is in our
possession to ensure data privacy.

Given the changes in ways of working of all of our
employees as well as our customers and suppliers
as a result of Covid-19 there has been an increased
reliance on certain elements of our IT infrastructure.
We are particularly reliant on third party experts in
this space and thus the impact of Covid-19 on their
operations also poses a risk for us.

Business
transformation

Successful execution of business transformation
projects is key to delivering their intended business
benefits and avoiding disruption to other business
activities.

Unilever is continually engaged in major change
projects, including acquisitions, disposals and
organisational transformation, to drive continuous
improvement in our business and to strengthen our
portfolio and capabilities. Continued digitalisation
of our business models and processes together
with enhancing data management capabilities is a
critical part of our transformation.

We have an extensive programme of transformation
projects. Failure to execute such initiatives
successfully could result in under-delivery of the
expected benefits and there could be a significant
impact on the value of the business.

To reduce the impact of external cyber-attacks
impacting our business we have firewalls and
threat monitoring systems in place, complete
with immediate response capabilities to mitigate
identified threats. We also maintain a global system
for the control and reporting of access to our critical IT
systems. This is supported by an annual programme
of testing of access controls.

We have policies covering the protection of both
business and personal information, as well as the
use of IT systems and applications by our employees.
Our employees are trained to understand these
requirements.

We also have a set of IT security standards and closely
monitor their operation to protect our systems and
information. Hardware that runs and manages core
operating data is fully backed up with separate
contingency systems to provide real-time backup
operations should they ever be required.

We have standardised ways of hosting information
on our public websites and have systems in place to
monitor compliance with appropriate privacy laws
and regulations, and with our own policies.

All acquisitions, disposals and global organisational
transformation projects are sponsored by a member
of the Unilever Leadership Executive. All such
projects have steering groups in place led by a senior
executive and regular progress updates are provided
to the Unilever Leadership Executive. Sound project
disciplines are used in all transformation projects
and these projects are resourced by dedicated and
appropriately qualified personnel.

The digitalisation of our business is led by a dedicated
specialist team together with representatives from
all parts of the business to ensure an integrated
and holistic approach. A significant part of the
organisational transformation involves the transfer of
activities to third parties on and offshore. New ways
of working are being developed to manage this new
business model.

Unilever also monitors the volume of change
programmes under way in an effort to stagger the
impact on current operations and to ensure minimal
disruption.

Increase

No change

Economic
and political
instability

Unilever operates around the globe and is exposed
to economic and political instability that may
reduce consumer demand for our products, disrupt
sales operations and/or impact the profitability of
our operations. Adverse economic conditions may
affect one or more countries within a region,
or may extend globally.

Government actions such as foreign exchange
or price controls can impact on the growth and
profitability of our local operations.

Unilever has more than half its turnover in
emerging markets which can offer greater growth
opportunities but also expose Unilever to related
economic and political volatility.

The breadth of Unilever’s portfolio and our geographic
reach help to mitigate our exposure to any particular
localised risk. Our flexible business model allows us
to adapt our portfolio and respond quickly to develop
new offerings that suit consumers’ and customers’
changing needs during economic downturns.

We regularly update our forecast of business results
and cash flows and, where necessary, rebalance
investment priorities.

We believe that many years of exposure to emerging
markets have given us experience of operating and
developing our business successfully during periods
of economic and political volatility.

No change

STRATEGIC REPORTUnilever Annual Report and Accounts 202050

Our risks continued

Risk

Risk description

Management of risk

Level of risk

Treasury
and Tax

Unilever is exposed to a variety of external financial
risks in relation to Treasury and Tax.

The relative values of currencies can fluctuate widely
and could have a significant impact on business
results. Further, because Unilever consolidates its
financial statements in euros, it is subject to exchange
risks associated with the translation of the underlying
net assets and earnings of its foreign subsidiaries.

We are also subject to the imposition of exchange
controls by individual countries which could limit our
ability to import materials paid in foreign currency or
to remit dividends to the parent company.

A material shortfall in our cash flow could undermine
Unilever’s credit rating, impair investor confidence
and restrict Unilever’s ability to raise funds. In times
of financial crisis, there is a further risk that we may
not be able to raise funds due to market liquidity.

We are exposed to counter-party risks with banks,
suppliers and customers which could result in
financial losses.

Tax is a complex and evolving area where laws and
their interpretation are changing regularly, leading
to the risk of unexpected tax exposures. International
tax reform remains a key focus of attention with
the OECD’s Base Erosion and Profit Shifting project,
and the Digitalising Economy Project, and further
potential tax reform in the EU.

Unilever’s brands and reputation are valuable
assets and the way in which we operate, contribute
to society and engage with the world around
us is always under scrutiny both internally and
externally.

Acting in an ethical manner, consistent with the
expectations of customers, consumers and other
stakeholders, is essential for the protection of the
reputation of Unilever and its brands.

A key element of our ethical approach to business
is to reduce inequality and promote fairness. Our
activities touch the lives of millions of people and it
is our responsibility to protect their rights and help
them live well. The safety of our employees and the
people and communities we work with is critical.
Failure to meet these high standards could result
in damage to Unilever’s corporate reputation and
business results.

Ethical

Legal and
regulatory

Compliance with laws and regulations is an
essential part of Unilever’s business operations.

Unilever is subject to national and regional laws and
regulations in such diverse areas as product safety,
product claims, trademarks, copyright, patents,
competition, employee health and safety, data
privacy, the environment, corporate governance,
listing and disclosure, employment and taxes.

Failure to comply with laws and regulations could
expose Unilever to civil and/or criminal actions
leading to damages, fines and criminal sanctions
against us and/or our employees with possible
consequences for our corporate reputation. Changes
to laws and regulations could have a material
impact on the cost of doing business.

Currency exposures are managed within prescribed
limits and by the use of financial hedging instruments.
Further, operating companies borrow in local
currency except where inhibited by local regulations,
lack of local liquidity or local market conditions.

We seek to maintain access to global debt markets
through short-term and long-term debt programmes.
In addition, we maintain significant undrawn
committed credit facilities for general corporate
purposes as disclosed in note 16A.

Group treasury regularly monitors exposure to
our banks, tightening counter-party limits where
appropriate. Unilever actively manages its banking
exposures on a daily basis. We regularly assess
and monitor counter-party risk in our suppliers and
customers and take appropriate action to manage
our exposures.

Our Global Tax Principles provide overarching
governance and we have a process in place to
monitor compliance with the Tax Principles. We have
a Tax Risk Framework in place which sets out the
controls established to assess and monitor tax risk
for direct and indirect taxes. We monitor proposed
changes in taxation legislation and ensure these
are taken into account when we consider our future
business plans.

Our Code of Business Principles and our Code Policies
govern the behaviour of our employees, suppliers,
distributors and other third parties who work with
us. Our processes for identifying and resolving
breaches of our Code of Business Principles and
our Code Policies are clearly defined and regularly
communicated throughout Unilever. Data relating to
such breaches is reviewed by the Unilever Leadership
Executive and by relevant Board Committees and
helps to determine the allocation of resources for
future policy development, process improvement,
training and awareness initiatives.

Our Responsible Sourcing Policy and Responsible
Business Partners Policy help us improve the lives of
the people in our supply chains by ensuring human
rights are protected and makes a healthy and safe
workplace a mandatory requirement for our suppliers.
We have detailed safety standards and monitor
safety incidents at the highest level.

Through our Brands with Purpose agenda, a number
of our brands are taking action on societal issues
such as fairness and equality.

Unilever is committed to complying with the laws and
regulations of the countries in which we operate. In
specialist areas the relevant teams at global, regional
or local levels are responsible for setting detailed
standards and ensuring that all employees are aware
of and comply with regulations and laws specific and
relevant to their roles.

Our legal and regulatory specialists are heavily
involved in monitoring and reviewing our practices
to provide reasonable assurance that we remain
aware of and in line with all relevant laws and legal
obligations.

No change

Unilever Annual Report and Accounts 202051

Sustainability deep-dives

In focus: Climate change

Climate change and the degradation of nature is a global
threat to the health of the planet, people’s lives and
livelihoods. It will also impact our business and supply chain.

We believe the world must reach net zero emissions by
2050 – preferably much earlier – to avoid the worst effects of
climate change. We advocate for national climate policies
that advance the Paris Agreement on Climate Change to limit
global temperature increases to well below 2°C, and ideally no
more than 1.5°C above pre-industrial levels.

We believe businesses have an important role to play in
taking decisive action to fight climate change. We are one
of the world’s largest consumer goods companies and our
greenhouse gas emissions footprint is significant. Much of our
footprint comes from raw material sourcing and consumer use
of our products and we use our influence to reduce emissions
across the value chain.

We have set ambitious science-based targets to reduce our
carbon footprint and we strongly support efforts to accelerate
the decarbonisation of energy grids to reduce emissions from
product use.

We support the aims of the Task Force on Climate-related
Financial Disclosures (TCFD) and believe that businesses should
communicate the risks and opportunities that climate change
brings. The TCFD provides a framework to improve the disclosure
of consistent, comparable, reliable, and clear climate-related
financial information so that investors can make better capital
allocation decisions in support of the transition to a low-carbon
economy. Unilever has adopted the TCFD’s recommendations
since their establishment, to aid understanding of the impacts
of climate change on our business.

In this Annual Report and Accounts, we continue to integrate
climate-related disclosures throughout the Strategic Report.
In this section, we discuss in detail the risks and opportunities
arising from climate change, the potential impact on our
business, and the actions we’re taking to mitigate these risks.

Governance

The Board take overall accountability for the management
of all risks and opportunities, including climate change
(see page 44). Our CEO and Executive Board member, Alan
Jope, is ultimately responsible for oversight of our climate
change agenda. The Corporate Responsibility Committee and
Audit Committee review our climate reporting and receive
presentations from sustainability experts, including the
Sustainability Advisory Council. The Board is supported by the
ULE. The ULE meet monthly to discuss key strategic matters
and during 2020, several agenda items related to climate
change were discussed, including progress against our USLP
climate goals and our new Compass climate goals.

Additional specialist governance groups are in place to support
our climate agenda and ULE decision making, including:
■ Carbon Neutral Board: Drives delivery of our carbon

ambition at corporate and country level and leads strategic
partnerships and policy on renewables. Chaired by our Chief
Supply Chain Officer, Marc Engel.

■ Sustainable Sourcing Steering Group: Supports our strategy
focusing on long-term, sustainable access to our key crops.
Chaired by our Chief Procurement Officer, David Ingram.

Remuneration linked to achievement of sustainability and
climate change targets is a key part of our reward framework.
For management employees – up to and including the ULE –
reward packages include fixed pay, a bonus as a percentage
of fixed pay and eligibility to participate in a long-term
management co-investment plan (MCIP) linked to financial and
sustainability performance. The Sustainability Progress Index
accounts for 25% of the total MCIP award. It includes amongst
others consideration of progress against our manufacturing
Scope 1 and 2 greenhouse gas target and a deforestation goal
covering palm oil. Subject to shareholder approval at the 2021
AGM the MCIP will be replaced by a Performance Share Plan
(PSP) and the performance measures for the PSP will continue to
include the Sustainability Progress Index. See pages 92 to 93 for
more on MCIP including the role of the Board’s Compensation
Committee and Corporate Responsibility Committee in
determining the Sustainability Progress Index outcome each
year and changes related to the PSP.

Strategy and risk management

Climate change is a principal risk to Unilever which has the
potential – to varying degrees – to impact our business in the
short, medium and long term. We face potential physical risks
from the effects of climate change on our business, including
extreme weather and water scarcity. Potential transition risks
associated with the shift to a low-carbon economy include
changing consumer preferences and future policy and
regulation. These also present opportunities.

More detail on these risks, opportunities and the mitigating
actions we’re taking is discussed on pages 55 to 56.

The process for assessing and identifying climate-related risks
is the same for all principal risks and is described on page 44.
For each of our principal risks we have a risk management
framework detailing the controls we have in place, who
is responsible for managing both the overall risk and the
individual controls mitigating it. We monitor risks throughout
the year to identify changes in the risk profile.

We regularly carry out climate-related risk assessments at
site level, supplier level, as well as innovation-project level.
Climate-related risks are managed by the team relevant to
where the risk resides. For example, climate risks in relation
to commodities in the supply chain are managed by our
procurement team.

We believe that the economy-wide shift to net zero emissions
will require a greater and deeper level of engagement
between companies and their investors about their climate
transition action plans. In December 2020, the Board
announced its intention to put Unilever’s climate transition
action plan before shareholders and seek a non-binding
advisory vote on our ambitious emissions reduction targets
and the plans to achieve them. The plan will set out our
climate strategy to reduce emissions within our operations,
through our value chain, as well as describe how we are
managing risks and meeting consumer needs connected
with climate change. In setting out our action plan in this very
transparent way, we hope to increase our accountability and
strengthen the dialogue with our shareholders whilst also
encouraging other companies to follow suit.

STRATEGIC REPORTUnilever Annual Report and Accounts 202052

Sustainability deep-dives continued

Understanding financial impact: scenario analysis

■ Zero net deforestation requirements are introduced

Scenario analysis helps us to understand the potential
impact of climate change on our business in 2030 to inform
our strategy and financial planning. We used two types of
scenario analysis:

1. Modelling the potential financial impact of average global

temperature increases of 2°C and 4°C on our business in 2030.

2. Deep-dive analysis of the potential financial impact of

climate change on three of our key agricultural commodities:
soy, black tea and palm oil.

We plan to extend our scenario analysis to assess the impact of
1.5°C temperature increases to reflect the latest science and our
commitment to limit global temperature increases, to well below
2°C and ideally no more than 1.5°C above pre-industrial levels.

1. Modelling the potential financial impact of 2°C and 4°C
temperature increases on our business
We have made a high-level assessment of the impact of 2°C
and 4°C temperature increases due to climate change by 2100.
Carried out in 2017, the assessment focused on the material
impacts on our business in the year 2030. The modelling
assumed that our business activities are the same as they
are today. The scenarios were based on existing internal and
external data.

While we understand that policy risk and physical impact can
happen simultaneously, we made the following simplifying
assumptions:
■ In the 2°C scenario, we assumed that in the period to 2030
society acts rapidly to limit greenhouse gas emissions
and puts in place measures to restrain deforestation and
discourage emissions (for example implementing carbon
pricing at $75-$100 per tonne, taken from the International
Energy Agency’s 450 scenario). We have assumed that
there will be no significant impact to our business from
the physical ramifications of climate change by 2030 – i.e.
from greater scarcity of water or increased impact of severe
weather events. The scenario assesses the impact on our
business from regulatory changes.

■ In the 4°C scenario, we assumed climate policy is less
ambitious and emissions remain high so the physical
manifestations of climate change are increasingly apparent
by 2030. Given this we have not included impacts from
regulatory restrictions but focus on those resulting from the
physical impacts.

We identified the material impacts on Unilever’s business
arising from each of these scenarios based on existing internal
and external data. The impacts were assessed without
considering any actions that Unilever might take to mitigate
or adapt to the adverse impacts or to introduce new products
which might offer new sources of revenue as consumers adjust
to the new circumstances.

The main elements of the 2°C scenario are as follows:
■ Carbon pricing is introduced in key countries and hence
there are increases in both manufacturing costs and the
costs of raw materials such as dairy ingredients and the
metals used in packaging.

and a shift to sustainable agriculture e.g. Climate Smart
Agriculture, puts pressure on agricultural production, raising
the price of certain raw materials.

The main impacts of the 4°C scenario are as follows:
■ Chronic and acute water stress reduces agricultural

productivity in some regions, raising prices of raw materials.

■ Increased frequency of extreme weather (storms and

floods) causes increased incidence of disruption to our
manufacturing and distribution networks.

■ Temperature increase and extreme weather events reduce
economic activity, GDP growth and hence sales levels fall.

Our analysis shows that, without action, both scenarios
present financial risks to Unilever by 2030, predominantly due
to increased costs. However, while there are financial risks
which would need to be managed, we would not have to
materially change our business model. The most significant
impacts of both scenarios are on our supply chain where costs
of raw materials and packaging rise, due to carbon pricing and
rapid shift to sustainable agriculture in a 2°C scenario and due
to chronic water stress and extreme weather in a 4°C scenario.
The impacts on sales and our own manufacturing operations
in the scenarios tested are relatively small.

Scenario: Potential impact of a 2°C temperature
increase by 2100 (transition impacts)

Scenario drivers

Increased costs due to
carbon pricing.

Potential financial impact in
2030 if no actions to mitigate
risks are taken

Turnover: Not material
Expenditure: Estimated increase
of €0.8bn

Increased raw material costs from
zero net deforestation policies and
a shift to sustainable agriculture.

Turnover: Not material
Expenditure: Estimated increase
of €0.9bn

Scenario: Potential impact of a 4°C temperature
increase by 2100 (physical impacts)

Scenario drivers

Chronic and acute water stress
reduces agricultural productivity
in some regions, raising prices
of raw materials.

Increased frequency of
extreme weather (storms and
floods) causes increased incidence
of disruption to our manufacturing
and distribution networks.

Temperature increase and extreme
weather events reduce economic
activity, GDP growth and hence
sales levels fall.

Potential financial impact in
2030 if no actions to mitigate
risks are taken

Turnover: Not material
Expenditure: Estimated increase
of €2.7bn

Turnover: Estimated reduction
of €0.4bn
Expenditure: Not material

Turnover: Estimated reduction
of €2.1bn
Expenditure: Not material

Unilever Annual Report and Accounts 202053

2. Deep-dive analysis of the potential financial impact
of climate change on key agricultural commodities
To help us understand the potential impact of climate change
on our supply chain, we’ve completed more detailed analysis
on three of our key agricultural commodities: palm oil, soybean
oil and black tea. We selected these commodities because of
their strategic importance to Unilever, the large volumes we
purchase and the availability of data.

We first piloted a methodology for soybean oil in 2018 and
since 2019 we’ve worked with the Potsdam Institute for Climate
Impact Research to develop models for black tea and palm oil.
Our methodology forecasts future yields using crop-specific
and climate models. The price model uses a range of supply
and demand drivers to determine the impact of changes in
yield from direct risks of climate change, isolating other factors
such as acreage and technology on price. Three modelling
steps were performed:
■ Yield estimation: We analysed multiple crop and climate
models to provide a forecast range of expected yields in
key growing regions.

■ Price relationship: An econometric model was developed,
based on an analysis of the raw material’s market and
historical trends, to estimate the impact of climate-induced
yield changes on future prices. The model seeks to isolate
the impact of yield changes on prices from other important
factors such as acreage, farming technology, extreme
weather events and man-made factors such as elections
and governmental policy.

■ Impact estimation: Future yields and price impacts were
then translated into an estimated financial exposure
from climate change for our business, using our forecast
procurement volumes.

While the 2°C and 4°C scenarios discussed above identified
financial risks to our supply chain, when we looked into these
specific commodities in more detail we found that overall,
the direct financial impact on our business is low. This is
because the high level 2°C and 4°C scenario analysis and
the commodity-specific deep-dive analyses are modelling
different conditions and the results cannot be directly
compared. For the commodities and sourcing countries we
modelled, climate change could increase crop growth due to
CO2 fertilisation and extended growing seasons, offsetting any
downside risks from changing rainfall or temperature patterns.

However, we do face higher risks in some specific scenarios
modelled for black tea. In two of four countries modelled we
found yields could decrease and prices increase, although
overall the results for black tea showed yield increases so our
total risk exposure remains low. We also face indirect risks
relating to climate change which were not included in the
modelling. These include the impacts of extreme weather
events and external policy changes. We also face price
disruption, reputational risks and land-use policy changes
associated with deforestation. We considered these indirect
impacts alongside the quantitative modelling and discuss
results in more detail below.

Palm oil

We are one of the largest buyers of palm oil in the consumer
goods industry. It’s an important raw material for many
of our brands, including in food, beauty and household
cleaning products.

What we modelled: We worked with Potsdam Institute
for Climate Impact Research to develop suitable climate
models for palm oil. We modelled yields for Indonesia and
Malaysia, where most palm oil is produced, along with four
other countries. The palm oil market operates globally so
we used a single price model. The market is characterised
by high monthly inventory levels (creating relatively stable
prices), substitution with other oils such as sunflower oil,
and government regulations on biodiesel. The price model
controlled for these factors and isolated the effect of changes
in yield from the direct impacts of climate change on prices.

Impact on yields: Likely increase in palm oil yields due to
CO2 fertilisation in all countries modelled over the 2030
to 2050 timeframe, leading to between 18% and 42%
lower palm oil prices.

Risk profile: Low direct financial risk to our business.

Key risks: Potential indirect risks from extreme weather
events, which can’t yet be sufficiently modelled. More palm
oil acreage will be needed to meet demand, but concerns
about deforestation could lead to changing regulations
on land use that could limit growth and impact prices. For
example, in Malaysia and Indonesia, the total land available
for palm oil plantations is being capped or new plantation
licenses have been halted. Despite the potential financial

impact to Unilever from deforestation regulation, we support
policies that tackle deforestation associated with palm oil.

We also face significant corporate reputational risks
associated with deforestation. Therefore, avoiding
deforestation is essential to improving the sustainability and
image of palm oil and land-use restrictions are a positive
development. Palm oil could also become increasingly
attractive compared to alternative oils because it produces
the most oil per hectare, which could further stimulate
demand and affect prices.

Mitigating actions: We are committed to ending
deforestation in our supply chain by 2023 and we have
been at the forefront of driving industry-wide change to
ensure a sustainable future for palm oil, including as a
founding member of the Roundtable on Sustainable Palm
Oil (RSPO). We were the first consumer goods company
to publish a list of palm oil suppliers and mills and we expect
all our suppliers to follow our Sustainable Palm Oil Sourcing
Policy. This includes commitments to ‘No deforestation,
No development on peat and No exploitation’.

We are working with suppliers to increase traceability and
transparency, including through using AI and technology
solutions. For instance, we’re working with Orbital Insight,
a US technology company that specialises in using GPS
technology to trace palm and soy used in our products back
to the farmland it was grown on (see page 27). We also help
smallholder farmers be more productive and adopt more
sustainable techniques, supporting them with high-quality
palm varieties, technology, finance and training.

STRATEGIC REPORTUnilever Annual Report and Accounts 202054

Sustainability deep-dives continued

Soybean oil

Soybean oil is a crucial ingredient in many of our food
products, such as mayonnaise, and we purchase large
volumes mostly from growers in the US and Brazil, where
there is significant stakeholder interest in the sustainability
of the crop. Good historical price data is also readily available.

What we modelled: We forecast future yields using crop and
climate models. To estimate the impact of climate-induced
yield changes on future soybean oil prices, we considered
the role of co-products (e.g. soybean meal), the potential
to substitute it with other oils such as sunflower oil, and the
impact of industrial uses.

Impact on yields: Likely average increase in soy yields over
the 2030 to 2050 timeframe, leading to between 2% and
12% lower soy prices.

Risk profile: Low direct financial risk to our business.

Key risks: Potential indirect risks such as extreme weather
events, which can’t yet be sufficiently modelled, and
corporate reputational risks from being associated with
deforestation. More soybean oil acreage will be needed to

meet demand for soy meal use in animal feed, but concerns
about deforestation could lead to changing regulations on
land-use that could limit growth and impact prices. Despite
the potential financial impact to Unilever from deforestation
regulation, we support policies that tackle deforestation
associated with soybean oil.

Mitigating actions: We are committed to ending
deforestation in our supply chain by 2023. As a founding
member of the Round Table on Responsible Soy (RTRS) we
have worked with NGOs, governments and suppliers to
develop an international standard and enable farmers
to improve their practices and gain sustainable sourcing
accreditation.

We are transparent about where we purchase soy from and
publish a list of our direct suppliers. In the US our work with
the Field to Market alliance and Practical Farmers of Iowa
supports farmers to improve soil health and water quality.
In Latin America we’ve been part of long-term collaborative
efforts to improve the sustainability of soy cultivation.
We’re also increasing our use of AI and technology solutions
to improve traceability.

Black tea

We are the world’s biggest tea company and buy around
10% of the world’s black tea. We source tea from our own
tea estates, our suppliers, or from smallholder farmers
across four continents.

What we modelled: We worked with the Potsdam Institute
for Climate Impact Research to forecast future tea yields
using crop and climate models. We similarly isolated
the impact of climate-induced yield changes on prices
from other important factors such as acreage, farming
technology, tea quality, extreme weather events and man-
made factors such as elections, unrest and governmental
policy. The black tea market is highly fragmented and lacks
liquidity so we modelled risks in four key sourcing countries:
Argentina, India, Kenya and Turkey.

Impact on yields: Varies between countries but on average,
overall yields are expected to increase. Reduced yields
are a particular risk in 2030 in a 2°C scenario in Kenya and
in 2050 in a 4°C scenario in Argentina. Associated average
price reductions are expected in most scenarios over
a 30-year horizon.

Risk profile: Some exposure to risk due to lower yields in
Kenya and Argentina in some scenarios. However overall,
there is a low direct financial risk to our black tea business
from climate change across all four countries modelled.

Key risks: Small potential price rises in Kenya and Argentina.

In Kenya there is a risk of plateauing yields if additional
acreage is not available due to government or land-use
change policies in the 2°C scenario. In India, the declining
quality of black tea could be a bigger risk to prices than
yields, driven by water scarcity and temperature stress in
both 2°C and 4°C scenarios. Extreme weather events and
man-made factors (such as elections or public unrest) could
also have a bigger – but very unpredictable – impact on
prices and production than the direct impacts of climate
change. Lack of appropriate substitutions for black tea
also increases the risk profile.

Mitigating actions: Since 2014, we’ve developed diverse
natural tea varieties that are more resilient to the impacts
of climate change such as drought, as well as pests and
disease. Our long-standing partnership with the Rainforest
Alliance supports smallholder farmers to improve
sustainable practices in Kenya and we’re working with The
Sustainable Trade Initiative (IDH) to reverse deforestation
and improve rainfall to support tea growing. In India, we
are a founding member of trustea, supporting sustainable
practices across the country’s tea estates. Together
with Oxfam and the Ford Foundation, we created the
Enhancing Livelihoods Fund (ELF), which aims to enhance
the livelihoods of smallholders while securing ingredients
sustainably. Our ELF programme in Kenya supports 200
women tea farmers with access to finance, skills and
training to cultivate drought-resistant tea crops.

Unilever Annual Report and Accounts 202055

Actions we’re taking: We’re investing in new products and
formulations that work with less water, poor quality water or
no water, with a particular focus on household cleaning, skin
cleansing, oral and hair care. Many of our Beauty & Personal
Care and Home Care products now have fast-rinse technology
as standard, using less water or low-temperature washing.
We recently committed to expand our water stewardship
programme to 100 locations in water-stressed areas by 2030
(see page 30).

Transition: changing consumer preferences
Risks and opportunities: Our growth and profitability depend
on our ability to pre-empt or respond to changing consumer
preferences. Public concern about climate change is higher
than ever and consumers are increasingly choosing more
sustainable brands. Consumers in a number of markets
are increasingly adopting plant-based diets which have
a lower GHG footprint than meat-based diets. Animal-based
agriculture (including fats and protein) is associated with only
around 7.5% of our Foods & Refreshment GHG footprint, and
2.5% of our total GHG footprint. We’re capturing opportunities
to develop new products and grow our consumer base by
appealing to eco-conscious consumers.

Actions we’re taking: We’re developing lower carbon footprint
products. We’ve spent years developing concentrated laundry
detergents that fit more washes into smaller bottles, reducing
packaging, manufacturing and transport emissions. Our Home
Care division’s Clean Future programme aims to eliminate
fossil fuels from cleaning products by 2030. By embedding
circular economy principles into both packaging and product
formulations, we’re shifting from using fossil-fuel derived
feedstocks to renewable or recycled sources of carbon for
cleaning chemicals. Our Foods & Refreshment brands offer
a range of vegan and vegetarian variants and continue to
actively promote vegetarian and vegan recipes (see page
22). A recent FAIRR report identified Unilever as a pioneer in
developing alternatives to meat.

In recent years, our M&A strategy has been to acquire new
businesses which serve specific consumer segments, such
as sustainability-conscious consumers. A number of these,
including Pukka Herbs, Seventh Generation and OLLY Nutrition,
are recognised as B Corps – meaning they have met stringent
environmental and social criteria as laid out in the B Corp
impact assessment. Existing brands such as our T2 premium
tea brand have also achieved B Corp certification. Seventh
Generation advocates for renewable energy and is taking
action to decarbonise its own business and Pukka Herbs has
its own science-based zero carbon goal. In 2020, we launched
a €1 billion Climate & Nature Fund which will be used over the
next ten years by our brands to take meaningful and decisive
action on climate change (see page 28).

Managing climate change risks and opportunities

The modelling scenarios presented above are useful to
understand the potential financial impacts of climate change
on our business, but there are limitations. Climate change
impacts are systemic and unpredictable. Scenario analysis
requires us to pick specific factors and model them using
fixed assumptions.

However, there are many wider potential impacts – including
opportunities – that we can’t capture from one type of
modelling. For instance, we considered the impact of extreme
weather in our 2°C and 4°C scenarios, but we did not quantify
this in detail due to how unpredictable extreme weather
events are. For this reason, we also look more broadly at
possible physical and transition risks and opportunities
to our business from climate change. In this section, we
discuss the actions we’re taking to mitigate these.

Physical: extreme weather
Risks and opportunities: Our business depends on purchasing
materials, efficient and uninterrupted manufacturing and the
timely distribution of products to our customers. Our operating
costs and commodity prices could be disrupted by increased
frequency of extreme weather events and changes to weather
systems. Our operations and assets could be physically
damaged by extreme weather events, including damage
or loss to our owned property or inventory of products. There
are opportunities to adapt our operations and assets to be
more resilient to extreme weather.

Actions we’re taking: While the frequency and extent of
extreme weather is hard to predict, we monitor changing
weather patterns on a short-term basis and take action to
mitigate any negative effects. We have contingency plans
to secure alternative key material supplies at short notice,
to transfer or share production between manufacturing
sites and to substitute materials in products and recipes
if needed. We manage commodity price risks through
forward-buying of traded commodities and other hedging
mechanisms. We integrate weather system modelling into our
forecasting process. Our Regenerative Agriculture Principles
and Sustainable Agriculture Code promote the principles of
Climate-Smart Agriculture to our suppliers and encourage
practices to sustainably increase their productivity and
resilience to extreme weather.

Physical: water stress
Risks and opportunities: Household water scarcity,
exacerbated by population growth and urbanisation is
a physical risk to our business. Consumers may reduce use
of certain products such as laundry detergents, shampoos,
conditioners and toilet cleaners if they don’t have access to
water. Reduced water quality could also impact our products
efficacy and consumers’ enjoyment. We investigated the
effects of water stress on our sales in the global scenario
analysis and while we found the overall impact by 2030 is
not significant, we could face greater short-term impacts
in specific communities. We can pursue opportunities to
develop new water-smart products and increase our market
share among consumers concerned about water use or facing
local water shortages.

STRATEGIC REPORTUnilever Annual Report and Accounts 202056

Sustainability deep-dives continued

Transition: future policies and regulation
Risks and opportunities: Current and emerging laws and
regulations could impact our financial performance as
governments may take action, such as the introduction
of carbon taxes which could increase both manufacturing
costs and the costs of raw materials such as ingredients and
packaging, or zero net deforestation policies which could
increase the costs of raw materials. We are dependent on
countries implementing their Paris Agreement commitments
and in raising the ambition of those commitments.

Actions we’re taking: Our science-based climate targets
are one of the ways we mitigate the risk of future policy and
regulation (see right). In 2020, we launched an additional
climate goal, committing to net zero emissions from all our
products by 2039 – from the sourcing of materials we use,
up to the point of product sale.

We support the use of carbon pricing as an important tool
to help us achieve our zero emissions objective. Our carbon
pricing approach is a mechanism which creates a sustainable
capital investment fund which is then used to fund the capital
investments needed to decarbonise our operations. This has
been operating since 2016 and, whilst there were some delays
to the projects during 2020 due to Covid-19, we have continued
to make progress in the reduction of our greenhouse gas
emissions in our operations. To ensure that we remain on
track to deliver our ambition of zero emissions by 2030 we are
committed to continue this capital investment programme.

Over the past decade, we have worked with governments and
others to drive action to end deforestation. We are committed
to achieving a deforestation-free supply chain by 2023 (see
page 29).

Metrics and targets

Our new Compass strategy includes stretching goals to
address climate risks and opportunities across our value chain.
Two of these GHG reduction targets have been recognised as
science-based by the Science Based Target initiative:

■ Halve the greenhouse gas impact of our products across
the lifecycle by 2030 (this is our full value chain goal and
covers all greenhouse gas scopes and all the phases across
the lifecycle of our products, including ingredients and raw
materials, manufacturing, distribution, retail, packaging,
consumer use and disposal, against a 2010 baseline). See
page 34 for our progress and table right for our progress on
Scope 3.

■ Reduce Scope 1 and 2 greenhouse gas emissions by 100%
from our operations by 2030 (this is our goal to achieve
zero emissions in our operations by 2030 from energy and
refrigerant use, against a 2015 baseline). See table right for
our progress on Scope 1 and 2.

We continuously review our GHG footprint estimations to
ensure we are using the best available data and thus improve
the accuracy of our GHG emissions reporting. These changes
can affect both the 2010 baseline and the annual emissions
that we report. In 2020 we concluded that the changes
required in certain estimations were sufficiently material to
require us to formally restate prior years reported changes in
GHG emissions per consumer use. The impact of the new data
was primarily in relation to the 2010 baseline and was due to
the following factors:

1. A revision of our estimates about the amount of hot water

used by consumers when using our products, such as shower
gels, shampoos and washing up liquid.

2. The inclusion of the GHG emissions from the biodegradation
of fossil-fuel derived ingredients at the end of a product’s life
in our Home Care and Beauty & Personal Care portfolio.
3. Errors in the GHG emissions from certain Savoury products.

Relative to the revised 2010 baseline (50.5g CO2e per consumer
use), our restated GHG performance was:
■ 2018: 48.8g CO2e per consumer use, -3% versus 2010

(compared to +6% in the 2019 Annual Report and Accounts).

■ 2019: 46.7g CO2e per consumer use, -8% versus 2010

(compared to +2% in the 2019 Annual Report and Accounts).

■ 2020: 45.6g CO2e per consumer use, -10% versus 2010.

While the GHG footprint results reported in this Annual Report
and Accounts differ from those stated in the 2019 Annual
Report and Accounts, the direction of change over the past
three years remains the same.

GHG emissions by activity

In line with the Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 as amended by the
Companies Act 2006 (Strategic Report and Directors’ Report)
Regulations 2013, our GHG emissions are set out below. The
Scope 1 and 2 GHG data below relates to emissions during the
12-month period from 1 October to 30 September. The Scope 3
data relates to emissions during the 12-month period from
1 July to 30 June. These periods are different from the Strategic
Report, Directors’ Report and Financial Statements which are
calendar year.

Unilever operations
(Scope 1 and 2)(a)(b)(c)

Total Scope 1 and 2 (tonnes CO2e)(d)
Scope 1 (tonnes CO2e)(e)
Scope 2 (tonnes CO2)(d)(f)
Reduction in Scope 1 and 2 GHG
emissions from energy and
refrigerant use in our operations
since 2015 baseline (%)

Upstream and downstream of
Unilever operations (Scope 3)(g)(h)

Total Scope 3 (tonnes CO2e)
Consumer use (tonnes CO2e)(i)
Ingredients and packaging
(tonnes CO2e)(i)(j)
Distribution and retail
(tonnes CO2e)(k)

2020

2019

2018

778,677

1,102,925

1,652,057

606,771

659,028

758,232

171,906

443,897

893,825

60%

44%

16%

60,388,592 61,020,357 62,017,585

42,093,341 41,743,454 42,281,468

14,239,918 14,897,174 15,367,491

4,055,333

4,379,729

4,368,626

(a) Since 2020 we have included HFC emissions in Scope 1 reporting, expressed as
CO2 equivalents (CO2e), as well as our CO2 emissions from energy, but other
GHG emissions are not included as these are considered to be immaterial. For
years prior to 2020 for Scope 1 and 2, we report our CO2 emissions only but
not other GHG emissions as these are considered to be immaterial compared
to CO2. For Scope 3, we report our GHG emissions (e.g. CO2, CH4, N2O) in terms
of CO2 equivalents. Carbon emission factors are used to convert energy used
in our operations to emissions of CO2. Carbon emission factors for fuels are
provided by the Intergovernmental Panel on Climate Change (IPCC). We report
our emissions with reference to the latest Greenhouse Gas Protocol Corporate
Accounting and Reporting Standard (GHG Protocol).

(b) Our Scope 1 and 2 operations data has been recalculated to include HFC

emissions in Scope 1 and Unilever’s production of third-party products in Scope
1 and 2. As such, it is not comparable with the 2019 and 2018 data in our 2019
Annual Report and Accounts. Our Scope 1 and 2 reporting covers manufacturing
sites for which we have operational control (owned or leased by Unilever, where
Unilever personnel are running/controlling the site and the site manufactures or
packs Unilever or third-party products or materials used in Unilever products),
R&D centres, data centres and logistics sites which are owned or leased by
Unilever or, where owned by a third-party, Unilever is a single user of the facility.
Our Scope 1 and 2 reporting excludes third party manufacturing sites.

for details of our assured GHG metrics.

Unilever Annual Report and Accounts 2020
57

Further climate change disclosures

This Annual Report and Accounts contains additional
disclosures on our climate change:
■ Governance: pages 4, 73 and 93
■ Strategy: pages 27 and 28 to 29
■ Risk management: page 47
■ Metrics and targets: pages 10 and 34

Find out more about our actions on climate and energy
efficiency on our website

Our CDP climate submission contains extensive disclosure
on our climate risks, opportunities, impacts and mitigating
actions

(d) We calculate our carbon emissions for grid electricity according to the

‘market- based method’.

(e) Scope 1: direct GHG emissions from energy generated from fossil fuels such as

(f)

gas and oil, as well as refrigerants.
Scope 2: indirect GHG emissions from the generation of purchased electricity
and steam from a utility provider.

(g) Scope 3: all other indirect GHG emissions in Unilever’s value chain (upstream

and downstream).

(i)

(h) Our Scope 3 emissions have been recalculated to include biodegradability
of organic materials. We have recalculated consumer use to also include
disposal, and ingredients and packaging to also include inbound transport
of raw materials. As such, it is not comparable with the 2018 and 2019 Scope
3 data in our 2019 Annual Report and Accounts. Our Scope 3 reporting covers
all indirect emissions by third parties in these phases of the value chain: raw
materials (primary packaging, secondary packaging, ingredients), inbound
transportation of raw materials into our factories, retail, consumer use, and
disposal. Our top three Scope 3 emissions amount to more than 99% of our GHG
footprint across our value chain.
We measure the GHG footprint of our product portfolio using an LCA method
compliant with the ISO 14040 standard. We measure the consumer use phase
using a combination of primary habits data and on-pack recommendations
of use combined with life-cycle inventory data. We measure a representative
sample of products across 14 countries which account for around 60-70% of our
annual sales volume.
We use a combination of external life-cycle inventory databases (secondary
data) and supplier-specific data (primary data e.g. for surfactants, perfumes
and some of our food ingredients) to measure the GHG emissions of purchased
ingredients and packaging materials used in the production of our products.
(k) Downstream distribution is calculated using average distances and modes
of transport derived from data collected from our distribution network and
logistic providers.

(j)

Streamlined Energy and Carbon Reporting

The table below represents Unilever’s energy use and
associated GHG emissions from electricity and fuel in the UK
(1 October to 30 September), calculated with reference to the
Greenhouse Gas Protocol. The scope of this data includes eight
manufacturing sites and 11 non-manufacturing sites based
in the UK. In 2020, the UK accounted for 6% of our global total
Scope 1 and 2 emissions as well as 6% of our global energy
use, outlined in the table below.

UK operations

Biogas (kWh)

2020

2019

2018(a)

9,420,000

17,045,000

15,958,000

Natural gas (kWh)

231,832,000

238,081,000

278,849,000

LPG (kWh)

Fuel oils (kWh)

Coal (kWh)

1,464,000

866,000

1,513,000

59,000

580,000

648,000

Electricity (kWh)

190,790,000

195,797,000

219,141,000

Heat and steam (kWh)

201,709,000

212,483,000

262,693,000

Total UK energy (kWh)(b)

392,499,000

408,280,000

481,833,000

Total global energy
(kWh)

Total UK Scope 1
emissions (tonnes CO2)(c)
UK Scope 1 emissions
(kg CO2) per tonne of
production

Total UK Scope 2
emissions (tonnes CO2)(c)(d)
UK Scope 2 emissions
(kg CO2) per tonne of
production

7,037,674,000 7,181,904,000 7,853,609,000

46,918

48,178

56,533

49.1

527

55.6

702

56.4

7,618

0.6

0.8

7.6

(a) We have restated our 2018 data to correct errors at one site where natural gas
was used to produce heat and steam, and electricity. As a result, 2018 data for
heat and steam has decreased by 4% and electricity has increased by 11%.
(b) Fleet and associated diesel use excluded as it is not material. Transportation

is operated by a third party and accounted for under Scope 3.

(c) We report our emissions with reference to the latest Greenhouse Gas Protocol
Corporate Accounting and Reporting Standard (GHG Protocol). Our only
material GHG from energy is CO2, reported as required by the GHG Protocol.
Other gases are immaterial. Energy use data is taken from meter reads and
energy invoices from each site and then converted to kWh using standard
conversion factors as published by the IPCC.

(d) Carbon emission factors for grid electricity calculated according to the

‘market-based method’.

STRATEGIC REPORTUnilever Annual Report and Accounts 202058

Sustainability deep-dives continued

In focus: Plastic packaging

We believe that plastic has a place in the economy but not in the
environment. We know it is a big concern for our stakeholders,
and despite challenging conditions due to Covid-19 such as
the availability of certain materials and the closure of sorting
and recycling centres in some markets, we are fully committed
to tackling plastic pollution. It is vital for us, and for the rest of
the industry, to stay the course, cut the amount of plastic we
use and rapidly transition to a circular economy. In this Annual
Report and Accounts, we have integrated plastic packaging
disclosures throughout the Strategic Report narrative. We have
also summarised the key risks and opportunities arising from
plastic packaging in this section of the report.

Governance

The Board takes overall accountability for the management
of all risks and opportunities, including plastic packaging (see
page 44). Our CEO and Executive Board member, Alan Jope, is
ultimately responsible for oversight of our plastic packaging
agenda. He is supported by the ULE, including our Chief R&D
Officer, Richard Slater, who is responsible for driving the plastic
strategy, and Divisional Presidents who lead the plastics
agenda within their respective Divisions.

The Sustainable Packaging Committee supports ULE decision
making and guides our strategy across all three Divisions. It
has oversight of delivery and progress against our packaging
goals, meets four times a year, is chaired by Richard Slater,
and includes senior leaders and plastic packaging specialists
from across our Divisions, markets and functions.

Plastic packaging is a key part of our sustainability programme.
Remuneration linked to achievement of sustainability and
plastic targets is a key part of our reward framework. For
management employees – up to and including the ULE – reward
packages include fixed pay, a bonus as a percentage of fixed
pay and eligibility to participate in a long-term management
co-investment plan (MCIP) linked to financial and sustainability
performance. The Sustainability Progress Index accounts for
25% of the total MCIP award. It includes, amongst others,
consideration of progress against our target to increase the
recycled plastic material content in our packaging. Subject to
shareholder approval at the 2021 AGM the MCIP will be replaced
by a Performance Share Plan (PSP) and the performance
measures for the PSP will continue to include the Sustainability
Progress Index. See pages 92 to 93 for more on MCIP including
the role of the Board’s Compensation Committee and Corporate
Responsibility Committee in determining the Sustainability
Progress Index outcome each year and changes related to the
PSP.

Strategy and risk management

Plastic has been identified as a principal risk for the company
which has the potential to impact our business in the short,
medium and long term. The process for assessing and
identifying plastic packaging risk is the same for all principal
risks and is described on page 44. For each of our principal risks
we have a risk management framework detailing the controls
we have in place and who is responsible for managing both the
overall risk and the individual controls mitigating it. We monitor
risks throughout the year to identify changes in the risk profile.

We have taken decisive action to mitigate the risks and
capitalise on the opportunities. In 2017, we were the first

company in our industry to commit to ensuring that 100% of
our plastic packaging is reusable, recyclable or compostable
by 2025. In 2019, we announced two new goals to complement
the 2017 commitment:
■ Halve our use of virgin plastic, by reducing our absolute

use of plastic packaging by more than 100,000 tonnes and
accelerating our use of recycled plastic.

■ Help collect and process more plastic packaging than we sell.

We also restated our commitment to use at least 25% recycled
plastic in our packaging by 2025.

Managing plastic risks and opportunities

Changing consumer preferences
Risks and opportunities: There has been a significant rise in
consumer concern regarding plastic packaging over the last few
years. Concern is not universal and takes on different dimensions
in different countries depending on the media coverage and
government focus. A recent study by GlobeScan found that
single-use plastic is a ‘very serious’ concern for over half of
consumers surveyed, behind climate change, natural resource
depletion and air pollution, while a Kantar and GfK study found
plastic waste as a top environmental concern after climate
change. As a result of Covid-19, we see a number of consumer
behaviour shifts that we believe will remain for the mid to long
term, including increased demand for ‘at home’ solutions and
rapid growth in eCommerce. The shift to eCommerce platforms
in particular presents opportunities to use different formats and
new business models such as reuseable and refillable packaging
that support the delivery of our virgin reduction commitment.

Actions we’re taking: We’re transforming our approach to
plastic packaging through our ‘Less plastic, Better plastic,
No plastic.’ framework. ‘Less plastic’ is about cutting down
how much we use in the first place. ‘Better plastic’ is about
making our products recyclable and eliminating problematic
materials. Specifically, it’s about how we get recycled
content into our packaging. And ‘No plastic’ is about thinking
differently – using alternative materials such as aluminium,
glass, paper and board where appropriate and removing
plastic where it is not necessary.

We know consumers expect us, first and foremost, to reduce our
reliance on plastic packaging. We have committed to reduce
our use of virgin plastic in our packaging by 50% by 2025, this
equates to no more than 350,000 tonnes. We plan to deliver this
firstly by eliminating over 100,000 tonnes of plastic from our
packaging by accelerating multiple-use packs and reusable,
refillable, and no plastic product innovations. We will deliver the
remainder by increasing our use of recycled materials, by giving
plastic a value to ensure it can be collected and processed (see
policy and regulatory risks below).

Our use of recycled plastic has increased significantly. Our
commitment has driven a step change in our sourcing and how
we integrate recycled plastic in our packaging. We estimate we
will end the year with 15% of our total plastic packaging footprint
consisting of recycled plastic. Dove has introduced 100% recycled
plastic bottles in North America and Europe across all ranges.
Magnum has rolled out of more than 7 million ice cream tubs
made from recycled plastic after a successful pilot. This is a big
technical achievement as the plastic not only needs to be food
grade, but also withstand freezing temperatures.

We’re exploring new ways of packaging and delivering products
– including refill at home concentrated formats such as our Cif
ecorefill which eliminates 75% of plastic and is now available

Unilever Annual Report and Accounts 202059

across Europe, Canada and Australia; and Omo Concentrate,
our first dilute at home laundry detergent which is available
in several South American markets. It was launched in Brazil in
2019 and has seen great success, shifting 30% of Omo 3 litre
consumers in Brazil to the refill at home format.

Finally, we continue to experiment with refills to eliminate
the need for plastic. In the UK, we have partnered with Asda
to launch our largest in-store refill pilot in Europe. And in
Chile we have partnered with Algramo, a social enterprise, to
deliver refills directly to consumers at home. This intelligent
dispensing system has thrived during Covid-19 thanks to
its tricycle distribution system across Santiago. We are also
experimenting with new formats that use alternative materials
or have no packaging at all. We have already brought to
the market innovations including bamboo toothbrushes
(Signal), recyclable glass bottles (Knorr) and paper ice cream
tubs (Carte D’Or). Seventh Generation has also launched a
zero-plastic range on eCommerce channels in the US, using
packaging made from steel. We now have dedicated teams
looking at scaling new business models on reusable, refillable
formats and we’re investing in pilot programmes all over the
world to test their viability.

Policy and regulatory risks
Risks and opportunities: There is a growing focus from
governments on plastic and the potential for further regulatory
and tax measures in a number of markets where we operate.
In the EU for example, member countries have agreed to the
Plastics Strategy set out by the European Commission, which
requires that all plastic waste will be recyclable by 2030. Policy
developments in the area of Extended Producer Responsibility
(EPR) are also more common. We are supportive of well-designed
EPR regulations which reflect the unique waste management
requirements in that country. We believe well-designed EPR
schemes can be a game-changer in the fight against plastic
waste. They boost recycling systems, ensure money is invested in
the right places, hold businesses to account for the packaging
choices they make, and as a result, enable a circular economy.
In developing markets, we are working with governments and
other stakeholders to support the development of collection
and reprocessing infrastructure before a formal EPR system is
designed and adopted. We also support the implementation of
comprehensive waste management legislation to build a more
effective and efficient waste infrastructure.

Actions we’re taking: Improving waste infrastructure is
key to us reaching our 100% recyclable goal and ensuring
availability of recycled plastic. To stimulate recycling in our
markets, we introduced a new target in 2019 to help collect
and process more plastic packaging than we sell by 2025.
This requires us to help collect and process around 690,000
tonnes of plastic annually by 2025. We continue to work with
many partners to help collect and process plastic packaging,
with programmes in multiple countries, including Brazil,
India, Indonesia, Philippines, Russia, South Africa, Thailand,
UK and US. This includes direct investments and partnerships
in waste collection and processing, buying recycled plastics,
and through supporting well-designed EPR schemes in which
Unilever directly pays for the collection of its packaging.

In India, for example, we’re working with the United Nations
Development Programme to protect the livelihoods of informal
waste collectors, who help segregate, collect and recycle
packaging. The partnership has reached more than 33,000
households and collected 2,500 tonnes of plastic waste so far,
and will scale up to include more households in the coming

years. In Indonesia, we have supported communities in 18
cities to develop systems where they can collect and sell waste.
We’re using a platform called ‘Google My Business’, which
enables consumers to access the locations of nearby waste
banks via Google Maps. Currently, around 780 waste banks
are searchable on the digital tool, and the aim is to make
2,000 waste banks available through Google Maps. Together
with other companies, we collectively pledged a total of
US$100 million in funding to Circulate Capital, an investment
firm that incubates and finances waste management
solutions and infrastructure. It’s a unique investment model,
designed to create the lasting systems change needed to
address the ocean plastic crisis. This year Circulate Capital
announced inaugural investments in two companies in India
and Indonesia that recycle local plastic waste into useful
products. Across all our plastic targets, we need to continue
our advocacy, partnerships and policy approach to drive
system-wide change and shift the economy from a finite and
linear – take, make, dispose – model to a circular approach
that protects the environment and protects our resources
whilst supporting a growing population. For example, it is
important that we unlock regulatory barriers for PCR use. It is
also imperative that there is a favourable policy environment
to support sustainable financing for collection as well as
financial incentives for the right behaviours.

Human rights risks
Risks and opportunities: We are aware that there are potential
human rights issues in emerging markets which do not have
formalised waste management infrastructure. Informal waste
collection (waste pickers) and recycling is a common way to
earn an income and a livelihood.

Actions we’re taking: Our Responsible Sourcing Policy
contains clear guidance on 12 fundamental principles such
as the protection of workers’ health and safety, employing
a permitted workforce (age/freedom of movement) and fair
wages. We have refused to work with waste management
companies based on a lack of assurances on human rights,
child labour and working conditions. We are developing a
global framework on how we approach and include human
rights in our plastic value chain, especially for informal waste
collectors who are involved in collection and processing in a
number of developing markets.

Metrics and targets

For the reporting period July 2019 to June 2020, as a result of
our ongoing efforts to improve our data coverage, we now
have accurate data for around 80% of the sales volume in
scope for plastic packaging reporting. Based on this, our total
plastic packaging footprint is 690,000 tonnes, of which 52% was
reusable, recyclable or compostable, in practice and at scale
(i.e. actual recyclability). We continue to make progress on
technical recyclability (i.e. packaging designed for recycling but
not yet recycled at scale). As recycling infrastructure improves
across the markets we operate in, we expect an increase in our
actual recyclability which will close the gap on what is technically
recyclable. We are helping to stimulate investment through our
collection and processing target. Approximately 11% (76,000
tonnes) of our total plastic packaging footprint consisted of
recycled plastic – a significant increase compared to last year
and strong progress towards our goal to use at least 25%
recycled plastic by 2025.

STRATEGIC REPORTUnilever Annual Report and Accounts 202060

Sustainability deep-dives continued

Our virgin plastic packaging footprint (our total plastic
packaging footprint minus packaging made of recycled plastic)
was approximately 615,000 tonnes, which is 12% less than in
2018, our baseline year. In the short term, our progress to reduce
our virgin plastic footprint will be driven primarily by our PCR
use. However, we are working towards an absolute reduction by
accelerating and scaling our less, better or no plastic innovations.

We are implementing a robust measurement approach to track
collection and processing. Since we announced this commitment,
we’ve developed country-specific roadmaps to achieve our goal
and established a number of initiatives.

Further waste and packaging disclosures

This Annual Report and Accounts contains additional
disclosures on plastic packaging:
■ Governance: pages 73 and 93
■ Strategy: page 29
■ Risk management: page 47
■ Metrics and targets: pages 10 and 34

Find out more about our actions on plastic packaging on
our website

Non-financial information statement

In accordance with sections 414CA and 414CB of the Companies Act 2006 which outline requirements for non-financial
reporting, the table below is intended to provide our stakeholders with the content they need to understand our development,
performance, position and the impact of our activities with regards to specified non-financial matters. Further information
on these matters can be found on our website and in our Human Rights Report, including relevant policies.

Non-financial matter and relevant sections
of Annual Report

Annual Report page reference

Environmental matters

Relevant sections of Annual Report and Accounts:
■ Protecting climate and nature
■ Net zero emissions
■ A waste-free world
■ Protecting and regenerating nature
■ Protecting water
■ In focus: Climate change
■ In focus: Plastic packaging

Social and community matters

Relevant sections of Annual Report and Accounts:
■ A fairer more socially inclusive world
■ Better health and hygiene

Employee matters

Relevant sections of Annual Report and Accounts:
■ Making our supply chain more diverse
■ Protecting wellbeing
■ Safety at work
■ A year of learning
■ Managing talent
■ A beacon for diversity

Human rights matters

Relevant sections of Annual Report and Accounts:
■ Promoting human rights
■ Raising living standards

Anti-corruption and bribery matters

Relevant sections of Annual Report and Accounts:
■ Working with integrity

■ Policy: pages 28 to 29
■ Position and performance: pages 28 to 29, 34, 56 to 57 and 59
■ Risk: pages 47, 55 to 56 and 58 to 59
■ Impact: pages 28 to 29

■ Policy: pages 30 to 31
■ Position and performance: pages 30 to 31 and 34
■ Risk: page 50
■ Impact: pages 30 to 31

■ Policy: pages 16 to 19
■ Position and performance: pages 16 to 19 and 34
■ Risk: page 48
■ Impact: pages 16 to 19

■ Policy: page 30
■ Position and performance: page 30
■ Risk: pages 50 and 59
■ Impact: page 30

■ Policy: Page 18
■ Position and performance: Page 18
■ Risk: Page 50
■ Impact: Page 18

Unilever Annual Report and Accounts 2020Corporate Governance

Unilever’s structure

Articles of association

In 2020, Unilever changed its legal structure by unifying under a single
parent company, PLC. For the first time in its history, Unilever now trades
with one market capitalisation, one class of shares and one global pool
of liquidity, whilst also maintaining the Unilever Group’s listings on the
Amsterdam, London and New York stock exchanges.

At the 2010 PLC AGM, the shareholders agreed that the objects clause
be removed from PLC’s Articles of Association so that there are no
restrictions on its objects.

The current Articles of Association were approved by shareholders in
October 2020 and adopted with effect from 29 November 2020.

Allocation of profits

Distributable profits of PLC are paid first at the rate of 5% per year on
the paid-up nominal capital of 3 1/9 pence of the ordinary shares and
secondly at a rate of 5% per year on the paid-up nominal capital of 3 1/9
pence of the ordinary shares. The surplus is paid by way of a dividend on
the ordinary shares.

Lapse of distributions

Any PLC dividend unclaimed after 12 years from the date of the
declaration of the dividend by PLC reverts to PLC.

The time periods for the right to claim cash dividends or the proceeds
of share distributions declared by Unilever NV before Unification will
remain at 5 and 20 years, respectively, after the first day the dividend or
share distribution was obtainable from Unilever NV. Any such unclaimed
amounts will now revert to Unilever PLC after the expiry of these time
periods.

Redemption provisions and capital call

Outstanding PLC ordinary shares cannot be redeemed. PLC may make
capital calls on money unpaid on shares and not payable on a fixed
date. PLC has only fully paid shares in issue.

Modification of rights

Modifications to PLC’s Articles of Association must be approved by a
general meeting of shareholders.

Modifications that prejudicially affect the rights and privileges of a
class of PLC shareholders require the written consent of three-quarters
of the affected holders (excluding treasury shares) or a special
resolution passed at a general meeting of the class at which at least
two persons holding or representing at least one third of the paid-up
capital (excluding treasury shares) must be present. Every shareholder
is entitled to one vote per share held on a poll and may demand a poll
vote. At any adjourned general meeting, present affected class holders
may establish a quorum.

Indemnification

The power to indemnify PLC Directors is provided for in PLC’s Articles
of Association and deeds of indemnity have been agreed with all PLC
Directors. Third-party directors’ and officers’ liability insurance was in
place for all Unilever Directors throughout 2020 and is currently in force.

In addition, PLC provides indemnities (including, where applicable,
a qualifying pension scheme indemnity provision) to the Directors of
three subsidiaries each of which acts, or acted as trustee of a Unilever
UK pension fund. Appropriate trustee liability insurance is also in place.

The Board believes that Unification will bring significant benefits
by increasing Unilever’s strategic flexibility for portfolio evolution,
including through equity-based acquisitions or demergers and
removing complexity and further strengthening Unilever’s corporate
governance, creating for the first time an equal voting basis per share
for all shareholders.

Since its formation in 1930 until 29 November 2020, the Unilever
Group operated under a dual-headed legal structure with two parent
companies: Unilever N.V. (NV), which was incorporated under the laws
of the Netherlands, and PLC, incorporated under the laws of England
and Wales. During that time, PLC and NV, together with their group
companies, operated as nearly as practicable as a single economic
entity, which was achieved by special provisions in their articles of
association and a series of agreements between PLC and NV known
as the Foundation Agreements. Each PLC share represented the same
underlying economic interest in the Unilever Group as each NV share.
As a result, parity between the economic rights of the respective
shareholders of PLC and NV was maintained. However, PLC and NV were
separate legal entities with different shareholder constituencies and
separate stock exchange listings. Shareholders were not able to convert
or exchange the shares of one company for the shares of the other.

Over the last two decades, the dual-parent holding company structure
of the Unilever Group was reviewed periodically and a series of steps
were taken to reduce complexity, including in October 2017 when NV’s
preference shares were successfully repurchased, and in June 2019
when NV terminated its depositary receipt structure.

On 29 November 2020, after receiving overwhelming support in favour
of the proposals at shareholders’ meetings of both NV and PLC held
in September 2020 and October 2020 respectively, the Unilever Group
completed the Unification of its dual-parent legal structure. Pursuant
to the cross-border merger: (i) PLC acquired all of the assets, liabilities
and legal relationships of NV by universal succession of title; (ii) NV was
dissolved without going into liquidation and ceased to exist; and (iii)
PLC issued and allotted shares in its capital to former NV shareholders.

Under the terms of Unification, all of the NV ordinary shares were
cancelled and NV shareholders received one new PLC ordinary share of 3
1/9 pence in exchange for each NV share owned, consistent with the one-
to-one equalisation ratio that was set out in the Equalisation Agreement,
and can continue to trade their new shares on Euronext in Amsterdam in
Euros. NV New York Registry Shares were converted one-for-one to new
PLC American Depositary Shares or new PLC ordinary shares. A very small
number of NV shareholders elected to receive cash instead of new PLC
shares pursuant to a Dutch statutory withdrawal mechanism. Unification
resulted in the issue and allotment of 1,460,713,122 new PLC ordinary
shares pursuant to the authority granted to the PLC Directors at the PLC
shareholders’ meeting held in October 2020. As at 29 November 2020, the
new PLC shares represented 55.56% of the total number of PLC shares. As
at 31 December 2020, PLC’s total issued ordinary share capital consisted
of 2,629,243,772 ordinary shares.

All of the 2,400 NV special ordinary shares and 100,000 PLC deferred
shares, which ensured the unity of management of NV and PLC, were
repurchased by NV and PLC respectively immediately prior to the
implementation of Unification and cancelled.

Following the implementation of Unification, PLC is now the single
parent company of the Unilever Group. PLC’s shares are traded through
its listings on the London Stock Exchange and Euronext in Amsterdam,
with its securities also traded on the New York Stock Exchange under its
American Depositary Share programme.

Unification did not change our Board composition or governance
framework, and the Board delegates a number of its authorities as
described below, including to our four Board Committees. The Board
of PLC has implemented standards of corporate governance and
disclosure policies applicable to a UK incorporated company, with
listings in London, Amsterdam and New York.

Unilever’s presence in the Netherlands and the United Kingdom, and
our multi-stakeholder approach to business remain unchanged as
a result of Unification.

Unilever Annual Report and Accounts 2020GOVERNANCE REPORT62

Corporate Governance continued

The Governance of Unilever

Board evaluation

A comprehensive description of Unilever’s corporate governance
arrangements, including further details on the structure of the Unilever
Group, is set out in ‘The Governance of Unilever’. It further details the roles
and responsibilities of the Chairman, Senior Independent Director (SID),
CEO, CFO and other corporate officers and how our Board effectively
operates, governs itself and delegates its authorities.

The Governance of Unilever also describes Directors’ appointment,
tenure, induction and training, Directors’ ability to seek independent
advice at Unilever’s expense and details about Board and Management
Committees (including the Disclosure Committee).

www.unilever.com/investor-relations/agm-and-corporate-
governance/our-corporate-governance

Board

The Board of PLC has ultimate responsibility for the management,
general affairs, direction, culture, performance and long-term success of
our business as a whole. The majority of the Directors are Non-Executive
Directors who essentially have a supervisory role, providing constructive
challenges, strategic guidance and specialist advice. In the normal
course Unilever has two Executive Directors, the CEO and the CFO. A list
of our current Directors can be found on pages 64 and 65.

Board Committees

The Board has established four Board Committees: the Audit Committee,
the Compensation Committee, the Corporate Responsibility Committee
and the Nominating and Corporate Governance Committee. The terms
of reference of these Committees can be found on our website and the
reports of each Committee, including attendance at meetings in 2020,
can be found on pages 70 to 103.

www.unilever.com/boardsofunilever

Board meetings

In the ordinary course six Board meetings are planned throughout the
calendar year to consider important corporate events and actions,
for example, the half-year and full-year results announcements; the
development and approval of our strategy; oversight of the performance
of the business; review of the risk framework; authorisation of major
transactions; declaration of dividends; review of the financial plan;
succession planning; review of the functioning of the Board and its
Committees; culture; workforce engagement; and review of corporate
responsibility. Other ad hoc Board meetings are convened to discuss
strategic, transactional and governance matters that arise. A majority
of Board meetings will be held in the UK.

In 2020, due to the Covid-19 pandemic, the Board met physically in
January only. The Board then held all remaining meetings virtually
in 2020, these being in March, April, May, June, July, October and
November. The Chairman leads the Board and is responsible for its
overall effectiveness in directing the Unilever Group. The Chairman sets
the Board’s agenda, ensures the Directors receive accurate, timely and
clear information, promotes and facilitates constructive relationships
and effective contribution of all the Executive and Non-Executive
Directors, and promotes a culture of openness and debate.

When there is a Board meeting, the Non-Executive Directors usually meet
also as a group, without the Executive Directors present. In 2020 they met
six times. The Chairman, or in his absence the SID, chairs such meetings.

The table showing the attendance of current Directors at Board meetings
in 2020 can be found on page 65. If Directors are unable to attend a
Board meeting they have the opportunity beforehand to discuss any
agenda items with the Chairman.

Each year the Board formally assesses its own performance, including
with respect to its composition, diversity and how effectively its members
work together, with the aim of helping to improve the effectiveness of
both the Board and the Committees. At least once every three years
an independent third-party facilitates the evaluation. The last external
evaluation was performed at the end of 2019 by No.4, an independent
third-party consultant, and consisted of individual interviews with the
Directors followed by a Board discussion in January 2020, covering both
the outcome of the evaluation and the proposed actions to enhance the
effectiveness of the Board.

At the end of 2020, the Board performed an internal evaluation which
consisted of the Directors completing a questionnaire that focused on
a number of key areas including strategy, risk/financial controls, Board
effectiveness, virtual ways of working, and information/knowledge. The
Chairman’s statement on page 5 describes the key actions agreed by the
Board following the internal evaluation.

The evaluation of the performance of the Chairman and CEO is led by
the SID and Chairman respectively, and bespoke questionnaires are
used to support these evaluations.

Committees of the Board evaluate themselves annually under
supervision of their respective Chairs taking into account the views of
respective Committee members and the Board. The key actions agreed
by each Committee in the 2020 evaluations can be found in each
Committee Report.

Board appointment

The report of the Nominating and Corporate Governance Committee
(NCGC) on pages 74 and 75 describes the work of the NCGC in Board
appointments and recommendations for re-election. In addition,
shareholders are able to nominate Directors for appointment. The
procedure for shareholders to nominate Directors is contained within the
document entitled ‘Appointment procedure for PLC Directors’ which is
available on our website. To do so they must put a resolution to the PLC
AGM in line with English law requirements. Directors are appointed by
shareholders by a simple majority vote at the AGM.

www.unilever.com/boardsofunilever

Board induction and training

All new Directors participate in a comprehensive induction programme
when they join the Board. The Chairman ensures that ongoing training is
provided for Directors by way of site visits, presentations and circulated
updates at (and between) Board and Board Committee meetings
on, among other things, Unilever’s business, environmental, social,
corporate governance, regulatory developments and investor relations
matters. For example, in 2020 the Directors received presentations on
shareholder activism and cyber security, and held a session with the
Unilever Sustainability Advisory Council.

Independence and conflicts

It is important that the Non-Executive Directors can be considered to
be independent. Each year the Board conducts a thorough review of
the Non-Executive Directors’, and their related or connected persons’,
relevant relationships referencing the criteria set out in The Governance
of Unilever which is derived from the relevant best practice guidelines
in the UK and US. The Board currently considers all our Non- Executive
Directors to be independent of Unilever.

We attach special importance to avoiding conflicts of interest between
PLC and its Directors. The Board ensures that there are effective
procedures in place to avoid conflicts of interest by Board members. A
Director must without delay report any conflict of interest or potential
conflict of interest to the Chairman and to the other Directors, or, in case
any conflict of interest or potential conflict of interest of the Chairman, to
the SID and to the other Directors. The Director in question must provide
all relevant information to the Board, so that the Board can decide
whether a reported (potential) conflict of interest of a Director qualifies
as a conflict of interest within the meaning of the relevant laws. A Director
may not take part in the decision-taking process of the Board in respect
of any situation in which he or she has a conflict of interest. We consider
the procedures that Unilever has put in place to deal with conflicts of
interest operate effectively.

Unilever Annual Report and Accounts 202063

Unilever recognises the benefit to the individual and the Unilever Group
of senior executives acting as directors of other companies but, to
ensure outside directorships of our Executive Directors do not involve
an excessive commitment or conflict of interest, the number of outside
directorships of listed companies is generally limited to one per Executive
Director and approval is required from the Chairman.

Unilever, through the Nominating and Corporate Governance
Committee, assesses and monitors the structure of the Board including
the other directorships held or proposed to be held by Non-Executive
Directors. Unilever aims to have a Board with a diverse range of skills
and capabilities and works to the principle that each Director shall have
sufficient time available for the performance of his or her duties. Unilever
considers that the other board responsibilities of its Non-Executive
Directors, including those taken on during 2020, are fully consistent
with these aims.

Engagement with employees

Given Unilever’s global footprint and scope of operations, the Board
decided that the most effective way of organising its engagement with
employees was to share the responsibility among all Non-Executive
Directors as a collective point of contact. The Board has therefore
endorsed a number of initiatives and events, including face-to-face
meetings to ensure that all the Non-Executive Directors engage with
the workforce and get a sense of employee sentiment at all levels. Due
to the Covid-19 pandemic we have been required to hold these face-to-
face meetings virtually and have incorporated additional engagement
sessions alongside virtual Board meetings and the virtual Board visits
to Unilever sites that we have undertaken this year. These engagement
sessions have enabled all Non-Executive Directors to meet and hear
directly from cohorts of employees at all levels how they feel about issues
important to them through open discussion.

In 2020, Non-Executive Directors attended 12 virtual workforce
engagement events with a diverse range of the workforce; from factory
staff and new joiners through to head office staff and people with
25+ years in the company. This method of engagement allowed for
discussions covering a wide range of topics.

The Covid-19 pandemic affected the way our employees worked in
2020, and our Non-Executive Directors engaged on a number of topics
related to this, such as how our factory workers at two factories in the
UAE experienced working during the pandemic. They also listened to
the experiences of employees who were at the centre of responding
to the pandemic in Italy. The Non-Executive Directors were also given
the opportunity to hear from employees in the US, Russia, India and
Sweden on how they had found working from home during the lockdown,
from employees about how the local Thriving Parents programme has
assisted working parents during lockdown, from employees located at
HIVE, the new Dutch Foods innovation centre which opened in December
2019, about how the way we innovate in Foods is changing, and from
employees in Denmark and Austria about preparing to return to the
office. In addition, Non-Executive Directors listened to employees who
had been redeployed during the pandemic at our Raeford factory in
the US and Maydon Wharf Factory in South Africa, and also how our
colleagues in Argentina had experienced their ways of working changing
in order to react to market shifts as a result of Covid-19. Lastly, Non-
Executive Directors also heard from employees of Unilever International
and the Prestige business.

The events have been a success with positive feedback from employees
and Non-Executive Directors alike. Our Non-Executive Directors were able
to engage, hear and share views with employees on a host of new topics
which was particularly helpful in a year when many new normals were
being established. This perspective has been taken into consideration
in decision making, for example improving UK employee onboarding
processes and reviewing and amending annual leave policies for front
line factory staff.

Unilever Annual Report and Accounts 2020GOVERNANCE REPORT64

Our Board of Directors

Our Non-Executive Directors bring diverse experience to the Board’s
strategic discussions and decision-making.

Nils Andersen
Chairman

Nationality Danish
Age 62, Male
Appointed April 2015

Youngme Moon
Vice-Chairman/Senior
Independent Director

Nationality American
Age 56, Female
Appointed April 2016

Alan Jope
CEO

Nationality British
Age 56, Male
Appointed CEO
January 2019
Appointed Director
May 2019

Previous experience: BP plc (NED); A.P. Moller
– Maersk A/S (Group CEO); Carlsberg A/S and
Carlsberg Breweries A/S (CEO); European
Round Table of Industrialists (Vice-Chairman);
Unifeeder S/A (Chairman).

Previous experience: Harvard Business School
(Chairman and Senior Associate Dean for the
MBA Program); Massachusetts Institute of
Technology (Professor); Avid Technology (NED);
Rakuten Inc (NED).

Current external appointments: AKZO Nobel
N.V. (Chairman); Faerch Plast (Chairman); Salling
Foundation (NED); Worldwide Flight Services
(Chairman).

Current external appointments: Mastercard
INC (Board Member); Sweetgreen Inc (Board
Member); JAND Inc (Board Member); Harvard
Business School (Professor).

Previous experience: Beauty and Personal Care
Division (President); Unilever Russia, Africa and
Middle East (President); Unilever North Asia
(President); SCC and Dressings (Global Category
Leader); Home and Personal Care North
America (President).

Current external appointments: Generation
Unlimited (Board Member).

Graeme Pitkethly
CFO

Nationality British
Age 54, Male
Appointed CFO
October 2015
Appointed Director
April 2016

Laura Cha
Non-Executive Director

Nationality Chinese
Age 71, Female
Appointed May 2013

Vittorio Colao
Non-Executive Director

Nationality Italian
Age 59, Male
Appointed July 2015
Stepped down as a director
on 18 February 2021

Previous experience: Unilever UK and Ireland
(EVP and General Manager); Finance Global
Markets (EVP); Group Treasurer; Head of M&A;
FLAG Telecom (VP Corporate Development);
PwC.

Current external appointments: Pearson Plc
(NED); Financial Stability Board Task Force on
Climate-related Financial Disclosures (Vice
Chair); The 100 Group Main Committee (Vice
Chair); UN Global Compact CFO Task Force.

Previous experience: Securities and Futures
Commission, Hong Kong (Deputy Chairman);
China Securities Regulatory Commission (Vice
Chairman); China Telecom Corporation Limited
(NED); 12th National People’s Congress of China
(Hong Kong Delegate).

Previous experience: Vodafone Group plc
(CEO); RCS MediaGroup SpA (CEO); McKinsey
& Company (Partner); Finmeccanica Group
Services SpA (renamed to Leonardo SpA) (NED);
RAS Insurance SpA (merged with Allianz AG)
(NED).

Current external appointments: HSBC Holdings
plc (NED); Hong Kong Exchanges and Clearing
Ltd (Non-Executive Chairman); Foundation
Asset Management Sweden AB (Senior
International Adviser); Executive Council of the
Hong Kong Special Administrative Region (Non-
official member); CSRC International Advisory
Council (Vice Chairman).

Current external appointments: Verizon
Communications Inc. (NED); General Atlantic
(Senior Advisor / Vice Chairman EMEA);
Bocconi University Italy (Executive Trustee);
Oxford Martin School – UK (Advisor); MedTech-
Humanitas / Politecnico – Italy (Advisor).

Judith Hartmann
Non-Executive Director

Nationality Austrian
Age 51, Female
Appointed April 2015

Andrea Jung
Non-Executive Director

Nationality
American/Canadian
Age 61, Female
Appointed May 2018

Susan Kilsby
Non-Executive
Director

Nationality
American/British
Age 62, Female
Appointed August 2019

Previous experience: Suez (NED); General
Electric (various roles); Bertelsmann SE & Co.
KGaA (CFO); RTL Group SA (NED); Penguin
Random House LLC (NED).

Current external appointments: ENGIE Group
(Deputy CEO).

Previous experience: Avon Products Inc (CEO);
General Electric (Board Member); Daimler AG
(Board Member).

Current external appointments: Grameen
America Inc (President and CEO); Apple Inc
(NED); Wayfair Inc (NED).

Previous experience: L’Occitane International
(NED); Keurig Green Mountain (NED); Coca-Cola
HBC AG (NED); Goldman Sachs International
(NED); Shire Plc (Chair); Mergers and
Acquisitions, EMEA – Credit Suisse (Chair).

Current external appointments: Fortune Brands
Home & Security Inc (Chair); Diageo Plc (Senior
Independent Director); BHP Plc (NED).

Committee membership key

AC Audit Committee

Compensation Committee
Corporate Responsibility Committee

Nominating and Corporate Governance
Committee

Chair

Unilever Annual Report and Accounts 2020
65

Strive Masiyiwa
Non-Executive
Director

Nationality
Zimbabwean
Age 60, Male
Appointed April 2016

John Rishton
Non-Executive Director

Nationality British
Age 63, Male
Appointed May 2013

Previous experience: Africa Against Ebola
Solidarity Trust (Co-Founder and Chairman); Grow
Africa (Co-Chairman); Nutrition International
(formerly known as Micronutrient Initiative)
(Chairman); Rockefeller Foundation (Trustee).

Current external appointments: Econet
Group, privately held (Founder and Executive
Chairman); Econet Wireless Zimbabwe Ltd
(NED); Netflix Inc. (NED); International Advisory
Board of Bank of America (Board member);
Stanford University Advisory Board (Board
member); National Geographic Society (Board
member).

Previous experience: Rolls-Royce Holdings
plc (CEO); Koninklijke Ahold NV (merged to
Koninklijke Ahold Delhaize NV) (CEO, President
and CFO); ICA (now ICA Gruppen AB) (NED).

Current external appointments: Informa Plc
(NED); Serco Group Plc (NED); Associated British
Ports Holdings Ltd. (NED); Majid al Futtaim
Properties LLC (Board Member).

Attendance at Board Meetings

Planned Ad hoc

Nils Andersen
Laura Cha
Vittorio Colao
Marijn Dekkers*
Judith Hartmann
Alan Jope
Andrea Jung
Susan Kilsby
Strive Masiyiwa
Youngme Moon
Graeme Pitkethly
John Rishton
Feike Sijbesma

6/6
6/6
6/6
3/3
6/6
6/6
6/6
6/6
6/6
6/6
6/6
6/6
6/6

7/7
7/7
7/7
1/1
7/7
7/7
7/7
7/7
7/7
7/7
7/7
7/7
7/7

* Marijn Dekkers retired from the Boards at the 2020 AGMs.

Gender diversity

Feike Sijbesma
Non-Executive Director

Nationality Dutch
Age 61, Male
Appointed
November 2014

Previous experience: Royal DSM NV (Former
CEO); Utrecht University (Supervisory Director);
Stichting Dutch Cancer Institute/Antoni van
Leeuwenhoek Hospital NKI/AVL (Supervisory
Director); CPLC WBG (Chair).

Current external appointments: Royal Philips
(Vice Chairman); Royal DSM NV (Honorary
Chairman); De Nederlandsche Bank NV
(Member of the Supervisory Board); Trustees
of the World Economic Forum (Board member);
Board of the Global Center on Adaptation
(Co-Chair); Advisor Africa Improved Foods;
Dutch Growth Fund.

Non-Executive Directors

Leadership of complex global entities

Broad board experience

Geo-political exposure

Financial expertise

FMCG/consumer insights

Emerging markets experience

Digital insights

Marketing and sales expertise

Investment banking and transaction expertise

Science, technology and innovation expertise

Purposeful business and sustainability experience

HR and remuneration in international firms

5
Female

7
Male

Board tenure

3
6-9 years

3
0-3 years

6
3-6 years

Nils
Andersen

Laura
Cha

Vittorio
Colao

Judith
Hartmann

Andrea
Jung

Susan
Kilsby

Strive
Masiyiwa

Youngme
Moon

John
Rishton

Feike
Sijbesma

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Unilever Annual Report and Accounts 2020GOVERNANCE REPORT

Unilever Leadership Executive (ULE)

Our executive management team is responsible for the day-to-day
running of the business and the execution of our strategy.

The Board have delegated the operational running of the Unilever
Group to the CEO with the exception of the following matters which are
reserved for the Board: structural and constitutional matters, corporate
governance, approval of dividends, approval and monitoring of overall
strategy for the Unilever Group, approval of significant transactions
or arrangements in relation to mergers, acquisitions, joint ventures
and pensions. The CEO is responsible to the Board in relation to the
operational running of the Group and other powers delegated to him by
the Board. The CEO can delegate any of his powers and discretions, and
he does so delegate to members of the ULE (with power to sub-delegate).
The ULE is composed of the CEO, CFO and other senior executives who

assist the CEO in the discharge of the powers delegated to the CEO by
the Board. Members of the ULE report to the CEO, and the CEO supervises
and determines the roles, activities and responsibilities of the ULE. While
ULE members (other than the CEO and the CFO) are not part of the Board
decision-making process, to provide the Board with deeper insights, ULE
members often attend those parts of the Board meetings which relate
to the operational running of the Group. The ULE currently consists of the
CEO, CFO and those listed below.

For Alan Jope and Graeme Pitkethly see page 64

Conny Braams
Chief Digital &
Marketing Officer

Nationality Dutch
Age 55, Female
Appointed to ULE
January 2020
Joined Unilever 1990

Marc Engel
Chief Supply
Chain Officer

Nationality Dutch
Age 54, Male
Appointed to ULE
January 2016
Joined Unilever 1990

Hanneke Faber
President, Foods
& Refreshment

Nationality Dutch
Age 51, Female
Appointed to ULE
January 2018
Joined Unilever 2018

Previous Unilever posts include: Unilever
Middle Europe (EVP); Unilever Benelux (Chair
and EVP); Home Care Europe (EVP); Unilever
FoodSolutions Asia, Africa and Middle East
(EVP); various Unilever marketing and general
management roles.

Current external appointments: Kröller-Müller
Museum (Advisory Board member); Rotterdam
School of Management, Erasmus University
(Advisory Board member).

Previous Unilever posts include: Unilever East
Africa and Emerging Markets (EVP); Chief
Procurement Officer; Supply Chain, Spreads,
Dressings and Olive Oil Europe (VP); Ice Cream
Latin America (Managing Director); Ice Cream
Brazil Supply Chain (VP); Corporate Strategy
Group (Manager); Birds Eye Wall’s, Unilever UK
(Operations Manager).

Current external appointments: A. P.
Møller Mærsk (Supervisory Board member);
Sustainable Trade Initiative (Supervisory Board
Member); AndGreen Funds (Advisory Board
Member); McLaren F1 (Advisory Group Member).

Previous posts include: Royal Ahold Delhaize
(CEIO & EC member); Royal Ahold (CCO & EC
member); P&G (VP & GM).

Previous Unilever posts include: Europe (President).

Current external appointments: Bayer AG
(Supervisory Board member); Food Drink Europe
(Board member); Leading Executives Advancing
Diversity (LEAD) (Advisory Board member);
Pepsi/ Lipton JV (Board Member).

Fabian Garcia
President, North
America

Nationality American
Age 61, Male
Appointed to ULE
January 2020
Joined Unilever 2019

Sunny Jain
President, Beauty
& Personal Care

Nationality Canadian
Age 45, Male
Appointed to ULE
June 2019
Joined Unilever 2019

Previous posts include: Revlon (President and
CEO); Colgate Palmolive (COO; President of the
Asia/ Pacific Division, EVP Latin America); P&G
(President of Asia Pacific, General Manager of
Venezuela).

Current external appointments: Council of
Foreign Relations in the US (member).

Previous posts include: Amazon.com Inc
(Head of Core Consumables/FMCG Retail; VP
Consumables/FMCG Innovation); P&G US and
P&G Canada (various roles in New Business
Creation, Marketing, Sales, and Information
Technology).

Sanjiv Mehta
President, Unilever,
South Asia and Chair
and Managing Director,
Hindustan Unilever

Nationality Indian
Age 60, Male
Appointed to ULE
May 2019
Joined Unilever 1992

Previous Unilever posts include: Unilever North
Africa and Middle East (Chair and Chief Executive
Officer); Unilever Philippines Inc. (Chair and Chief
Executive Officer); Unilever Bangladesh Limited
(Chair and Managing Director).

Current external appointments: Board of
Indian School of Business (Director); Federation
of Indian Chambers of Commerce and Industry
(Senior Vice-President); Breach Candy Hospital
Trust (Member); South Asia Advisory Board of
Harvard Business School (Member); Xynteo’s
‘India 2022’ (Chair); Advisory Network to the High
Level Panel for a Sustainable Ocean Economy
(Co-Chair).

Unilever Annual Report and Accounts 202067

Leena Nair
Chief HR Officer

Nationality British
Age 51, Female
Appointed to ULE
March 2016
Joined Unilever 1992

Nitin Paranjpe
Chief Operating
Officer

Nationality Indian
Age 57, Male
Appointed to ULE
October 2013
Joined Unilever 1987

Richard Slater
Chief R&D Officer

Nationality British
Age 43, Male
Appointed to ULE April
2019
Joined Unilever 2019

Previous Unilever posts include: HR Leadership
and Organisational Development and Global
Head of Diversity (SVP); Hindustan Unilever
Limited (Executive Director HR); Hindustan Lever
(various roles).

Current external appointments: BT Plc (NED).

Previous Unilever posts include: Foods and
Refreshment (President); Home Care (President);
Unilever South Asia (EVP) and Hindustan
Unilever Limited (CEO); Home and Personal
Care India (EVP); Home Care India (VP); senior
positions in Laundry and Household Care.

Previous posts include: GSK (Head of R&D,
Consumer Healthcare); Reckitt Benckiser (Head
of R&D, Consumer Healthcare); Reckitt Benckiser
(Global Group Director / VP R&D Personal Care;
Global Director R&D Aircare, Analgesics and
New Brands); Boots Healthcare (various roles).

Ritva Sotamaa
Chief Legal Officer
& Group Secretary

Nationality Finnish
Age 57, Female
Appointed to ULE
February 2013
Joined Unilever 2013

Peter ter Kulve
President, Home Care

Nationality Dutch
Age 56, Male
Appointed to ULE
May 2019
Joined Unilever 1988

Previous posts include: Siemens AG – Siemens
Healthcare (GC); General Electric Company –
GE Healthcare (various positions including GE
Healthcare Systems (GC)); Instrumentarium
Corporation (GC).

Current external appointments: Fiskars
Corporation (NED).

Previous Unilever posts include: Unilever South
East Asia & Australasia (President) and Chief
Digital Transformation & Growth Officer; EVP
Corporate Transformation; Unilever Benelux
(Chair and EVP); Unilever Ice Cream (Global
Head & EVP); various Brand and Channel
Management roles.

Unilever Annual Report and Accounts 2020GOVERNANCE REPORT68

Corporate Governance continued

Our shares

Share capital

PLC’s issued share capital on 31 December 2020 was made up of
£81,798,695 split into 2,629,243,772 ordinary shares of 31/9p each and
each carrying one vote.

Listings

PLC has ordinary shares (ULVR) listed on the London Stock Exchange,
on Euronext Amsterdam (UNA) and, as American Depositary Receipts*
(UL), on the New York Stock Exchange.

* One American Depositary Receipt represents one
PLC ordinary share with a nominal value of 31/9p.

Share issues and purchase of shares

At the 2020 PLC AGM held on 29 April 2020 the PLC Directors were
authorised to:
■ issue new shares, up to a maximum of £12,102,222 nominal value
(which at the time represented approximately 33% of PLC’s issued
ordinary share capital);

■ disapply pre-emption rights up to a maximum of £1,817,714 nominal

value (which at the time represented approximately 5% of PLC’s
issued ordinary share capital) for general corporate purposes and an
additional 5% authority in connection with an acquisition or specified
capital investment; and

■ make market purchases of its ordinary shares, up to a maximum

of 116,853,000 ordinary shares (which at the time represented just
under 10% of PLC’s issued ordinary share capital and within the limits
prescribed in the resolution).

In addition, at the general meeting of PLC held in October 2020, the
PLC Directors were authorised to allot new shares in PLC up to an
aggregate nominal amount of £46 million only in connection with
Unification and to disapply pre-emption rights in connection with a
statutory withdrawal mechanism up to an aggregate nominal value of
£23 million. As announced by PLC on 30 November 2020, following the
completion of Unification, 1,460,713,122 new PLC shares were issued
under these authorities which represent 55.56% of the total number of
PLC shares. Since the 2020 PLC AGM, no shares have been issued under
the 2020 PLC AGM authorities. To the extent that they are unused, each
of those authorities expire on the earlier of the conclusion of PLC’s 2021
AGM and 30 June 2021. Renewal of these authorities is sought each year.
In connection with Unification, PLC purchased and cancelled 100,000
deferred shares of £1.00 each, which ensured the unity of management
of NV and PLC prior to Unification, from N.V. Elma and United Holdings
Limited, members of the Group, for an aggregate amount of £100,000.
The deferred shares represented 0.27% of the issued share capital of PLC
prior to Unification.

During 2020, companies within the Unilever Group did not purchase any
PLC ordinary shares or American Depositary Shares.

Trust Office

On 26 June 2019, the meeting of depositary receipt holders resolved to
terminate the former NV depositary receipt structure with effect from
28 June 2019. As a result, holders of depositary receipts automatically
received one NV ordinary share for every depositary receipt they
owned. In addition, the trading line of depositary receipts on Euronext
Amsterdam was terminated and all trading continued in NV ordinary
shares. On implementation of Unification, the remaining NV ordinary
shares held by the Trust Office were cancelled and new PLC ordinary
shares were issued to the Trust Office on a one-for-one basis.

The Trust Office will not be dissolved until 27 June 2021 as a limited
number of depositary receipts are outstanding in respect of which
the bearer certificates issued by N.V. Nederlandsch Administratie- en
Trustkantoor, the predecessor of the Trust Office, have not been handed
in and have not been exchanged for PLC ordinary shares. Thereafter, it
is expected that the Trust Office shall sell the PLC ordinary shares that
have not been exchanged and the proceeds will be given in consignment
to the Dutch Ministry of Finance. Holders of bearer certificates have
thereafter no claim whatsoever towards the Trust Office.

www.administratiekantoor-unilever.nl/eng/home

Our shareholders

Significant shareholders of PLC

As far as Unilever is aware, the only holder of more than 3% of,
or 3% of voting rights attributable to, PLC’s ordinary share capital
(‘Disclosable Interests’) on 31 December 2020, was BlackRock with
a shareholding of 6.40% and voting interest of 6.18%.

As far as Unilever is aware, no new Disclosable Interests have been
notified to PLC between 1 January 2021 and 23 February 2021 (the latest
practicable date for inclusion in this report). Between 1 January 2018
and 23 February 2021, (i) BlackRock, and (ii) the aggregated holdings of
the trustees of the Leverhulme Trust and the Leverhulme Trade Charities
Trust, have held more than 3% of, or 3% of voting rights attributable to,
PLC’s ordinary shares.

Shareholder engagement

We value open and effective communication with our shareholders.

The CFO has lead responsibility for shareholder engagement, with the active
involvement of the CEO and supported by the Investor Relations department.

In 2020, meetings were held with institutional shareholders based across
the world. Members of the ULE and Investor Relations team also met a
large number of investors at industry conferences. From March 2020,
all engagement was carried out virtually, as a result of the Covid-19
pandemic. The Chairman, CEO and CFO also engaged with investors on
the proposals to unify the Unilever Group’s legal structure under a single
parent company.

The Chair of the Compensation Committee extensively engaged with and
sought feedback from investors in relation to our Directors’ Remuneration
Policy which is up for renewal at the 2021 PLC AGM. Further details can
be found on pages 76 to 78 of the Directors’ Remuneration Report. On an
ongoing basis, the Board is briefed on investor reactions to the Unilever
Group’s quarterly results announcements and on any issues raised by
shareholders that are relevant to their responsibilities.

We maintain a frequent dialogue with our principal institutional
shareholders and regularly collect feedback. Private shareholders are
encouraged to give feedback via shareholder.services@unilever.com.
Our shareholders are also welcome to raise any issues directly with the
Chairman or the SID, and the Chairman, Executive Directors and Chairs
of the Committees are also generally available to answer questions from
the shareholders at the AGM each year. More information on shareholder
engagement can be found on pages 15 and 77.

www.unilever.com/investor-relations/

General meetings

At the PLC AGM the Chairman gives his thoughts on governance
aspects of the preceding year and the CEO gives a detailed review of
the performance of the Unilever Group over the last year. Shareholders
are encouraged to attend the meeting and to ask questions at or in
advance of the meeting. Indeed, the question and answer session forms
an important part of each meeting. The external auditors are welcomed
to the AGM and are entitled to address the meeting on any part of the
business of the meeting which concerns them as auditors.

As a result of the Covid-19 pandemic and the UK government’s ‘Stay at
Home’ measures, the 2020 PLC AGM was held as a closed meeting and
shareholders were unable to attend the meeting in person. However,
recognising that the AGM also serves as a forum for shareholders to
engage with Directors, following the conclusion of the PLC AGM, a live
webcast was held on Unilever’s corporate website with statements
by the Chairman and CEO before responding to questions submitted
by shareholders prior to the meeting and follow-up questions raised
at the meeting.

In addition, following the passing of emergency legislation in the
Netherlands and the UK relating to the holding of shareholder
meetings in light of the Covid-19 pandemic, the NV AGM and the NV
and PLC shareholders’ meetings to approve Unification were each held
electronically. A live webcast of these meetings was held on Unilever’s
corporate website with statements by the Chairman and CEO before
responding to any questions submitted by shareholders prior to the
meetings and follow-up questions raised at the meeting.

Shareholders of PLC may propose resolutions if they individually or
together hold shares representing at least 5% of the total voting rights

Unilever Annual Report and Accounts 202069

A European Works Council, embracing employee and management
representatives from countries within Europe, has been in existence for
several years and provides a forum for discussing issues that extend
across national boundaries. Further details on how the Board has
engaged with the workforce can be found on page 63.

Equal Opportunities and Diversity: Consistent with our Code of Business
Principles, Unilever aims to ensure that applications for employment from
everyone are given full and fair consideration and that everyone is given
access to training, development and career opportunities. Every effort
is made to reskill and support employees who become disabled while
working within the Group.

The United States

PLC is listed on the New York Stock Exchange (NYSE). As such, PLC must
comply with the requirements of US legislation, regulations enacted
under US securities laws and the Listing Standards of the NYSE, that are
applicable to foreign private issuers, copies of which are available on
their websites.

We are substantially compliant with the Listing Standards of the NYSE
applicable to foreign private issuers except as set out below.

We are required to disclose any significant ways in which our corporate
governance practices differ from those typically followed by US
companies listed on the NYSE. Our corporate governance practices are
primarily based on the requirements of the UK Listing Rules and the UK
Corporate Governance Code but substantially conform to those required
of US companies listed on the NYSE. The only significant way in which our
corporate governance practices differ from those followed by domestic
companies under Section 303A Corporate Governance Standards of
the NYSE is that the NYSE rules require that shareholders must be given
the opportunity to vote on all equity-compensation plans and material
revisions thereto, with certain limited exemptions. The UK Listing Rules
require shareholder approval of equity compensation plans only if new or
treasury shares are issued for the purpose of satisfying obligations under
the plan or if the plan is a long-term incentive plan in which a director may
participate. Amendments to plans approved by shareholders generally
only require approval if they are to the advantage of the plan participants.

Attention is drawn to the Report of the Audit Committee on pages 70
and 71. In addition, further details about our corporate governance are
provided in the document entitled ‘The Governance of Unilever’ which
can be found on our website.

All senior executives and senior financial officers have declared their
understanding of and compliance with Unilever’s Code of Business
Principles and the related Code Policies. No waiver from any provision
of the Code of Business Principles or Code Policies was granted in 2020
to any of the persons falling within the scope of the SEC requirements.
The Code of Business Principles and related Code Policies are published
on our website.

Risk Management and Control: Following a review by the Disclosure
Committee, Audit Committee and Board, the CEO and the CFO concluded
that the design and operation of the Unilever Group’s disclosure controls
and procedures, including those defined in the United States Securities
Exchange Act of 1934 – Rule 13a – 15(e), as at 31 December 2020
were effective.

Unilever is required by Section 404 of the US Sarbanes-Oxley Act of
2002 to report on the effectiveness of its internal control over financial
reporting. This requirement is reported on within the section entitled
‘Management’s Report on Internal Control over Financial Reporting’
on page 201.

www.unilever.com/corporategovernance

of PLC, or 100 shareholders who hold on average £100 each in nominal
value of PLC share capital can require PLC to propose a resolution at a
General Meeting. PLC shareholders holding in aggregate 5% of the issued
PLC ordinary shares are able to convene a General Meeting of PLC.

Information on the 2021 PLC AGM can be found within the PLC AGM
Notice which will be published in March 2021.

Required majorities

Resolutions are usually adopted at PLC General Meetings by an absolute
majority of votes cast, unless there are other requirements under the
applicable laws or PLC’s Articles of Association. For example, there are
special requirements for resolutions relating to the alteration of the
Articles of Association and the liquidation of PLC.

A proposal to alter the Articles of Association of PLC can be made either
by the PLC Board or by requisition of shareholders in accordance with
the UK Companies Act 2006. Unless expressly specified to the contrary
in PLC’s Articles of Association, PLC’s Articles of Association may be
amended by a special resolution. The Articles of Association of PLC can
be found on our website.

www.unilever.com/investor-relations/agm-and-corporate-
governance/our-corporate-governance/

Right to hold and transfer shares

Unilever’s constitutional documents place no limitations on the right to
hold or transfer PLC ordinary shares. There are no limitations on the right
to hold or exercise voting rights on the ordinary shares of PLC imposed
by English law.

Corporate governance
compliance

We conduct our operations in accordance with internationally accepted
principles of good governance and best practice, while ensuring
compliance with the corporate governance requirements applicable
in the countries in which we operate. Unilever is subject to corporate
governance requirements (legislation, codes and/or standards) in the UK
and the US and in this section we report on our compliance against these.

The United Kingdom

In 2020, PLC has applied the Principles and complied with the Provisions
of the UK Corporate Governance Code. Further information on how
Unilever has applied the five overarching categories of Principles can
be found on the following pages – (i) Board Leadership and Company
Purpose: pages 1, 8 and 61 to 63, (ii) Division of Responsibilities: pages 62
and 70 to 78, (iii) Composition, Succession and Evaluation: pages 5, 62,
74 and 75, (iv) Audit, Risk and Internal Control: pages 44 to 60, 70, 71 and
104; and (v) Remuneration: pages 76 to103. The UK Code is available on
the Financial Reporting Council’s (FRC) website.

Risk Management and Control: Our approach to risk management and
systems of internal control is in line with the recommendations in the
FRC’s revised guidance ‘Risk management, internal control and related
financial and business reporting’ (the Risk Guidance). It is Unilever’s
practice to review acquired companies’ governance procedures and
to align them to the Unilever Group’s governance procedures as soon
as is practicable.

Under the European Takeover Directive as implemented in the UK, the
UK Companies Act 2006 and rules of the US Securities and Exchange
Commission, Unilever is required to provide information on contracts and
other arrangements essential or material to the business of the Unilever
Group. We believe we do not have any such contracts or arrangements.

Greenhouse Gas (GHG) Emissions: Information on GHG emissions can
be found on page 56.

Employee Involvement and Communication: Unilever’s UK companies
maintain formal processes to inform, consult and involve employees
and their representatives. A National Consultative Forum comprising
employees and management representatives from key locations
meets regularly to discuss issues relating to Unilever sites in the United
Kingdom. We recognise collective bargaining on a number of sites and
engage with employees via the Sourcing Unit Forum, which includes
national officer representation from the three recognised trade unions.

Unilever Annual Report and Accounts 2020GOVERNANCE REPORT70

Report of the
Audit Committee

Committee members and attendance

John Rishton Chair

Judith Hartmann

Susan Kilsby

Attendance

7/7

This table shows the membership of the Committee together with their
attendance at meetings during 2020. Attendance is expressed as the
number of meetings attended out of the number eligible to be attended.

The Audit Committee is comprised only of independent Non-Executive
Directors with a minimum requirement of three such members. It is
chaired by John Rishton and the other current members are Judith
Hartmann and Susan Kilsby. For the purposes of the US Sarbanes-Oxley
Act of 2002, John Rishton is the Audit Committee’s financial expert.
The Board is satisfied that the members of the Audit Committee are
competent in financial matters and have recent and relevant experience.
Other attendees at Committee meetings were the Chief Financial Officer,
Chief Auditor, EVP Financial Control, Risk Management, Pensions &
Sustainability, Chief Legal Officer and Group Secretary and the external
auditors. Throughout the year the Committee members periodically met
without others present and also held separate private sessions with the
Chief Financial Officer, Chief Auditor and the external auditors, allowing
the Committee to discuss issues in more detail. Since April, due to the
pandemic all meetings have been held virtually.

Role of the Committee
The role and responsibilities of the Audit Committee are set out in written
terms of reference which are reviewed annually by the Committee, taking
into account relevant legislation and recommended good practice. The
terms of reference are contained within ‘The Governance of Unilever’
which is available on our website at

www.unilever.com/corporategovernance

The Committee’s responsibilities include, but are not limited to, the
following matters:
■ oversight of the integrity of Unilever’s financial statements;
■ review of Unilever’s half yearly and annual financial statements
(including clarity and completeness of disclosure) and approval
of the quarterly trading statements for quarter 1 and quarter 3;
■ oversight of risk management and internal control arrangements;
■ oversight of compliance with legal and regulatory requirements;
■ oversight of the external auditors’ performance, objectivity,

qualifications and independence; the approval process of non audit
services; recommendation to the Board of the nomination of the
external auditors for shareholder approval; and approval of their
fees, refer to note 24 on page 166.

■ performance of the internal audit function; and
■ approval of the Unilever Leadership Executive (ULE) expense policy

and the review of Executive Director expenses.

All relevant matters arising are brought to the attention of the Board.

In order to help the Committee meet its oversight responsibilities, each
year management organise knowledge sessions for the Committee
on subject areas within its remit. In 2020, sessions were held with
management on cyber security, data privacy and the activities of our
global business services function. Given the Covid-19 crisis the Committee
also had presentations from management and discussions on: the
implications of the pandemic on the businesses risk management
activities; the preparation of the financial statements; the overall control
environment; and the operation of the financial reporting controls.

How the Committee has discharged its
responsibilities
During the year, the Committee’s principal activities were as follows:

Financial Statements
The Committee reviewed prior to publication the quarterly financial press
releases together with the associated internal quarterly reports from the
Chief Financial Officer and the Disclosure Committee and, with respect

to the full-year results, the external auditor’s report. It also reviewed
this Annual Report and Accounts and the Annual Report on Form 20-F
2020. These reviews incorporated the accounting policies and significant
judgements and estimates underpinning the financial statements as
disclosed within note 1 on pages 116 to 118. Particular attention was paid
to the following significant issues in relation to the financial statements:
■ indirect tax provisions and contingent liabilities, refer to note 19

and 20 on page 160 and 161;

■ direct tax provisions, refer to note 6 on pages 131 to 133;
■ revenue recognition – including discounts and incentives;
■ acquisition of Horlicks, refer to note 21 on pages 162 to 165; and
■ Unification, refer to note 1 on page 116.

These matters are also highlighted by our external auditors as being
important in their audit.

For each of the above areas the Committee considered the key facts and
judgements outlined by management. Members of management attended
the section of the meeting of the Committee where their item was discussed
to answer any questions or challenges posed by the Committee. The issues
were also discussed with the external auditors and further information
can be found on pages 105 to 111. The Committee specifically discussed
with the external auditor how management’s judgement and assertions
were challenged and how professional scepticism was demonstrated
during their audit of these areas; this included the disclosures for each
matter noted above and where relevant challenging the sensitivity analysis
performed by the external auditor. The Committee is satisfied that there are
relevant accounting policies in place in relation to these significant issues
and management have correctly applied these policies.

In addition to the matters noted above, our external auditors, as required
by auditing standards, also consider the risk of management override of
controls. Nothing has come to our attention or their attention to suggest
any material misstatement with respect to suspected or actual fraud
relating to management override of controls.

At the request of the Board the Committee undertook to:
■ review the appropriateness of adopting the going concern basis

of accounting in preparing the annual financial statements;

■ assess whether the business was viable in accordance with the requirement
of the UK Corporate Governance Code. The assessment included a review
of the principal risks facing Unilever, their potential impact, how they were
being managed, together with a discussion as to the appropriate period
for the assessment. The Committee recommended to the Board that there
is a reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the three-year period
(consistent with the period of the strategic plan) of the assessment; and

■ consider whether the Unilever Annual Report and Accounts 2020

was fair, balanced and understandable and whether it provided the
necessary information for shareholders to assess the Group’s position
and performance, business model and strategy. The Committee also
reviewed the processes and controls that are the basis for its preparation.
The Committee was satisfied that, taken as a whole, the Unilever Annual
Report and Accounts 2020 is fair, balanced and understandable.

In terms of regulatory reviews during the year, on 12 March 2020 we
received confirmation from the Dutch regulator (AFM) that they were
satisfied with our responses and enhancements to certain disclosures
in our annual reports and accounts, as a result of their review of our
2018 annual report and accounts. On 30 November 2020 we received a
letter from the UK regulator (FRC) with respect to their thematic review
of the climate disclosures in the 2019 annual report and accounts. They
had no questions, just a couple of observations and no response was
required. In March 2020 the FRC and the SEC issued general guidance for
companies given the Covid-19 crisis. This has been reviewed and taken
into consideration in preparing the 2020 Annual Report and Accounts.

Risk management and internal control arrangements
The Committee reviewed Unilever’s overall approach to risk
management and control, and its processes, outcomes and disclosure.
The assessment was undertaken through a review of:
■ the yearly report detailing the risk identification and assessment

process, together with new significant risks and any emerging risks
identified by management;

■ reports from senior management on those 2020 corporate risks for which

the Audit Committee had oversight responsibility: treasury, tax and

Unilever Annual Report and Accounts 202071

pensions, information security, legal and regulatory compliance and
business transformation;

2020 AGMs. On the recommendation of the Committee, the Directors
will be proposing the reappointment of KPMG at the AGM in May 2021.

■ the proposed 2021 corporate risks identified by the ULE;
■ the Controller’s Quarterly Risk and Control Status Reports, including

Code of Business Principles cases relating to frauds and financial crimes
and significant issues received through the Unilever Code Support Line;
■ a summary of control deficiencies identified through controls testing
activities together with action plans to address underlying causes;

■ management’s improvements to reporting through further

automation and centralisation; and

■ the annual financial plan and Unilever’s dividend policy and

dividend proposals.

Each of these reports included any impacts or implications of Covid-19.
The impact of Covid-19 on the businesses principal risks is outlined on
page 46. Whilst most office based employees have been working remotely
during the pandemic this has not impacted the reporting process or the
timetable. The only change has been an increased use in collaboration
tools. A review of the financial controls concluded that, except for a limited
number of changes with respect to the physical verification of fixed
assets and inventory the ongoing operation of the financial controls have
substantially been unaffected by Covid-19 restrictions.

The Committee reviewed the application of the requirements under
Section 404 of the US Sarbanes-Oxley Act of 2002 with respect to internal
controls over financial reporting.

In fulfilling its oversight responsibilities in relation to risk management
and internal control, the Committee met regularly with senior members
of management and is satisfied with the key judgements taken.

The Committee has completed its review for 2020 on both risk management
and internal control and was satisfied that the process had worked
effectively and where specific areas for improvement were identified, there
was adequate mitigating or alternative controls and that processes were
underway to ensure sustainable improvements. The key area for focus
going forward is ensuring that controls impacted by the significant change
programmes are appropriately designed and operated before those
programmes are started.

During 2020 the Committee also continued its oversight of the
independent assurance work that is performed on a number of our
USLP metrics (selected on the basis of their materiality to the USLP).

Internal audit function
The Committee reviewed internal audit’s plan for the year which is focused on
Unilever’s corporate risks, and agreed its budget and resource requirements.
The pandemic impacted the way the audits have been completed since
April 2020. All work has been done remotely and there has been more focus
on data analysis and the use of remote video technology. The Committee
reviewed interim and year-end summary reports and management’s
response together with the completion status of agreed actions.

Every five years, the Committee engages an independent third party to
perform an effectiveness review of the function. This was last completed
in 2018. In 2020 the Committee evaluated the performance of the internal
audit function through a questionnaire. The feedback was reviewed and
the Committee was satisfied with the effectiveness of the internal audit
function. During the year, the Committee also met independently with the
Chief Auditor and discussed the results of the audits performed and any
additional insights obtained from the Chief Auditor.

Audit of the annual accounts
KPMG, Unilever’s external auditors and independent registered public
accounting firm, reported in depth to the Committee on the scope and
outcome of the annual audit, including their audit of internal controls over
financial reporting as required by Section 404 of the US Sarbanes-Oxley Act
of 2002. Their reports included audit and accounting matters, governance
and control, and accounting developments.

The Committee held independent meetings with the external auditors
during the year and reviewed, agreed, discussed and challenged their
audit plan, including the materiality applied, scope and assessment of
the financial reporting risk profile of the Group.

The Committee discussed the views and conclusions of KPMG regarding
management’s treatment of significant transactions and areas of
judgement during the year. The Committee considered these views and
comments and is satisfied with the treatment in the financial statements.

External auditors
KPMG have been the Group’s auditors since 2014 and shareholders
approved their reappointment as the Group’s external auditors at the

The Committee confirms that the Group is in compliance with The Statutory
Audit Services for Large Companies Market Investigation (Mandatory use
of Competitive Tender Processes and Audit Committee Responsibilities)
Order 2014, which requires Unilever to tender the audit every 10 years. The
last tender for the audit of the Annual Report and Accounts was performed
in 2013 with respect to the audit for the financial year ending 2014. At
present, we are satisfied with the effectiveness of our current auditors and
hence have no plans to retender the external auditor appointment earlier.
This position is re-evaulated each year.

Both Unilever and KPMG have safeguards in place to avoid the possibility
that the external auditors’ objectivity and independence could be
compromised, such as audit partner rotation and the restriction on non-
audit services that the external auditors can perform as described below.
KPMG has issued a formal letter to the Committee outlining the general
procedures to safeguard independence and objectivity, disclosing the
relationship with the Company and confirming their audit independence.

Each year, the Committee assesses the effectiveness of the external audit
process which includes discussing feedback from the members of the
Committee and stakeholders at all levels across Unilever. Interviews are
also held with key senior management within both Unilever and KPMG. The
FRC’s Audit Quality Review (AQR) team monitors the quality of audit work
of certain UK audit firms through annual inspections of a sample of audits
and related procedures at individual audit firms. During the year, the 2019
audit of the Group by KPMG was reviewed by the AQR and their report was
issued in February 2021. The review identified a number of improvements.
The Committee are in the process of engaging with the AQR and KPMG
to ensure there is a full understanding of the issues and that all the
appropriate actions have been undertaken or are in the process of being
undertaken by KPMG.

The Committee also reviewed the statutory audit, other audit and
non-audit services provided by KPMG and compliance with Unilever’s
documented approach, which prescribes in detail the types of
engagements, listed below, for which the external auditors can be used:
■ statutory audit services, including audit of subsidiaries;
■ other audit services – audits that are not required by law or regulation; and
■ non-audit services – work that our external auditors are best placed

to undertake, which may include:
■ services required by law or regulation to be performed by the audit

firm; and

■ services where knowledge obtained during the audit is relevant

to the service such as bond issue comfort letters.

Unilever has for many years maintained a policy which prescribes in
detail the types of engagements for which the external auditors can be
used with all other engagements being prohibited. The policy is aligned
with both European and SEC regulations and was updated during the
year in line with these regulations.

All engagements over €250,000 require specific advance approval by
the Audit Committee Chairman. The Committee further approve all
engagements which have been authorised by the EVP Financial Control,
Risk Management, Pensions & Sustainability. These authorities are reviewed
regularly and, where necessary, updated in the light of internal and
external developments. Since the appointment of KPMG in 2014 the level
of non-audit fees has been below 7% of the annual statutory audit fee. The
level of other audit fees has been below 6% of the annual statutory audit
fee except for 2017 (41%), 2018 (24%) and 2020 (32%) due to assurance
work relating to the disposal of our Spreads business (2017 and 2018) and
assurance work relating to the separation of our Tea business (2020).

Evaluation of the Audit Committee
As part of the internal Board evaluation carried out in 2020, the Board
evaluated the performance of the Committee. The Committee also carried
out an assessment of its own performance in 2020. While overall the
Committee members concluded that the Committee is performing effectively,
the Committee agreed that given the Covid-19 crisis, to further enhance
its effectiveness whilst operating virtually, it needed to ensure continued
engagement with the Group’s operations by organising virtual site visits.

John Rishton
Chair of the Audit Committee

Judith Hartmann

Susan Kilsby

Unilever Annual Report and Accounts 2020GOVERNANCE REPORT
72

Report of the Corporate
Responsibility Committee

Committee members and attendance

Strive Masiyiwa Chair

Youngme Moon

Feike Sijbesma

Attendance

5/5

4/5

The Corporate Responsibility Committee (CRC) comprises three
Non-Executive Directors: Strive Masiyiwa (Chair), Youngme Moon
and Feike Sijbesma.

The Chief Supply Chain Officer, the Chief Sustainability Officer and
the Chief Business Integrity Officer attend the Committee’s meetings.
The Chief Legal Officer and Group Secretary may also join the
Committee’s discussions.

Role of the Committee

The Corporate Responsibility Committee oversees Unilever’s conduct as a
responsible global business. Core to this remit has been the Committee’s
tracking of the progress and potential risks associated with the decade-
long Unilever Sustainable Living Plan (USLP). As the Plan came to its
conclusion in 2020, the Committee will turn its attention to monitoring the
company’s progress as guided by its new Compass strategy (see page 8
to 9).

The Committee is also charged with ensuring that Unilever’s reputation is
protected and enhanced, so it must consider the company’s influence and
impact on stakeholders. Central to this is the need to identify any external
developments that are likely to have an influence on Unilever’s standing
in society, and to ensure that appropriate and effective communications
policies are in place to support the company’s reputation.

Reviewing health and safety and ensuring Unilever’s Code of Business
Principles continues to reflect best practice are also within the Committee’s
scope. Complementing the CRC’s role, the Audit Committee is responsible
for reviewing significant breaches of the Code of Business Principles
as part of its remit to review risk management and for overseeing the
independent assurance programme for the USLP and Unilever’s new
strategy, the Compass.

The CRC’s discussions are informed by the experience of the Unilever
Leadership Executive – as those accountable for driving responsible and
sustainable growth through Unilever’s brands and operations. Other
senior leaders are invited to the Committee to share their perspectives
and insights on key issues and external developments. These in-depth
discussions ensure the Committee stays alert to current and emerging
trends and any potential risks arising from sustainability issues. The
Committee captures these insights for the Board through formal
feedback and the ongoing sharing of knowledge.

During 2020 the Committee reviewed its terms of reference and agreed
that minor modifications were required to reflect Unification.

The Committee’s terms of reference are set out at

www.unilever.com/corporategovernance

Meetings are held quarterly and ad hoc as required – five were held
in 2020, including an additional meeting to agree the scope of the
Management Co-Investment Plan (MCIP) 2021 Sustainability Progress
Index. The Committee Chairman is responsible for reporting the findings
from meetings to the Board, thus ensuring that the Board can fulfil their
oversight responsibilities.

Following the Committee’s terms of reference and Unilever’s principal
risks, in 2020 the Committee’s agenda covered the Code and third-party
compliance, safety, plastic packaging, the USLP and Compass strategy,
corporate reputation and litigation.

During the year, the Committee also addressed a range of other strategic
and current issues. How Unilever handled the Covid-19 pandemic was

first and foremost in these discussions, but other topics spanned human
rights, how Dove puts its brand purpose into action and the company’s
activities and advocacy at the World Economic Forum.

How the Committee has discharged its
responsibilities

In 2020, the Committee’s principal activities were as follows:

Code of Business Principles

The Code and associated Code Policies set out the standards of conduct
expected of all Unilever employees in their business endeavours.
Compliance with these is an essential element in ensuring Unilever’s
continued business success and is identified as an ethical, legal and
regulatory risk to Unilever (see page 50).

The Corporate Responsibility Committee is responsible for oversight of
the Code and Code Policies, ensuring that they remain fit for purpose and
are appropriately applied. It maintains close scrutiny of the mechanisms
for implementing the Code and Code Policies. This is vital as compliance
is essential to promote and protect Unilever’s values and standards, and
hence the good reputation of the Group.

In 2020, the Code of Business Principles was refreshed to include the
provision of a living wage for employees, ethical use of data, a greater
focus on health and safety by including mental wellbeing, and a
commitment to transparency.

At each meeting the Committee reviews an analysis of investigations
into non-compliance with the Code and Code Policies and discusses any
trends arising from these investigations.

The Committee also considers litigation and regulatory matters which
may have a reputational impact and reviews a summary of any significant
developments at each meeting. These matters include environmental
issues, anti-bribery and corruption and competition law compliance

The Committee studied Unilever’s latest methodology for assessing
anti-bribery and corruption risks and the comprehensive mapping of
these risks by country and business activities. These and a number of
other initiatives have helped Unilever move to Band A of Transparency
International UK’s Anti-Corruption Compliance Benchmark.

It also reviewed the range of programmes Unilever runs to ensure it
complies with the growing number of competition laws worldwide
as well as its own Code of Business Principles policy on competition.

Principles and standards for third parties

Extending Unilever’s values to third parties is essential if Unilever is to
generate responsible growth and a positive social impact on the industry.

A lack of third-party compliance can pose a significant risk to the business,
(see principal risks, page 50), so the Committee examines Unilever’s
compliance programmes in detail to ensure risks are minimised.

At each meeting, the Committee tracks compliance with Unilever’s
Responsible Sourcing Policy (RSP) for suppliers and its Responsible
Business Partner Policy (RBPP) for customers and distributors. Together
they set out Unilever’s requirements that third parties conduct business
with integrity and respect for human rights and core labour principles. In
2020, responsibility for supplier compliance was transferred from Supply
Chain into the Business Integrity function allowing a clearer segregation
of responsibilities for running the RSP and its compliance oversight.
Sourcing 100% of Unilever’s procurement spend in line with the RSP was
a target within the USLP. See page 30 for details.

Safety and security

The need to keep people safe came to the fore in the face of Covid-19.
At the outset of the pandemic, the Committee emphasised the vital role
a global business can play in protecting not only its own workers but
local communities through pooling resources and sharing knowledge
with governments and partners.

Unilever Annual Report and Accounts 202073

The Committee requested an ongoing update of Unilever’s Covid-19
preparations and actions across its business and supply chain. Unilever’s
approach centred on ensuring business continuity and ensuring
people were physically equipped and felt psychologically secure in
the workplace or when working from home, see page 16. While setting
up and putting in place detailed guidance and protocols to ensure
that its factories continued to operate in 2020, Unilever maintained its
safety standards and continued to protect people from accidents. Total
Recordable Frequency Rate (TRFR) improved, but sadly two contractors
and one employee lost their lives (see page 17).

Recognising the potential burden on mental health imposed by the pandemic,
the Committee probed Unilever on how it is supporting its employees.
Unilever has longstanding employee assistance programmes which are
accessible to all employees. More use was made of these programmes
during the year as the demands of the pandemic started to affect people’s
wellbeing (see pages 16 to 17). The Committee commended these
programmes and the thoroughness of the approach, counselling Unilever
to maintain its monitoring and protection of employees’ wellbeing.

The Committee also examined Unilever’s approach to security. As a
global business, Unilever operates in many countries, some of which
suffer from a weak rule of law or from growing social and political unrest.
Similarly, cyber threats continue to expand. The business continues to
upgrade its resilience programmes to protect its people and assets.

Taking action on plastics, climate and nature

Packaging waste and single-use plastic in particular continued as high
priorities for the business and society in 2020. Unilever’s goals cover
using more recycled and less virgin plastic, improving the recyclability of
plastic and an industry-leading commitment to an absolute reduction in
plastic (see pages 10 and 29). Covid-19 has impacted a number of these
activities but Unilever has remained committed to its goals and much
progress was maintained during the year.

The effects of climate change and nature loss are becoming ever more
apparent and increasingly urgent. In June Unilever set out new and
stretching goals on climate and nature (see pages 10 and 28 to 29).
These succeed the targets in the Unilever Sustainable Living Plan.

Taking action on living standards and creating
opportunities

Unilever has developed ambitious new social goals to complement its
environmental goals, recognising the interdependence of people and
planet. The new goals set out to contribute to a fairer and more socially
inclusive world.

The first of these goals sets out to ensure that everyone who directly
provides goods and services to Unilever will earn at least a living wage
or income by 2030. It will also create more opportunities for people by:
being more inclusive, removing barriers and reaching under-represented
groups; increasing representation of diverse groups in its advertising;
and upskilling its workforce and helping young people get ready for work
(see pages 17 to 18). Unilever scrutinises its social strategy from a gender
perspective, drawing on respect for human rights as the foundational
principle underpinning its approach.

Diversity and inclusion

The Committee discussed Unilever’s approach to diversity and inclusion
as the Black Lives Matter movement gathered pace during the year.
Alongside its new social goals, Unilever has strengthened its focus on
race, establishing a racial and ethnic equity taskforce to deliver its racial
equity strategy. Race runs in tandem with the other elements of Unilever’s
equity, inclusion and diversity strategy, namely gender, disability and
LGBTQI+ (see page 19).

As the Committee charged with overseeing Unilever’s reputation,
members scrutinised Unilever’s processes for managing issues. These
proactive processes are defined within a clear governance framework
and have been enhanced with more sophisticated forecasting
techniques to gauge likely future issues and extended training.

Sharing expert perspectives

The Unilever Sustainability Advisory Council comprises external experts
from fields as diverse as human rights, gender and the environment. Its
role is to provide an independent view and challenge as strategies are
mapped out and implemented by Unilever’s management.

In spring 2020, the Council came together with the Board to share
insights and perspectives. The meeting addressed a number of crucial
issues: deforestation and eco-system protection; gender, inclusion and
diversity; and human rights.

These discussions offered the Board the chance to examine how
Unilever’s strategies are viewed by the different stakeholder groups
represented on the Council, and to probe the impact Unilever’s strategies
have delivered.

Management Co-investment Plan

Unilever’s Reward Framework includes the Management Co-investment
Plan (MCIP), a long-term incentive plan that is linked to financial and
USLP performance (see pages 92 to 93).

To come to a view on the USLP, the Corporate Responsibility Committee
and the Compensation Committee evaluate performance against
a Sustainability Progress Index (SPI).

The SPI is an assessment that captures quantitative and qualitative
elements. Firstly, it considers the 2019 performance on USLP targets
reported on Unilever’s website, alongside performance evidenced in a
number of sustainability ratings and indices. These targets illustrate how
Unilever aims to address a number of its principal risks, such as brand
preference, climate change, plastic packaging, supply chain and ethics
(see our risks on pages 46 to 50). The second part of the assessment takes
into account Unilever’s wider progress on sustainability.

Following an in-depth discussion of the SPI, the Corporate Responsibility
Committee agreed a performance rating which was endorsed by the
Compensation Committee. This joint assessment forms part of the
Compensation Committee’s overall recommendation on MCIP (see
page 93).

Subject to shareholder approval at the 2021 AGM, the Performance Share
Plan (PSP) replaces the MCIP as the sole long term incentive plan. The
performance measures for the PSP will continue to include the currently
used Sustainability Progress Index (see pages 92 to 93).

For 2021, PSP SPI awards will be assessed against the final year of the
USLP (performance in 2020). A new SPI will be agreed to reflect Unilever’s
Compass strategy. This will apply to PSP awards made from 2022 onwards.

Evaluation of the Corporate Responsibility
Committee

As part of the internal Board evaluation carried out in 2020, the Board
evaluated the performance of the Committee. The Committee also
carried out an assessment of its own performance in 2020 and concluded
that it was working effectively.

Members agreed to enhance the working of the Committee by including
more external perspectives in its discussions and by continuing to
fine-tune how it assesses the SPI.

www.unilever.com/planet-and-society

Protecting and enhancing Unilever’s reputation

Ensuring its good reputation is maintained is vital to Unilever’s ongoing
success. As activism rises, commentary on issues such as deforestation
for palm oil or animal testing can travel faster and wider than ever
before, while social media continues to amplify and accelerate issues.
As noted above, one of the most significant changes in 2020 was the
spotlight placed on businesses by the Black Lives Matter movement.

Strive Masiyiwa
Chair of the Corporate Responsibility Committee

Youngme Moon

Feike Sijbesma

Unilever Annual Report and Accounts 2020GOVERNANCE REPORT74

Report of the Nominating and Corporate
Governance Committee

Committee members
and attendance

Appointment and reappointment of Directors
and ULE

Nils Andersen Chair

Laura Cha

Marijn Dekkers
(Member until 30 April 2020)

Andrea Jung
(Member since 30 April 2020)

Feike Sijbesma

Attendance

4/4

3/4

2/2

4/4

The Committee is comprised of three Non-Executive Directors and the
Chairman. The Group Secretary acts as secretary to the Committee.
Other attendees at Committee meetings in 2020 were the Chief
Executive Officer and the Chief HR Officer.

Role of the Committee

The Nominating and Corporate Governance Committee is primarily
responsible for periodically assessing the structure, size and composition
of the Board evaluating the balance of skills, experience, independence,
diversity and knowledge on the Board; ongoing succession planning
(including the development of a diverse pipeline for succession);
drawing up selection criteria and appointment procedures for Directors;
reviewing the feedback in respect of the role and functioning of the Board
Committees arising from Board and Board Committee evaluations; and,
periodic reviewing and assessing Unilever’s practices and procedures
in relation to workforce engagement. It also has oversight of all matters
relating to corporate governance and brings any issues in this respect
to the attention of the Board.

The Committee’s terms of reference are set out in ‘The Governance
of Unilever’ which can be found on our website at

www.unilever.com/corporategovernance

During the year, the Committee reviewed its own terms of reference
to determine whether its responsibilities are properly described.
The amended terms became effective on 29 November 2020.

In 2020 the Committee met four times. At the start of the year the
Committee considered the results of the Committee’s annual self-
evaluation for 2019 and its priorities for the year and used these
to help create an annual plan for meetings for 2020.

Reappointment of Directors

All Directors (unless they are retiring) are nominated by the Board
for re-election at the AGM each year on the recommendation of the
Committee who, in deciding whether to recommend nomination of
a Director, take into consideration the outcomes of the Chairman’s
discussions with each Director on individual performance, the evaluation
of the Board and its Committees and the continued good performance of
individual Directors. Non-Executive Directors normally serve for a period
of up to nine years. The average tenure of the Non-Executive Directors
who have retired from the Board over the past ten years has been seven
years. The schedule the Committee uses for orderly succession planning
of Non-Executive Directors can be found on our website at

www.unilever.com/committees

Marijn Dekkers retired from the Board and did not put himself forward for
reappointment at the AGMs in April 2020. The Committee proposed the
reappointment of all other Directors and the Directors were appointed
by shareholders by a simple majority vote at the AGMs bringing the then
number of Non-Executive Directors from eleven to ten.

The Committee also recommends to the Board candidates for election as
Chairman and Senior Independent Director. After being reappointed as
Non-Executive Director at the 2020 AGMs, Youngme Moon remained the
Senior Independent Director.

Committee Chairs remained in place in 2020 with John Rishton as Chair
of the Audit Committee, Strive Masiyiwa as Chair of the Corporate
Responsibility Committee, Vittorio Colao as Chair of the Compensation
Committee and Nils Andersen as Chair of the Nominating and Corporate
Governance Committee.

On 18 February 2021 Vittorio Colao stepped down as a director. Andrea
Jung has replaced Vittorio Colao as Chair of the Compensation Committee.

Succession planning and Board changes

In consultation with the Committee, the Board reviews the adequacy of
succession planning processes and the actual succession planning at
Board level.

When recruiting, the Committee will take into account the profile of
Unilever’s Board of Directors set out in ‘The Governance of Unilever’
which is in line with the recommendations of applicable governance
regulations and best practice. Pursuant to the profile the Board should
comprise a majority of Non-Executive Directors who are independent
of Unilever, free from any conflicts of interest and able to allocate
sufficient time to carry out their responsibilities effectively. With respect
to composition and capabilities, the Board should be in keeping with
the size of Unilever, its strategy, portfolio, consumer base, culture,
geographical spread and its status as a listed company and have
sufficient understanding of the markets and business where Unilever is
active in order to understand the key trends and developments relevant
for Unilever. The objective pursued by the Board is to have a variety of
nationality, race, gender, ethnicity, social background and relevant
skills and expertise. It is important that the Board has sufficient global
experience and outlook, and financial literacy. As discussed later in this
Report, Unilever currently has a diverse Board in terms of gender and
nationality and, as can be seen from the subset of the mapping that
this Committee has done of the current Non-Executive Directors’ skills
and capabilities on page 65, composition and capabilities in line with
our Board profile described above.

ULE succession planning and appointment

In consultation with the Committee, the Board reviews the adequacy
of succession planning processes and the actual succession planning
at ULE level.

Unilever Annual Report and Accounts 202075

Diversity Policy

Unilever has long understood the importance of diversity and inclusion
within our workforce because of the wide range of consumers and other
stakeholders we connect with globally. This goes right through our
organisation, starting with the Board.

Unilever’s Board Diversity Policy, which is reviewed by the Committee
each year, is reflected on our website at

www.unilever.com/boardsofunilever

The Board believes that the composition and quality of the Board
should be in keeping with the size and geographical spread of Unilever,
its portfolio, culture and status as a listed company. A diverse Board
with a range of views enhances decision-making which is beneficial
to the company’s long-term success and in the interests of Unilever’s
stakeholders. Thus, the Board believes that Unilever Directors must
be selected on the basis of wide-ranging experience, backgrounds,
skills, knowledge and insight with a continuing emphasis on diversity
of its members.

In 2020, the Committee also reviewed and considered relevant
recommendations on diversity and remains pleased that 50% of our
Non-Executive Directors and 42% of all Directors were women and that
nine nationalities were represented on the Board. As regards ethnicity,
in 2020 eight directors identified themselves as White, three Directors
identified themselves as Asian and one Director identified himself as
Black. Further details on our approach to diversity and inclusion as well
as gender balance of our workforce can be found on page 19.

Corporate Governance Developments

The Committee reviews relevant proposed legislation and changes to
relevant corporate governance codes at least twice a year. It carefully
considers whether and how the proposed laws/rules would impact
upon Unilever and whether Unilever should participate in consultations
on the proposed changes. For example, during 2020, developments on
the virtual Shareholder meetings, pay gap reporting and Boardroom
diversity were discussed by the Committee.

Evaluation of the Nominating and Corporate
Governance Committee

As part of the Board evaluation carried out in 2020, the Board evaluated
the performance of the Committee. The Committee also carried out an
assessment of its own composition and performance in 2020. The Committee
members concluded that the Committee is performing effectively.

Nils Andersen
Chair of the Nominating and Corporate Governance Committee

Laura Cha

Andrea Jung

Feike Sijbesma

Unilever Annual Report and Accounts 2020GOVERNANCE REPORT76

Directors’ Remuneration Report

Committee members and attendance

Outcomes for 2020 annual bonus

Andrea Jung Chair

Vittorio Colao
(Member and Chair until 18 February 2021)

Nils Andersen

Laura Cha
(Member as from 30 April 2020)

Marijn Dekkers
(Member until 30 April 2020)

Attendance

7/7

4/4

3/3

This table shows the membership of the Compensation Committee
(Committee) together with their attendance at meetings during 2020.
Attendance is expressed as the number of meetings attended out of
the number eligible to be attended.

Letter from the Chair

Dear shareholders,

As the Committee Chair, I am pleased to present Unilever’s Directors’
Remuneration Report 2020. In the sections below, I set out:
■ our business performance in 2020 and how it links to key

remuneration outcomes for the year; and

■ our new Remuneration Policy, which is being presented for

shareholder approval at the May 2021 AGM.

Business performance and remuneration

Unilever demonstrated in 2020 resilience and agility in the face of an
unprecedented and continuing global crisis.

Throughout the Covid-19 pandemic, Unilever acted decisively to place
health, safety and wellbeing of our people worldwide at the forefront
of our decisions during this extraordinary period. Our supply chain
teams and frontline employees maintained production levels across
290 manufacturing sites and were able to ensure the supply of essential
hygiene and food products. We protected our workforce from sudden
drops in pay arising from market disruption or from being unable to
undertake their role. This protection covered not only our employees but
also contractors and others who we manage or who work on our sites, on
a full- or part-time basis. Unilever has delivered this protection without
seeking any direct financial support from any government worldwide.

During 2020, Unilever moved quickly to focus the business on competitive
growth, absolute underlying operating profit and Free Cash Flow delivery.
The business responded swiftly to shifts in customer demand patterns.
Growth was driven by hand and home hygiene products and in home food
and refreshments. Food service and out of home ice cream sales declined,
impacted by channel closures. As people stayed at home and had fewer
opportunities to socialise, they spent less time on personal care which
impacted sales in much of the Beauty and Personal Care business. Online
channels grew strongly, and our e-commerce business grew significantly.
Alongside growing competitively with an increase in underlying sales of
1.9%, Unilever generated underlying operating profit of €9.4 billion and
Free Cash Flow of €7.7 billion, an increase of €1.5 billion compared to the
prior year.

Unilever maintained its quarterly shareholder dividend throughout the
year, and increased it in the fourth quarter, reflecting our confidence
in the prospects for our business as the impact of the pandemic on our
markets became clearer.

The formulaic outcome for the 2020 annual bonus plan against targets
that were set before the Covid-19 pandemic came into view was 48% as
detailed in the chart on page 90.

After careful consideration, the Committee decided neither to change
the targets in response to the pandemic nor to exercise discretion on
the formulaic outcome, which therefore will be applied for the Executive
Directors and members of the Unilever Leadership Executive (ULE).

Accordingly, the Committee confirmed a bonus of 48% of target
opportunity for both the CEO Alan Jope (resulting in a bonus of 72%
of fixed pay against a target of 150%), and the CFO Graeme Pitkethly
(resulting in a bonus of 58% of fixed pay against a target of 120%).

Outcomes for GSIP and MCIP vesting in 2021

Whilst we have fallen short of our multi-year 3-5% growth ambition,
we were well on track to achieve our Underlying Operating Margin
improvement (UOM) ambition of 20% before the impact of Covid-19.
Our Free Cash Flow was well ahead of target and our Return On Invested
Capital (ROIC) was in the high teens. We faced challenges delivering our
Underlying Earnings Per Share (EPS) Growth targets due to the negative
impact of Covid-19 and the headwind of elevated translation currency
impacts. Over the past three years (2018-2020) Total Shareholder Return
(TSR) did not reach the threshold for vesting. We continued to make
strong progress on our USLP agenda, achieving a 130% outcome for the
Sustainability Progress Index.

After careful consideration, the Committee decided neither to change the
targets for these long-term incentive plans in response to the pandemic
nor to exercise discretion on the formulaic outcomes. The following
outcomes therefore will be applied for respective Executive Directors
and members of the Unilever Leadership Executive (ULE).

The formulaic outcome for the 2017-2020 Management Co-Investment
Plan (MCIP) was 83% of target as detailed in the chart on page 92,
(corresponding to a vesting of 42% of the maximum of 200% for our two
Executive Directors), as detailed on page 92.

The formulaic outcome for the 2018-2020 Global Share Incentive
Plan (GSIP) was 52% of target as detailed in the chart on page 91
corresponding to a vesting of 26% of the maximum of 200% for the CFO
(who received an award in 2018 under this plan), as detailed on page 91.

Our new Remuneration Policy for 2021

Our Remuneration Policy was last approved at the May 2018 AGM.
Consequently, it reaches the end of its three-year approval period and
a new Remuneration Policy is being presented for shareholder approval
at the May 2021 AGM.

The Committee has closely monitored the external environment on pay
together with shareholder views and feedback from employees at all
levels on the current reward structure.

The key changes we are proposing to make to our Executive Directors‘
Remuneration Policy are to:
■ replace the current long-term incentive plan, MCIP, with a new
Performance Share Plan (PSP) that is entirely separate from the
annual bonus plan;

■ replace the voluntary investment of bonus through MCIP with
a mandatory deferral of 50% of the annual bonus in shares for
three years;

■ set performance measures for the PSP that are strategically aligned

with the business, as outlined below; and

■ reduce the long-term performance period from four to three years
while maintaining a five-year period from award to release on PSP
by increasing the retention period from one year to two years.

Unilever Annual Report and Accounts 202077

The Committee is making these changes to:
■ simplify remuneration arrangements;
■ enable the Committee to set stretching but achievable performance

targets over realistic timeframes;

■ make incentives more resilient and less dependent on the outcome

of the short term incentive;

■ deleverage incentives by separating the short- and long-term

incentive plans (that were previous linked through MCIP);

■ reduce maximum pay;
■ maintain our Executive Directors’ overall pay at a relatively

restrained level compared to peers; and

■ more closely align Unilever’s reward structure with standard

market practice.

Having undertaken an extensive consultation exercise before finalising
the new Remuneration Policy, the Committee believes it can be fully
supported by the great majority of our shareholders.

As with our previous Reward Framework, Unilever will cascade the
new approach across our 14,400+ managers throughout the whole
business worldwide. Many of the most junior colleagues have shared
feedback that they find the current MCIP structure complex and
financially burdensome, which may negatively impact the motivational
effectiveness of current remuneration arrangements. The Committee is
satisfied that the new structure addresses these issues, and is therefore
confident that the new approach will be well received by employees.

Changes to Remuneration Policy

The key changes in the new Executive Directors‘ Remuneration Policy
are summarised in the following sections.

Change in target and maximum pay levels

In moving from the current MCIP to the proposed PSP structure, the
annual bonus opportunity remains unchanged while the potential value
of the long-term PSP has been increased at target and decreased at
maximum. The overall result is an increase in target pay of 13%/12%
for the CEO/CFO respectively and decrease in maximum pay of 6% for
both individuals.

As fixed pay and annual bonus remain unchanged, the increase in target
pay opportunity can only be realised through the delivery of long-term
performance against stretching three-year performance conditions
with any such award held in Unilever shares for a further two years.
This strengthens alignment of Executive Directors’ pay to the long-term
performance of the business and the shareholder experience, while
reducing the level of maximum pay.

In determining the quantum for pay, the Committee did consider external
benchmarking data against a group of comparable major European
companies, as detailed on page 79. Whilst the Committee is neither led
by benchmarking data, nor targets a specific benchmark position, this
data provides an important reference point to ensure that pay levels for
the Executive Directors of Unilever are not significantly out of line with
the market. Under the proposed policy, total target compensation is
around lower quartile for our CEO and around median for our CFO. The
Committee is mindful that this relatively low market position is in contrast
to Unilever’s market capitalisation in the top quartile of the comparator
group. The Committee believes this market benchmarking data clearly
shows that the proposals do not provide excessive levels of remuneration
versus the market. Furthermore, the Committee believes that a lower
level of target compensation than proposed would create undue risks
in terms of retention and or any future recruitment.

Incentive performance measures for 2021

Our proposed annual bonus policy continues to state that at least 70%
of measures must be financial in nature. For 2021 all of our proposed
measures are financial and they are the same as for 2020:
■ Underlying Sales Growth (1/3);
■ Underlying Operating Margin (1/3);
■ Free Cash Flow (1/3).

The Committee continues to believe that these are the best measures
to assess one year financial performance at Unilever.

We are proposing a new set of metrics for our long-term incentive,
PSP, to further strengthen strategic alignment to the company’s longer
term aims:
■ Competitiveness: % Business Winning Market Share (25%);
■ Cumulative Free Cash Flow (25%);
■ Return On Invested Capital (ROIC) (25%);
■ Sustainability Progress Index (25%).

The rationale for each of the proposed PSP performance measures for
2021 is set out below:
■ Competitiveness: % Business Winning Market Share: Winning market

share across our portfolio is a key strategic driver for long-term
sustainable growth. Accordingly, this measure assesses, each year,
the aggregate turnover of portfolio components (country/category
cells) where Unilever is gaining market share as a % of total turnover
that is measured by market data. It measures what proportion of
our revenue is being generated when growing market share versus
our competitors. In adopting this measure, the Committee has
confirmed the focus on gaining share across the breadth of our
portfolio and believes this is the best method to track progress. As
with other measures, the Committee will undertake a supplementary
evaluation, to confirm that the outcome of this measure provides a
good and fair assessment of how competitiveness is contributing to
Unilever’s growth performance.

■ Cumulative Free Cash Flow measure: Free Cash Flow from operating
activities in current currency ensures sufficient cash is available to
fund a range of strategic capital allocation choices.

■ Return On Invested Capital (ROIC): Supports disciplined investment
of capital within the business and encourages acquisitions which
create long-term value.

■ Sustainability Progress Index (SPI): Building a sustainable business

that benefits multiple stakeholders continues to be Unilever’s
Business model. Consequently, the Committee has resolved to retain
SPI as a long-term performance measure.

Engaging with shareholders

Before finalising the new Remuneration Policy, the Committee consulted
with shareholders, and major proxy advisers including the Investment
Association, ISS, Glass Lewis, Hermes and Eumedion on the new Policy.
I would like to take this opportunity to thank all of the shareholders
and proxy voting agencies for their time spent engaging with us and
providing commentary on our proposed changes to our Directors’
Remuneration Policy.

Through this consultation process, the Committee was pleased to
receive overwhelming support for the main structural changes to our
Remuneration Policy. In particular, shareholders were supportive of
delinking the annual bonus from the long-term incentive opportunity
through the discontinuation of MCIP and its replacement with the new
PSP, together with mandatory deferral of half the annual bonus award
in Unilever shares for three years.

Unilever Annual Report and Accounts 2020GOVERNANCE REPORT78

Directors’ Remuneration Report continued

During our consultation process, a significant number of investors
expressed a strong view that they would prefer ROIC to be retained as
a performance measure within the PSP instead of the introduction of
relative total shareholder return (TSR), as we had originally proposed.
The Board is committed to generating superior returns on capital for
our investors and whilst the Committee felt that a relative TSR measure
would more closely reflect the shareholder experience we reflected on
the feedback and decided to retain ROIC within the PSP, in line with the
views expressed by shareholders.

Some shareholders asked if we will maintain the current policy limits
to discretion i.e. that formulaic incentive outcomes can be adjusted
upwards and downwards by up to 25% for annual bonus and 10% for the
long-term incentive. In line with the UK Corporate Governance Code and
best practice the Committee decided to remove these limits so that the
Committee can use discretion fully to override any formulaic outcome
(including to nil) that does not accurately reflect the outcome the
Committee considers to be appropriate to the circumstances.

Executive Director fixed pay increases

There will be no fixed pay review for the Executive Directors in the first
half of 2021. Such a review will take place in the second half of 2021, with
any potential changes based on performance, external circumstances
and salary increases for the wider workforce.

CEO and CFO Target Total Pay

Alan Jope CEO
€’000 p.a.

Graeme Pitkethly CFO
€’000 p.a.

Engaging with employees

As previously announced, the Board decided to share the responsibility
for workforce engagement among all Non-Executive Directors to ensure
that all Directors have a collective responsibility for bringing employee
views into relevant board discussion. We continued these engagements
in 2020, see page 63 for a summary of the discussions that took place.
I also communicated to all employees to provide an update of Unilever’s
Executive Directors’ remuneration, highlighting how this aligns with
employees’ remuneration and with our medium and long-term purpose
and strategy. In the context of the renewal of the Remuneration Policy the
Committee was briefed on employee feedback on the introduction of the
new Reward Framework that was gathered through surveys, interviews,
focus groups and consultation with the relevant employee representative
bodies. See page 84.

Implementation report

The annual report on remuneration in this report describes 2020
remuneration in detail together with the planned implementation of the
proposed Remuneration Policy in 2021 (including remuneration decisions
for 2021). It also includes a description of the Committee’s key activities
in the year.

On behalf of the Committee and the entire Board, I thank all
shareholders and their representatives for their constructive engagement
in 2020 and look forward to your support for our remuneration related
proposals at the 2021 AGM.

Fixed pay

1,508

1,136

Proposed
Policy

Current
Policy

Proposed
Policy

Current
Policy

1,136

Andrea Jung
Chair of the Compensation Committee

Bonus (% fixed pay)

PSP (% fixed pay)

2,262
(150%)

3,016
(200%)

MCIP* Match share award

n/a

2,262
(150%)

1,363
(120%)

n/a

2,273
(150%)

1,817
(160%)

n/a

1,370
(120%)

Total Compensation

6,786

6,043

4,316

3,869

CEO and CFO Maximum Total Pay

Alan Jope CEO
€’000 p.a.

Graeme Pitkethly CFO
€’000 p.a.

Proposed
Policy

Current
Policy

Proposed
Policy

Current
Policy

Fixed pay

1,508

1,136

Bonus (% fixed pay)

PSP (% fixed pay)

3,393
(225%)

6,032
(400%)

MCIP* Match share award

n/a

3,393
(225%)

n/a

6,820
(450%)

2,045
(180%)

3,635
(320%)

n/a

2,045
(180%)

n/a

4,110
(360%)

Total Compensation

10,933

11,721

6,816

7,291

The figures in these tables are calculated pursuant to UK requirements.
* MCIP at maximum (67%) investment of bonus.

Unilever Annual Report and Accounts 202079

Directors’ Remuneration Policy

Policy report

The following sets out our new Directors’ Remuneration Policy (the Remuneration Policy). It fundamentally continues our existing policy
principles with some key proposed changes, which are discussed below.

This new Remuneration Policy will be presented for approval by shareholders at the 2021 AGM and, if approved, will apply to payments made after
that date and will replace the existing remuneration policy in its entirety. It is intended that the new Remuneration Policy will apply for three years,
although the Committee may seek approval for a new policy at an earlier point if it is considered appropriate. The supporting information section
provides the rationale for any changes from the existing remuneration policy where appropriate.

Fixed pay

Purpose and link to strategy

Opportunity

Supports the recruitment and retention of Executive Directors
of the calibre required to implement our strategy. Reflects the
individual’s skills, experience, performance and role within
the Group.

Operation

Set by the Board on the recommendation of the Committee and
generally reviewed once a year, with any changes usually effective
from 1 January (although changes may be made at any other time
if the Committee considers that is appropriate).

Fixed pay is paid in cash and is generally paid monthly. Fixed
pay is set at an appropriate level to attract and retain Executive
Directors of the required calibre, taking into account:
■ our policy generally to pay at around the median of an
appropriate peer group of other global companies of
a similar financial size and complexity to Unilever;*

■ the individual’s skills, experience and performance; and
■ pay and conditions across the wider organisation.

Performance measures

n/a

Any increases will normally be in line with the range of increases awarded
to other employees within the Group.

Increases may be above this level or applied more frequently in certain
circumstances, such as:
■ where there is, in the Committee’s opinion, a significant change in an

Executive Director’s scope or role;

■ where a new Executive Director has been appointed to the Board at

a rate lower than the typical market level for such a role and becomes
established in the role; and

■ where it is considered necessary to reflect significant changes in market

practice.

The maximum aggregate increase for the current Executive Directors
during the time in which this policy applies will be no higher than 25% for
each Director.

Supporting information

The maximum aggregate increase to fixed pay has been increased to
25% over the life of this Policy. This change is being made to provide the
Committee flexibility in the case of any unforeseen circumstances. The
Committee would engage with shareholders in the event that a material
fixed pay increase is proposed.

* The current peer group includes Anheuser-Bush InBev, Bayer, BP, British American Tobacco, Danone, Diageo, GlaxoSmithKline, Heineken, Hermes Intl., L’Oréal, LVMH,
Nestlé, Novartis, Reckitt Benckiser, Royal Dutch Shell, Sanofi, Total and Volkswagen (XET). The peer group used for benchmarking purposes is reviewed regularly and
companies are added and/or removed at the Committee’s discretion to ensure that it remains appropriate.

Benefits

Purpose and link to strategy

Opportunity

Provides certain benefits on a cost-effective basis to aid attraction
and retention of Executive Directors.

Based on the cost to Unilever of providing the benefit and dependent on
individual circumstances.

Operation

Benefits include provision of death, disability and medical
insurance cover, directors’ liability insurance and actual tax
return preparation costs. Other benefits may be provided in the
future where it is considered necessary by the Committee and/or
required by legislation.

In the event that Unilever were to require an existing or new
Executive Director to relocate, Unilever may pay appropriate
relocation allowances for a specified time period of no more
than three years. This may cover costs such as (but not limited to)
relocation, cost of living, housing benefit, home leave, tax and
social security equalisation and education assistance.

Executive Directors are entitled to participate on the same terms
as all UK employees in the Unilever PLC Sharebuy Plan.

Relocation allowances – the level of such benefits would be set at an
appropriate level by the Committee, taking into account the circumstances
of the individual and typical market practice.

Awards under the all-employee Unilever PLC Sharebuy Plan may be
up to HMRC-approved limits. The only change in the value of the current
benefits (for single figure purposes) will reflect changes in the costs of
providing those benefits.

Performance measures

n/a

Supporting information

There are no changes relative to the previous remuneration policy.

Unilever Annual Report and Accounts 2020GOVERNANCE REPORT80

Directors’ Remuneration Report continued

Annual bonus

Purpose and link to strategy

Performance measures

Incentivises year-on-year delivery of rigorous short-term financial,
strategic and operational objectives selected to support our
annual business strategy and the ongoing enhancement of
shareholder value.

The ability to recognise performance through annual bonus
enables us to manage our cost base flexibly and react to events
and market circumstances.

The business performance multiplier is based on a range of business
metrics set by the Committee on an annual basis to ensure that they are
appropriately stretching for the delivery of threshold, target and maximum
performance. These performance measures may include Underlying Sales
Growth (USG), Underlying Operating Margin improvement (UOM) and Free
Cash Flow (FCF), along with any other measures chosen by the Committee,
as appropriate. The Committee also sets the weightings of the respective
metrics on an annual basis.

Operation

Each year Executive Directors may have the opportunity to
participate in the annual bonus plan. Executive Directors are
set a target opportunity that is assessed against the business
performance multiplier of up to 150% of target opportunity at the
end of the year.

Directors are required to defer 50% of their bonus into shares or
share awards for three years. Deferred bonus awards can earn
dividends or dividend equivalents during the vesting period and
may be satisfied in cash and/or shares. Deferral may be effected
under the Unilever Share Plan, or by such other method as the
Committee determines.

Ultimate remedy/malus and claw-back provisions apply (see
details on page 81).

Opportunity

The maximum annual bonus opportunity under this Policy is 225%
of fixed pay.

The normal target bonus opportunity for the CEO is 150% of fixed
pay, and for the CFO is 120% of fixed pay. This results in normal
maximums of 225% and 180% respectively.

Achievement of threshold performance results in a payout of 0%
of the maximum opportunity.

The Committee has discretion to adjust the formulaic outcome of the business
performance multiplier, if it believes this better reflects the underlying
performance of Unilever. In any event, the overall business performance
multiplier will not exceed 150%. The use of any discretion will be fully disclosed
in the directors’ remuneration report for the year to which discretion relates.

The Committee may introduce non-financial measures in the future subject
to a minimum of 70% of targets being financial in nature.

Performance is normally measured over the financial year.

Supporting information

There are two changes from the previous policy. The first is the requirement
for 50% of bonus to be deferred, rather than voluntarily invested into the
Management Co-Investment Plan (the historic long-term incentive plan).
The second is that the Committee can now override any formulaic outcome
(including to nil), instead of being limited to adjusting by 25%. This is in line
with best practice and the UK Corporate Governance Code. Any exercise
of discretion will continue to be disclosed in full in the relevant directors’
remuneration report.

The Policy sets out a single maximum opportunity that applies to any
potential Executive Director, this is different to the previous policy which sets
out different maximum opportunities for each Director. This is intended to
simplify the Policy, and provide flexibility if needed over the course of the
Policy. If the Committee sought to increase the annual grant for the CFO,
it would only do so after engaging with shareholders.

Unilever Annual Report and Accounts 202081

Performance Share Plan (PSP)

Purpose and link to strategy

Performance measures

Operation

The Performance Share Plan (PSP) replaces the Management
Co-Investment Plan (MCIP) as the sole long-term incentive plan
(LTIP). Under the PSP, Executive Directors are granted rights to
receive free shares on vesting (awards) which normally vest after
three years, to the extent performance conditions (described
below) are achieved. Upon vesting, Executive Directors will have
an additional two-year retention period (during which shares
cannot be sold) to ensure there is a five-year duration between
the grant of the award and release of the shares.

Ultimate remedy/malus and claw-back provisions apply (see
details on page 81).

Opportunity

The maximum annual grant available under this Policy is 400%
of fixed pay.

The normal maximum award for the CEO is 400% of fixed pay,
and for the CFO is 320% of fixed pay. At target 50% of maximum
vests, equating to 200% and 160% of fixed pay respectively. 0% of
the award will vest for below threshold performance. The amount
payable for threshold performance will be disclosed for each
metric in the relevant directors’ remuneration report.

Dividend equivalents may be earned (in cash or additional
shares) on the award when and to the extent that the award
vests. Dividends or dividend equivalents will also be payable
in respect of dividends paid during the retention period.

The Committee sets performance measures for each PSP award. These will be
tested over the three financial years starting with the financial year in which
the award is granted.

The performance measures for the PSP grants in 2021 will be:
Competitiveness: % Business Winning Market Share (% Business Winning),
Cumulative Free Cash Flow (current FX rates), Return On Invested Capital
(ROIC), and Sustainability Progress Index (SPI). ROIC and SPI are used
currently and the other two measures are new. Each measure will have a 25%
weighting. The Committee retains the discretion to change these measures
and/or weighting for future grants, based on strategic priorities for Unilever
at that time.

The Committee will ensure that the targets set are appropriately rigorous for the
delivery of threshold, target and maximum performance.

The Committee retains the discretion to adjust the formulaic outcome of these
performance measures to reflect its assessment of the underlying long-term
performance. The use of any discretion will be fully disclosed and explained
in the directors’ remuneration report for the year to which discretion relates.

Supporting information

Maximum opportunity as a percentage of fixed pay has reduced from 450%
of fixed pay under the previous MCIP to 400% of fixed pay for the CEO under
the PSP and from 360% of fixed pay to 320% of fixed pay for the other Executive
Directors. Conversely, target opportunity has increased from 150% of fixed
pay to 200% for the CEO and from 120% to 160% for other Executive Directors.
As per the rationale included in the chairman’s letter this increase in target
opportunity will only be realised subject to performance against stretching
three-year performance conditions and will be delivered fully in shares which
executives will not be able to sell until five years after grant.

The PSP, which operates under the plan rules approved at the 2017 AGMs,
is assessed over a three-year performance period and there is a retention
period for executive directors for two additional years before those shares
are released. This is the same total timeframe as the previous MCIP which
had a four-year performance period and one-year holding period.

The Committee can now override any formulaic outcome (including to
nil), instead of being limited to adjusting by 10%. This is in line with best
practice and the UK Corporate Governance Code. Any exercise of discretion
will continue to be disclosed and explained in full in the relevant directors’
remuneration report.

Previously the Committee considered the quality and sustainability of
underlying performance if the outcomes of any annual bonus and the
MCIP it was invested in exceeded 75% of maximum. This strict requirement
is removed due to the delinking of annual bonus and long-term incentives.
However, the Committee will continue to assess the quality and sustainability
of performance when determining if any adjustments are required to overall
formulaic outcomes.

Elements of previous policy that will continue

MCIP awards granted under a previous remuneration policy will continue to operate under the terms of that policy and the relevant plan rules. Further
details of the terms of the awards made are included in the directors’ remuneration reports for their respective years. This applies to the MCIP awards
granted in 2017, 2018, 2019 and 2020. This provision will cease to apply once all of these awards have vested, been exercised or been forfeited as
appropriate, as per the relevant policy and plan rules. Additional details are set out below.

Claw-back, ultimate remedy, discretion and flexibility

Claw-back: Claw-back is the recovery of payments made under the annual bonus (including deferred bonus shares) or vested LTIP awards,
(both PSP awards under this Remuneration Policy, and awards under any previous remuneration policies). The Committee may decide to apply
claw-back for up to three years from the payment of bonus awards, and up to two years from vesting for the PSP or MCIP awards (including where
awards vest prior to or during the retention period), in the event of:
■ a significant downward restatement of the financial results of Unilever;
■ error in calculation or misleading data; or
■ corporate failure.

Claw-back may apply to all or part of a participant’s payment or award and may be effected, among other means, by reducing outstanding awards,
or requiring the return of the net value of vested awards to Unilever.

Unilever Annual Report and Accounts 2020GOVERNANCE REPORT82

Directors’ Remuneration Report continued

Malus: Malus is the adjustment of bonus, unvested deferred bonus awards or unvested LTIP awards (both PSP awards under this Remuneration
Policy, and predecessor awards under any previous remuneration policies). The Committee may apply malus to reduce an award or determine
that it will not vest or only vest in part. Malus applies to deferred bonus awards during the three-year deferral period and to unvested LTIP awards
(PSP awards under this Remuneration Policy and predecessor awards under any previous remuneration policies) during the vesting period and
retention period, in the event of:
■ a significant downward restatement of the financial results of Unilever;
■ gross misconduct or gross negligence;
■ material breach of Unilever’s Code of Business Principles or any of the Unilever Code Policies;
■ breach of restrictive covenants by which the individual has agreed to be bound, or conduct by the individual which results in significant losses

or serious reputation damage to Unilever; and

■ for PSP awards and deferred bonus awards, error in calculation or misleading data or corporate failure.

The annual bonus will also be subject to malus on the same grounds as apply for deferred bonus awards and unvested LTIP awards. This power is an
addition to the normal discretion to adjust awards and the additional sustainability test outlined in the policy table.

Ultimate remedy: Awards under the PSP (and predecessor long-term incentives under any previous remuneration policy) are subject to ultimate
remedy. Upon vesting of an award, the Committee shall have the discretionary power to adjust the value of the award if the award, in the
Committee’s opinion taking all circumstances into account, produces an unfair result. In exercising this discretion, the Committee may take into
account Unilever’s performance against non-financial measures.

These powers are in addition to the normal discretion to adjust awards and the additional sustainability test outlined in the policy table.

Ultimate remedy/malus and claw-back will not apply to an award which has been exchanged following a change of control and claw-back will not
apply where an award vests on a change of control.

Committee discretion to amend targets/measures: For PSP awards (or MCIP awards under the previous policy) and annual bonus, the Committee
may change a performance measure or target (including replacing a measure) in accordance with the award’s terms or if anything happens which
causes the Committee reasonably to consider it appropriate to do so. The Committee may also adjust the number or class of shares subject to MCIP,
PSP and deferred bonus awards if certain corporate events (e.g. rights issues) occur.

The Committee will continue to review targets on all unvested awards in the event of any material acquisitions or disposals that were not included
in the financial plan, or were not anticipated at the time of target setting. The Committee may make adjustments if deemed appropriate to ensure
that all targets remain relevant and equally stretching in light of any M&A activity, other corporate events, or any other event that the Committee
considers to be material, that was not foreseen at the time of target setting.

Legacy arrangements

For the duration of this Remuneration Policy, entitlements arising before the adoption of this Remuneration Policy will continue to be honoured in line
with the approved remuneration policy under which they were granted, or their contractual terms.

The Committee reserves the right to make any remuneration payments and payments for loss of office (including exercising any relevant discretions)
notwithstanding that they are not in line with this Remuneration Policy where the terms of the payment were agreed before this Remuneration Policy
came into effect or at a time when the relevant individual was not a Director of Unilever and, in the opinion of the Committee, the payment was not in
consideration for the individual becoming a Director of Unilever. For these purposes, ‘payments’ includes the Committee satisfying awards of variable
remuneration and, in relation to an award over shares, the terms of the payment are ‘agreed’ at the time the award is granted.

Remuneration scenarios: our emphasis on performance-related pay

It is Unilever’s policy that the total remuneration package for Executive Directors should be competitive with other global companies and that
a significant proportion should be performance-related.

For the remuneration scenarios below, the maximum and target pay opportunities have been chosen to be consistent with the current levels for
Executive Directors. In reviewing the appropriate level of pay opportunity for the Executive Directors, the Committee considers internal and external
comparators. Although pay is not driven by benchmarking, the Committee is aware that pay needs to be within a reasonable range of competitive
practice. The Committee notes that total target pay is slightly below lower quartile for the CEO and slightly below median for our CFO for the
benchmark group used by the Committee.

The Committee typically reviews, on at least an annual basis, the impact of different performance scenarios on the potential reward opportunity and
payouts to be received by Executive Directors and the alignment of these with the returns that might be received by shareholders. The Committee
believes that the level of remuneration that can be delivered in the various scenarios is appropriate for the level of performance delivered and the
value that would be delivered to shareholders. The charts below show hypothetical values of the remuneration package for Executive Directors in the
first full year of the policy under below threshold, target and maximum performance scenarios.

CEO Alan Jope

CFO Graeme Pitkethly

Below Threshold

100% €1.56m

Below Threshold

100% €1.17m

Target

23%

33%

44%

€6.84m

Target

27% 31% 42% €4.35m

Maximum

14%

31%

55%

€10.99m

Maximum

17% 30%

53%

€6.85m

€0m €2 m €4 m €6 m €8 m €10 m €12 m €14 m

Fixed pay

Annual bonus

Long-term incentives

Unilever Annual Report and Accounts 202083

Details of fixed element of remuneration for CEO and CFO and assumptions for scenario charts

Fixed remuneration

Assumptions as follows (for actual Executive Director pay details, please see Annual Remuneration Report below):
■ Fixed pay for CEO effective from 1 January 2021 = €1,508,000.
■ Fixed pay for CFO = €1,135,960.
■ Benefits assumed to be around €56,000 for CEO and €38,000 for CFO.

Variable
remuneration

Below threshold

■ No 2021 annual bonus payout and no vesting under the PSP.

On target

Maximum

■ Target payout of the 2021 annual bonus (150% of fixed pay for the CEO
and 120% of fixed pay for the CFO). 50% of the bonus would be deferred
for three years.

■ Target vesting of 2021 awards under the PSP (200% of fixed pay for the

CEO and 160% of fixed pay for the CFO).

■ Maximum payout of the 2021 annual bonus (225% of fixed pay for the
CEO and 180% of fixed pay for the CFO). 50% of the bonus would be
deferred for three years.

■ Maximum vesting under 2021 awards under the PSP (400% of fixed pay

for the CEO and 320% of fixed pay for the CFO).

Maximum with 50% share price increase

■ As per maximum above, and in addition shows the impact of a share

price increase of 50% from the date of grant to the date of vesting of the
PSP award. The maximum remuneration payable to the CEO and CFO
assuming a 50% share price between grant and vest of the PSP is EUR
14.01m and EUR 8.67m respectively.

Notes to variable remuneration

■ Dividends, dividend equivalents and (except as described above) share
price movements are ignored for the purposes of the illustrations above.

Approach to target setting

Performance measures are selected to align with Unilever’s short-term performance targets and long-term business strategy objectives. Unilever’s
primary business objective is to create value in a sustainable way. Performance measures focus management on the delivery of a combination of
top-line revenue growth and bottom-line profit growth that Unilever believes will build shareholder value over the longer term and that will benefit
all of our stakeholders.

The measures chosen for the incentives will support the delivery of this objective, with distinct measures for each of the short- and longer-term
incentive programmes.

The Committee sets performance targets for incentive plans, taking into account internal budgets, business priorities and external forecasts so
that the targets are sufficiently stretching. Good performance results in target payout while maximum payout is only achieved for delivering
exceptional performance.

The following sets out the performance measures for short- and long-term incentive plans to be awarded in 2021, as well as the business
performance and the behaviours that they drive.

Performance measures and the link to strategy

Incentive plan

Performance measure

Link to strategy

Short-term: Annual
Bonus

Underlying Sales Growth (USG)
at constant FX rates

Clear, simple and well understood measure supporting the achievement
of Unilever’s growth ambition.

Long-term: PSP

Underlying Operating Margin
Improvement (UOM) at current FX rates

Free Cash Flow (FCF) at current FX rates

Competitiveness % Business Winning
Market Share measure
New measure for this policy

Cumulative Free Cash Flow at
current FX rates measure
New measure for this policy

Return On Invested Capital (ROIC)
at exit year %

Unilever Sustainability Progress Index
(Compass) (SPI)

Underlines the importance of achieving increasingly profitable growth.

Provides clear focus on the achievement of Unilever’s cash generation
ambition.

Growing faster than the market and so winning market share are key
strategic drivers for our long-term sustainable growth.

Free Cash Flow from operating activities in current currency ensures sufficient
cash is available to fund a range of strategic capital allocation choices.

Supports disciplined investment of capital within the business and
encourages acquisitions which create long term value (an especially
relevant measure for members of the ULE who make investment decisions).

Unilever is committed to demonstrating that the Compass, our purpose-led,
future-fit strategy, drives superior performance, which protects our consumers,
people, planet and society, customers, suppliers and business partners
and shareholders. To capture the breadth and depth of the Compass
in relation to the SPI, the Corporate Responsibility Committee and
Compensation Committee agree a number of key performance indicators
(KPIs) to assess progress towards the Compass targets in our reported
Compass sustainability commitments (see page 10). These KPIs illustrate
how Unilever aims to address a number of its principal risks such as brand
preference, climate change, supply chain and ethics (see Our risks on page 44).

For the 2021 PSP award, progress will be measured against the forerunner
of the Compass, the Unilever Sustainable Living Plan (USLP).

Unilever Annual Report and Accounts 2020GOVERNANCE REPORT84

Directors’ Remuneration Report continued

Changes in pay policy generally

The key changes in the new Remuneration Policy are to:
■ replace the current long-term incentive plan, the MCIP with the PSP – a long-term incentive plan that is operated entirely separately from the

annual bonus plan;

■ replace voluntary investment in the long-term incentive plan with a mandatory deferral of 50% of the annual bonus into shares or share awards,

for three years;

■ change the performance measures for the long-term incentive plan (to maximise the strategic alignment as outlined above);
■ reduce maximum total pay; and
■ maintain a five-year period from award to release on PSP by reducing the performance period from four years to three years, and increasing the

retention period from one year to two years.

The Committee wants to increase the impact, traction and resilience of Unilever’s incentives to drive sustainable long-term growth which can be
better achieved with distinct short- and long-term incentive plans, enabling the Committee to set stretching but achievable performance targets over
realistic timeframes. This change more closely aligns Unilever’s reward structure with standard market practice.

By separating short- and long-term incentive plans the policy will further simplify executive pay. Currently, these are linked by our MCIP as the MCIP
opportunity is driven by the outcome of the annual bonus plan. Delinking the two plans will deleverage incentives, reduce maximum pay and make
our incentives more resilient and less dependent on the short-term incentive.

Change in target and maximum pay levels
In moving from the current MCIP to the proposed PSP structure, the quantum of the previous annual bonus has been unchanged and the quantum
of the PSP has been increased at target and decreased at maximum. The overall result is an increase in target pay of 13%/12% for the CEO/CFO
respectively and decrease in maximum pay of 6% for both individuals.

As fixed pay and annual bonus opportunities have been unchanged, this increase in target opportunity will only be realised subject to performance
against stretching three-year performance conditions and will be delivered fully in shares which executives will not normally be able to sell until five
years after grant. This is to create an even stronger alignment to both the long-term performance of the business and the shareholder experience,
and to address shareholder comments on the levels of maximum pay available under the previous structure.

In determining the appropriate quantum, the Committee did consider external benchmarking data against a group of comparable major European
companies. Whilst the Committee is not led by benchmarking data, or target a specific benchmark position, this data is used as a reference point to
ensure that pay levels are not significantly out of line with the market. Under the proposed changes total target compensation is slightly below lower
quartile for our CEO and slightly below median for our CFO. This is despite the fact that Unilever is above the upper quartile of this group by market
capitalisation. The Committee believes this data shows that the proposals do not provide excessive levels of remuneration versus the market. In
addition, the Committee believes that a lower level of target compensation would create undue risks in terms of retention or any future recruitment.

The Committee was also cognisant of the need to maintain a sufficient pay differential between the Executive Directors and the rest of the ULE and
this modest increase at target pay helps the Committee to do this.

Application beyond the Board
Remuneration arrangements are determined throughout the Group based on the same principle: that reward should support our business strategy
and should be sufficient to attract and retain high-performing individuals without paying more than is necessary. Unilever is a global organisation
with employees at a number of different levels of seniority and in a number of different countries and, while this principle underpins all reward
arrangements, the way it is implemented varies by geography and level.

In principle, all our managers participate in the same Unilever annual bonus scheme with the same performance measures based on Unilever’s
overall performance and the requirement to defer 50% of bonus also extends to the ULE. The intention is to extend the new policy across all of
Unilever’s 14,400+ managers worldwide in 2021. Wherever possible, all other employees have the opportunity to participate in the global ’buy 3
get 1 free’ employee share plan called ‘SHARES’, which is offered in more than 100 countries.

Through these initiatives we continue to encourage all our employees to adopt an owner’s mindset with the goal of achieving our growth ambition,
so they can share in the future long-term success of Unilever.

Stakeholders’ considerations:
Guided by our purpose-led and future-fit business model the Committee has applied a multi-stakeholder approach in reviewing the current reward
framework in view of the 2021 policy renewal. The Committee has therefore engaged with various stakeholders, both internally and externally as set
out below.

Consideration of conditions elsewhere in the Group

When determining the pay of Executive Directors, the Committee considers the pay arrangements for other employees in the Group, including
considering the average global pay review budget for the management population, to ensure that remuneration arrangements for Executive
Directors remain reasonable. Unilever takes the views of its employees seriously and on an ongoing basis, we conduct the ‘Rate-My-Reward’ survey
to gauge the views of employees on the different parts of their reward package.

In establishing the Future Reward Framework, Unilever conducted an employee survey amongst its WL1+ population to seek their views on Unilever’s
approach to reward. Interviews and focus groups have also been organised for the management population to receive feedback on the proposed
Future Reward Framework. In addition, the company consulted with the European Works Council and employee representation bodies in other
relevant jurisdictions. Employees value the mix between fixed and variable pay, and the various benefits (including non-cash benefits), but there is
also a desire for more flexibility in reward to fit individual’s different life stages. The Future Reward Framework is well received for its simplicity and
market alignment. It is seen as a more competitive, inclusive and fair reward programme. The ability to receive the bonus in cash rather than having
to invest it to receive a long-term incentive award is valued in times of uncertainty caused by the Covid-19 pandemic. More senior employees would
have preferred the continuation of an attractive opportunity to investment in Unilever shares. Based on feedback from the European Works Council,
we will continue to explore opportunities to widen and deepen Unilever’s all-employee share scheme.

Fairness in the workplace is a core pillar of the Compass and incorporates our Framework for Fair Compensation. As part of our Framework’s living
wage element, we are committed to pay a living wage to all our direct employees. At the end of 2020, 100% of Unilever’s direct employees globally
were paid at or above a certified living wage level. Further detail can be found on page 19. The living wage principle is also endorsed as good practice
in Unilever’s Responsible Sourcing Policy. The Committee already upholds its obligation under Section 172 of the UK Companies Act 2006 (see page
14) to consider the impact of what we do on our multiple stakeholders. These considerations shape the way the Committee looks at pay and sets pay
rates for our Executive and Non-Executive Directors relative to our wider workforce. We will continue to advance these initiatives over the years ahead
to enhance the livelihoods of all our employees.

www.unilever.com/planet-and-society

Unilever Annual Report and Accounts 202085

Consideration of shareholder views

The Committee takes the views of shareholders seriously. We maintain an open and regular dialogue with our shareholders on remuneration matters,
including consulting with our largest investors and shareholder representative bodies, when we are considering making material changes to our
remuneration policy. Accordingly, shareholders have been consulted extensively and their views have been influential in shaping this Remuneration
Policy. Their feedback influenced our proposals in relation to the balance between fixed and variable pay, between the annual bonus and PSP
components, and the performance measures for the incentives. Further details can be found on page 77.

Minimum shareholding requirement

The remuneration arrangements applicable to our Executive Directors require them to build and retain a personal shareholding in Unilever (within
five years from the date of appointment with extra time granted if requirements increase significantly) to align their interests with those of Unilever’s
long-term shareholders. The current requirement is 500% fixed pay for the CEO and 400% fixed pay for the CFO. All shares beneficially owned and
any awards not subject to performance conditions (but, for example, subject to retention or deferral periods) count towards the shareholding
requirement (on an estimated net of tax basis if tax is expected to be payable). Incoming Executive Directors will be required to retain all shares
vesting from any share awards (net of any sales to cover tax) until their minimum shareholding requirements have been met in full.

Any Executive Director who leaves after the date the new Remuneration Policy has effect will be required to maintain at least 100% of their minimum
shareholding requirement for two years after leaving. These shares will be held in the Company nominee vested accounts. If the leaver has not yet
met their shareholding requirements on departure they will be required to retain the shares they do own up to these limits. This requirement can be
waived in certain exceptional personal circumstances (e.g. death, disability, ill health).

Remuneration Policy for new hires

Area

Overall

Fixed pay

Benefits

Policy and operation

The Committee will pay new Executive Directors in accordance with the approved Remuneration Policy and all its
elements as set out herein above. The terms of service contracts will not overall be more generous than those of the
current CEO and CFO summarised below in the ‘service contracts’ paragraph. The ongoing annual remuneration
arrangements for new Executive Directors will therefore comprise fixed pay, benefits, annual bonus and PSP. For
internal promotions, any variable remuneration element awarded in respect of a prior role may be paid out according
to its original terms.

Fixed pay would be set at an appropriate level to recruit the best candidate based on their skills, experience and
current remuneration.

Benefits provision would be in line with the approved relevant remuneration policy. Where appropriate, the Executive
Director may also receive relocation benefits or other benefits reflective of normal market practice in the territory
in which the Executive Director is employed. In addition, the Committee may agree that Unilever will pay certain
allowances linked to repatriation on termination of employment.

Incentive awards

Incentive awards would be made under the annual bonus and PSP in line with the relevant remuneration policy.
Off-cycle PSP awards may be made on joining for the year of joining, subject to the normal maxima.

Buy-out awards

The Committee may grant awards to compensate Executive Directors hired from outside for any awards they lose
by leaving previous employers broadly on a like-for-like basis. Incoming Executive Directors will be required to retain
all shares vesting from any share awards until their minimum shareholding requirements have been met in full.

If a buy-out award is required, the Committee would aim to reflect the nature, timing, and value of awards forgone in
any replacement awards. Awards may be made in cash, shares or any other method as deemed appropriate by the
Committee. Where possible, share awards will be replaced with share awards. Where performance measures applied
to the forfeited awards, performance measures will be applied to the replacement award or the award size will be
discounted accordingly. In establishing the appropriate value of any buy-out the Committee would also take into
account the value of the other elements of the new remuneration package. The Committee would aim to minimise
the cost to Unilever, although buy-out awards are not subject to a formal maximum. Any awards would be broadly
no more valuable than those being replaced.

Unilever Annual Report and Accounts 2020GOVERNANCE REPORT86

Directors’ Remuneration Report continued

Service contracts

Policy in relation to Executive Director service contracts and payments in the event of loss of office

Service contracts &
notice period

Current Executive Directors’ service contracts are not for a fixed duration but are terminable upon notice (12 months’
notice from Unilever, six months’ notice from the Executive Director), and are available for shareholders to view at the
AGM or on request from the Group Secretary. Starting dates of the service contracts for the current CEO and CFO:
CEO: 1 January 2019 (signed on 16 December 2020); and
CFO: 1 October 2015 (signed on 16 December 2015).

Termination payments A payment in lieu of notice can be made, to the value of no more than 12 months’ fixed pay and other benefits (unless

dictated by applicable law).

Other elements

■ Executive Directors may, at the discretion of the Board, remain eligible to receive an annual bonus for the

financial year in which they cease employment. Such annual bonus will be determined by the Committee taking
into account time in employment and performance.

■ Treatment of share awards is as set out in the section on leaver provisions, below.
■ Any outstanding all-employee share arrangements will be treated in accordance with HMRC-approved terms.
■ Other payments, such as legal or other professional fees, repatriation or relocation costs and/or outplacement
fees, may be paid if it is considered appropriate. Additional payments may be permitted at the proposal of the
Committee if the Committee considers not allowing such a payment would be manifestly unreasonable given the
circumstances.

■ The Committee reserves the discretion to approve gifts to Executive Directors who are retiring or who are

considered by the Board to be otherwise leaving in good standing (e.g. those leaving office for any reason other
than termination by Unilever or in the context of misconduct). If the value of the gift for any one Executive Director
exceeds £5,000 it will be disclosed in the relevant directors’ remuneration report. Where a tax liability is incurred
on any such a gift, the Committee has the discretion to approve the payment of such liability on behalf of the
Executive Director in addition to the value of the gift.

Leaver provisions in share plan rules

‘Good leavers’ as determined by the
Committee in accordance with the
plan rules*

Leavers in other
circumstances*

Change of control

Investment shares
under the MCIP

Investment shares are not impacted
by termination (although they may be
transferred to the personal representative
of the Executive Director in the event
of his or her death without causing the
corresponding matching shares to lapse).

Investment shares
are not impacted by
termination.

Awards will normally
lapse upon termination.

PSP awards and
awards of matching
shares under MCIP

Awards will normally vest following the end
of the original performance period, taking
into account performance and (unless the
Board on the proposal of the Committee
determine otherwise) pro-rated for time in
employment. Alternatively, the Board may
determine that awards shall vest upon
termination based on performance at that
time and pro-rated for time in employment
(unless the Board on the proposal of the
Committee determine otherwise). If an
Executive Director dies or leaves due to ill
health, injury or disability, awards will vest
at the time of death or leaving at the target
level of vesting (in case of death pro-rated
for time in employment if the Director had
previously left as a good leaver).

Investment shares may normally be
disposed of in connection with a change of
control without causing the corresponding
matching shares to lapse. Alternatively,
Executive Directors may be required
to exchange the investment shares for
equivalent shares in the acquiring company.

Awards will vest based on performance at
the time of the change of control and the
Board, on the proposal of the Committee,
have the discretion to pro-rate for time.
Alternatively, Executive Directors may
be required to exchange the awards for
equivalent awards over shares in the
acquiring company.

The retention period of a PSP award will
end on a change of control.

Deferred bonus
awards

Unvested deferred bonus awards will continue in effect and vest on
the normal timescale unless the Executive Director is terminated for
misconduct or breach of the terms of their employment, unless the
Committee decides otherwise.

Unvested deferred bonus awards vest
in full.

* An Executive Director will usually be treated as a good leaver if he or she leaves due to ill health, injury or disability, retirement with Unilever’s agreement or redundancy,
or death in service. The Board may decide to treat an Executive Director who leaves in other circumstances as a good leaver. An Executive Director will not be treated as
a good leaver if he or she chooses to leave for another job elsewhere unless the Board determines otherwise, if he or she is summarily dismissed or leaves because of
concerns about performance. In deciding whether or not to treat an Executive Director as a good leaver, the Board will have regard to his or her performance in the role.

If Unilever is affected by a demerger, special distribution or other transaction which may affect the value of awards, the Committee may allow PSP awards, matching
shares under legacy MCIP and/or deferred bonus awards to vest early over such number of shares as it shall determine (to the extent any performance measures have
been met) and awards may be pro-rated to reflect the acceleration of vesting at the Committee’s discretion.

Unilever Annual Report and Accounts 2020
87

Non-Executive Directors

Key aspects of Unilever’s 2021 fee policy for Non-Executive Directors

Approach to
setting fees

Operation

Non-Executive Directors receive annual fees from Unilever. The Board determine Non-Executive Director fee levels,
which are limited to the aggregate amount permitted by the Company’s articles of association, as approved by
shareholders from time to time (which is currently £2 million (€2,253,013) per year, and will, subject to shareholder
approval at the 2021 AGM increase to €5 million per year (which reflects the applicable limit as approved by
shareholders prior to Unification).

Unilever’s policy is to set fees at a level which is sufficient to attract, motivate and retain high-class talent of the
calibre required to direct the strategy of the business without paying more than necessary. They are set taking into account:
■ the commitment and contribution expected by the Group;
■ fee levels paid in other global non-financial services companies based in Europe; and
■ that fees are paid in cash.

Unilever applies a modular fee structure for Non-Executive Directors to ensure we fairly reflect the roles and
responsibilities of committee membership and chairmanship. Our basic philosophy is to pay the Chairman an all-
inclusive fee. Other Board members receive a basic fee and additional fees for being Senior Independent Director,
chairing or membership of various committees. The Board may decide to pay fees in any other currency based on
such foreign exchange rates as the Board shall determine, provided total Non-Executive Director fees stay within the
annual limits as approved by shareholders from time to time. The 2021 fee structure can be found in the Directors’
Remuneration Report on page 97. The fee structure may vary from year to year within the terms of this Remuneration
Policy.

Fees are normally reviewed annually but may be reviewed less frequently.

Additional allowances are made available to Non-Executive Directors where appropriate, to reflect any additional
time commitment or duties.

Other items

Non-Executive Directors are encouraged to build up a personal shareholding of at least 100% of their total annual fees
over the five years from appointment.

Non-Executive Directors are not entitled to participate in any of the Group’s incentive plans.

All reasonable travel and other expenses incurred by Non-Executive Directors in the course of performing their duties
are considered to be business expenses and are reimbursed together with any tax payable. Non-Executive Directors
also receive expenses relating to the attendance of the Director’s spouse or partner, when they are invited by Unilever.
Other benefits or additional payments may be provided in the future if, in the view of the Board, this is considered
appropriate. Such benefits and/or payments would be within the total annual limits as approved by shareholders
as described above.

The Committee reserves the discretion to approve gifts to Non-Executive Directors who are retiring or who are
considered by the Board to be otherwise leaving in good standing (e.g. those leaving office for any reason other than
termination by Unilever or in the context of misconduct). If the value of the gift for any one Non-Executive Director
exceeds £5,000 it will be disclosed in the relevant directors’ remuneration report. Where a tax liability is incurred on any
such a gift the Committee has the discretion to approve the payment of such liability on behalf of the Non-Executive
Director in addition to the value of the gift.

Remuneration Policy for new Non-Executive Director hires

In the event of hiring a new Non-Executive Director, the Committee will align the remuneration package with the Remuneration Policy
as set out above.

Non-Executive Directors’ letters of appointment

The terms of engagement of Non-Executive Directors are set out in letters of appointment which each Non-Executive Director signs upon
appointment. Non-Executive Directors are currently appointed for a one-year term, subject to satisfactory performance, renomination at the
discretion of the Board on the recommendation of the Nominating and Corporate Governance Committee and re-election at forthcoming annual
shareholder meetings. It is Unilever’s expectation that Non-Executive Directors serve for a minimum of three years. The letters of appointment
allow for Unilever to terminate a Non-Executive Director’s appointment in cases of gross misconduct, failure to perform their duties competently,
conduct bringing Unilever into disrepute, bankruptcy or where the Non-Executive Director is prevented from occupying such a position by law.

The letters do not contain provision for notice periods or compensation if the Non-Executive Directors’ appointments are terminated by Unilever.
Non-Executive Directors may terminate their engagement upon three months’ notice. Except in exceptional circumstances, the Board will not propose
Non-Executive Directors for renomination when nine years have elapsed since the date of their appointment. Letters of appointment are available
for inspection on request from the Group Secretary.

In considering appointments to the Board, the Directors and Unilever give due consideration to the time commitment required to fulfil the
role appropriately.

Unilever Annual Report and Accounts 2020GOVERNANCE REPORT88

Directors’ Remuneration Report continued

Annual report on remuneration

This section sets out how Unilever’s remuneration policy (which was approved by shareholders at the May 2018 AGMs and is available on our website)
was implemented in 2020. Furthermore, the following sets out how our new Remuneration Policy (as set out on pages 79 to 87) will be implemented if
it receives shareholder approval at the 2021 AGM.

www.unilever.com/remuneration-policy

Implementation of the Remuneration Policy for Executive Directors

If approved by shareholders, Unilever’s new Remuneration Policy will be implemented with effect from the 2021 AGM as set out below. If the updated
Remuneration Policy is not approved, Unilever’s existing remuneration policy will continue to apply.

Elements of remuneration

Fixed Pay

Purpose and link to strategy

Supports the recruitment and retention of Executive Directors of the calibre required to implement our
strategy. Reflects the individual’s skills, experience, performance and role within the Group. Provides a simple
competitive alternative to the separate provision of salary, fixed allowance and pension.

At a glance

Details of the rationale for our Executive Directors’ fixed pay amounts can be found on page 78.

Implementation in 2020

Planned for 2021

Annual Bonus

Purpose and link to strategy

Effective from January 2020:
■ CEO: €1,508,000
■ CFO: €1,135,960

Effective from January 2021:
■ CEO: €1,508,000
■ CFO: €1,135,960

Incentivises year-on-year delivery of rigorous short-term financial, strategic and operational objectives
selected to support our annual business strategy and the ongoing enhancement of shareholder value.

The ability to recognise performance through an annual bonus enables us to manage our cost base flexibly
and react to events and market circumstances.

At a glance

■ Target annual bonus of 150% of fixed pay for the CEO and 120% of fixed pay for the CFO.
■ Business performance multiplier of between 0% and 150% based on achievement against business

Implementation in 2020

Planned for 2021

Long-term Incentive
(MCIP)/(PSP)

Purpose and link to strategy

At a glance

targets over the year.

■ Performance target ranges are considered to be commercially sensitive and will be disclosed in full
with the corresponding performance outcomes retrospectively following the end of the relevant
performance year.

■ Maximum annual bonus is 225% of fixed pay for the CEO and 180% for the CFO.
■ Subject to ultimate remedy/malus and claw-back provisions.

Implemented in line with the 2018 remuneration policy; however, the weight attached to each performance
measure changed to reflect management’s focus on delivering growth as a key priority for 2020 (pre Covid 19):
■ Underlying Sales Growth: 50%
■ Underlying Operating Margin Improvement: 25%
■ Free Cash Flow: 25%

The performance measures for 2021 will remain the same with performance measures weighted as follows:
■ Underlying Sales Growth: 1/3
■ Underlying Operating Margin Improvement: 1/3
■ Free Cash Flow: 1/3

In 2021 a new requirement is introduced to defer 50% of the bonus into shares or share awards. Details for
this rationale can be found on pages 76.

The MCIP encouraged senior management to invest their own money into Unilever shares, aligning their
interests with shareholders by focusing on the sustained delivery of high-performance results over the long
term. As from 2021 the PSP replaces the MCIP as the sole long-term incentive plan.

■ Executive Directors were required to invest a minimum of 33% and a maximum of 67% of their bonus into
the legacy MCIP. Investment was made out of after-tax income, so investing 67% of gross bonus would
require an investment of more than the total net bonus received.

■ Matching shares were awarded based on performance up to a maximum of 3x matching shares.
■ The final MCIP award was made on 24 April 2020, vesting 15 February 2024 (with a requirement to hold

vested matching shares for a further one-year retention period).

■ Subject to shareholder approval at the 2021 AGM, the new PSP grants rights to receive free shares on

vesting (awards) which normally vest after three years, to the extent performance conditions
are achieved.

■ Upon vesting, Executive Directors will have another two-year retention period to ensure there is

a five-year duration between the grant of the award and release of the shares.

■ Subject to ultimate remedy/malus and claw-back provisions.

Implementation in 2020

Implemented in line with the 2018 remuneration policy. Vesting details of the 2017-2020 MCIP award can be
found on page 95. Details of the 2020 MCIP awards can be found on page 94.

Unilever Annual Report and Accounts 202089

Elements of remuneration continued

Planned for 2021

As detailed in our new Remuneration Policy (as set out on pages 79 to 87), the performance conditions for
PSP awards are assessed over a three-year period with a further two-year retention period. The performance
conditions and target ranges for 2021 awards under the PSP will be as follows:

PSP 2021 – 2023 awards

Competitiveness: % Business
Winning Market Share

Cumulative Free Cash Flow
(Current FX)

Return On Invested Capital
(Exit year %)

Sustainability Progress Index
(Committee assessment of
USLP 2020 progress)

Weighting

Threshold

Max

25%

45%

€16.7bn

15%

60%

200%

€22.7bn

200%

19%

200%

Performance at threshold results in nil PSP awards vesting, target performance results in an award equal to
200% of fixed pay (at time of award) for the CEO and 160% for the CFO, up to a maximum of 400% for the CEO
and 320% for the CFO, with straight-line vesting between threshold and maximum. A retention period of two
years applies from vesting.

Cumulative Free Cash Flow, ROIC and Sustainability Progress Index are all established measures. Cumulative
Free Cash Flow from operating activities in current currency ensures sufficient cash is available to fund a range
of strategic capital allocation choices.

ROIC measures the return generated on capital invested by the Group and is calculated as underlying
operating profit after tax divided by the annual average of: goodwill, intangible assets, property, plant and
equipment, net assets held for sale inventories, trade and other current receivables, and trade payables
and other current liabilities. The target range of a threshold of 15% and maximum of 19% expresses our
commitment to deliver ROIC at a level of mid to high teens, whilst continuing to reshape our portfolio through
acquisitions and disposals.

Competitiveness: % Business Winning Market Share (% Business Winning) is a new metric for incentive
purposes. It has been part of operational management and will be part of management’s performance
updates to investors. % Business Winning will be assessed each year as the aggregate turnover of the portfolio
components (country/category cells) gaining value market share as a % of the total turnover measured by
market data. As such it assesses what percentage of our revenue is being generated in areas where we
are gaining market share. The outcome for the 2021-2023 PSP is the average of the 3 years % Business Winning
performance. With intense competition and changing shopper trends, winning share in each portfolio or
geography segment presents a challenge for all players; repeating these wins over successive years is even
more demanding. At consolidated Group level delivering consistently in the range of 50% business winning will
enable us to grow with our markets, delivering a premium above 50% Business Winning over successive years
supports our objective of growing ahead of our markets. Keeping this in mind, the Committee believes that a
target of 52.5% Business Winning and a stretch of 60%, to be appropriate, with a threshold performance of 45%
Business Winning paying out zero for this performance measure.

In addition to the three elements mentioned above, our Executive Directors are provided with non-monetary benefits to aid attraction and retention.
These include medical insurance cover, actual tax return preparation costs and provision of death-in-service benefits and administration.

Ultimate remedy/malus and claw-back

Grants under the PSP, the legacy MCIP and the legacy GSIP are subject to ultimate remedy as explained in the remuneration policy. Malus and
claw-back apply to all performance-related payments as explained in the remuneration policy.

In 2020, the Committee did not reclaim or claw back any of the value of awards of performance-related payments to current or former Executive Directors.

Unilever Annual Report and Accounts 2020GOVERNANCE REPORT

Directors’ Remuneration Report continued

Single figure of remuneration and implementation of the remuneration policy in 2020
for Executive Directors (Audited)

The table below shows a single figure of remuneration for each of our Executive Directors for the years 2019 and 2020.

(A) Fixed pay

Total fixed pay

(B) Other benefits

Fixed pay & benefits sub total

(D) LTI: GSIP Performance Shares(a)

(D) LTI: MCIP Match Shares

Variable Remuneration sub total

LTI Sub total

Total Remuneration (A+B+C+D)

Proportion
of Fixed
and
Variable
Rem

45.4%

54.6%

2020

1,508

1,564

1,086

n/a

797

1,883

797

3,447

Alan Jope CEO (€’000)

Graeme Pitkethly CFO (€’000)

Proportion
of Fixed
and
Variable
Rem

2020

1,136

30.5%

1,174

39.7%

69.5%

654

670

463

1,787

1,133

2,961

60.3%

2019

1,450

1,491

1,784

1,619

n/a

3,403

1,619

4,894

Proportion
of Fixed
and
Variable
Rem

26.0%

74.0%

2019

1,103

1,130

1,085

2,132

n/a

3,217

2,132

4,347

(a) Alan Jope received his last GSIP award in 2017 that vested on 13 February 2020 as disclosed in the Remuneration Report of the 2019 Annual Report.

Where relevant, amounts for 2020 have been translated into euros using the average exchange rate over 2020 (€1 = £0.8877), excluding amounts in respect
of MCIP and GSIP, which have been translated into euros using the exchange rates on the vesting date at 16 February 2021 (€1 = £0.8711 and €1 = $1.2136)
for MCIP and 17 February 2021 (€1 = £0.8703) for GSIP. Amounts for 2019 have been translated into euros using the average exchange rate over 2019
(€1 = £0.8799), excluding amounts in respect of GSIP, which have been translated into euros using the exchange rate at vesting date of 13 February 2020
(€1 = £0.8390).

We do not grant our Executive Directors any personal loans or guarantees.

Elements of single figure remuneration 2020

(A) Fixed pay (Audited)

Fixed pay set in euros and paid in 2020: CEO – €1,508,000, CFO – €1,135,960

(B) Other benefits (Audited)

For 2020 this comprises:

Medical insurance cover and actual tax return preparation costs

Provision of death-in-service benefits and administration

Total

(a) The numbers in this table are translated where necessary using the average exchange rate over 2020 of €1 = £0.8877.

Alan Jope
CEO(€)(a)

Graeme Pitkethly
CFO(€)(a)

2020

40,445

16,000

56,445

2020

26,259

12,000

38,259

Annual bonus 2020 actual outcomes: CEO – €1,085,760 (which is 32% of maximum, 72% of fixed pay). CFO – €654,313 (which is 32% of maximum,
58% of fixed pay).

Alan Jope

Graeme Pitkethly

Bonus @ target
= 150% x fixed pay
(€2,262,000)

Business

performance
48%

€1,085,760

Bonus @ target
= 120% x fixed pay
(€1,363,152)

Business

performance
48%

€654,313

Annual bonus measures are not impacted by share price growth.

50% of the net bonus earned is, subject to shareholder approval, deferred into shares (€287,726 for Alan Jope and €173,393 for Graeme Pitkethly).
Shares are deferred for three years, in line with the proposed Remuneration Policy set out on pages 79 to 87. See the opposite page for details.

The annual bonus measures and performance against targets are set out below. All performance ranges are straight-line between threshold
and maximum:

Unilever Annual Report and Accounts 2020
Performance metric (weighting)

Underlying Sales Growth (50%)

Performance: Annual Bonus

Threshold
0%

1.5%

1.9%

Free Cash Flow (€bn) (25%)

€5.0bn

Underlying Operating Margin
Improvement compared to prior year (25%)

-60bps

percentage points 0bps

Overall performance ratio (based on
actual performance bonus formula)
and endorsed by the Committee after
quality of results assessment

48%

Target
100%

Maximum
150%

4.5%

€7.7bn

€7.0bn

percentage
points
+80bps

150%

Further details of the annual bonus outcomes are described in the Committee’s Chair letter on page 76.

Result
vesting
(%of
target)

20%

150%

48%

(D) GSIP – UK law requirement (Audited)

2020 Outcomes
This includes GSIP performance shares (operated under the Unilever Share Plan 2017) granted to Graeme Pitkethly on 16 February 2018, based on
performance in the three-year period to 31 December 2020, which vested on 17 February 2021.

The values included in the single figure table for 2020 are calculated by multiplying the number of shares granted on 16 February 2018 (including
additional shares in respect of accrued dividends through to 31 December 2020) by the level of vesting (52% of target award) and the share price on
the date of vesting (PLC £39.80). This has been translated into euros using the exchange rate on the date of vesting (€1 = £0.8711).

Performance against targets:

Performance: GSIP 2018–2020

Performance metric (weighting)

Threshold
0%

Target
100%

Maximum
200%

Underlying Sales Growth (CAGR) (25%)

2.0%

2.7%

Average annual Underlying Operating
Margin Improvement (bps vs PY,
current FX) (25%)

+27bps

percentage points +50bps

Cumulative Operating Cash Flow
(€bn)(25%)

Total Shareholder Return (25%)(a)

€20.2bn

11th

10th position

Overall vesting

52%

Result
vesting
(%of
target)

54%

6.0%

percentage
points
+140bps

€23.8bn

€25.2bn

153%

3rd position

200%

52%

(a) For the relative TSR measure, Unilever’s TSR is measured against a comparator group of other consumer goods companies. TSR measures the return received by a shareholder,
capturing both the increase in share price and the value of dividend income (assuming dividends are reinvested). The TSR results are measured on a common currency basis to
better reflect the shareholder experience. The current TSR peer group consists of 18 companies (19 including Unilever) as follows: Avon, Beiersdorf, Campbell Soup, Coca-Cola,
Colgate-Palmolive, Danone, General Mills, Estée Lauder, Henkel, Kao, Kellogg’s, Kimberly-Clark, L’Oréal, Nestlé, PepsiCo, Procter & Gamble, Reckitt Benckiser, Shiseido. The
Committee may change the TSR vesting levels set out above if the number of companies in the TSR comparator group changes (e.g. via M&A activity).

Further details of the GSIP outcomes are described in the Committee’s Chair letter on page 76.

On the basis of this performance, the Committee determined that the GSIP awards to the end of 2020 will vest at 52% of initial target award levels
(i.e. 26% of maximum for GSIP).

Share price growth GSIP 2018-2021

xx,xxx shares €XXX,XXX

Graeme
Pitkethly

PLC
Shares

25,544 shares €1,119,512(a)

2.5%(d)

€669,924(e)

-600,000

-400,000

-200,000

200,000

400,000

600,000

800,000

1,000,000

1,200,000

Original(a)

Performance(b)

Dividends(c)

Share price growth(d)

(a) The conditional number of shares awarded (including decimals) at the share price on the award date. This number includes the Unilever N.V. shares awarded on the

award date. These Unilever N.V. shares converted into Unilever PLC shares (on a one-on-one ratio) upon Unification on 29 November 2020 which is why only Unilever PLC
shares are provided in this table.

(b) The business performance ratio applied to the original conditional share award (including decimals) at the share price on the award date.
(c) The dividends accrued on the original conditional share award (including decimals) at the share price on the award date.
(d) The nominal movement in share price between the award date and the vesting date applied to the original conditional share award plus accrued dividends (including

decimals) multiplied by the business performance ratio.

(e) The final value of the award on the vesting date using the exchange rate on the day of vesting of €1 = £0.8711. The actual number of vested shares can be found on page 95.

Unilever Annual Report and Accounts 2020GOVERNANCE REPORT
92

Directors’ Remuneration Report continued

(D) MCIP – UK law requirement (Audited)

2020 Outcomes
This includes MCIP match shares (operated under the Unilever Share Plan 2017) granted to Alan Jope and Graeme Pitkethly on 17 May 2017, based
on performance in the four- year period to 31 December 2020, which vested on 16 February 2021.

The values included in the single figure table for 2020 are calculated by multiplying the number of shares granted on 17 May 2017 (including additional
shares in respect of accrued dividends through to 31 December 2020) by the level of vesting (83% of target award) and the share price on the date
of vesting (PLC £40.06 and PLC ADS $55.74). These have been translated into euros using the exchange rates on the date of vesting (€1 = £0.8711 and
€1 = $1.2136).

Performance metric (weighting)

Threshold
0%

Target
100%

Maximum
200%

Performance: MCIP 2017–2020

Underlying Sales Growth (CAGR) (25%)

2.0%

2.7%

Underlying Earnings Per Share Growth
(CAGR, Current FX) (25%)

5.3%

Return On Invested Capital
(Exit year %) (25%)

Sustainability Progress Index (Committee
assessment of USLP progress) (25%)(a)

Overall vesting

7.0%

15.4%

6.0%

13.0%

18.0%

18.4%

124%

83%

200%

Result
vesting
(%of
target)

35%

175%

124%

83%

Further details of the MCIP outcome are described in the Committee’s Chair letter on page 76. Further details on the Sustainability Progress Index
vesting is set out below. On the basis of this performance the Committee determined that the MCIP awards at the end of 2020 will vest at 83% of initial
target award levels (i.e. 42% of maximum for MCIP).

Outcome of Sustainability Progress Index (SPI) for MCIP cycle 2017-2020:
On 16 February 2021 the first MCIP cycle vested with SPI as one of the four performance measures. The SPI is an assessment of the business’s
sustainability performance by the Corporate Responsibility Committee and the Compensation Committee that captures quantitative and qualitative
elements (see page 73). The Corporate Responsibility Committee and Compensation Committee agreed a framework for SPI assessment that
captures the breadth and depth of the USLP in relation to a number of key performance indicators (KPIs). These KPIs illustrate how Unilever aims to
address a number of its principal risks such as brand preference, climate change, plastic packaging, supply chain and ethics (see Our risks on page
44). The Committees review qualitative and quantitative progress across each category and delivery against the KPIs. The Committees then agree
on a SPI achievement level against the KPI taking into account performance across the entire SPI Category.

In previous directors’ remuneration reports we have described the annual assessments and outcomes for the SPI years 2017, 2018 and 2019 and
2020 SPI performance (based on 2019 USLP performance) is set out on the following page. The SPI index for the four-year MCIP performance period
is calculated by taking a simple average and is set out at the bottom of the table for MCIP 2017-2020.

Unilever Annual Report and Accounts 202093

(D) MCIP – UK law requirement (Audited) continued

Our Unilever Sustainable Living Plan is a bold ambition to achieve change within our company – through our brands, innovation, sourcing and
operations. We helped more than a billion people take action to improve their health and wellbeing, through our programmes on handwashing,
safe drinking water, sanitation, oral health, self-esteem and skin-healing. We have doubled the proportion of our portfolio that meets the highest
nutritional standards, thereby helping hundreds of millions of people to achieve a healthier diet. We have seen a CO2 efficiency in our global logistics
network of 40% and now purchase all electricity from the grid from renewable sources. We sourced 95% of our palm oil from physically certified
sustainable sources. We have enhanced the livelihoods of millions of people by improving agricultural practices, providing skills and opportunities
to increase incomes and embedding human rights across our business. We work in partnerships with others – including NGOs, governments,
businesses and industry platforms – to drive systemic change on the issues that matter for our business and the world. The average SPI outcome
for MCIP 2017-2020 is set out at the bottom of the table.

SPI Category

USLP

Health &
Well-being

Environmental Impact

Enhancing
Livelihoods

KPIs

Judgement

SPI 2020

SPI 2018
2019 actuals 2018 actuals 2017 actuals 2016 actuals 2015 actuals

SPI 2019

SPI 2017

With our Dove brand help young
people build up positive body
confidence and self-esteem through
educational programme (millions)

Reduce CO2 emissions from energy
from our factories per tonne of
production vs 2008 baseline (%)

Over-achieved

>60m

35m

29m

23m

19.4m

Increase the recycled plastic material
content in our packaging (% purchased) Partly achieved

Over-achieved

-65%

-52%

4845T
(<1%)

-47%

-43%

-39%

4850T

3830T

4900T

Source our procurement spend through
suppliers meeting the mandatory
requirements of our Responsible
Sourcing Policy (%)

Reduce our Total Recordable Frequency
Rate (TRFR) for accidents
in our factories and offices (#)

Achieved

70%

61%

55%

67%

54%

Achieved

0.76

0.69

0.89

1.01

1.12

Transformational change agenda

Sustainable Palm Oil

External recognition

Rankings
and ratings*

Annual SPI outcome

Average SPI outcome
for MCIP 2017-2020

Purchase crude palm oil from physically
certified sustainable sources (%)

Over-achieved

95%

81%

56%

42%

19%

Achieve Leader/A ratings (number)

Over-achieved

5 of 5

130%

124%

3 of 5

125%

4 of 5

120%

5 of 5

120%

4 of 5

* DJSI, CDP Climate, CDP Water, CDP Forests, GlobeScan

Share price growth MCIP 2017-2021

Alan
Jope

PLC ADS
Shares

Graeme
Pitkethly

PLC
Shares

18,711 shares €842,267(a)

1.9%(d)

€797,197(e)

-4.7%(d)

10,846 shares €525,682

€463,412(e)

-600,000

-400,000

-200,000

200,000

400,000

600,000

800,000

1,000,000

1,200,000

Original(a)

Performance(b)

Dividends(c)

Share price growth(d)

(a) The conditional number of shares awarded (including decimals) at the share price on the award date. This number includes the Unilever N.V. shares awarded on the

decimals) multiplied by the business performance ratio.

(e) The final value of the award on the vesting date using the exchange rate on the vesting date of €1 = £0.8711 and €1= $1.2136. The actual number of vested shares can

be found on page 95. The share values for Alan Jope are grossed up for tax and social security.

Unilever Annual Report and Accounts 2020GOVERNANCE REPORT94

Directors’ Remuneration Report continued

Scheme interests awarded in the year (Audited)

MCIP Plan Conditional matching share award made on 24 April 2020

Basis of award

Based on the level of 2019 annual bonus paid in 2020 invested by the CEO and CFO. The following numbers
of matching shares were awarded on 24 April 2020 (vesting on 15 February 2024)(a):

CEO:
■ PLC – 39,594

CFO:
■ PLC – 23,795

Maximum vesting results in 200% of the above awards vesting. Dividend equivalents may be earned (in cash
or additional shares) on the award when and to the extent that the award vests.

Maximum face value of awards

■ CEO: €3,650,301(b)
■ CFO: €2,193,739(b)

Threshold vesting
(% of target award)

Performance period

Four equally weighted long-term performance measures. 0% of the target award vests for threshold
performance.

1 January 2020 – 31 December 2023 (with a requirement to hold vested matching shares for a further
one-year retention period).

Details of performance measures

Performance measures:

MCIP 2020 – 2023 awards

Weighting

Threshold

Max

Underlying Sales Growth
(CAGR)

Underlying EPS Growth
(CAGR, Current FX)

Return On Invested Capital
(Exit year %)

Sustainability Progress Index
(Committee assessment of
USLP progress)

25%

2.0%

15.0%

6.0%

200%

8.0%

200%

20.0%

200%

(a) Under the legacy MCIP, Executive Directors invested in Unilever N.V. or Unilever PLC shares, and received a corresponding number of performance-related matching
shares. On 24 April 2020, the CEO and the CFO invested the maximum value of their 2019 annual bonus (i.e. 67%) in MCIP investment shares (Alan Jope elected to
receive Unilever N.V. shares only and Graeme Pitkethly elected to receive Unilever PLC shares only, in line with the share choice provisions in operation at the time).
Upon Unification on 29 November 2020 all Unilever N.V. shares were converted into Unilever PLC shares (on a one-on-one ratio), which is why only Unilever PLC shares
are provided in this table.

(b) Face values are calculated by multiplying the number of shares granted on 24 April 2020 (including decimals) by the share price on that day of PLC £40.92, assuming
maximum performance and therefore maximum vesting of 200% for MCIP and then translating into euros using an average exchange rate over 2020 of €1 = £0.8877.

Impact of Covid-19

The MCIP awards were granted, in line with the normal grant timetable, in late April – shortly after the outbreak of Covid-19. No adjustment was
made to the level of MCIP awards granted because, in accordance with the applicable remuneration policy, the number of shares subject to each
MCIP award was based on the portion of 2019 bonus which executives had already chosen to invest in Unilever shares at the time of award, so the
Committee had limited flexibility to adjust grant levels for any element of windfall. Further, at the time of grant, it was too early to tell whether or not
there would be windfall gains from the grant of awards because of their four-year time horizon and the fact that the immediate drop in Unilever’s
share price from its pre-Covid-19 levels was not as pronounced as that suffered by many other companies (particularly given it was not then clear
whether that drop would be sustained over the longer term).

When the MCIP awards vest, the Committee will look again at the question of windfall gains by looking at the following factors:
■ the level of share price growth delivered over the vesting period, compared to historical and expected norms;
■ an assessment of any share price growth that may be attributable to an improvement in Unilever performance, as opposed to general market /

sector-specific movements.

If the Committee concludes that there have been windfall gains, it may use its discretion to adjust the formulaic outcome of the performance conditions
to mitigate the impact of any windfall. When determining whether or not there have been windfall gains in relation to the 2020 MCIP awards, the
Committee will take into account share price movements over the whole vesting period of the 2020 MCIP awards – with particular focus on the share
price and share price volatility over the portion of the vesting period during which the pandemic is determined to impact performance.

Minimum shareholding requirement and Executive Director share interests (Unaudited)

The remuneration arrangements applicable to our Executive Directors require them to build and retain a personal shareholding in Unilever within five
years of their date of appointment to align their interests with those of Unilever’s shareholders. Incoming Executive Directors will be required to retain
all shares vesting from any share awards made since their appointment until their minimum shareholding requirements have been met in full.

The table below shows the Executive Directors’ share ownership against the minimum shareholding requirements as at 31 December 2020 and the
interest in PLC ordinary shares of the Executive Directors and their connected persons as at 31 December 2020.

When calculating an Executive Director’s personal shareholding the following methodology is used:
■ fixed pay at the date of measurement;
■ shares in PLC will qualify provided they are personally owned by the Executive Director, by a member of his (immediate) family or by certain

corporate bodies, trusts or partnerships as required by law from time to time (each a ‘connected person’);

Unilever Annual Report and Accounts 202095

■ shares purchased under the legacy MCIP, whether from the annual bonus or otherwise, will qualify as from the moment of purchase as these

are held in the individual’s name and are not subject to further restrictions;

■ shares or entitlements to shares that are subject only to the Director remaining in employment will qualify on a net of tax basis;
■ shares awarded on a conditional basis by way of the legacy GSIP or legacy MCIP will not qualify until the moment of vesting (i.e. once the precise
number of shares is fixed after the three-year vesting period for the legacy GSIP, or a four-year vesting period for the legacy MCIP, has elapsed);

■ the shares will be valued on the date of measurement or, if that outcome fails the personal shareholding test, on the date of acquisition.

The share price for the relevant measurement date will be based on the average closing share prices and the euro/sterling/US dollar exchange rates
from the 60 calendar days prior to the measurement date.

Any Executive Director who leaves after the date of the new Remuneration Policy has effect will be required to maintain at least 100% of their
minimum shareholding requirement for two years after leaving. ULE members are required to build a shareholding of 400% of Fixed Pay (500% for
the CEO). This requirement is 250% of Fixed Pay for the ‘Top 75’ management layer below ULE.

Executive Directors’ and their connected persons’ interests in shares and share ownership (Audited)

Share ownership
guideline as % of
fixed pay (as at
31 December 2020)

Have guidelines
been met (as at
31 December 2020)

Actual share
ownership as a %
of Fixed Pay (as at
31 December 2020)(a)

Shares held as at
1 January 2020(b)

Shares held as at
31 December 2020(c)

PLC

PLC ADS

PLC

PLC ADS

CEO: Alan Jope

CFO: Graeme Pitkethly

500%

400%

Yes

834%

632%

11,112

153,890

200,338

37,508

214,714

–

144,366

–

(a) Calculated based on the minimum shareholding requirements and methodology set out above and the headline fixed pay for the CEO and CFO as at 31 December

2020 (€1,508,000 for the CEO and €1,135,960 for the CFO).

(b) As per 1 January 2020 Alan Jope held 11,112 Unilever N.V. shares and 151,141 Unilever NV NY shares and Graeme Pitkethly held 39,535 Unilever N.V. shares. These Unilever N.V.
shares converted into Unilever PLC shares (on a one-on-one ratio) upon Unification on 29 November 2020 which is why only Unilever PLC shares are provided in this table.

During the period between 31 December 2020 and 23 February 2021, the following changes in interests have occurred:
■ Graeme Pitkethly purchased 6 PLC shares under the PLC ShareBuy Plan: 3 on 11 January 2021 at a share price of £44.45, and a further 3

on 8 February 2021 at a share price of £40.02; and

■ as detailed under headings (D) on page 92, on 16 February 2021:

■ Alan Jope acquired 7,985 PLC ADSs shares following the vesting of his 2017 MCIP award; and
■ Graeme Pitkethly acquired 10,074 PLC shares following the vesting of his 2017 MCIP award.

■ as detailed under headings (D) on page 91, on 17 February 2021:

■ Graeme Pitkethly acquired 14,638 PLC shares following the vesting of his 2018 GSIP award.

The voting rights of the Directors (Executive and Non-Executive) and members of the ULE who hold interests in the share capital of PLC are the same as
for other holders of the class of shares indicated. As at 23 February 2021 none of the Directors’ (Executive and Non-Executive) or other ULE members’
shareholdings amounted to more than 1% of the issued shares in that class of share. All shareholdings in the table above are beneficial. On page 68 the
full share capital of PLC has been described. Page 129 and 130 set out how many shares Unilever held to satisfy the awards under the share plans.

Information in relation to outstanding share incentive awards

As at 31 December 2020, Alan Jope held awards over a total of 83,647 shares which are subject to performance conditions, and Graeme Pitkethly
held awards over a total of 112,063 shares which are subject to performance conditions. There are no awards of shares without performance
conditions and no awards in the form of options.

Management Co-Investment Plan (Audited)

The following conditional shares were outstanding at 31 December 2020 under the MCIP:

Balance of conditional
shares at January 2020

No. of
shares(b)

Conditional
shares
awarded
in 2020(a)

Performance
period 1 Jan-
uary 2020 to
31 December
2023

Price
award

17,050(c)

39,594

€45.27

24,575(c)

–

57,587(d)

23,795

£40.92

Dividend
shares
accrued
during the
year (e)

1,589

839

2,532

Balance of
conditional shares
at 31 December 2020

Additional
shares
earned in
2020(g)

–

No. of
shares

58,233

25,414

83,914

Vested in
2020(f)

Price at
vesting

–

Alan Jope

Graeme Pitkethly

Share
type

PLC

PLC ADS

PLC

(a) On 24 April 2020, Alan Jope and Graeme Pitkethly each invested in the legacy MCIP the maximum value of their annual bonus earned during 2019 and paid in 2020, and

received a corresponding award of 1.5x matching shares (which will vest, subject to performance, on 15 February 2024).

(b) As per 1 January 2020 Alan Jope held 17,050 Unilever N.V. conditional shares and 24,575 Unilever NV NY conditional shares and Graeme Pitkethly held 18,959 Unilever

N.V. conditional shares. These Unilever N.V. shares converted into Unilever PLC shares (on a one-on-one ratio) upon Unification on 29 November 2020 which is why only
Unilever PLC shares are provided in this table.

(c) This includes a grant of 8,607 NV NY shares made on 17 May 2017 (which vested on 16 February 2021), a grant of 14,454 NV NY shares made on 23 April 2018 (vesting
on 16 February 2022) a grant of 16,668 NV shares on 23 April 2019 (vesting on 9 February 2023), and 382 NV shares and 1,514 NV NY shares from reinvested dividends
accrued in prior years in respect of awards.

(d) This includes a grant of 5,423 of each NV and PLC shares made on 17 May 2017 (vesting on 16 February 2021), a grant of 12,408 of each NV and PLC shares made on
3 May 2018 (vesting on 16 February 2022), a grant of 19,196 PLC shares on 23 April 2019 (vesting on 9 February 2023) and 1,128 NV shares and 1,601 PLC shares from
reinvested dividends accrued in prior years in respect of awards.

(e) Reflects reinvested dividend equivalents accrued during 2020 and subject to the same performance conditions as the underlying matching shares.
(f) There was no MCIP vesting in 2020 due to the extension of the performance period following the approval of the remuneration policy in 2018.
(g) This includes the additional shares earned and accrued dividends as result of a business performance multiplier on vesting above 100%.

Unilever Annual Report and Accounts 2020GOVERNANCE REPORT
96

Directors’ Remuneration Report continued

Global Share Incentive Plan (Audited)

The following conditional shares vested during 2020 or were outstanding at 31 December 2020 under the GSIP:

Balance of
conditional
shares at
January 2020(a)

Share
type

PLC ADS

PLC

No. of
shares(b)

11,689(c)

58,121(d)

Dividend
shares
accrued
during the

year (e)

–

927

Vested in

2020(f)

13,910

36,769

Price at
vesting

$60.53

£46.12

Balance of
conditional shares
at 31 December 2020

Additional
shares
earned in
2020(g)

2,221

5,870

No. of
shares

–

28,149

Alan Jope

Graeme Pitkethly

(a) In accordance with the remuneration policy adopted by shareholders in May 2018 no GSIP award has been granted after 2018.
(b) As per 1 January 2020 Alan Jope held 5,842 Unilever NV NY conditional shares and Graeme Pitkethly held 29,011 Unilever N.V. conditional shares. These Unilever N.V. shares

converted into Unilever PLC shares (on a one-on-one ratio) upon Unification on 29 November 2020 which is why only Unilever PLC shares are provided in this table.

(c) This includes a grant of 5,370 of each NV NY and PLC ADS shares made on 13 February 2017 (which vested on 13 February 2020), and 472 NV NY and 477 PLC ADS shares

from reinvested dividends accrued in prior years in respect of awards.

(d) This includes a grant of 14,171 of each NV and PLC shares made on 13 February 2017 (which vested on 13 February 2020), a grant of 12,772 of each NV and PLC shares
made on 16 February 2018 (vesting 17 February 2021), and 2,068 NV shares and 2,167 PLC shares from reinvested dividends accrued in prior years in respect of awards.

(e) Reflects reinvested dividend equivalents accrued during 2020, subject to the same performance conditions as the underlying GSIP shares.
(f)
(g) This includes the additional shares earned and accrued dividends as result of a business performance multiplier on vesting above 100%.

The 13 February 2017 grant vested on 13 February 2020 at 119% for both Alan Jope and Graeme Pitkethly.

Executive Directors’ service contracts

Starting dates of our Executive Directors’ service contracts:
■ Alan Jope: 1 January 2019 (signed on 16 December 2020); and
■ Graeme Pitkethly: 1 October 2015 (signed on 16 December 2015).

Service contracts are available to shareholders to view at the AGMs or on request from the Group Secretary, and can be terminated with 12 months’
notice from Unilever or six months’ notice from the Executive Director. A payment in lieu of notice can be made of no more than one year’s fixed pay
and other benefits. Other payments that can be made to Executive Directors in the event of loss of office are disclosed in our remuneration policy
which is available on our website.

www.unilever.com/remuneration-policy

Payments to former Directors (Audited)

The table below shows the 2020 payments to Paul Polman in accordance with arrangements made with him upon his stepping down as CEO on
31 December 2018 and his retirement from employment with Unilever effective 2 July 2019. These arrangements were disclosed in the directors’
remuneration report in the Unilever Annual Report and Accounts 2018.

Paul Polman

Benefits(a)

GSIP 2018-2020 (pro-rated)(b)

MCIP 2017-2020 (pro-rated)(c)

Total Remuneration

(€’000)

655

631

673

1,959

(a) This includes tax preparation fees and social security.
(b) Actual time pro-rated GSIP vesting (46%) on 17 February 2021 of 6,860 Unilever PLC shares at a closing share price of £39.30 and 6,857 Unilever PLC shares at a closing

share price of €45.81.

(c) Actual time pro-rated MCIP vesting (59%) on 16 February 2021 of 14,622 Unilever PLC shares at a closing share price of €46.02.

There have been no other payments to former Directors nor have there been any payments for loss of office during the year.

Unilever Annual Report and Accounts 2020
97

Implementation of the remuneration policy for Non-Executive Directors

The current Non-Executive Director fee levels will not be changed for 2021, and we will review fee levels for 2022 during the course of the year. The
table below outlines the current fee structure with fees set in euros and paid by Unilever PLC (in sterling) shown using an exchange rate of 1 pound
£ = €1.2817 (rounded).

Roles and responsibilities

Basic Non-Executive Director Fee

Chairman (all inclusive)

Senior Independent Director (modular)

Member of Nominating and Corporate Governance Committee

Member of Compensation Committee

Member of Corporate Responsibility Committee

Member of Audit Committee

Chair of Nominating and Corporate Governance Committee

Chair of Compensation Committee

Chair of Corporate Responsibility Committee

Chair of Audit Committee

2021
Annual Fee €

2020
Annual Fee €

108,949

833,105

51,270

19,226

23,071

19,226

29,479

38,452

51,270

108,949

833,105

51,270

19,226

23,071

19,226

29,479

38,452

51,270

All reasonable travel and other expenses incurred by Non-Executive Directors in the course of performing their duties are considered to be business
expenses and so are reimbursed. Non-Executive Directors also receive expenses relating to the attendance of their spouse or partner, when they are
invited by Unilever.

Single figure of remuneration in 2020 for Non-Executive Directors (Audited)

The table below shows a single figure of remuneration for each of our Non-Executive Directors, for the years 2019 and 2020.

Non-Executive Director

Nils Andersen(c)

Laura Cha

Vittorio Colao(d)

Marijn Dekkers(e)

Judith Hartmann

Andrea Jung(f)

Susan Kilsby

Mary Ma(g)

Strive Masiyiwa(h)

Youngme Moon(i)

John Rishton(j)

Feike Sijbesma

Total

Fees(a)
€’000

Benefits(b)
€’000

2020

Total
remuneration
€’000

Fees(a)
€’000

Benefits(b)
€’000

2019

Total
remuneration
€’000

778

134

138

129

135

129

–

138

168

150

138

2,084

–

778

134

138

129

135

129

–

138

168

150

138

211

121

139

673

127

121

139

169

151

139

2,084

2,124

–

113

220

121

172

708

146

121

139

169

168

139

2,237

(a) This includes fees received from Unilever for 2019 and 2020 respectively. Includes basic Non-Executive Director fee and committee chairmanship and/ or membership.
Where relevant, amounts for 2019 have been translated into euros using the average exchange rate over 2019 (€1 = £0.8799). Amounts for 2020 have been translated
into euros using the average exchange rate over 2020 (€1 = £0.8877).

(b) The only benefit received relates to travel by spouses or partners where they are invited by Unilever. There was no travel by the spouses or partners in 2020 due to the

Covid-19 pandemic.

(c) Chairman and Chair of the Nominating and Corporate Governance Committee.
(d) Chair and member of the Compensation Committee until 18 February 2021.
(e) Retired from the Board at the May 2020 AGMs.
(f) Chair of the Compensation Committee from 18 February 2021.
(g) Passed away on 31 August 2019.
(h) Chair of the Corporate Responsibility Committee.
(i) Senior Independent Director.
(j) Chair of the Audit Committee.

We do not grant our Non-Executive Directors any personal loans or guarantees or any variable remuneration, nor are they entitled to any severance
payments.

Unilever Annual Report and Accounts 2020GOVERNANCE REPORT98

Directors’ Remuneration Report continued

Percentage change in remuneration of Non-Executive Directors

The table below shows the five-year history year-on-year percentage change for fees and other benefits for the current Non-Executive Directors.

Non-Executive Director

Nils Andersen

Laura Cha

Vittorio Colao(b)

Marijn Dekkers

Judith Hartmann

Andrea Jung

Susan Kilsby

Strive Masiyiwa

Youngme Moon

John Rishton

Feike Sijbesma

% change
from
2019 to 2020

% change
from
2018 to 2019

% change
from
2017 to 2018

% change
from
2016 to 2017

% change
from
2015 to 2016

% change
from
2014 to 2015

Total Remuneration(a)

253.9%

10.8%

-19.9%

-93.3%

-11.4%

11.8%

144.0%

-0.9%

-0.8%

-10.9%

-0.9%

69.2%

5.2%

35.4%

-6.5%

14.1%

51.3%

–

6.1%

15.0%

17.5%

3.0%

16.1%

7.5%

23.3%

2.3%

14.3%

–

18.0%

42.7%

12.6%

6.3%

-12.5%

-10.1%

-3.7%

42.6%

-8.2%

–

56.3%

45.1%

-9.3%

-3.8%

62.0%

-2.5%

87.7%

–

52.5%

–

5.3%

3.9%

–

20.8%

–

24.3%

693.8%

(a) Non-Executive Directors receive an annual fixed fee and do not receive any Company performance-related payment. Therefore, the year-on-year % changes are mainly
due to changes in committee chair or memberships, mid-year appointments of Non-Executive Directors, fee increases as disclosed in earlier directors’ remuneration
reports and changes in the average sterling: euro exchange rates. Susan Kilsby joined Unilever in August 2019 and therefore her change from 2019 to 2020 shows a
larger percentage change than for a usual mid year joiner. Marijn Dekkers stepped down as Chairman in November 2019 and retired in April 2020, and was succeeded
by Nils Andersen, hence his larger percentage increase from 2019 to 2020. Feike Sijbesma joined Unilever in November 2014 and therefore his change from 2014 to 2015
shows a larger % change than for a usual mid-year joiner.

(b) Stepped down as Director on 18 February 2021.

Non-Executive Directors’ interests in shares (Audited)

Non-Executive Directors are encouraged to build up a personal shareholding of at least 100% of their annual fees over the five years from
appointment. The table shows the interests in Unilever N.V. and Unilever PLC ordinary shares as at 1 January 2020 and Unilever PLC ordinary shares
as at 31 December 2020, as result of Unification on 29 November 2020, of Non-Executive Directors and their connected persons. This is set against
the minimum shareholding recommendation. There has been no change in these interests between 31 December 2020 and 23 February 2021 (other
than Susan Kilsby, who bought 1,000 PLC shares on 8 February 2021 at a share price of £40.03 and John Rishton, who bought 1,256 PLC shares on 9
February 2021 at a share price of £39.51).

Non-Executive Director

Share type

Shares held at
31 December 2020

Share type

Shares held at
1 January 2020

Actual share ownership as a % of NED fees
(as at 31 December 2020)

Nils Andersen

Laura Cha

Vittorio Colao(a)

Marijn Dekkers(b)

Judith Hartmann

Andrea Jung

Susan Kilsby

Strive Masiyiwa

Youngme Moon

John Rishton

Feike Sijbesma

PLC

PLC ADS

PLC

PLC ADS

PLC

(a) Stepped down as Director on 18 February 2021.
(b) Shares held at 30 April 2020.

21,014

3,518

5,600

20,000

2,500

4,576

1,250

1,130

3,500

5,340

10,000

PLC

NV NY

PLC

NV NY

PLC

21,014

2,660

858

5,600

20,000

2,500

4,576

–

1,130

3,500

3,340

2,000

10,000

131%

128%

198%

2,089%

94%

165%

47%

40%

102%

173%

353%

Unilever Annual Report and Accounts 202099

Non-Executive Directors’ letters of appointment

All Non-Executive Directors were reappointed to the Boards at the 2020 AGMs.

Non-Executive Director

Date first appointed to the Boards

Effective date of current appointment(a)

Nils Andersen

Laura Cha

Vittorio Colao

Marijn Dekkers

Judith Hartmann

Andrea Jung

Susan Kilsby

Strive Masiyiwa

Youngme Moon

John Rishton

Feike Sijbesma

30 April 2015

15 May 2013

1 July 2015

21 April 2016

30 April 2015

3 May 2018

1 August 2019

21 April 2016

15 May 2013

1 November 2014

30 April 2020

n/a

30 April 2020

(a) Apart from Vittorio Colao who stepped down as a Director on 18 February 2021, the unexpired term for all Non-Executive Directors’ letters of appointment is the

period up to the 2021 AGM, as they all, unless they are retiring, submit themselves for annual reappointment. Letters of appointment were amended in November and
December 2020 to reflect Unification.

Other disclosures related to Directors’ remuneration (Unaudited)

Unilever regularly looks at pay ratios throughout the company, and the pay ratio between each work level, and we have disclosed this for a number
of years. The table below provides a detailed breakdown of the fixed and variable pay elements for each of our UK and Dutch work levels, showing
how each work level compares to the CEO and CFO in 2020 (with equivalent figures from 2019 included for comparison purposes). Going forward we
will disclose this compared to UK work levels.

CEO/CFO Pay Ratio Comparison (split by fixed/variable pay)

CEO/CFO Pay Comparison (split by fixed/variable pay)

WL1

CEO = 100.2 x WL1 | CFO = 88.0 x WL1

CEO = 56.0 x WL1 | CFO = 48.1 x WL1

CEO = 54.8 x WL2 | CFO = 51.3 x WL2

CEO = 26.2 x WL2 | CFO = 22.5 x WL2

CEO = 23.0 x WL3 | CFO = 20.2 x WL3

CEO = 14.1 x WL3 | CFO = 12.1 x WL3

CEO = 10.9 x WL4 | CFO = 9.6 x WL4

CEO = 7.1 x WL4 | CFO = 6.1 x WL4

CEO = 3.9 x WL5 | CFO = 3.5 x WL5

CEO =2.9 x WL5 | CFO = 2.5 x WL5

CEO = 2.0 x WL6 | CFO = 1.7 x WL6

CEO = 1.6 x WL6 | CFO = 1.3 x WL6

CEO = 1.2 x CFO

CEO = 1.1 x CFO

WL2

WL3

WL4

WL5

WL6

CFO

CEO

€0m

€1m

€2m

€3m

€4m

€5m

€6m

€7m

€8m

€9m

€10m

€11m

€12m

2020 Fixed

2020 Variable

2019 Fixed

2019 Variable

Figures for the CEO and CFO are calculated using the data from the Executive Directors’ single figure table on page 90. Accordingly, the year-on-year
comparison reflects the significant drop in total compensation for the Executive Directors in 2020. This has been the result of the lower performance
outcomes on bonus and long-term incentives, as well as the ending of the legacy GSIP. The numbers are further impacted by fluctuation in the
exchange rates used to convert pay elements denominated in pounds sterling to euros for reporting purposes in 2019. From 2019 the CEO and CFO
fixed pay is paid in euros. Where relevant, amounts for 2019 have been translated using the average exchange rate over 2019
(€1 = £0.8799), and amounts for 2020 have been translated using the average exchange rate over 2020 (€1 = £0.8877).

Annual bonus and long-term incentives (MCIP) for the UK and Dutch employees were not calculated following the statutory method for single
figure pay. Instead, variable pay figures were calculated using:
■ target annual bonus values multiplied by the actual bonus performance ratio for the respective year (disregarding personal performance

multipliers, which equal out across the population as a whole); and

■ MCIP values calculated at an appropriate average for the relevant Work Level of employees, i.e. an average 45% investment of bonus for WL3

employees; 60% for WL4-5 employees; and 100% for WL6 employees, mulitplied by the actual MCIP business performance ratio.

Fixed pay figures reflect all elements of pay (including allowances) and benefits paid in cash.

Unilever Annual Report and Accounts 2020GOVERNANCE REPORT100

Directors’ Remuneration Report continued

CEO pay ratio comparison

The table below is included to meet UK requirements and shows how pay for the CEO compares to our UK employees at the 25th percentile, median
and 75th percentile.

Year

25th Percentile Median Percentile

75th Percentile

Mean Pay Ratio

Year ended 31 December 2020

Salary:

Pay and benefits:

Pay ratio (Option A):

Year ended 31 December 2019

Salary:

Pay and benefits (excluding pension):

Pay ratio (Option A):

£34,298

£45,713

£38,510

£50,689

£41,010

£55,751

£45,154

£61,086

£55,000

£80,670

£59,988

£87,982

Figures for the CEO are calculated using the data from the Executive Directors’ single figure table on page 90 translated into sterling using the
average exchange rate over 2020 (€1 = £0.8877).

Option A was used to calculate the pay and benefits (including pension) of the 25th percentile, median and 75th percentile UK employees because the
data was readily available for all UK employees of the group and Option A is the most accurate method (as it is based on total full-time equivalent total
reward for all UK employees for the relevant financial year). Figures are calculated by reference to 31 December 2020, and the respective salary and pay
and benefits figures for each quartile are set out in the table above. Full-time equivalent figures are calculated on a pro-rated basis.

Variable pay figures for the UK employees are calculated on the basis set out in the paragraph for other work levels below the ‘CEO/CFO pay ratio
comparison’ table. The reason for this is it would be unduly onerous to recalculate these figures when, based on a sample, the impact of such
recalculation is expected to be minimal.

Year-on-year comparisons reflects the lowering incentive performance outcomes in 2020. For the overall UK employee calculation salary has
increased by approximately 1.29% (despite the lowering of performance outcomes and changes in FTE’s), which is aligned to our defined peer group
at the 50th percentile (market median), that we benchmark against on a yearly basis.

Additionally, in the UK we are required to show additional disclosures on the rates of change in pay year on year. The pay ratios set out above are more
meaningful as they compare to the pay of all of our UK employees. By contrast, the UK regulations require us to show the percentages below based on
employees of our PLC top company only, which forms a relatively small proportion of our total UK workforce. So, whilst operationally we may pay greater
attention to our internal pay ratios (included above in the ‘CEO/CFO pay ratio comparison’ table), these new required figures are as follows:

Percentage change in remuneration of Executive Directors (CEO/CFO)

The table below shows the five-year history year-on-year percentage change for fixed pay, other benefits (excluding pension) and bonus for
the CEO, CFO and PLC’s employees (based on total full-time equivalent total reward for the relevant financial year) pursuant to UK requirements.
The respective changes in percentages in fees for our Non-Executive Directors are included in the table ‘Percentage change in remuneration of
Non-Executive Directors’ on page 98.

% change from 2019 to 2020

CEO(a)(b)

CFO(a)(c)

PLC employees(d)

% change from 2018 to 2019

CEO(a)(b)

% change from 2017 to 2018

% change from 2016 to 2017

CFO(a)

PLC employees(d)

CEO(a)

CFO(a)

PLC employees(d)

CEO(a)

CFO(a)

PLC employees(d)

% change from 2015 to 2016

CEO(a)

CFO(a)(c)

PLC employees(d)

% change from 2014 to 2015

CEO(a)

CFO(a)(c)

PLC employees(d)

Fixed pay

Other benefits
(not including
pension)

4.0%

3.0%

1.7%

-9.5%

4.2%

15.0%

11.3%

8.2%

8.4%

-6.9%

-2.2%

-6.8%

-11.0%

-30.8%

10.1%

11.3%

-16.6%

0.3%

36.6%

40.7%

30.2%

-92.3%

4.8%

-5.2%

-19.2%

8.3%

-5.0%

5.0%

-5.5%

-7.0%

-5.1%

-32.2%

19.1%

14.5%

-27.6%

20.7%

Bonus

-39.1%

-39.7%

-3.0%

-7.4%

7.9%

9.7%

-16.5%

-10.5%

-3.9%

0.8%

21.1%

14.5%

-11.0%

14.3%

16.6%

55.8%

4.4%

79.0%

(a) Calculated using the data from the Executive Directors’ single figure table on page 90 (for information on exchange rates please see the footnotes in that table).
(b) As result of a lower differentiation factor for the bonus in 2020, the Bonus from 2019 to 2020 decreased compared to prior years. As at 1 January 2020 the tax gross-up
has been added in the cost instead of in base salary and therefore the Other Benefits increased from 2019 to 2020 compared to prior years. As at 1 January 2019 Alan
Jope succeeded Paul Polman as CEO and therefore the CEO remuneration from 2018 to 2019 decreased compared to prior years as Alan Jope’s Fixed Pay was set at a
level lower than Paul Polman’s.

(c) As result of a lower differentiation factor for the bonus in 2020, the Bonus from 2019 to 2020 decreased compared to prior years. As at 1 January 2020 the tax gross-up has

been added in the cost instead of in base salary and therefore the Other Benefits increased from 2019 to 2020 compared to prior years. As at October 2015 Jean-Marc Huet
stepped down as CFO and therefore the figures only include ten months for 2015. Graeme Pitkethly succeeded Jean-Marc Huet as an Executive Director as per 21 April
2016, although he assumed the role of CFO as from October 2015. As a result the figure for 2016 include payments from May 2016 onwards. The CFO remuneration from
2015 to 2016 therefore decreased, which was also due to Graeme Pitkethly’s Fixed Pay being set at a level lower than Jean-Marc Huet’s. In 2013 the CFO received a one-off
payment for the loss and costs on the sale of his house, as agreed upon his recruitment. Consequently, ‘other benefits’ decreased from 2014 to 2013.

(d) For the PLC employees, fixed pay numbers have been restated to include cash-related benefits employees receive as part of their total compensation, to ensure we can

accurately compare fixed pay for them against that of the CEO and CFO. Figures are also affected by changes in the average sterling: euro exchange rates.

Unilever Annual Report and Accounts 2020101

Relative importance of spend on pay

The chart below shows the relative spend on pay compared with dividends paid to Unilever shareholders and underlying earnings. Underlying
earnings represent the underlying profit attributable to Unilever shareholders and provides a good reference point to compare spend on pay.
The chart below shows the percentage of movement in underlying earnings, dividends and total staff costs versus the previous year.

Underlying
earnings

Dividends recognised
during the year

Total
staff costs

1.8%

3.5%

-2.3%

5.4%

-4.6%

-2.5%

€0m

€1,000 m

€2,000 m

€3,000 m

€4,000 m

€5,000 m

€6,000 m

€7,000 m

2020

2019

In calculating underlying profit attributable to shareholders, net profit attributable to shareholders is adjusted to eliminate the post-tax impact of
non-underlying items in operating profit and any other significant unusual terms within net profit but not operating profit (see note 7 on page 133
for details).

CEO single figure ten-year history

The table below shows the ten-year history of the CEO single figure of total remuneration:

CEO single figure of total remuneration (€‘000)

6,010

7,852

7,740

9,561

10,296

8,370

11,661

11,726

4,894

3,447

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Annual bonus award rates against maximum
opportunity

GSIP performance shares vesting rates against
maximum opportunity

MCIP matching shares vesting rates against
maximum opportunity

68%

100%

78%

66%

92%

100%

51%

55%

32%

44%

55%

64%

61%

49%

35%

74%

66%

60%

n/a

81%

65%

47%

99%

88%

n/a

42%

Unilever Annual Report and Accounts 2020GOVERNANCE REPORT102

Directors’ Remuneration Report continued

Ten-year historical Total Shareholder Return (TSR) performance

The graph below includes growth in the value of a hypothetical £100 investment over ten years’ FTSE 100 comparison based on 30-trading-day
average values.

The table below shows Unilever’s performance against the FTSE 100 Index, which is the most relevant index in the UK where we have our principal
listing. Unilever is a constituent of this index.

Ten-year historical TSR performance

g
n
d
o
h
£
l

a
c
i
t
e
h
t
o
p
y
h
f
o
e
u
a
V

400

350

300

250

200

150

100

Dec 10

Dec 11

Dec 12

Dec 13

Dec 14

Dec 15

Dec 16

Dec 17

Dec 18

Dec 19

Dec 20

Unilever PLC

FTSE 100

Serving as a non-executive on the board of another company

Unilever recognises the benefit to the individual and the Group of senior executives acting as directors of other companies in terms of broadening
Directors’ knowledge and experience, but the number of outside directorships of listed companies is generally limited to one per Executive Director.
The remuneration and fees earned from that particular outside listed directorship may be retained (see ‘Independence and Conflicts’ on page 62 for
further details).

For the reason above, Graeme Pitkethly is permitted to be a Non-Executive Director of Pearson PLC since 1 May 2019. In 2020 he received an annual
fee of €104,014 (£92,333) (2019: €64,969 (£57,166)) (of which 25% was in accordance with Pearson’s remuneration policy delivered in Pearson shares)
based on an average exchange rate over 2020 of €1 = £0.8877. Figures for 2019 have been translated in euros based on an average exchange rate
over 2019 of €1 = £0.8799.

The Compensation Committee

During 2020, the Committee met seven times and its activities included: determining the 2019 annual bonus outcome; determining vesting of the
GSIP awards for the CEO, CFO and the ULE; approving the 2019 directors’ remuneration report; setting the 2020 annual bonus and MCIP 2020-
2023 performance measures and targets; reviewing fixed pay for the CEO and CFO and fees for the Non-Executive Directors; tracking external
developments and assessing their impact on Unilever’s remuneration policy and its implementation, in particular in Covid-19 context; review of the
remuneration policy, underlying reward principles and proposed changes to the Remuneration Policy, including extensive consultation with investors
and proxy agencies (see page 77 of the Committee’s Chair letter), workforce pay, including pay philosophy and pay positioning, review of gender pay
gap data, and progress on the Fair Compensation Framework.

The Committee operates within its terms of reference which were last updated on 29 November 2020. The Committee’s revised terms of reference are
contained within ‘The Governance of Unilever’, and are also set out on our website.

www.unilever.com/investor-relations/agm-and-corporate-governance/

As part of the Board evaluation carried out in 2020, the Boards evaluated the performance of the Committee. The Committee also carried out an
assessment of its own performance in 2020. Overall the Committee members concluded that the Committee is performing effectively. The Committee
has agreed to further enhance its effectiveness by continuing to closely monitor (regulatory) developments and trends in the executive remuneration
landscape to gain insights of stakeholders’ views.

Unilever Annual Report and Accounts 2020

103

Advisers

While it is the Committee’s responsibility to exercise independent judgement, the Committee does request advice from management and
professional advisers, as appropriate, to ensure that its decisions are fully informed given the internal and external environment.

Tom Gosling and Fiona Camenzuli of PricewaterhouseCoopers (PwC) provided the Committee with independent advice on various matters it
considered. During 2020, the wider PwC firm has also provided tax and consultancy services to Unilever including tax compliance, transfer pricing,
other tax-related services, managed legal services, internal audit advice and secondees, third-party risk and compliance advice, cyber security
advice, sustainability assurance and consulting and merger and acquisition support. PwC is a member of the Remuneration Consultants Group
and, as such, voluntarily operates under the code of conduct in relation to executive remuneration consulting in the UK, which is available online.

www.remunerationconsultantsgroup.com (Code of Conduct: Executive Remuneration Consulting)

The Committee is satisfied that the PwC engagement partner and team, which provide remuneration advice to the Committee, do not have
connections with PLC that might impair their independence. The Committee reviewed the potential for conflicts of interest and judged that there were
appropriate safeguards against such conflicts. The fees paid to PwC in relation to advice provided to the Committee in the year to 31 December 2020
were £196,000. This figure is calculated based on time spent and expenses incurred for the majority of advice provided, but on occasion for specific
projects a fixed fee may be agreed.

During the year, the Committee also sought input from the CEO (Alan Jope), the Chief Human Resources Officer (Leena Nair) and the VP Global Head
of Reward (Constantina Tribou) on various subjects including the remuneration of senior management. No individual Executive Director was present
when their own remuneration was being determined to ensure a conflict of interest did not arise, although the Committee has separately sought
and obtained Executive Directors’ own views when determining the amount and structure of their remuneration before recommending individual
packages to the Boards for approval. The Committee also received legal and governance advice from the Chief Legal Officer and Group Secretary
(Ritva Sotamaa) and the Chief Counsel Executive Compensation & Employment (Margot Fransen).

Shareholder voting

Unilever remains committed to ongoing shareholder dialogue and takes an active interest in voting outcomes. In the event of a substantial vote
against a resolution in relation to Directors’ remuneration, Unilever would seek to understand the reasons for any such vote and would set out in
the following Annual Report and Accounts any actions in response to it. The following table sets out actual voting in respect of our previous report:

Voting outcome (% of votes)

2019 Directors’ remuneration report (2020 AGM) (excluding the Directors’ remuneration policy)

2017 Directors’ remuneration policy (2018 AGM)

For

Against

Witheld

PLC

95.51%

96.44%

64.19%

73.06%

4.49%

12,833,255

3.56%

1,139,351

35.81%

38,734,868

26.94%

15,018,135

The Directors’ Remuneration Report has been approved by the Board, and signed on their behalf by Ritva Sotamaa, Chief Legal Officer and
Group Secretary.

Unilever Annual Report and Accounts 2020GOVERNANCE REPORT104

Financial Statements

Statement of Directors’
responsibilities

Annual accounts

The Directors are responsible for preparing the Annual Report and
Accounts in accordance with applicable law and regulations. The
Directors are also required by the UK Companies Act 2006 to prepare
accounts for each financial year which give a true and fair view of the
state of affairs of the Unilever Group, and PLC, as at the end of the
financial year and of the profit or loss and cash flows for that year.

The Directors consider that, in preparing the accounts, the Group and PLC
have used the most appropriate accounting policies, consistently applied
and supported by reasonable and prudent judgements and estimates,
and that all International Financial Reporting Standards as adopted by the
EU and as issued by the International Accounting Standards Board, which
they consider to be applicable have been followed.

The Directors have responsibility for ensuring that PLC keep accounting
records which disclose with reasonable accuracy their financial position
and which enable the Directors to ensure that the accounts comply with all
relevant legislation. They also have a general responsibility for taking such
steps as are reasonably open to them to safeguard the assets of the Group,
and to prevent and detect fraud and other irregularities.

This statement, which should be read in conjunction with the
Independent Auditor’s Report, is made with a view to distinguishing for
shareholders the respective responsibilities of the Directors and of the
auditors in relation to the accounts.

A copy of the financial statements of the Unilever Group is placed on
our website at www.unilever.com/investorrelations. The maintenance
and integrity of the website are the responsibility of the Directors, and
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 UK and the
Netherlands governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.

Independent auditors and disclosure
of information to auditors

UK law sets out additional responsibilities for the Directors of PLC
regarding disclosure of information to auditors. To the best of each of
the Directors’ knowledge and belief, and having made appropriate
enquiries, all information relevant to enabling the auditors to provide
their opinions on PLC’s consolidated and parent company accounts has
been provided. Each of the Directors has taken all reasonable steps to
ensure their awareness of any relevant audit information and to establish
that Unilever PLC’s auditors are aware of any such information.

Directors’ responsibility statement

Each of the Directors confirms that, to the best of his or her knowledge:
■ The Unilever Annual Report and Accounts 2020, taken as a whole, is
fair, balanced and understandable, and provides the information
necessary for shareholders to assess the Group’s position and
performance, business model and strategy;

■ The financial statements which have been prepared in accordance
with International Financial Reporting Standards as adopted by the
EU and as issued by the International Accounting Standards Board
give a true and fair view of the assets, liabilities, financial position
and profit or loss of the Group and the undertakings included in the
consolidation taken as a whole; and

■ The Strategic Report includes a fair review of the development and
performance of the business and the position of the Group and
the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties
that they face.

The Directors and their roles are listed on pages 64 to 65.

Going concern

The activities of the Group, together with the factors likely to affect its
future development, performance, the financial position of the Group,
its cash flows, liquidity position and borrowing facilities are described
on pages 1 to 43. In addition, we describe in notes 15 to 18 on pages 143
to 160 the Group’s objectives, policies and processes for managing its
capital; its financial risk management objectives; details of its financial
instruments and hedging activities and its exposures to credit and
liquidity risk. Although not assessed over the same period as going
concern, the viability of the Group has been assessed on page 45.

The Group has considerable financial resources together with established
business relationships with many customers and suppliers in countries
throughout the world. As a consequence, the Directors believe that the
Group is well placed to manage its business risks successfully for at least
twelve months from the date of approval of the financial statements
despite the current uncertain outlook.

After making enquiries, the Directors consider it appropriate to adopt
the going concern basis of accounting in preparing this Annual Report
and Accounts.

Internal and disclosure controls and procedures

Please refer to pages 46 to 50 for a discussion of Unilever’s principal risk
factors and to pages 44 to 50 for commentary on the Group’s approach
to risk management and control.

Unilever Annual Report and Accounts 2020105

Independent Auditor’s Report

Independent Auditor’s Report to the members of Unilever PLC

1. Our opinions are unmodified

What we have audited

We have audited the financial statements (“the Financial Statements”) of Unilever PLC (“the Company”) for the year ended 31 December 2020 which
comprise the Consolidated Financial Statements and the Company Accounts, and the related notes, including the accounting policies in note 1.

Our opinions

In our opinion the Financial Statements:
■ give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 December 2020 and of the Group’s and of the

Company’s profit for the year then ended;

■ have been properly prepared in accordance with international accounting standards in conformity with the requirements of the Companies
Act and international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union
(IFRS as adopted by the EU); and

■ have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Consolidated Financial Statements,

Article 4 of the IAS Regulation to the extent applicable.

Additional opinion in relation to IFRS as issued by the IASB

As explained in the accounting policies set out in the Consolidated Financial Statements, in addition to complying with its legal and regulatory
obligation to apply international accounting standards in conformity with the requirements of the Companies Act and IFRS as adopted by the
EU, the Group has also applied IFRS as issued by the International Accounting Standards Board (IASB). In our opinion, the Consolidated Financial
Statements have been properly prepared in accordance with IFRS as issued by the IASB.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities are
described below. We believe that the audit evidence we have obtained is a sufficient and appropriate basis for our opinion. Our audit opinion is
consistent with our report to the Audit Committee.

We were appointed as auditor by the shareholders on 14 May 2014. The period of total uninterrupted engagement is for the seven financial years
ended 31 December 2020. We have fulfilled our ethical responsibilities under, and we remain independent of the Group in accordance with, UK
ethical requirements including the FRC Ethical Standard as applied to listed public interest entities. No non-audit services prohibited by that
standard were provided.

Overview

Materiality

Consolidated Financial Statements as a whole

Coverage

Key audit matters

€380 million (2019: €380 million)
4.8% (2019: 4.6%) of Group profit before taxation

78% (2019: 79%) of revenue

Recurring key audit matters

Revenue recognition – Discounts

Indirect tax contingent liabilities in Brazil

Uncertain direct tax transfer pricing provisions

New key audit matters

Valuation of Horlicks Brand acquired from GlaxoSmithKline plc (‘GSK’)

Accounting for the Unification of Unilever’s Corporate structure

Prior to the merger of Unilever PLC and Unilever N.V. on 29th November 2020, and as reported in previous years, the Unilever Group consisted of
Unilever PLC, Unilever N.V. and the entities they controlled and the Consolidated Financial Statements of the Group were audited by both KPMG LLP
(KPMG UK) and KPMG Accountants N.V. (KPMG NL). Following Unification (refer to page 61) the Group is represented by Unilever PLC and the entities
controlled by Unilever PLC and the Consolidated Financial Statements are therefore solely audited by KPMG LLP (Unilever N.V. ceased to exist as of the
merger date).

2. Key audit matters: Our assessment of risks of material misstatement

Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the Financial Statements and
include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had
the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. We
summarise below the key audit matters, in decreasing order of audit significance, in arriving at our audit opinions above, together with our key audit
procedures to address those matters and, as required, for public interest entities, our results from those procedures. These matters were addressed,
and our results are based on procedures undertaken, in the context of, and solely for the purpose of, our audit of the Financial Statements as a
whole, and in forming our opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on these
matters.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS106

Independent Auditor’s Report continued

The key audit matter

Our response and results

Revenue recognition –
Discounts

As discussed in the report of
the Audit Committee (page
70), note 2, note 13 and
note 14 to the Consolidated
Financial Statements, the
rebate accrual was €3,852
million as of 31 December
2020 and €3,476 million as of
31 December 2019.

Indirect tax contingent
liabilities in Brazil

As discussed in the Report
of the Audit Committee
(page 70) and note 20 to
the Consolidated Financial
Statements, the Brazil indirect
tax contingent liability
related to a 2001 corporate
reorganisation was €2,040
million as of 31 December
2020 and €2,235 million as of
31 December 2019.

Revenue is measured net of rebates, price
reductions, incentives given to customers,
promotional couponing and trade
communication costs (‘’discounts’’).

Certain discounts for goods sold in
the year are only finalised when the
precise amounts are known and revenue
therefore includes an estimate of variable
consideration. The variable consideration
represents the portion of discounts that
are not directly deducted on the invoice
and is complex as a result of diversity in
the terms in contractual arrangements
with customers. The unsettled portion
of the variable consideration results in
discounts due to customers per
31 December 2020 (“rebate accrual”).

Therefore, there is a risk of revenue
being misstated as a result of incorrect
calculations of the variable consideration.

Within revenue recognition we identified
the rebate accrual as a key audit matter,
as in a number of markets the rebate
accrual is significant and the terms in
contractual arrangements with customers
are not uniform.

This is considered to be an area which
had a significant effect on our overall
audit strategy and allocation of resources
in planning and completing our audit
as significant effort was required in
evaluating the contractual arrangements
and the related rebate accrual.

There is also a risk that revenue may
be overstated due to fraud through
manipulation of the rebate accrual
recognised resulting from the pressure
management may feel to achieve
performance targets.

In Brazil, there is a high degree of
complexity involved in the local indirect tax
regimes (both state and federal), related
to certain corporate reorganisations.

We identified the assessment of indirect
tax contingent liabilities in Brazil related
to a corporate reorganisation as a key
audit matter. Due to the complex nature
of the Brazilian local tax regimes and
jurisprudence, there is a high degree of
judgement applied by the Group with
respect to this matter, which given the
high degree of estimation uncertainty
has a particularly wide potential extent
of possible outcomes. Complex auditor’s
judgement and specialised skills were
also required in assessing the outcome
of investigations by the authorities, if a
liability exists, and in making an estimate
of any economic outflows.

Procedures

The following are the primary procedures we performed to address
this key audit matter in a selected number of markets:
■ We evaluated the design and tested the operating effectiveness

of certain internal controls related to the revenue process
including controls over the rebate agreements, calculation of the
rebate accrual, rebate payments and the Group’s review over the
rebate accrual.

■ Within the relevant Group’s markets, used the prior year rebate

accrual together with our understanding of current year
developments to form an expectation of the rebate accrual at
31 December 2020. We compared this expectation against the
actual rebate accrual, completing further corroborative inquiries
and obtained underlying documentation as appropriate.

■ Tested a selection of recorded rebate accruals after 31 December
2020 and assessed whether the accrual is recorded in the proper
period.

■ Tested a selection of payments made after 31 December 2020
and, where relevant, compared the payment to the related
rebate accrual.

■ Critically assessed manual journals recorded to revenue to
identify unusual or irregular items and obtained underlying
documentation.

■ Assessed the Group’s disclosures in respect of the rebate accrual.

Our results

The results of our testing were satisfactory (2019: satisfactory).

Procedures

The following are the primary procedures we performed to address
this key audit matter:
■ We evaluated the design and tested the operating effectiveness
of certain internal controls related to the indirect tax process
including controls around the assessment of the outcome of
investigations if a liability exists and the quantification of the
potential economic outflow.

■ We involved local indirect tax professionals with specialised

skills and knowledge who assisted in:
■ assessing the appropriateness of the contingent liabilities

compared to the nature of the exposures, applicable
regulations and related correspondence with the tax
authorities.

■ assessing the impact of historical and recent judgements
passed by the court authorities in considering any legal
precedent or case law by inquiring of the Group’s external
lawyers and inspection of relevant information.

■ We inspected legal opinions from third party lawyers and

obtained formal confirmations from the Group’s external lawyers
and, where relevant, compared to the underlying exposure.

Our results

The results of our testing were satisfactory (2019: satisfactory)
and we considered the Brazilian indirect tax contingent liability
disclosures to be acceptable (2019: acceptable).

Unilever Annual Report and Accounts 2020107

Uncertain direct tax transfer
pricing provisions

As discussed in the Report of
the Audit Committee (page
70), note 6 and note 20 to
the Consolidated Financial
Statements, the uncertain
direct tax provisions were €879
million as of 31 December
2020 and €787 million as of
31 December 2019, a portion
of which related to transfer
pricing.

Valuation of Horlicks
brand acquired from
GlasoSmithKline plc (‘GSK’)

As discussed in the Report of
the Audit Committee (page
70), Note 1 and Note 21 to
the Consolidated Financial
Statements, on 1 April 2020
the Group acquired the
GlaxoSmithKline plc Health
Food Drinks portfolio in India
and 20 other predominantly
Asian markets.

Accounting for the
Unification of Unilever’s
Corporate structure

Applicable for both
Consolidated Financial
Statements and Company
Accounts

As discussed in the Corporate
Governance Report (page
61), the Report of the Audit
Committee (page 70), Note 1
to the Consolidated Financial
Statements and Note 1 to the
Company Accounts.

The key audit matter

Our response and results

The Group has extensive international
operations and is operating in a number
of tax jurisdictions, each with its own
taxation regime. The laws and regulations
for transfer pricing in each jurisdiction
are open to different interpretations
by taxpayers and tax authorities and
require judgement in the interpretation
thereof. Judgements are made by the
Group with respect to interpretations of
the tax legislation and in assessing the
potential outcome of investigations by the
authorities, and if a liability exists.

We identified the assessment of uncertain
direct tax transfer pricing provisions as
a key audit matter. Due to the complex
nature of transfer pricing across multiple
jurisdictions, there is judgement applied by
the Group with respect to interpretations
of the tax legislation, to assess the
potential outcome of investigations by the
authorities and if a liability exists. Complex
auditor’s judgement and specialised
skills were also required in assessing the
interpretations of the tax legislation, the
potential outcome of investigations by the
authorities and if a liability exists.

The fair value of the acquired intangible
assets was €3.3 billion as of the acquisition
date, a portion of which related to the
Horlicks brand. The Group recorded the fair
value of the Horlicks brand based on the
expected cashflows of the brand.

We identified the assessment of the fair
value measurement of the Horlicks brand
acquired from GSK as a key audit matter.
Significant judgements were made by
the Group in determining the revenue
growth rate and the discount rate used
to develop the fair value of the Horlicks
brand. Complex auditor’s judgement
and specialised skills were also required
in evaluating these assumptions. Minor
changes to these assumptions could have
had a significant impact on the valuation
of the Horlicks brand.

On 29 November 2020, the structure of
the Group was further simplified from a
dual parent structure to a single parent
structure by way of a cross border merger
of Unilever PLC and Unilever N.V. Following
the completion of the Unification, Unilever
PLC is the sole parent company of the
Group.

We identified the accounting for the
Unification as a key audit matter due to
the unique nature of the transaction as a
cross border merger being affected by the
legal and regulatory framework of two
countries. We spent a significant amount
of time and resources to assess the Group’s
interpretation of UK and Dutch Company
and tax law as well as the interpretation of
financial reporting standards.

Procedures

The following are the primary procedures we performed to address
this key audit matter:
■ We evaluated the design and tested the operating effectiveness
of certain controls related to the income tax process including
controls around the assessment of the potential outcome of
investigations, interpretations of the tax legislation and if a
liability exists.

■ We involved tax professionals with specialised skills and

knowledge who assisted in:
■ assessing the relevant changes to the business during the
year and the corresponding impact of any changes to the
transfer pricing models for compliance with applicable laws
and regulations;

■ evaluating a selection of uncertain tax positions using our
own expectations based on our knowledge of the Group,
considering relevant judgements passed and investigations
by authorities to assess the potential exposures and if a
liability exists; and

■ reading the settlement agreements with the relevant
tax authorities and assessing the reasonableness of
corresponding adjustments.

■ We assessed the Group’s disclosures in respect of direct tax

provisions and uncertain tax positions.

Our results

The results of our testing were satisfactory (2019: satisfactory) and
we found the level of direct tax provisions to be acceptable (2019:
acceptable).

Procedures

The following are the primary procedures we performed to address
this key audit matter:
■ We evaluated the design and tested the operating effectiveness

of certain internal controls related to the Group ’s valuation
process in relation to the Horlicks brand, including controls over
the revenue growth and the discount rate.

■ We evaluated the revenue growth for the Horlicks brand by

comparing it to historical actual revenues and external industry
growth rates.

■ In addition, we involved valuation professionals with specialised
skills and knowledge, who assisted in evaluating the discount
rate applied by the Group by comparing it to a range of rates that
were independently developed using publicly available market
indices and market data for comparable entities.

Our results

The results of our testing were satisfactory and we considered the
carrying amount of the brand to be acceptable.

Procedures

The following are the primary procedures we performed to address
this key audit matter:
■ We assessed the legal positions taken by the Group in relation
to the interpretation of the UK and Dutch Company law and
evaluated the Group’s use of external experts.

■ We assessed the accounting for the transaction considering the
requirements under UK legislation and the applicable financial
reporting standards.

■ We involved tax professionals with specialised skills and

knowledge to assist in evaluating the taxation impact of the
transaction, based on the applicable laws and regulations.

■ We assessed the disclosures in respect of this transaction in the
Consolidated Financial Statements and Company Accounts.

Our results

The results of our testing were satisfactory.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS108

Independent Auditor’s Report continued

3. Our application of materiality and an overview of the scope of our audit

Materiality

Materiality for the Consolidated Financial Statements as a whole was set at €380 million (2019: €380 million), determined with reference to a
benchmark of Group profit before taxation, of which it represents 4.8% (2019: 4.6%). Materiality for the Company Accounts as a whole was set at £298
million (2019: £61 million), determined with reference to a benchmark of Company Net Assets, of which it represents 0.4% (2019: 0.8%).

In line with our audit methodology, our procedures on individual account balances and disclosures were performed to a lower threshold,
performance materiality, so as to reduce to an acceptable level the risk that individually immaterial misstatements in individual account balances
add up to a material amount across the financial statements as a whole.

Performance materiality for the Consolidated Financial Statements and the Company Accounts set at 75% (2019 : 75%) of materiality for the financial
statements as a whole, which equates to €285 million for the Group (2019: €285 million) and £224 million (2019: £46 million) for the Company. We
applied this percentage in our determination of performance materiality because we did not identify any factors indicating an elevated level of risk.

We agreed with the Audit Committee that any corrected or uncorrected identified misstatements exceeding €20 million (2019: €20 million) and £15
million (2019: £5 million) which are identified during the audit of the Consolidated Financial Statements and Company Accounts respectively, would
be reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.

Overall scope of our audit

The Group operates through a significant number of legal entities and these form reporting components that are primarily country based. To provide
sufficient coverage over the Group’s key audit matters, we performed audits of 15 components (2019: 15), which are included within ‘Audit for group
reporting purposes’ below, as well as audits of account balances including revenue and the related accounts receivables balances at a further 22
(2019: 23) components which are included within ‘Audit of account balances’ below. The latter were not individually financially significant enough to
require an audit for group reporting purposes but were included in the scope of our group reporting work in order to provide additional coverage.

The Group operates centralised operating centres in China, India, Mexico, Philippines and Poland that perform accounting and reporting activities alongside
related controls. Together, these operating centres process a substantial portion of the Group’s transactions. The outputs from the centralised operating centres
are included in the financial information of the reporting components they service and therefore they are not separate reporting components. Each of the
operating centres is subject to specified audit procedures. Further audit procedures are performed at each reporting component to cover matters not covered
at the centralised operating centres and together this results in audits for group reporting purposes on those reporting components.

The components within the scope of our work accounted for the following percentages of the Group’s results:

2020

Audits for group reporting purposes

Audits of account balances

Total

2019

Audits for group reporting purposes

Audits of account balances

Total

Number of
components

Group revenue

Total profits and
losses that made
up Group profit
before taxation Group total assets

52%

26%

78%

53%

26%

79%

50%

25%

75%

58%

20%

78%

72%

80%

69%

76%

The remaining 22% (2019: 21%) of Group revenue, 25% (2019: 22%) of total profits and losses that made up Group profit before taxation and 20% (2019:
24%) of Group total assets is represented by a significant number of reporting components, none of which individually represented more than 3%
(2019: 3%) of any of Group revenue, total profits and losses that made up Group profit before taxation or Group assets. A substantial portion of these
components utilise the operating centres and are therefore subject to audit procedures performed at these operating centres. For these components,
we performed analysis at an aggregated Group level to re-examine our assessment that there were no significant risks of material misstatement
within these.

The Group audit team instructed component auditors as to the significant areas to be covered, including the key audit matters detailed above and
the information to be reported back. The Group audit team approved the component materialities, which ranged from €1 million to €328 million
(2019: €1 million to €275 million), having regard to the mix of size and risk profile of the Group across the components. The work on components was
performed by component auditors.

In view of restrictions on the movement of people across borders the Group audit team made changes to the planned audit approach to evaluate
the component auditors’ communications and the adequacy of their work. Under our original audit plan, we had intended to visit the components
in countries Brazil, China, France, Germany, India, Indonesia, Italy, Netherlands, UK and USA to review selected component auditor documentation.
Due to the aforementioned restrictions, this was not practicable in the current environment. As a result, we requested those component auditors
to provide us with access to audit workpapers to perform these evaluations, subject to local law and regulations. In addition, due to the inability to
arrange in-person meetings with such component auditors, we increased the use of alternative methods of communication with them, including
through written instructions, exchange of emails and virtual meetings.

The Group audit team held virtual meetings with local management instead of physical site visits this year in Brazil, China, France, Germany, India,
Indonesia, Italy, Netherlands, UK and USA (2019: Brazil, China, France, Germany, India, Indonesia, Netherlands, South Africa, Switzerland, UK and
USA). Telephone and/or online meetings were also held with these component auditors and the majority of the others that were not physically visited.
The findings reported to the Group audit team were discussed in more detail with component auditors and any further work required by the Group
audit team was then performed by the component auditors.

The work on 36 of the 37 components (2019: 36 of the 38 components) was performed by component auditors (KPMG member firms) and the audit of
the Company, was performed by the Group audit team.

Unilever Annual Report and Accounts 2020109

4. Going concern

The Directors have prepared the Financial Statements on the going concern basis as they do not intend to liquidate the Group or the Company or
to cease their operations, and as they have concluded that the Group’s and the Company’s financial position means that this is realistic. They have
also concluded that there are no material uncertainties that could have cast significant doubt over their ability to continue as a going concern for at
least a year from the date of approval of the financial statements (“the going concern period”).

We used our knowledge of the Group, its industry, and the general economic environment to identify the inherent risks to its business model and
analysed how those risks might affect the Group’s and Company’s financial resources or ability to continue operations over the going concern period.
The risks that we considered most likely to adversely affect the Group’s and the Company’s available financial resources over this period were:
■ continued slowdown in the broader macro-economic environment and therefore market growth;
■ increased global and local competition; and
■ external pressures on gross margin through cost price inflation.

We also considered realistic second order impacts, such as a major IT data breach, the loss of all material litigation cases and the impact of Brexit
which could result in a rapid reduction of available financial resources. We considered whether these risks could plausibly affect the liquidity in the
going concern period by assessing the degree of downside assumptions that, individually and collectively, could result in a liquidity issue, taking
into account the Group’s current and projected cash and facilities and the outcome of their reverse stress testing. We considered whether the going
concern disclosure in note 1 to the financial statements gives a full and accurate description of the Directors’ assessment of going concern.

Our conclusions based on this work:
■ we consider that the Directors’ use of the going concern basis of accounting in the preparation of the Financial Statements is appropriate;
■ we have not identified, and concur with the Directors’ assessment that there is not, a material uncertainty related to events or conditions

that, individually or collectively, may cast significant doubt on the Group’s or Company’s ability to continue as a going concern for the going
concern period;

■ we have nothing material to add or draw attention to in relation to the Directors’ statement on page 104 to the Financial Statements on the

use of the going concern basis of accounting with no material uncertainties that may cast significant doubt over the Group and Company’s use
of that basis for the going concern period, and we found the going concern disclosure on page 104 to be acceptable; and

■ the related statement under the Listing Rules set out on page 104 is materially consistent with the financial statements and our audit knowledge.

However, as we cannot predict all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements
that were reasonable at the time they were made, the above conclusions are not a guarantee that the Group or the Company will continue in operation.

5. Fraud and breaches of laws and regulations – ability to detect

Identifying and responding to risks of material misstatement due to fraud

To identify risks of material misstatement due to fraud (“fraud risks”) we assessed events or conditions that could indicate an incentive or pressure to
commit fraud or provide an opportunity to commit fraud. Our risk assessment procedures included:
■ Enquiring of directors, the audit committee, internal audit and inspection of policy documentation as to the Group’s high-level policies and

procedures to prevent and detect fraud, including the internal audit function, and the Group’s channel for “whistleblowing”, as well as whether
they have knowledge of any actual, suspected or alleged fraud.

■ Reading Board and audit committee minutes.
■ Considering remuneration incentive schemes and performance targets for directors.
■ Using analytical procedures to identify any usual or unexpected relationships.
■ Using our own forensic professionals with specialised skills and knowledge to assist us in identifying the fraud risks based on discussions of the

circumstances of the Group.

We communicated identified fraud risks throughout the audit team and remained alert to any indications of fraud throughout the audit. This
included communication from the group to full scope component audit teams of relevant fraud risks identified at the Group level and request to full
scope component audit teams to report to the Group audit team any instances of fraud that could give rise to a material misstatement at group.

As required by auditing standards, and taking into account possible pressures to meet profit targets, we performed procedures to address the risk of
management override of controls and the risk of fraudulent revenue recognition. Further detail in respect of Revenue recognition – Discounts is set
out in the key audit matter disclosures in section 2 of this report. We did not identify any additional fraud risks.

In determining the audit procedures we took into account the results of our evaluation and testing of the operating effectiveness of the Group-wide
fraud risk management controls. For further details in respect to the Group-wide risk management controls refer to the report of the Audit Committee
on page 70.

We also performed procedures including:
■ Identifying manual journal entries to test for all full-scope components based on risk criteria and comparing the identified entries to

supporting documentation.

■ Evaluating the business purpose of significant unusual transactions.
■ Assessing significant accounting estimates for bias.

Identifying and responding to risks of material misstatement due to non-compliance with laws and regulations

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our
general commercial and sector experience, through discussion with the Directors and other management (as required by auditing standards)
and from inspection of the Group’s regulatory and legal correspondence. We discussed with the Directors and other management the policies
and procedures regarding compliance with laws and regulations and we made use of our own forensic professionals with specialised skills and
knowledge to assist us in evaluating the facts and circumstances.

We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the
audit. This included communication from the group to full-scope component audit teams of relevant laws and regulations identified at the Group
level, and a request for full scope component auditors to report to the group team any instances of non-compliance with laws and regulations that
could give rise to a material misstatement at the Group level.

The potential effect of these laws and regulations on the financial statements varies considerably.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS110

Independent Auditor’s Report continued

5. Fraud and breaches of laws and regulations – ability to detect continued

Firstly, the Group is subject to laws and regulations that directly affect the financial statements including financial reporting legislation (including
related companies legislation), distributable profits legislation and taxation legislation and we assessed the extent of compliance with these laws
and regulations as part of our procedures on the related financial statement items.

Secondly, the Group is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on
amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as
those most likely to have such an effect:
■ Competition legislation (reflecting the Group’s involvement in a number of ongoing investigations by national competition authorities),
■ Employment legislation (reflecting the Group’s significant and geographically diverse work force).
■ Health and safety regulation (reflecting the nature of the Group’s production and distribution processes).
■ Consumer product law such as product safety and product claims (reflecting the nature of the Group’s diverse product base).
■ Contract legislation (reflecting the Group’s extensive use of trademarks, copyright and patents).
■ Data privacy (requirements from existing data privacy laws).
■ Environmental regulation (reflecting nature of the Group’s production and distribution processes).

Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors and
other management and inspection of regulatory and legal correspondence, if any. Therefore, if a breach of operational regulations is not disclosed
to us or evident from relevant correspondence, an audit will not detect that breach.

Context of the ability of the audit to detect fraud or breaches of law or regulation

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the
financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the
further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely
the inherently limited procedures required by auditing standards would identify it.

In addition, as with any audit, there remained a higher risk of non-detection of fraud, as these may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible
for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.

6. We have nothing to report on the other information

The Directors are responsible for the other information presented in the Unilever Annual Report and Accounts 2020 together with the Financial
Statements. Our opinion on the Financial Statements does not cover the other information and, accordingly, we do not express an audit opinion or,
except as explicitly stated below, any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information
therein is materially misstated or inconsistent with the Financial Statements or our audit knowledge. Based solely on that work we have not
identified material misstatements in the other information.

Strategic report and Directors’ report

Based solely on our work on the other information:
■ we have not identified material misstatements in the Strategic report and the Directors’ report;
■ in our opinion the information given in those reports for the financial year is consistent with the Financial Statements; and
■ in our opinion those reports have been prepared in accordance with the Companies Act 2006.

Directors’ remuneration report

In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.

Disclosures of emerging and principal risks and longer-term viability

We are required to perform procedures to identify whether there is a material inconsistency between the Directors’ disclosures in respect of emerging
and principal risks and the viability statement, and the financial statements and our audit knowledge.

Based on the knowledge we acquired during our audit, we have nothing material to add or draw attention to in relation to:
■ the Directors’ confirmation within the Viability Statement on page 45 that they have carried out a robust assessment of the emerging and

principal risks facing the Group, including those that would threaten its business model, future performance, solvency and liquidity;

■ the Principal Risk Factors disclosures describing these risks and how emerging risks are identified, and explaining how they are being managed

and mitigated; and

■ the Directors’ explanation in the Viability Statement of how they have assessed the prospects of the Group, over what period they have done
so and why they considered that period to be appropriate, and their statement as to whether they have a reasonable expectation that the
Group will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related
disclosures drawing attention to any necessary qualifications or assumptions.

We are also required to review the Viability Statement, set out on page 45 under the Listing Rules. Based on the above procedures, we have
concluded that the above disclosures are materially consistent with the financial statements and our audit knowledge.

Our work is limited to assessing these matters in the context of only the knowledge acquired during our financial statements audit. As we cannot predict
all future events or conditions and as subsequent events may result in outcomes that are inconsistent with judgements that were reasonable at the
time they were made, the absence of anything to report on these statements is not a guarantee as to the Group’s and Company’s longer-term viability.

Unilever Annual Report and Accounts 2020111

6. We have nothing to report on the other information continued

Corporate governance disclosures

We are required to perform procedures to identify whether there is a material inconsistency between the Directors’ corporate governance disclosures
and the financial statements and our audit knowledge.

Based on those procedures, we have concluded that each of the following is materially consistent with the financial statements and our audit knowledge:
■ the directors’ statement that they consider that the annual report and financial statements taken as a whole is fair, balanced and

understandable, and provides the information necessary for shareholders to assess the Group’s position and performance, business model
and strategy;

■ the section of the annual report describing the work of the Audit Committee, including the significant issues that the audit committee

considered in relation to the financial statements, and how these issues were addressed; and

■ the section of the annual report that describes the review of the effectiveness of the Group’s risk management and internal control systems.

We are required to review the part of Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate
Governance Code specified by the Listing Rules for our review. We have nothing to report in this respect.

7. We have nothing to report on the other matters on which we are required to report by exception

Under the Companies Act 2006, we are required to report to you if, in our opinion:
■ adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not

visited by us; or

■ the Company Accounts and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and

returns; or

■ certain disclosures of Directors’ remuneration specified by law are not made; or
■ we have not received all the information and explanations we require for our audit.

We have nothing to report in these respects.

8. Respective Responsibilities

Directors’ responsibilities

As explained more fully in their statement set out on page 104, the Directors are responsible for the preparation of the Financial Statements
including being satisfied that they give a true and fair view. They are also responsible for: such internal control as they determine is necessary to
enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error; assessing the Group and
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and using the going concern basis of
accounting unless they either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether
due to fraud, or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of the financial statements.

A fuller description of our responsibilities is provided on the FRC’s website at

www.frc.org.uk/auditorsresponsibilities.

9. The purpose of our audit work and to whom we owe our responsibilities

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and the terms
of our engagement by the Company. Our audit work has been undertaken so that we might state to the Company’s members those matters we are
required to state to them in an auditor’s report and the further matters we are required to state to them in accordance with the terms agreed with
the Company, and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Company and the Company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.

Nicholas Frost

(Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants
15 Canada Square
London, E14 5GL
3 March 2021

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS
112

Consolidated Financial Statements
Unilever Group

Consolidated income statement

for the year ended 31 December

Turnover

Operating profit

Which includes non-underlying item credits/(charges) of

Net finance costs

Pensions and similar obligations

Finance income

Finance costs

Which includes non-underlying costs of

Non-underlying item net monetary gain/(loss) arising from hyperinflationary
economies

Share of net profit/(loss) of joint ventures and associates

Which includes non-underlying item credits/(charges) of

Other income/(loss) from non-current investments and associates

Profit before taxation

Taxation

Which includes tax impact of non-underlying items of

Net profit

Attributable to:

Non-controlling interests

Shareholders’ equity

Combined earnings per share

Basic earnings per share (€)

Diluted earnings per share (€)

Notes

1,3

€ million
2020

50,724

8,303

(1,064)

(505)

(9)

232

(728)

(56)

175

–

7,996

(1,923)

126

6,073

492

5,581

2.13

2.12

€ million
2019

51,980

8,708

(1,239)

(627)

(30)

224

(821)

–

176

–

8,289

(2,263)

113

6,026

401

5,625

2.15

2.14

€ million
2018

50,982

12,639

3,176

(608)

(25)

135

(718)

–

122

185

12,360

(2,572)

(288)

9,788

419

9,369

3.49

3.48

Consolidated statement of comprehensive income

for the year ended 31 December

Net profit

Other comprehensive income

Items that will not be reclassified to profit or loss, net of tax:

Gains/(losses) on equity instruments measured at fair value through other
comprehensive income

Remeasurement of defined benefit pension plans

Items that may be reclassified subsequently to profit or loss, net of tax:

Gains/(losses) on cash flow hedges

Currency retranslation gains/(losses)

Total comprehensive income

Attributable to:

Non-controlling interests

Shareholders’ equity

Notes

15B

€ million
2020

6,073

€ million
2019

6,026

€ million
2018

9,788

215

(2,590)

3,836

286

3,550

353

176

(15)

6,569

407

6,162

(328)

(55)

(839)

8,617

407

8,210

Note references in the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated balance
sheet and consolidated cash flow statement relate to notes on pages 116 to 167, which form an integral part of the consolidated financial statements.

Unilever Annual Report and Accounts 2020

Consolidated statement of changes in equity

for the year ended 31 December

Consolidated statement of changes in equity
31 December 2017
Hyperinflation restatement to 1 January 2018
1 January 2018 (restated)
Profit or loss for the period
Other comprehensive income,net of tax:

Gains/(losses) on

Equity instruments
Cash flow hedges

Remeasurement of defined benefit pension plans
Currency retranslation gains/(losses)

Total comprehensive income
Dividends on ordinary capital
Repurchase of shares(a)
Cancellation of treasury shares(b)
Other movements in treasury shares(c)
Share-based payment credit(d)
Dividends paid to non-controlling interests
Currency retranslation gains/(losses) net of tax
Hedging gain/(loss) transferred to non-financial assets
Other movements in equity(e)
31 December 2018
Impact of adopting IFRIC 23
1 January 2019 (restated)
Profit or loss for the period
Other comprehensive income,net of tax:

Gains/(losses) on

Equity instruments
Cash flow hedges

Remeasurement of defined benefit pension plans
Currency retranslation gains/(losses)

Total comprehensive income
Dividends on ordinary capital
Cancellation of treasury shares(b)
Other movements in treasury shares(c)
Share-based payment credit(d)
Dividends paid to non-controlling interests
Currency retranslation gains/(losses) net of tax
Hedging gain/(loss) transferred to non-financial assets
Other movements in equity
31 December 2019
Profit or loss for the period
Other comprehensive income,net of tax:

Gains/(losses) on

Equity instruments
Cash flow hedges

Remeasurement of defined benefit pension plans
Currency retranslation gains/(losses)

Total comprehensive income
Dividends on ordinary capital
Issue of PLC ordinary shares as part of Unification(f)
Cancellation of NV ordinary shares as part of Unification(f)
Other effects of Unification(g)
Movements in treasury shares(c)
Share-based payment credit(d)
Dividends paid to non-controlling interests
Currency retranslation gains/(losses) net of tax
Hedging gain/(loss) transferred to non-financial assets
Net gain arising from Horlicks acquisition(h)
Other movements in equity(e)
31 December 2020

€ million
Called
up share
capital
484
–
484
–

€ million
Share
premium
account
130
–
130
–

€ million
Unifi-
cation
reserve
–
–
–
–

–
–
–
–
–
–
–
(20)
–
–
–
–
–
–
464
–
464
–

–
–
–
–
–
–
(44)
–
–
–
–
–
–
420
–

–
–
–
–
–
–
51
(233)
(146)
–
–
–
–
–
–
–
92

–
–
–
–
–
–
–
–
–
–
–
(1)
–
–
129
–
129
–

–
–
–
–
–
–
–
–
–
–
5
–
–
134
–

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

–
–
–
–
–
–
–
(20)
73,364
–
–
–
(6)
–
–
–
73,472

–
–
–
–
–
–
–
–
(73,364)
–
–
–
–
–
–
–
(73,364)

€ million

Other
reserves
(13,587)
–
(13,587)
–

Retained
profit
26,413
393
26,806
9,369

51
(56)
–
(814)
(819)
–
(6,020)
5,069
(8)
–
–
–
71
76
(15,218)
–
(15,218)
–

25
176
–
(18)
183
–
9,416
64
–
–
–
32
(51)
(5,574)
–

68
62
–
(2,356)
(2,226)
–
–
–
132
220
–
–
–
10
–
(44)
(7,482)

–
–
(330)
(10)
9,029
(4,081)
–
(5,049)
(245)
196
–
–
–
(634)
26,022
(38)
25,984
5,625

–
–
352
2
5,979
(4,223)
(9,372)
(231)
151
–
–
–
(76)
18,212
5,581

–
–
217
(22)
5,776
(4,300)
(51)
253
14
(158)
108
–
–
–
2,930
(236)
22,548

Total
13,440
393
13,833
9,369

51
(56)
(330)
(824)
8,210
(4,081)
(6,020)
–
(253)
196
–
(1)
71
(558)
11,397
(38)
11,359
5,625

25
176
352
(16)
6,162
(4,223)
–
(167)
151
–
5
32
(127)
13,192
5,581

68
62
217
(2,378)
3,550
(4,300)
–
–
–
62
108
–
(6)
10
2,930
(280)
15,266

113

€ million
Non-
controlling
interests
758
–
758
419

€ million

Total
equity
14,198
393
14,591
9,788

–
1
2
(15)
407
–
–
–
–
–
(342)
–
–
(103)
720
–
720
401

4
–
1
1
407
–
–
–
–
(435)
–
–
2
694
492

10
(2)
(2)
(212)
286
–
–
–
–
–
–
(559)
–
2
1,918
48
2,389

51
(55)
(328)
(839)
8,617
(4,081)
(6,020)
–
(253)
196
(342)
(1)
71
(661)
12,117
(38)
12,079
6,026

29
176
353
(15)
6,569
(4,223)
–
(167)
151
(435)
5
32
(125)
13,886
6,073

78
60
215
(2,590)
3,836
(4,300)
–
–
–
62
108
(559)
(6)
12
4,848
(232)
17,655

(a) Repurchase of shares reflects the cost of acquiring ordinary shares as part of the share buyback programmes announced on 19 April 2018 and 6 April 2017.
(b) During 2019, 254,012,896 NV ordinary shares and 18,660,634 PLC ordinary shares were cancelled and in 2018 122,965,077 PLC ordinary shares were cancelled. The

amount paid to repurchase these shares was initially recognised in other reserves and is transferred to retained profit on cancellation.

(c) Includes purchases and sales of treasury shares, and transfer from treasury shares to retained profit of share-settled schemes arising from prior years and differences

between exercise and grant price of share options.

(d) The share-based payment credit relates to the non-cash charge recorded against operating profit in respect of the fair value of share options and awards granted to

employees.

(e) 2020 includes €163 million paid for purchase of the non-controlling interest in Unilever Malaysia. 2018 includes a €662 million premium paid for purchase of the non-

(f)

controlling interest in Unilever South Africa from Remgro.
As part of Unification (see note 1 for further details), the shareholders of NV were issued new PLC ordinary shares, and all NV shares in issue were cancelled. The net
impact is recognised in retained profit.

(g) Includes the reduction of PLC’s share capital following the cessation of the Equalisation Agreement. Prior to Unification, a conversion rate of £1= €5.143 was used in

accordance with the Equalisation Agreement to translate PLC’s share capital. Following Unification, PLC’s share capital has been translated using the exchange rate
at the date of Unification. To reflect the legal share capital of the PLC company, an increase to share premium of €73,364 million and a debit unification reserve for the
same amount have been recorded as there is no change in the net assets of the group. This debit is not a loss as a matter of law.

(h) Consideration for the Main Horlicks Acquisition included the issuance of shares in a group subsidiary, Hindustan Unilever Limited, which resulted in a net gain being

recognised within equity. See note 21 for further details.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS

114

Consolidated Financial Statements Unilever Group continued

Consolidated balance sheet

for the year ended 31 December

Assets

Non-current assets

Goodwill

Intangible assets

Property, plant and equipment

Pension asset for funded schemes in surplus

Deferred tax assets

Financial assets

Other non-current assets

Current assets

Inventories

Trade and other current receivables

Current tax assets

Cash and cash equivalents

Other financial assets

Assets held for sale

Total assets

Liabilities

Current liabilities

Financial liabilities

Trade payables and other current liabilities

Current tax liabilities

Provisions

Liabilities held for sale

Non-current liabilities

Financial liabilities

Non-current tax liabilities

Pensions and post-retirement healthcare liabilities:

Funded schemes in deficit

Unfunded schemes

Provisions

Deferred tax liabilities

Other non-current liabilities

Total liabilities

Equity

Shareholders’ equity

Non-controlling interests

Total equity

Total liabilities and equity

Notes

€ million
2020

€ million
2019

17A

15C

18,942

15,999

10,558

2,722

1,474

876

931

18,067

12,962

12,062

2,422

1,336

874

653

51,502

48,376

4,462

4,939

372

5,548

808

16,157

67,659

4,461

14,132

1,451

547

4,164

6,695

397

4,185

907

16,430

64,806

4,691

14,768

898

620

20,592

20,978

22,844

149

1,109

1,326

583

3,166

235

29,412

50,004

15,266

2,389

17,655

67,659

23,566

182

1,157

1,461

664

2,573

339

29,942

50,920

13,192

694

13,886

64,806

These financial statements have been approved by the Directors.

The Board of Directors
3 March 2021

Unilever Annual Report and Accounts 2020Notes

Consolidated cash flow statement

for the year ended 31 December

Net profit

Taxation

Share of net (profit)/loss of joint ventures/associates and other (income)/loss
from non-current investments and associates

Net monetary (gain)/loss arising from hyperinflationary economies

Net finance costs

Operating profit

Depreciation, amortisation and impairment

Changes in working capital:

Inventories

Trade and other receivables

Trade payables and other liabilities

Pensions and similar obligations less payments

Provisions less payments

Elimination of (profits)/losses on disposals

Non-cash charge for share-based compensation

Other adjustments(a)

Cash flow from operating activities

Income tax paid

Net cash flow from operating activities

Interest received

Purchase of intangible assets

Purchase of property, plant and equipment

Disposal of property, plant and equipment

Acquisition of businesses and investments in joint ventures and associates

Disposal of businesses, joint ventures and associates

Acquisition of other non-current investments

Disposal of other non-current investments

Dividends from joint ventures, associates and other current/non-current
investments

(Purchase)/sale of financial assets

Net cash flow (used in)/from investing activities

Dividends paid on ordinary share capital

Interest paid

Net change in short-term borrowings

Additional financial liabilities

Repayment of financial liabilities

Capital element of lease payments

Repurchase of shares

Other movements on treasury shares

Other financing activities(b)

Net cash flow (used in)/from financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Effect of foreign exchange rate changes

Cash and cash equivalents at the end of the year

17A

€ million
2020

6,073

1,923

(178)

(20)

505

8,303

2,018

680

(587)

1,125

142

(182)

(53)

108

(1)

10,933

(1,875)

9,058

169

(158)

(863)

(1,426)

(128)

188

558

(1,481)

(4,279)

(624)

722

3,117

(3,577)

(443)

–

(720)

(5,804)

1,773

4,116

(414)

5,475

115

€ million
2019

6,026

2,263

€ million
2018

9,788

2,572

(176)

(32)

627

8,708

1,982

(9)

313

(445)

123

(260)

151

10,641

(2,532)

8,109

146

(210)

(1,316)

(1,122)

177

(160)

164

(68)

(2,237)

(4,209)

(694)

337

5,911

(4,912)

(435)

–

(201)

(464)

(207)

(122)

608

12,639

2,216

(793)

(471)

(1,298)

976

(128)

(4,313)

196

(260)

9,612

(2,294)

7,318

110

(203)

(1,329)

108

(1,336)

7,093

(94)

151

154

(10)

4,644

(4,066)

(571)

(4,026)

10,595

(6,594)

(481)

(6,020)

(257)

(693)

(4,667)

(12,113)

1,205

3,090

(179)

4,116

(151)

3,169

3,090

(a) 2018 includes a non-cash credit of €277 million from early settlement of contingent consideration relating to Blueair.
(b) Other financing activities include cash paid for the purchase of non-controlling interests and dividends paid to minority interest.

The cash flows of pension funds (other than contributions and other direct payments made by the Group in respect of pensions and similar
obligations) are not included in the Group cash flow statement.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS116

Notes to the Consolidated Financial
Statements Unilever Group

1. Accounting information

and policies

Unification

On 29 November 2020, the Unilever Group underwent a reorganisation
so that there were no longer two parent companies, Unilever N.V.
(“NV”) and Unilever PLC (“PLC”), but one parent company PLC. This
reorganisation is referred to as “Unification” in the Group consolidated
financial statements.

Prior to 29 November 2020, the Group operated with two parent
companies, NV and PLC, who together with the group companies
operated as a single economic entity. NV and PLC had the same
Directors and were linked by a series of agreements, including an
Equalisation Agreement, which were designed so that the positions of
the shareholders of both companies were as closely as possible as if they
held shares in a single company. NV and PLC together formed a single
reporting entity for the purposes of presenting consolidated financial
statements and group companies included in the consolidation included
those companies controlled by NV or PLC.

Following Unification, all group companies are now controlled solely
by PLC. There is no change to the companies included in the Group as
a result of Unification, other than NV ceasing to exist.

Unification was implemented through a Cross-Border Merger, as a
result of which (i) PLC acquired all of the assets, liabilities and legal
relationships of NV by universal succession of title; (ii) NV was dissolved;
and (iii) PLC issued and allotted shares in its capital to former NV
shareholders, except for a very small minority of NV shareholders
that chose to receive cash instead of PLC shares. The shareholders of
NV received one new PLC share in exchange for each NV share held,
consistent with the 1 to 1 equalisation ratio as set out in the Equalisation
Agreement.

The transfer of assets and liabilities from NV to PLC that occurred
as part of the Cross-Border Merger was within the Group so there is
no revaluation of these assets and liabilities in the Group financial
statements. The only impact to the consolidated balance sheet from
Unification is within equity due to the cancellation of NV shares and
issuance of PLC shares.

Additional details on the impact of Unification on the PLC company
financial statements are given in the PLC Company Accounts on pages
168 to 176.

Basis of consolidation

Group companies included in the consolidated financial statements for 2020
are PLC and all subsidiary undertakings, which are those entities controlled
by PLC. Control exists when the Group has the power to direct the activities of
an entity so as to affect the return on investment.

Due to the operational and contractual arrangements referred to above,
prior to Unification NV and PLC formed a single reporting entity for the
purposes of presenting consolidated financial statements. Accordingly,
group companies included in the comparative information provided in the
consolidated financial statements, for 2019 and 2018, are PLC and NV and
those companies controlled by NV or PLC during those years.

The net assets and results of acquired businesses are included in the
consolidated financial statements from their respective dates of acquisition,
being the date on which the Group obtains control. As noted above,
Unification did not cause the acquisition by the Group of any new business.
All companies controlled by NV before Unification are included in the Group
consolidation for the year ending 31 December 2020 and they were already
Group companies prior to Unification.

The results of disposed businesses are included in the consolidated financial
statements up to their date of disposal, being the date control ceases.

Intra-group transactions and balances are eliminated.

Companies legislation and accounting standards

The consolidated financial statements have been prepared in
accordance with international accounting standards in conformity with
the requirements of the Companies Act 2006, international financial
reporting standards (IFRS) adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union and IFRS as issued by the
International Accounting Standards Board.

These financial statements are prepared under the historical cost
convention unless otherwise indicated.

These financial statements have been prepared on a going concern
basis. Refer to the going concern statement on page 104.

Accounting policies

The accounting policies adopted are the same as those which were
applied for the previous financial year, except as set out above under the
headings ‘Unification’ and ‘Basis of consolidation’ and below under the
heading ‘Recent accounting developments’.

Accounting policies are included in the relevant notes to the consolidated
financial statements. These are presented as text highlighted in grey on
pages 116 to 167. The accounting policies below are applied throughout
the financial statements.

Foreign currencies

The consolidated financial statements are presented in euros. The
functional currency of PLC is pound sterling. Items included in the
financial statements of individual group companies are recorded in
their respective functional currency which is the currency of the primary
economic environment in which each entity operates.

Foreign currency transactions in individual group companies are
translated into functional currency using exchange rates at the date
of the transaction. Foreign exchange gains and losses from settlement
of these transactions, and from translation of monetary assets and
liabilities at year-end exchange rates, are recognised in the income
statement except when deferred in equity as qualifying hedges.

In preparing the consolidated financial statements, the balances in
individual group companies are translated from their functional currency
into euros. Apart from the financial statements of group companies in
hyperinflationary economies (see below), the income statement, the
cash flow statement and all other movements in assets and liabilities are
translated at average rates of exchange as a proxy for the transaction
rate, or at the transaction rate itself if more appropriate. Assets and
liabilities are translated at year-end exchange rates.

The financial statements of group companies whose functional currency
is the currency of a hyperinflationary economy are adjusted for inflation
and then translated into euros using the balance sheet exchange
rate. Amounts shown for prior years for comparative purposes are
not modified. To determine the existence of hyperinflation, the Group
assesses the qualitative and quantitative characteristics of the economic
environment of the country, such as the cumulative inflation rate over the
previous three years.

The ordinary share capital of PLC is translated to euro using the historical
rate at the date the shares were issued (see note 15B on page 144).

The effect of exchange rate changes during the year on net assets of
foreign operations is recorded in equity. For this purpose net assets
include loans between group companies and any related foreign
exchange contracts where settlement is neither planned nor likely to
occur in the foreseeable future.

The Group applies hedge accounting to certain exchange differences
arising between the functional currencies of a foreign operation and PLC,
regardless of whether the net investment is held directly or through an
intermediate parent. Differences arising on retranslation of a financial
liability designated as a foreign currency net investment hedge are recorded
in equity to the extent that the hedge is effective. These differences are
reported within profit or loss to the extent that the hedge is ineffective.

Unilever Annual Report and Accounts 2020117

1. Accounting information and policies continued

Cumulative exchange differences arising since the date of transition to
IFRS of 1 January 2004 are reported as a separate component of other
reserves. In the event of disposal or part disposal of an interest in a group
company either through sale or as a result of a repayment of capital, the
cumulative exchange difference is recognised in the income statement as
part of the profit or loss on disposal of group companies.

Hyperinflationary economies

The Argentinian economy was designated as hyperinflationary from
1 July 2018. As a result, application of IAS 29 ‘Financial Reporting in
Hyperinflationary Economies’ has been applied to all Unilever entities
whose functional currency is the Argentinian Peso. The application of
IAS 29 includes:
■ Adjustment of historical cost non-monetary assets and liabilities for
the change in purchasing power caused by inflation from the date of
initial recognition to the balance sheet date;

■ Adjustment of the income statement for inflation during the reporting

period;

■ The income statement is translated at the period end foreign

exchange rate instead of an average rate; and

■ Adjustment of the income statement to reflect the impact of inflation

and exchange rate movement on holding monetary assets and
liabilities in local currency.

The main effects of the Group consolidated financial statements for
2020 are:
■ Total assets are reduced by €68 million
■ Turnover is reduced by €58 million
■ Operating profit is reduced by €23 million

Critical accounting estimates and judgements

The preparation of financial statements requires management to make
estimates and judgements in the application of accounting policies that
affect the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates. Estimates and judgements
are continuously evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to
be reasonable. Revisions to accounting estimates are recognised in the
period in which the estimate is revised and in any future period affected.

The following estimates are those that management believe have the
most significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are:
■ Measurement of defined benefit obligations – the valuations of the
Group’s defined benefit pension plan obligations are dependent on
a number of assumptions. These include discount rates, inflation and

life expectancy of scheme members. Details of these assumptions
and sensitivities are in note 4B.

■ Measurement of consideration and assets and liabilities acquired as
part of business combinations – estimates are required to value the
assets and liabilities acquired in business combinations. Intangible
assets such as brands are commonly a core part of an acquired
business as they allow us to obtain more value than would otherwise
be possible. During 2020 Unilever completed several acquisitions, as
explained in note 21. The Horlicks brand acquired in 2020 was valued
at €2.7 billion based on the expected cashflows of the brand. We
involved external professionals to advise on the valuation techniques
and key assumptions in the valuation. This input, combined with our
internal knowledge and expertise on the relevant market growth
opportunities, enabled us to determine the appropriate brand
valuation. Additionally,contingent consideration depends on an
acquired business achieving targets within a fixed period. Estimates
of future performance are required to calculate the obligations at the
time of acquisition and at each subsequent reporting date. See note
21 for further information.

The following judgements are those that management believe have
the most significant effect on the amounts recognised in the Group’s
financial statements:
■ Separate presentation of items in the income statement – certain
items of income or expense are presented separately as non-
underlying items. These are excluded in several of our performance
measures, including underlying operating profit and underlying
earnings per share due to their nature and/or frequency of
occurrence. See note 3 for further details.

■ Utilisation of tax losses and recognition of other deferred tax assets
– The Group operates in many countries and is subject to taxes in
numerous jurisdictions. Management uses judgement to assess the
recoverability of tax assets such as whether there will be sufficient
future taxable profits to utilise losses – see note 6B.

■ Likelihood of occurrence of provisions and contingent liabilities –

events can occur where there is uncertainty over future obligations.
Judgement is required to determine if an outflow of economic
resources is probable, or possible but not probable. Where it is
probable, a liability is recognised and further judgement is used
to determine the level of the provision. Where it is possible but not
probable, further judgement is used to determine if the likelihood is
remote, in which case no disclosures are provided; if the likelihood
is not remote then judgement is used to determine the contingent
liability disclosed. Unilever does not have provisions and contingent
liabilities for the same matters. External advice is obtained for any
material cases. See notes 6A, 19 and 20.

■ Recognition of pension surplus – where there is an accounting

surplus on a defined benefit plan, management uses judgement
to determine whether the Group can realise the surplus through
refunds, reductions in future combinations or a combination of both.

Recent accounting developments adopted by the Group

The Group applied for the first-time amendments to the following standards from 1 January 2020.

Applicable standard

Key requirements

Impact on Group

Interest Rate Benchmark
Reform (Phase 1)

Amendments to IFRS 9, IAS 39
and IFRS 7

The amendments modified specific hedge accounting
requirements so entities can continue to forecast future cash
flows assuming that the interest rate benchmark continue
despite ongoing reviews of interest rate benchmark reform.
As a result there is no requirement for an entity to discontinue
hedge relationships or to reassess the economic relationships
between hedged items and hedging instruments as a result
of the uncertainties of the interest rate benchmark reform.

We do not have significant derivatives that
refer to an interest rate benchmark so these
amendments have not had a material impact
on Unilever.

All other standards or amendments to standards that have been issued by the IASB and were effective by 1 January 2020 were not applicable
or material to Unilever.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS118

Notes to the Consolidated Financial Statements Unilever Group continued

New standards, amendments and interpretations of existing standards that are not yet effective and have not
been early adopted by the Group

The following new standards have been released but are not yet adopted by the Group. The expected impact and progress is shown below. In
addition to the above, based on an initial review the Group does not currently believe adoption of the following standard/amendments will have
a material impact on the consolidated results or financial position of the Group.

Applicable standard

Key requirements or changes in accounting policy

Interest Rate Benchmark
Reform (Phase 2)

Amendments to IFRS 9, IAS
39, IFRS 7, IFRS 4 and IFRS 16

The amendments are applicable when an existing interest rate benchmark is replaced by another interest rate
benchmark. The amendments provide a practical expedient that modifications to asset and liability values
as a direct consequence of the interest rate benchmark reform and made on an economically equivalent basis
(i.e. where the basis for determining contractual cash flows is the same), can be accounted for by only updating
the effective interest rate.

Effective from the year ended
31 December 2021

IFRS 17 ‘Insurance Contracts’

Effective from the year ended
31 December 2023

Additionally, hedge accounting is not discontinued solely because of the replacement of another interest
rate benchmark. Hedging relationships (and related documentation) must instead be amended to reflect
modifications to the hedged item, hedging instrument and hedged risk.

This standard introduces a new model for accounting for insurance contracts. Work continues to review existing
arrangements to determine the impact on adoption.

All other standards or amendments to standards that have been issued by the IASB and are effective from 1 January 2021 onwards are not applicable
or material to Unilever.

2. Segment information

Segmental reporting

Beauty & Personal Care

■ primarily sales of skin cleansing (soap, shower), hair care (shampoo, conditioner, styling), skin care (face,

hand and body moisturisers) and deodorants categories.

Foods & Refreshment

■ primarily sales of ice cream, savoury (soups, bouillons, seasoning), dressings (mayonnaise, ketchup)

and tea categories.

Home Care

■ primarily sales of fabric category (washing powders and liquids, rinse conditioners) and includes a wide

range of cleaning products.

Revenue

Turnover comprises sales of goods after the deduction of discounts, sales taxes and estimated returns. It does not include sales between group
companies. Discounts given by Unilever include rebates, price reductions and incentives given to customers, promotional couponing and trade
communication costs and are based on the contractual arrangements with each customer. Discounts can either be immediately deducted from
the sales value on the invoice or off-invoice and settled later through credit notes when the precise amounts are known. Rebates are generally
off-invoice. Amounts provided for discounts at the end of a period require estimation; historical data and accumulated experience is used to
estimate the provision using the most likely amount method and in most instances the discount can be estimated using known facts with a high
level of accuracy. Any differences between actual amounts settled and the amounts provided are not material and recognised in the subsequent
reporting period.

Customer contracts generally contain a single performance obligation and turnover is recognised when control of the products being sold has
transferred to our customer as there are no longer any unfulfilled obligations to the customer. This is generally on delivery to the customer but
depending on individual customer terms, this can be at the time of dispatch, delivery or upon formal customer acceptance. This is considered the
appropriate point where the performance obligations in our contracts are satisfied as Unilever no longer has control over the inventory.

Our customers have the contractual right to return goods only when authorised by Unilever. At 31 December 2020, an estimate has been made of
goods that will be returned and a liability has been recognised for this amount. An asset has also been recorded for the corresponding inventory
that is estimated to return to Unilever using a best estimate based on accumulated experience.

Some of our customers are distributors who may be able to return unsold goods in consignment arrangements.

Underlying operating profit

Underlying operating profit means operating profit before the impact of non-underlying items within operating profit (see note 3). 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.

Unilever Annual Report and Accounts 2020
119

2. Segment information continued

Our segments are comprised of similar product categories. 10 categories (2019: 9; 2018: 9) individually accounted for 5% or more of our revenue in one
or more of the last three years. The following table shows the relevant contribution of these categories to Group revenue for the periods shown:

Other post-
employment
benefit plans

Defined benefit
pension plans

Other post-
employment
benefit plans

1.3%

2.2%

2.9%

2.1%

2.3%

n/a

3.3%

n/a

3.0%

n/a

5.1%

1.9%

2.3%

2.9%

2.2%

2.4%

n/a

3.9%

n/a

3.0%

n/a

5.4%

The valuations of other post-employment benefit plans generally assume a higher initial level of medical cost inflation, which falls from 6% to the
long-term rate within the next four years. Assumed healthcare cost trend rates have a significant effect on the amounts reported for healthcare plans.

During 2020, refinements were made in assumption setting methodologies to reflect changes being made more generally by corporates and their
advisers in setting discount rates and future inflation rates, specifically in the UK, which resulted in a €880 million lower liability.

For the UK and Netherlands pension plans, representing approximately 70% of all defined benefit pension liabilities, the assumptions used at
31 December 2020 and 2019 were:

Discount rate

Inflation

Rate of increase in salaries

Rate of increase for pensions in payment (where provided)

Rate of increase for pensions in deferment (where provided)

Number of years a current pensioner is expected to live beyond age 65:

Men

Women

Number of years a future pensioner currently aged 45 is expected to live beyond
age 65:

Men

Women

United Kingdom

Netherlands

2019

2020

2019

2.0%

2.9%

3.2%

2.8%

21.6

23.4

22.6

24.6

0.7%

1.5%

2.0%

1.5%

21.5

23.6

23.4

25.4

1.1%

1.5%

2.0%

1.5%

22.6

24.1

24.5

26.2

2020

1.4%

2.7%

3.3%

2.7%

21.7

23.4

22.7

24.6

Demographic assumptions, such as mortality rates, are set with having regard to the latest trends in life expectancy (including expectations of future
improvements), plan experience and other relevant data. These assumptions are reviewed and updated as necessary as part of the periodic actuarial
valuation of the pension plans. The years of life expectancy for 2020 above have been translated from the following tables:

UK: Standard life expectancy tables Series S3, adjusted to reflect the experience of our plan members analysed as part of the 2019 actuarial
valuation. Future improvements in longevity have been allowed for in line with the core CMI 2018 Mortality Projections Model with a 1.0% p.a. long-
term improvement rate.

Netherlands: The Dutch Actuarial Society’s AG Prognosetafel 2020 table is used with correction factors (2020) to allow for the typically longer life
expectancy for fund members relative to the general population. This table has an in-built allowance for future improvements in longevity.

The remaining defined benefit plans are considered immaterial. Their assumptions vary due to a number of factors including the currency and long-
term economic conditions of the countries where they are situated.

Unilever Annual Report and Accounts 2020125

Notes

€ million
2020

€ million
2019

€ million
2018

(223)

(216)

(220)

(37)

(203)

(419)

(9)

(428)

(5)

(2)

(193)

(334)

(30)

(364)

(16)

(41)

–

(179)

(439)

(25)

(464)

€ million
2018

(1,108)

–

611

(437)

4B. Pensions and similar obligations continued

Income statement
The charge to the income statement comprises:

Charged to operating profit:

Defined benefit pension and other benefit plans:

Current service cost

Employee contributions

Special termination benefits

Past service cost including (losses)/gains on curtailments

Settlements

Defined contribution plans

Total operating cost

Finance income/(cost)(a)

Net impact on the income statement (before tax)

(a) This includes the impact of interest on asset ceiling.

Statement of comprehensive income
Amounts recognised in the statement of comprehensive income on the remeasurement of the net defined benefit liability/asset.

Return on plan assets excluding amounts included in net finance income/(cost)

Change in asset ceiling, excluding amounts included in finance cost

Actuarial gains/(losses) arising from changes in demographic assumptions

Actuarial gains/(losses) arising from changes in financial assumptions

Experience gains/(losses) arising on pension plan and other benefit plan liabilities

Total of defined benefit costs recognised in other comprehensive income

€ million
2020

1,494

246

€ million
2019

2,385

(37)

183

(1,414)

(2,138)

(78)

250

(12)

381

Balance sheet
The assets, liabilities and surplus/(deficit) position of the pension and other post-employment benefit plans at the balance sheet date were:

Fair value of assets

Present value of liabilities

Computed net assets/(liabilities)

Irrecoverable surplus(a)

Net pension assets/(liabilities)

Of which in respect of:

Funded plans in surplus:

Liabilities

Assets

Aggregate Surplus:

Irrecoverable surplus

Pension asset net of liabilities

Funded plans in deficit:

Liabilities

Assets

Pension liability net of assets

Unfunded plans:

Pension liability

€ million 2020

Other post-
employment
benefit plans

€ million 2019

Other post-
employment
benefit plans

Pension plans

(447)

(438)

–

(438)

–

(40)

(32)

23,749

(23,438)

311

(37)

274

(17,772)

20,229

2,457

(37)

2,420

(4,657)

3,520

(1,137)

(484)

(470)

–

(470)

–

(32)

(20)

Pension plans

24,023

(23,272)

751

(26)

725

(18,043)

20,790

2,747

(26)

2,721

(4,310)

3,233

(1,077)

(919)

(407)

(1,009)

(452)

(a) A surplus is deemed recoverable to the extent that the Group can benefit economically from the surplus. Unilever assesses the maximum economic benefit available
through a combination of refunds and reductions in future contributions in accordance with local legislation and individual financing arrangements with each of our
funded defined benefit plans.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS126

Notes to the Consolidated Financial Statements Unilever Group continued

4B. Pensions and similar obligations continued

Reconciliation of change in assets and liabilities
The group of plans within ‘Rest of world’ category in the tables below are not materially different with respect to their risks that would require
disaggregated disclosure.

Movements in assets during the year:

1 January

Employee contributions

Settlements

Actual return on plan assets (excluding
amounts in net finance income/charge)

Change in asset ceiling, excluding amounts
included in finance cost

Interest income(a)

Employer contributions

Benefit payments

Others

Currency retranslation

31 December

(a) This includes the impact of interest on asset ceiling.

Movements in liabilities during the year:

1 January

Current service cost

Special termination benefits

Past service costs including (losses)/gains on
curtailments

Settlements

Interest cost

Actuarial gain/(loss) arising from changes in
demographic assumptions

Actuarial gain/(loss) arising from changes in
financial assumptions

Actuarial gain/(loss) arising from experience
adjustments

Benefit payments

Others

Currency retranslation

31 December

UK Netherlands

Rest of
world

€ million
2020
Total

UK Netherlands

Rest of
world

€ million
2019
Total

12,122

5,522

6,082

23,726

10,329

4,996

5,555

20,880

–

(67)

–

1,109

206

179

1,494

1,233

588

564

2,385

–

230

104

(467)

(645)

–

(166)

(47)

146

282

436

398

–

292

–

(37)

192

293

(37)

573

401

(507)

(1,140)

(455)

(165)

(588)

(1,208)

–

(235)

(880)

–

629

–

713

12,499

5,587

5,920

24,006

12,122

5,522

6,082

23,726

UK Netherlands

Rest of
world

€ million
2020
Total

UK Netherlands

Rest of
world

€ million
2019
Total

(11,001)

(5,097)

(7,824)

(23,922)

(9,739)

(4,664)

(7,351)

(21,754)

(114)

–

(3)

–

(106)

(37)

(223)

(37)

(104)

–

(4)

–

(108)

(216)

(5)

(2)

(5)

(2)

(208)

(55)

(182)

(445)

(276)

(82)

(245)

(603)

(1)

245

246

157

183

(806)

(354)

(254)

(1,414)

(955)

(511)

(672)

(2,138)

(67)

467

(44)

609

(6)

166

–

(5)

507

(38)

349

(78)

1,140

(38)

958

(44)

455

–

(551)

(15)

165

–

588

(20)

(77)

(12)

1,208

(20)

(628)

(11,148)

(5,060)

(7,511)

(23,719)

(11,001)

(5,097)

(7,824)

(23,922)

Unilever Annual Report and Accounts 2020127

4B. Pensions and similar obligations continued

Movements in (deficit)/surplus during the year:

1 January

Current service cost

Employee contributions

Special termination benefits

Past service costs including (losses)/gains on
curtailments

Settlements

Actual return on plan assets (excluding
amounts in net finance income/charge)

Change in asset ceiling, excluding amounts
included in finance cost

Interest cost

Interest income(a)

Actuarial gain/(loss) arising from changes in
demographic assumptions

Actuarial gain/(loss) arising from changes in
financial assumptions

Actuarial gain/(loss) arising from experience
adjustments

Employer contributions

Benefit payments

Others

Currency retranslation

31 December

(a) This includes the impact of interest on asset ceiling.

UK Netherlands

Rest of
world

€ million
2020
Total

1,121

(114)

425

(1,742)

(3)

(106)

–

(37)

(196)

(223)

(37)

UK Netherlands

Rest of
world

590

(104)

332

(1,796)

(4)

(108)

–

(5)

(2)

€ million
2019
Total

(874)

(216)

(5)

(2)

1,109

206

179

1,494

1,233

588

564

2,385

–

(208)

230

–

(55)

(182)

146

(445)

436

–

(276)

292

(1)

245

246

157

–

(82)

(37)

(245)

192

(37)

(603)

573

183

(806)

(354)

(254)

(1,414)

(955)

(511)

(672)

(2,138)

(67)

104

–

(36)

1,351

(6)

–

(3)

–

(5)

282

–

(17)

114

527

(1,591)

(78)

398

–

(18)

287

(44)

–

(15)

–

293

–

(18)

(12)

401

–

(18)

1,121

425

(1,742)

(196)

The actual return on plan assets during 2020 was €1,930 million, being €1,494 million of asset returns and €436 million of interest income shown in the
tables above (2019: €2,958 million).

Movements in irrecoverable surplus during the year:

1 January

Interest income

Change in irrecoverable surplus in excess of
interest

Currency retranslations

31 December

UK Netherlands

Rest of
world

€ million
2020
Total

UK Netherlands

Rest of
world

€ million
2019
Total

–

(37)

(1)

(26)

(37)

(1)

(26)

–

(37)

–

(37)

–

(37)

–

(37)

The duration of the principal defined benefit plan liabilities (representing 96% of total pension liabilities and other post-employment benefit
liabilities) and the split of liabilities between different categories of plan participants are:

Duration (years)

Active members

Deferred members

Retired members

UK Netherlands

Rest of
world(a)

12%

35%

53%

12%

43%

45%

20%

17%

63%

2020
Total

7 to 22

14%

32%

54%

UK Netherlands

14%

34%

52%

14%

41%

45%

Rest of
world(a)

2019
Total

7 to 23

21%

17%

62%

16%

31%

53%

(a) Rest of world numbers shown are weighted averages by liabilities.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS128

Notes to the Consolidated Financial Statements Unilever Group continued

4B. Pensions and similar obligations continued

Plan assets
The group of plans within ‘Rest of world’ category in the tables below are not materially different with respect to their risks that would require
disaggregated disclosure.

The fair value of plan assets, which are reported net of fund liabilities that are not employee benefits, at the end of the reporting period for each
category are as follows:

€ million
31 December 2020

UK Netherlands

Rest of
world

2020
Total

UK Netherlands

€ million
31 December 2019

Rest of
world

2019
Total

12,499

5,587

5,937

24,023

12,122

5,522

6,105

23,749

4,653

921

2,740

992

5,819

3,292

1,167

1,360

274

835

318

470

–

1,837

1,694

437

894

506

2,766

798

540

1,428

456

–

320

–

506

747

441

3,108

1,367

1,111

630

332

377

370

8,184

1,864

4,381

1,939

11,693

5,457

2,818

3,418

347

1,623

380

1,167

370

4,173

930

2,312

931

5,317

2,711

1,120

1,486

325

916

688

454

–

1,831

1,752

517

825

489

2,795

765

542

1,488

491

–

289

–

583

707

462

3,250

1,369

1,272

609

321

415

300

7,756

2,030

3,844

1,882

11,362

4,845

2,934

3,583

396

1,728

757

1,158

300

Total plan assets

Assets

Equities total

Europe

North America

Other

Fixed income total

Government bonds

Investment grade corporate bonds

Other fixed income

Private equity

Property and real estate

Hedge funds

Other

Other plans

Assets/fund (liabilities) that are not employee
benefits

Derivatives

130

144

(15)

259

249

(8)

292

The fair values of the above equity and fixed income instruments are determined based on quoted market prices in active markets. The fair value
of private equity, properties, derivatives and hedge funds are not based on quoted market prices in active markets. The Group uses derivatives and
other instruments to hedge some of its exposure to inflation and interest rate risk – the degree of this hedging of liabilities was 70% for interest rate
and 70% for inflation for the UK plan and 33% for interest rate and 20% for inflation for the Netherlands plan. Foreign currency exposures in part are
also hedged by the use of forward foreign exchange contracts. Assets included in the Other category are cash and insurance contracts which are also
unquoted assets.

Equity securities include Unilever securities amounting to €9 million (0.04% of total plan assets) and €12 million (0.05% of total plan assets) at
31 December 2020 and 2019 respectively. Property includes property occupied by Unilever amounting to €29 million and €30 million at 31 December
2020 and 2019 respectively.

The pension assets above exclude the assets in a Special Benefits Trust amounting to €44 million (2019: €54 million) to fund pension and similar
obligations in the United States (see also note 17A on page 157).

Sensitivities
The sensitivity of the overall pension liabilities to changes in the weighted key assumptions are:

Discount rate

Inflation rate

Life expectancy

Long-term medical cost inflation(a)

Change in liabilities

Change in assumption

Netherlands

Increase by 0.5%

Increase by 1 year

Increase by 1.0%

-8%

-9%

Total

-8%

(a) Long-term medical cost inflation only relates to post-retirement medical plans and its impact on these liabilities.

An equivalent decrease in each assumption would have an equal and opposite impact on liabilities.

The sensitivity analyses above have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the
reporting period and may not be representative of the actual change. It is based on a change in the key assumption while holding all other assumptions
constant. When calculating the sensitivity to the assumption, the same method used to calculate the liability recognised in the balance sheet has been
applied. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared with the previous period.

Unilever Annual Report and Accounts 2020129

4B. Pensions and similar obligations continued

Cash flow
Group cash flow in respect of pensions and similar post-employment benefits comprises company contributions paid to funded plans and benefits
paid by the company in respect of unfunded plans. The table below sets out these amounts:

Company contributions to funded plans:

Defined benefit(a)

Defined contributions

Benefits paid by the company in respect of unfunded plans:

Defined benefit

Group cash flow in respect of pensions and similar benefits

€ million
2021
Estimate

285

220

135

640

€ million
2020

€ million
2019

€ million
2018

266

203

132

601

244

193

157

594

238

179

144

561

(a) Following the conclusion of the 2019 Funding valuation of the US Unicare Pension Plan, the Group contributed $100 million into the plan in 2020. Deficit contributions to

the US Pension plan are expected to be nil for the following few years.

The Group’s funding policy is to periodically review the contributions made to the plans while taking account of local legislation.

4C. Share-based compensation plans

The fair value of awards at grant date is calculated using observable market price. This value is expensed over their vesting period, with a
corresponding credit to equity. The expense is reviewed and adjusted to reflect changes to the level of awards expected to vest, except where this
arises from a failure to meet a market condition. Any cancellations are recognised immediately in the income statement.

As at 31 December 2020 the Group had share-based compensation plans in the form of performance shares and other share awards. Following
Unification (see note 1 for more information on Unification), all continuing plans are now awarded in shares of PLC, and awards and rights under
plans in existence at the time of Unification have been converted into awards and rights over PLC shares. Unification does not result in modification to
the previously granted awards, any shares that vest will be PLC shares.

The numbers in this note include those for Executive Directors shown in the Directors’ Remuneration Report on pages 76 to 103 and those for key
management shown in note 4A on page 122. Non-Executive Directors do not participate in any of the share-based compensation plans.

The charge in each of the last three years is shown below, and relates to equity-settled plans:

Income statement charge

Performance share plans

Other plans

Performance share plans

€ million
2020

€ million
2019

€ million
2018

(98)

(10)

(108)

(142)

(9)

(151)

(183)

(13)

(196)

Performance share awards are made in respect of the Management Co-Investment Plan (MCIP). Awards for the Global Share Incentive Plan (GSIP)
were last made in February 2018 and vested in February 2021. No further MCIP or GSIP awards will be made. The awards of each plan will vest
between 0 and 200% of grant level, subject to the level of satisfaction of performance measures (limits for Executive Directors may vary, and are
detailed in the Directors’ Remuneration Report on pages 76 to 103).

The MCIP allowed Unilever’s managers to invest up to 100% of their annual bonus (a minimum of 33% and maximum of 67% for Executive Directors)
in shares in Unilever, and to receive a corresponding award of performance-related shares. The performance measures for MCIP are underlying sales
growth, underlying EPS growth, return on invested capital and sustainability progress index for the Group. MCIP awards made will vest after four
years.

Under the GSIP, Unilever’s managers received annual awards of PLC shares. The performance measures for GSIP are underlying sales growth,
underlying operating margin, and cumulative operating cash flow for the Group. There is an additional target based on relative total shareholder
return for senior executives. GSIP awards vest after three years.

A summary of the status of the Performance Share Plans as at 31 December 2020, 2019 and 2018 and changes during the years ended on these dates
is presented below:

Outstanding at 1 January

Awarded

Vested

Forfeited

Outstanding at 31 December

2020
Number
of shares

2019
Number
of shares

2018
Number
of shares

11,137,801

13,634,518

13,684,747

4,395,633

4,538,771

6,870,882

(3,240,738)

(6,041,011)

(5,854,388)

(921,260)

(994,477)

(1,066,723)

11,371,436

11,137,801

13,634,518

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS130

Notes to the Consolidated Financial Statements Unilever Group continued

4C. Share-based compensation plans continued

Share award value information

Fair value per share award during the year

2020

2019

2018

€43.91

€48.22

€42.44

Additional information
At 31 December 2020 shares in PLC totalling 12,283,872 were outstanding in respect of share-based compensation plans of PLC and its subsidiaries,
including North American plans. At 31 December 2019 shares in NV and PLC totalling 11,944,106 were outstanding in respect of share-based
compensation plans of NV, PLC and its subsidiaries, including North American plans.

Shortly before Unification, 4,523,367 NV and PLC ordinary shares, 892,155 NV NYRSs and 468,989 PLC ADSs held by NV in connection with share-based
compensation plans were transferred to an employee share ownership trust that will satisfy the awards granted. At 31 December 2020 the employee
share ownership trust held 5,884,511 PLC shares and PLC and its subsidiaries held 1,382,155 PLC shares which are held as treasury shares. At 31
December 2019 PLC and NV shares totalling 12,419,009 were held by NV as treasury shares. In the future either the employee share ownership trust or
subsidiaries of PLC will buy PLC shares in the open market to satisfy share-based payment obligations.

The book value of €483 million of the shares held by the trust and by Unilever PLC and its subsidiaries in respect of share-based compensation plans is
eliminated on consolidation by deduction from other reserves (2019: €640 million of shares were held as treasury shares by NV). Their market value at
31 December 2020 was €357 million (2019: €635 million).

Shares held to satisfy awards are accounted for in accordance with IAS 32 ‘Financial Instruments: Presentation’. All differences between the purchase
price of the shares held to satisfy awards granted and the proceeds received for the shares, whether on exercise or lapse, are charged to reserves.

Between 31 December 2020 and 23 February 2021 (the latest practicable date for inclusion in this report), nil shares were granted, 2,232,282 shares
vested and 43,435 shares were forfeited related to the Performance Share Plans.

5. Net finance costs

Net finance costs are comprised of finance costs and finance income, including net finance costs in relation to pensions and similar obligations.

Finance income includes income on cash and cash equivalents and income on other financial assets. Finance costs include interest costs in relation
to financial liabilities. This includes interest on lease liabilities which represents the unwind of the discount rate applied to lease liabilities.

Borrowing costs are recognised based on the effective interest method.

Net finance costs

Finance costs

Bank loans and overdrafts

Interest on bonds and other loans(a)

Interest on lease liabilities

Net gain/(loss) on transactions for which hedge accounting is not applied

On foreign exchange derivatives

Exchange difference on underlying items(b)

Finance income(c)

Pensions and similar obligations

Net finance costs before non-underlying items(d)

Interest related to the UK tax audit of intangible income and centralised services

Notes

€ million
2020

€ million
2019

€ million
2018

(672)

(32)

(533)

(82)

(25)

275

(300)

232

(9)

(449)

(56)

(505)

(821)

(46)

(617)

(100)

(58)

(321)

263

224

(30)

(627)

–

(627)

(718)

(44)

(560)

(127)

144

(131)

135

(25)

(608)

–

(608)

(a) Interest on bonds and other loans includes the impact of interest rate derivatives that are part of hedge accounting relationships and the related recycling of results

from the hedge accounting reserve. Includes an amount of €(21) million (2019: €(6) million) relating to unwinding of discount on deferred consideration for acquisitions.

(b) 2020 includes Nil (2019: €(40) million) finance cost due to change in functional currency in Group’s operating entities in Zimbabwe from US dollar to RTGS dollar. For

further details of derivatives for which hedge accounting is not applied, please refer to note 16C.

(c) Includes an amount of €90 million (2019: €70 million) that relates to interest on tax settlement in Brazil and €27 million (2019: Nil) related to interest on corporate

income tax refund in India.

(d) See note 3 for explanation of non-underlying items.

Unilever Annual Report and Accounts 2020131

6. Taxation

6A. Income tax

Income tax on the profit for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that
it relates to items recognised directly in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet
date, and any adjustments to tax payable in respect of previous years.

Current tax in the consolidated income statement will differ from the income tax paid in the consolidated cash flow statement primarily because
of deferred tax arising on temporary differences and payment dates for income tax occurring after the balance sheet date.

Unilever is subject to taxation in the many countries in which it operates. The tax legislation of these countries differs, is often complex and is subject
to interpretation by management and the government authorities. These matters of judgement give rise to the need to create provisions for tax
payments that may arise in future years with respect to transactions already undertaken. Provisions are made against individual exposures and
take into account the specific circumstances of each case, including the strength of technical arguments, recent case law decisions or rulings on
similar issues and relevant external advice. The provision is estimated based on one of two methods, the expected value method (the sum of the
probability weighted amounts in a range of possible outcomes) or the single most likely amount method, depending on which is expected to better
predict the resolution of the uncertainty.

Tax charge in income statement

Current tax

Current year

Over/(under) provided in prior years

Deferred tax

Origination and reversal of temporary differences

Changes in tax rates

Recognition of previously unrecognised losses brought forward

€ million
2020

€ million
2019

€ million
2018

(2,128)

(154)

(2,282)

344

(19)

359

(1,923)

(2,098)

119

(1,979)

(255)

(59)

(284)

(2,263)

(2,647)

(10)

(2,657)

(12)

(2,572)

The reconciliation between the computed weighted average rate of income tax expense, which is generally applicable to Unilever companies, and
the actual rate of taxation charged is as follows:

Reconciliation of effective tax rate

Computed rate of tax(a)

Differences between computed rate of tax and effective tax rate due to:

% 2020

% 2019

% 2018

Incentive tax credits

Withholding tax on dividends

Expenses not deductible for tax purposes

Irrecoverable withholding tax

Income tax reserve adjustments – current and prior year

Transfer to/(from) unrecognised deferred tax assets

Others

Underlying effective tax rate

Non-underlying items within operating profit(b)

Taxes related to the UK tax audit of intangible income and centralised
services(b)

Impact of Spreads disposal(b)

Taxes related to the reorganisation of our European business(b)

Effective tax rate

(2)

(1)

–

(1)

–

(2)

–

(2)

–

(3)

–

(1)

–

(4)

–

(a) The computed tax rate used is the average of the standard rate of tax applicable in the countries in which Unilever operates, weighted by the amount of underlying

profit before taxation generated in each of those countries. For this reason, the rate may vary from year to year according to the mix of profit and related tax rates.

(b) See note 3 for explanation of non-underlying items.

Our tax rate is reduced by incentive tax credits, the benefit from preferential tax regimes that have been legislated by the countries and provinces
concerned in order to promote economic development and investment. The tax rate is increased by business expenses which are not deductible for
tax, such as entertainment costs and some interest expense and by irrecoverable withholding taxes on dividends paid by subsidiary companies and
on other cross-border payments such as royalties and service fees, which cannot be offset against other taxes due. Uncertain tax provisions including
the related interest and penalties amounted to €879 million (2019: €787 million). In 2020, a provision of €186 million was established in respect of
the tax amortisation of intangible assets, including goodwill, related to Horlicks in India. Our expectation is that we will continue to provide for this
until the matter is resolved. We note that the Indian budget on 1 February 2021 includes a proposal to exclude goodwill from the definition of tax
depreciable assets effective 1 April 2020. If this were enacted €59 million of the provision would no longer be required with no material impact on the
income statement.

The Group’s future tax charge and effective tax rate could be affected by several factors, including changes in tax laws and their interpretation and
the continuing OECD international tax reform work, as well as the impact of acquisitions, disposals and any restructuring of our businesses.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS132

Notes to the Consolidated Financial Statements Unilever Group continued

6B. Deferred tax

Deferred tax is recognised using the liability method on taxable temporary differences between the tax base and the accounting base of items
included in the balance sheet of the Group. Certain temporary differences are not provided for as follows:
■ goodwill not deductible for tax purposes;
■ the initial recognition of assets or liabilities that affect neither accounting nor taxable profit; and
■ differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future.

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities,
using tax rates enacted, or substantively enacted, at the year end.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can
be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

€ million

Movements in 2020 and 2019

Pensions and similar obligations

Provisions and accruals

Goodwill and intangible assets

Accelerated tax depreciation

Tax losses

Fair value gains

Fair value losses

Share-based payments

Lease liability

Right of use asset

Other(a)

€ million
As at
1 January
2020

272

756

(2,096)

(685)

184

(50)

156

319

(269)

161

(1,237)

Income
statement

(97)

(6)

(30)

(4)

373

359

€ million
As at
31 December
2020

€ million
As at
1 January
2019

698

404

821

Other

(95)

(96)

(661)

(2,734)

(1,911)

(26)

(14)

(34)

(8)

(641)

190

(52)

146

294

(244)

526

(814)

(1,692)

(679)

130

155

175

428

(370)

(748)

€ million

Income
statement

(81)

(73)

(31)

(200)

(2)

(39)

(113)

107

Other

(51)

(154)

(18)

(9)

(5)

(6)

€ million
As at
31 December
2019

272

756

(2,096)

(685)

184

(50)

156

319

(269)

161

(284)

(205)

(1,237)

(a) The deferred tax - other includes the recognition of an asset of €345 million relating to the impact of the expected outcome of the Mutual Agreement Procedure which

Unilever applied for following the conclusion of the UK tax audit for the tax years 2011-2018.

At the balance sheet date, the Group had unused tax losses of €4,808 million (2019: €4,790 million) and tax credits amounting to €454 million (2019:
€524 million) available for offset against future taxable profits. Deferred tax assets have not been recognised in respect of unused tax losses of €4,246
million (2019: €4,272 million) and tax credits of €429 million (2019: €497 million), as it is not probable that there will be future taxable profits within the
entities against which the losses and credits can be utilised. Of these losses €4,195 million (2019: €4,108 million) have expiry dates, the majority being
corporate income tax losses in the Netherlands which expire between now and 2027.

Deferred tax assets have not been recognised in respect of other deductible temporary differences of €1,445 million (2019: €48 million) as it is not
expected they will be utilised. Of these differences €1,193 million relates to limitation on the deduction of interest expenses. There is no expiry date for
these differences.

At the balance sheet date, the aggregate amount of temporary differences associated with undistributed earnings of subsidiaries for which deferred
tax liabilities have not been recognised was €2,097 million (2019: €2,476 million). No liability has been recognised in respect of these differences
because the Group is in a position to control the timing of the reversal of the temporary differences, and it is probable that such differences will not
reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and
when the deferred income taxes relate to the same fiscal authority. The following amounts, determined after appropriate offsetting, are shown in the
consolidated balance sheet:

Movements in 2020 and 2019

Pensions and similar obligations

Provisions and accruals

Goodwill and intangible assets

Accelerated tax depreciation

Tax losses

Fair value gains

Fair value losses

Share-based payments

Lease liability

Right of use asset

Other

Of which deferred tax to be recovered/(settled) after more than 12 months

€ million
Assets
2020

€ million
Assets
2019

€ million
Liabilities
2020

€ million
Liabilities
2019

€ million
Total
2020

€ million
Total
2019

404

408

330

(37)

161

(1)

157

(128)

127

1,474

1,230

402

495

248

(67)

153

(14)

–

170

(142)

1,336

1,030

(324)

290

(130)

261

698

272

756

(3,064)

(2,344)

(2,734)

(2,096)

(604)

(618)

(51)

120

137

(116)

399

(36)

125

149

(127)

101

(641)

190

(52)

146

294

(244)

526

(3,166)

(2,573)

(1,692)

(3,311)

(2,681)

(2,081)

(685)

184

(50)

156

319

(269)

161

(1,237)

(1,651)

Unilever Annual Report and Accounts 2020133

6C. Tax on items recognised in equity or other comprehensive income

Income tax is recognised in equity or other comprehensive income for items recognised directly in equity or other comprehensive income.

Tax effects directly recognised in equity or other comprehensive income were as follows:

Movements in 2020 and 2019

Gains/(losses) on:

Equity instruments at fair value through other comprehensive income

Cash flow hedges

Remeasurements of defined benefit pension plans

Currency retranslation gains/(losses)

7. Combined earnings per share

€ million

Before
tax
2020

€ million
Tax
(charge)/
credit
2020

250

(2,646)

(2,232)

(27)

(35)

(5)

€ million

After
tax
2020

215

(2,590)

(2,237)

Before
tax
2019

198

381

620

€ million
Tax
(charge)/
credit
2019

(6)

(22)

(28)

(21)

(77)

€ million

After
tax
2019

176

353

(15)

543

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 shares.

In calculating diluted earnings per share and underlying earnings per share, a number of adjustments are made to the number of shares,
principally, the exercise of share plans by employees.

Underlying earnings per share is calculated as underlying profit attributable to shareholders’ equity divided by the diluted average number of ordinary
shares. In calculating underlying profit attributable to shareholders’ equity, 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.

Earnings per share for total operations for the 12 months were as follows:

Basic earnings per share

Diluted earnings per share

Underlying earnings per share

Calculation of average number of share units(a)

Average number of shares: PLC

Less treasury shares held by employee share trusts and companies

Average number of shares – used for basic earnings per share

Add dilutive effect of share-based compensation plans

Diluted average number of shares – used for diluted and underlying earnings per share

€
2020

2.13

2.12

2.48

2020

1,351.1

1,278.1

(8.9)

2,620.3

9.5

2,629.8

€
2019

2.15

2.14

2.55

€
2018

3.49

3.48

2.35

Millions of share units

2019

1,175.5

1,598.0

(157.0)

2,616.5

10.2

2,626.7

2018

1,264.0

1,714.7

(295.4)

2,683.3

11.5

2,694.8

(a) In the calculation of the weighted average number of share units, NV shares are included only for the period they were issued (until 29 November 2020). Following

Unification, all NV shares were cancelled and the shareholders of NV were issued PLC ordinary shares on a 1:1 ratio. Accordingly, there is no significant impact on the
average number of share units as a result of Unification.

Calculation of earnings

Net profit

Non-controlling interests

Net profit attributable to shareholders’ equity – used for basic and diluted earnings
per share

Post tax impact of non-underlying items

Underlying profit attributable to shareholders’ equity – used for underlying earnings
per share

Notes

€ million
2020

6,073

(492)

5,581

951

6,532

€ million
2019

6,026

(401)

5,625

1,063

€ million
2018

9,788

(419)

9,369

(3,024)

6,688

6,345

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS134

Notes to the Consolidated Financial Statements Unilever Group continued

8. Dividends on ordinary capital

Dividends are recognised on the date that the shareholder’s right to receive payment is established. This is generally the date when the dividend
is declared.

Dividends on ordinary capital during the year

PLC dividends

NV dividends(a)

(a) Amount relates to NV dividends paid prior to Unification.

€ million
2020

(1,911)

(2,389)

(4,300)

€ million
2019

(1,871)

(2,352)

(4,223)

€ million
2018

(1,819)

(2,262)

(4,081)

Four quarterly interim dividends were declared and paid during 2020 totalling €1.64 (2019: €1.62) per NV ordinary share and £1.45 (2019: £1.42) per PLC
ordinary share.

A quarterly dividend of €1,125 million (2019: €1,073 million) was declared on 4 February 2021, to be paid in March 2021; £0.38 per PLC ordinary share
(2019: £0.35). Total dividends declared in relation to 2020 were £1.48 (2019: £1.43) per PLC ordinary share.

9. Goodwill and intangible assets

Goodwill
Goodwill is initially recognised based on the accounting policy for business combinations (see note 21). Goodwill is subsequently measured at cost
less amounts provided for impairment.

Goodwill acquired in a business combination is assessed to determine whether new cash generating units are created, and if not, is allocated to
the Group’s CGUs, or groups of CGUs, that are expected to benefit from the synergies of the combination. These might not always be the same as
the CGUs that include the assets and liabilities of the acquired business. Each unit or group of units to which the goodwill is allocated represents the
lowest level within the Group at which the goodwill is monitored for internal management purposes, and is not larger than an operating segment.

The Group has ten cash generating units (CGUs) based on the three geographical areas and three divisions as well as a health and wellbeing CGU
which was recognised in 2019 following the acquisition of the OLLY business.

Intangible assets
Separately purchased intangible assets are initially measured at cost, being the purchase price as at the date of acquisition. On acquisition of new
interests in group companies, Unilever recognises any specifically identifiable intangible assets separately from goodwill. These intangible assets
are initially measured at fair value as at the date of acquisition.

Expenditure to support development of internally-produced intangible assets is recognised in profit or loss as incurred.

Indefinite-life intangibles mainly comprise trademarks and brands, for which there is no foreseeable limit to the period over which they are
expected to generate net cash inflows. These are considered to have an indefinite life, given the strength and durability of our brands and the
level of marketing support. These assets are not amortised but are subject to a review for impairment annually, or more frequently if events or
circumstances indicate this is necessary. Any impairment is charged to the income statement as it arises.

Finite-life intangible assets mainly comprise software, patented and non-patented technology, know-how and customer lists. These assets are
amortised on a straight-line basis in the income statement over the period of their expected useful lives, or the period of legal rights if shorter. None
of the amortisation periods exceeds ten years.

Unilever Annual Report and Accounts 20209. Goodwill and intangible assets continued

Movements during 2020

Cost

1 January 2020

Additions through business combinations(a)

Disposal of businesses

Additions

Disposals and other movements

Hyperinflationary adjustment

Currency retranslation

31 December 2020

Accumulated amortisation and impairment

1 January 2020

Amortisation/impairment for the year

Disposals and other movements

Currency retranslation

31 December 2020

Net book value 31 December 2020(b)

Movements during 2019

Cost

1 January 2019

Additions through business combinations

Disposal of businesses

Reclassification to held for sale

Additions

Disposals

Currency retranslation

Hyperinflationary adjustment

31 December 2019

Accumulated amortisation and impairment

1 January 2019

Amortisation/impairment for the year

Disposals of group companies

Disposals

Currency retranslation

31 December 2019

Net book value 31 December 2019(b)

135

€ million

Goodwill

Indefinite-life
intangible assets

Software

Other

Total

Finite-life intangible assets

19,246

2,407

12,121

4,244

(1)

–

(38)

(1,496)

20,118

–

(5)

(940)

15,420

(1,179)

(212)

–

(1,176)

18,942

(211)

15,209

2,991

–

156

(144)

–

(184)

2,819

(2,292)

(279)

139

150

(2,282)

537

1,161

(31)

–

(58)

1,074

(807)

(54)

–

(821)

253

35,519

6,620

(1)

158

(144)

(43)

(2,678)

39,431

(4,490)

(333)

139

194

(4,490)

34,941

€ million

Goodwill

Indefinite-life
intangible assets

Software

Other

Total

Finite-life intangible assets

18,502

11,247

2,689

1,103

444

(2)

–

313

(9)

726

(1)

–

150

(1)

–

205

(11)

108

–

(5)

–

(2)

–

33,541

1,220

(8)

(2)

208

(13)

583

(10)

19,246

12,121

2,991

1,161

35,519

(1,161)

(18)

–

(212)

–

(1,179)

18,067

(212)

11,909

(1,927)

(296)

–

(74)

(2,292)

699

(748)

(56)

(9)

(807)

354

(4,048)

(370)

(83)

(4,490)

31,029

(a) Includes the provisional fair value of goodwill and intangibles for acquisitions made in 2020 as well as subsequent changes to the fair value of goodwill and intangibles

for acquisitions made in 2019 where the initial acquisition accounting was provisional at the end of 2019. See note 21 for further details.

(b) Within indefinite-life intangible assets there are four existing brands that have a significant carrying value: Horlicks €2,718 million (2019: €nil), Knorr €1,744 milion (2019:
€1,816 million), Carver Korea €1,468 million (2019: €1,509 million) and Hellmann’s €1,112 million (2019: €1,220 million). The Horlicks brand was acquired in 2020 and the
valuation is provisional.

Impairment

We have tested goodwill and indefinite-life intangible assets for impairment. No impairment was identified. In 2019, a €18 million charge was
recognised in non-underlying items within the ‘impairments’ line (see note 3 on pages 121 and 122). This related to goodwill of a local business
classified to held for sale.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS136

Notes to the Consolidated Financial Statements Unilever Group continued

9. Goodwill and intangible assets continued

Significant CGUs

The goodwill and indefinite-life intangible assets held in the CGUs relating to Foods & Refreshment Europe, Foods & Refreshment The Americas, Foods
& Refreshment Asia/AMET/RUB, Beauty & Personal Care The Americas and Beauty & Personal Care Asia/AMET/RUB are considered significant within
the total carrying amounts of goodwill and indefinite-life intangible assets at 31 December 2020.

Foods & Refreshment Europe

Foods & Refreshment The Americas

Foods & Refreshment Asia/AMET/RUB(a)

Beauty & Personal Care The Americas

Beauty & Personal Care Asia/AMET/RUB

Total significant CGUs

Others(b)

Total CGUs

2020 CGUs

2019 CGUs

€ billion

Goodwill

€ billion
Indefinite-life
intangible assets

€ billion

Goodwill

€ billion
Indefinite-life
intangible assets

4.0

3.4

3.7

3.8

1.6

16.5

2.4

18.9

1.7

1.9

3.7

3.1

1.9

12.3

2.9

15.2

4.1

4.0

1.9

4.3

1.7

16.0

2.1

18.1

1.7

2.1

0.5

3.1

2.0

9.4

2.5

11.9

(a) The Main Horlicks Acquisition increased goodwill by €2.0 billion and indefinite-life intangible assets by €3.3 billion in 2020. These values are provisional.
(b) Included within Others are individually insignificant amounts of goodwill and intangible assets that have been allocated between multiple cash generating units.

Key assumptions

The recoverable amount of each CGU has been calculated based on its value in use, estimated as the present value of projected future cash flows.

The growth rates and margins for the significant CGUs are set out below:

For the year 2020

Longer-term sustainable growth rates

Average near-term nominal growth rates

Average operating margins

For the year 2019

Longer-term sustainable growth rates

Average near-term nominal growth rates

Average operating margins

Foods &
Refreshment
Europe

Foods &
Refreshment
The Americas

Foods &
Refreshment
Asia/AMET/RUB

Beauty &
Personal Care
The Americas

Beauty &
Personal Care
Asia/AMET/RUB

1.1%

(1.0)%

13%

1.7%

0.1%

15%

3.9%

4.9%

16%

1.7%

2.5%

22%

3.9%

3.4%

22%

Foods &
Refreshment
Europe

Foods &
Refreshment
The Americas

Foods &
Refreshment
Asia/AMET/RUB

Beauty &
Personal Care
The Americas

Beauty &
Personal Care
Asia/AMET/RUB

1.1%

1.2%

16%

1.7%

(1.2)%

15%

3.9%

6.5%

18%

1.7%

1.6%

21%

3.9%

5.3%

22%

Projected cash flows include specific estimates for a period of five years. The growth rates and operating margins used to estimate cash flows for the
first five years are based on past performance and on the Group’s three-year strategic plan, which includes the impact on our business of climate
change and activities we are undertaking to reduce carbon emissions, extended to years four and five.

The estimated cash flows after year five are extrapolated using a longer-term sustainable growth rate, which is determined as the lower of our own
three-year average market growth projection and external forecasts for the relevant market.

In 2020, the projected cash flows are discounted using pre-tax discount rates in the range between 6.0%-7.4% (2019: 7.4%). The discount rates are
specific to each CGU and are determined based on the weighted average cost of capital, including a market risk premium.

There are no reasonably possible changes in key assumptions that would cause the carrying amount of a CGU to exceed its recoverable amount.

Unilever Annual Report and Accounts 2020

137

10. Property, plant and equipment

The Group’s property, plant and equipment is comprised of owned assets (note 10A) and leased assets (note 10B). Property, plant and equipment
is measured at cost including eligible borrowing costs less depreciation and accumulated impairment losses.

Property, plant and equipment is subject to review for impairment if triggering events or circumstances indicate that this is necessary. If an
indication of impairment exists, the asset’s or cash generating unit’s recoverable amount is estimated and any impairment loss is charged to the
income statement as it arises.

Owned assets
Owned assets are initially measured at historical cost. Depreciation is provided on a straight-line basis over the expected average useful lives of the
assets. Residual values are reviewed at least annually. Estimated useful lives by major class of assets are as follows:
■ freehold buildings (no depreciation on freehold land)
■ leasehold land and buildings
■ plant and equipment

40 years
40 years (or life of lease if less)
2–20 years

Leased assets
The cost of a leased asset is measured as the lease liability at inception of the lease contract and other direct costs less any incentives granted by
the lessor. The Group has not capitalised leases which are less than 12 months or leases of low value assets. These mainly relate to IT equipment,
office equipment, furniture and fitting and other peripheral items. When a lease liability is remeasured, the related lease asset is adjusted by the
same amount.

Depreciation is provided on a straight-line basis from the commencement date of the lease to the end of the lease term.

Property, plant and equipment

Owned assets

Leased assets

Total

10A. Owned assets

Movements during 2020

Cost

1 January 2020

Additions through business combinations

Additions

Disposals and other movements

Hyperinflationary adjustment

Reclassification as held for sale

Currency retranslation

31 December 2020

Accumulated depreciation

1 January 2020

Depreciation charge for the year

Disposals and other movements

Hyperinflationary adjustment

Reclassification as held for sale

Currency retranslation

31 December 2020

Net book value 31 December 2020(a)

Includes capital expenditures for assets under construction

Notes

10A

10B

€ million
2020

8,909

1,649

10,558

€ million
2019

10,249

1,813

12,062

€ million
Land and
buildings

€ million
Plant and
equipment

€ million

Total

4,498

15,844

20,342

122

107

(90)

(18)

(19)

(397)

4,203

(1,479)

(135)

103

(1,440)

2,763

756

(901)

(27)

(81)

(1,330)

14,305

(8,614)

(1,093)

814

654

(8,159)

6,146

660

166

863

(991)

(45)

(100)

(1,727)

18,508

(10,093)

(1,228)

868

757

(9,599)

8,909

735

The Group has commitments to purchase property, plant and equipment of €251 million (2019: €264 million).

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS138

Notes to the Consolidated Financial Statements Unilever Group continued

10A. Owned assets continued

Movements during 2019

Cost

1 January 2019

Additions through business combinations

Additions

Disposals and other movements

Hyperinflationary adjustment

Reclassification as held for sale

Currency retranslation

31 December 2019

Accumulated depreciation

1 January 2019

Depreciation charge for the year

Disposals and other movements

Hyperinflationary adjustment

Reclassification as held for sale

Currency retranslation

31 December 2019

Net book value 31 December 2019(a)

Includes capital expenditures for assets under construction

(a) Includes €347 million (2019: €319 million) of freehold land.

10B. Leased assets

Movements during 2020

Cost

1 January 2020

Additions through business combinations

Additions

Disposals and other movements

Hyperinflationary adjustment

Currency retranslation

31 December 2020

Accumulated depreciation

1 January 2020

Depreciation charge for the year

Disposals and other movements

Currency retranslation

31 December 2020

Net book value 31 December 2020

€ million
Land and
buildings

€ million
Plant and
equipment

4,386

175

(72)

(3)

(63)

15,216

1,141

(649)

(28)

(116)

252

€ million

Total

19,602

1,316

(721)

(31)

(179)

320

4,498

15,844

20,342

(1,390)

(134)

(26)

(1,479)

3,019

(7,998)

(1,022)

456

(161)

(8,614)

7,230

872

(9,388)

(1,156)

484

119

(187)

(10,093)

10,249

950

€ million
Land and
buildings

€ million
Plant and
equipment

€ million

Total

2,874

390

(436)

(3)

(216)

2,639

(1,397)

(315)

300

101

(1,311)

1,328

827

189

(188)

–

(63)

768

(491)

(142)

150

(447)

321

3,701

579

(624)

(3)

(279)

3,407

(1,888)

(457)

450

137

(1,758)

1,649

Unilever Annual Report and Accounts 202010B. Leased assets continued

Movements during 2019

Cost

1 January 2019

Additions

Disposals and other movements

Hyperinflationary adjustment

Currency retranslation

31 December 2019

Accumulated depreciation

1 January 2019

Depreciation charge for the year

Disposals and other movements

Hyperinflationary adjustment

Currency retranslation

31 December 2019

Net book value 31 December 2019

139

€ million
Land and
buildings

€ million
Plant and
equipment

€ million

Total

2,770

278

(240)

2,874

(1,241)

(297)

154

(22)

(1,397)

1,477

816

174

(180)

–

827

(471)

(159)

150

–

(11)

(491)

336

3,586

452

(420)

3,701

(1,712)

(456)

304

(33)

(1,888)

1,813

Our leases mainly comprise of land and buildings and plant and equipment. The Group leases land and buildings for manufacturing, warehouse
facilities and office space and also sublets some property. Plant and equipment includes leases for vehicles.

The Group has recognised in the income statement, a charge of €96 million (2019: €97 million) for short-term leases and €77 million (2019:
€79 million) on leases for low-value assets.

During the year, the Group recognised an income of €19 million (2019: €25 million) from sublet properties.

Cash flows: The total cash outflows for leases was €525 million (2019: €534 million).

Lease liabilities: Lease liabilities are shown in note 15 on pages 143 and 147.

11. Other non-current assets

Joint ventures are undertakings in which the Group has an interest and which are jointly controlled by the Group and one or more other parties.
Associates are undertakings where the Group has an investment in which it does not have control or joint control but can exercise significant influence.

Interests in joint ventures and associates are accounted for using the equity method and are stated in the consolidated balance sheet at cost, adjusted
for the movement in the Group’s share of their net assets and liabilities. The Group’s share of the profit or loss after tax of joint ventures and associates
is included in the Group’s consolidated profit before taxation.

Where the Group’s share of losses exceeds its interest in the equity accounted investee, the carrying amount of the investment is reduced to zero and
the recognition of further losses is discontinued, except to the extent that the Group has an obligation to make payments on behalf of the investee.

Biological assets are measured at fair value less costs to sell with any changes recognised in the income statement.

Interest in net assets of joint ventures

Interest in net assets of associates

Long-term trade and other receivables(a)

Fair value of biological assets

Other non-current assets(b)

€ million
2020

€ million
2019

465

391

931

380

184

653

(a) Mainly relates to indirect tax receivables where we do not have the contractual right to receive payment within 12 months.
(b) Includes direct tax assets, withholding tax assets, interest on tax assets and contingent assets. During 2020 contingent assets of €73 million were recognised as part of

the Horlicks acquisition, see note 21 for further details.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS140

Notes to the Consolidated Financial Statements Unilever Group continued

11. Other non-current assets continued

Movements during 2020 and 2019

Joint ventures(a)

1 January

Additions

Dividends received/reductions

Share of net profit/(loss)

Currency retranslation

31 December

Associates(b)

1 January

Additions

Dividend received/reductions

Share of net profit/(loss)

Currency retranslation

31 December

€ million
2020

€ million
2019

(182)

177

(2)

–

(2)

–

(158)

179

–

(3)

(1)

(a) Our principal joint ventures are Unilever FIMA Lda for Portugal, Binzagr Unilever Distribution and Al Gurg Unilever for Middle East, the Pepsi/Lipton Partnership for the US

and Pepsi Lipton International Ltd for the rest of the world.

(b) Associates as at 31 December 2020 primarily comprise our investments in Langholm Capital Partners.

The joint ventures and associates have no contingent liabilities to which the Group is exposed, and the Group has no contingent liabilities in relation
to its interests in the joint ventures and associates.

The Group has no outstanding capital commitments to joint ventures.

Outstanding balances with joint ventures and associates are shown in note 23 on page 166.

12. Inventories

Inventories are valued at the lower of weighted average cost and net realisable value. Cost comprises direct costs and, where appropriate, a
proportion of attributable production overheads. Net realisable value is the estimated selling price less the estimated costs necessary to make
the sale.

Inventories

Raw materials and consumables

Finished goods and goods for resale

Total inventories

Provision for inventories

Provisions for inventories

1 January

Charge to income statement

Reduction/releases

Currency translations

Others(a)

31 December

€ million
2020

€ million
2019

1,523

3,223

4,746

(284)

4,462

1,399

3,053

4,452

(288)

4,164

€ million
2020

€ million
2019

288

116

(97)

(26)

284

205

153

(71)

–

288

(a) Others include the amount relating to the acquisition/disposal of businesses.

Inventories with a value of €204 million (2019: €159 million) are carried at net realisable value, this being lower than cost. During 2020, a total expense
of €381 million (2019: €363 million) was recognised in the income statement for inventory write downs and losses.

Unilever Annual Report and Accounts 2020141

13. Trade and other current receivables

Trade and other current receivables are initially recognised at fair value plus any directly attributable transaction costs. Subsequently these assets
are held at amortised cost, using the effective interest method and net of any impairment losses. Discounts payable to customers are shown as
a reduction in trade receivables when there is a legal right and intent to settle them on a net basis.

We do not consider the fair values of trade and other current receivables to be significantly different from their carrying values. Concentrations
of credit risk with respect to trade receivables are limited, due to the Group’s customer base being large and diverse. Our historical experience
of collecting receivables, supported by the level of default, is that credit risk is low across territories and so trade receivables are considered to
be a single class of financial assets. Impairment for trade receivables are calculated for specific receivables with known or anticipated issues
affecting the likelihood of recovery and for balances past due with a probability of default based on historical data as well as relevant
forward-looking information.

Trade and other current receivables

Due within one year

Trade receivables(a)

Prepayments and accrued income

Other receivables

€ million
2020

€ million
2019

3,433

423

1,083

4,939

4,916

579

1,200

6,695

(a) 2020 includes €61 million (2019: €698 million) due from KKR as a result of an arrangement following the sale of the global spreads business (excluding Southern Africa)

where Unilever provided services to KKR for two years from completion of the disposal. See also trade payables on page 142.

Included within trade receivables are discounts due to our customers of €2,082 million (2019: €2,423 million). The decrease from 2019 is primarily
driven by differences in the timing of promotional activities and the settlement of customer invoices compared to last year. Other receivables
comprise financial assets of €214 million (2019: €208 million), and non-financial assets of €869 million (2019: €992 million). Financial assets include
supplier and customer deposits, employee advances and certain derivatives. Non-financial assets mainly consist of reclaimable sales tax of €561
million (2019: €584 million).

Ageing of trade receivables

Not overdue

Past due less than three months

Past due more than three months but less than six months

Past due more than six months but less than one year

Past due more than one year

Total trade receivables

Impairment provision for trade receivables

€ million
2020

2,849

481

124

3,626

(193)

3,433

€ million
2019

3,856

827

186

164

5,127

(211)

4,916

The total impairment provision includes €193 million (2019: €211 million) for current trade receivables, €20 million (2019: €26 million) for other current
receivables and €63 million (2019: €84 million) for non-current trade and other receivables.

Impairment provision for total trade and other receivables

1 January

Charge to income statement

Reduction/releases

Reclassifications(a)

Currency translations

31 December

(a) 2019 includes an amount transferred from provisions relating to Brazil indirect taxes.

€ million
2020

€ million
2019

321

(68)

(44)

276

214

(54)

(4)

321

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS
142

Notes to the Consolidated Financial Statements Unilever Group continued

14. Trade payables and other liabilities

Trade payables
Trade payables are initially recognised at fair value less any directly attributable transaction costs. Trade payables are subsequently measured at
amortised cost, using the effective interest method.

Other liabilities
Other liabilities are initially recognised at fair value less any directly attributable transaction costs. Subsequent measurement depends on the type
of liability:
■ accruals are subsequently measured at amortised cost, using the effective interest method;
■ social security and sundry taxes are subsequently measured at amortised cost, using the effective interest method;
■ deferred consideration is subsequently measured at fair value with changes in the income statement as explained below; and
■ others are subsequently measured either at amortised cost, using the effective interest method or at fair value, with changes being recognised

in the income statement.

Deferred Consideration
Deferred consideration represents any payments to the sellers of a business that occur after the acquisition date. These typically comprise
contingent consideration and fixed deferred consideration:
■ fixed deferred consideration is a payment with a due date after acquisition that is not dependent on future conditions; and
■ contingent consideration is a payment which is dependent on certain conditions being met in the future and is often variable.

All deferred consideration is initially recognised at fair value as at the acquisition date, which includes a present value discount. Subsequently,
deferred consideration is measured to reflect the unwinding of discount on the liability, with changes recognised in finance cost within the income
statement. In the balance sheet it is remeasured to reflect the latest estimate of the achievement of the conditions on which the consideration is
based; changes in value other than the discount unwind are recognised as acquisition and disposal-related costs within non-underlying items in the
income statement.

We do not consider the fair values of trade payables and other liabilities to be significantly different from their carrying values.

Trade payables and other liabilities

Current: due within one year

Trade payables(a)

Accruals

Social security and sundry taxes

Deferred consideration

Others

Non-current: due after more than one year

Accruals

Deferred consideration

Others

€ million
2020

€ million
2019

8,375

4,266

401

1,047

14,132

121

235

9,190

4,153

507

879

14,768

117

169

339

Total trade payables and other liabilities

14,367

15,107

(a) 2020 includes €5 million (2019: €359 million) due to KKR as a result of an arrangement following the sale of the global spreads business (excluding Southern Africa).

Unilever provided services to KKR for two years from completion of the disposal and paid KKR for amounts collected on its behalf. See also trade receivables on page
141.

Included within trade payables and other liabilities are discounts due to our customers of €1,770 million (2019: €1,053 million). The increase from 2019
is primarily driven by differences in the timing of promotional activities and the settlement of customer invoices compared to last year.

Included within others are IT and consulting services.

Deferred Consideration
At 31 December 2020 the total balance of deferred consideration for acquisitions is €164 million (2019: €208 million), which includes contingent
consideration of €140 million (2019: €154 million). These contingent consideration payments are dependent on acquired businesses achieving
contractually agreed financial targets (mainly relates to cumulative increases in turnover and profit before tax) and fall due up until 2025, with a
maximum contractual amount of €718 million.

Supplier financing arrangements for trade payables
Some of our suppliers elect to factor some of their receivables from the Group with financial institutions. In some instances we provide suppliers and/
or banks with visibility of invoices approved for payment, which helps them receive cash from the bank before the invoice due date, if they choose to
do so. Payment dates and terms for Unilever do not vary based on whether the supplier chooses to factor their receivable. If a receivable is purchased
by a third party bank, that third party bank does not benefit from additional security when compared to the security originally enjoyed by the supplier.
The Group evaluates these arrangements to assess if the payable holds the characteristics of a trade payable or should be classified as a financial
liability. At 31 December 2020 and 31 December 2019 all such liabilities were classified as trade payables.

Unilever Annual Report and Accounts 2020143

15. Capital and funding

Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from
equity, net of any tax effects.

Share-based compensation
The Group operates a number of share-based compensation plans involving awards of ordinary shares. Full details of these plans are given in note
4C on pages 129 and 130.

Unification reserve
The Group recognised a separate Unification Reserve within Equity as a result of PLC Share Premium that arose from Unification.

Other reserves
Other reserves include the fair value reserve, the foreign currency translation reserve, the capital redemption reserve and treasury shares.

Shares held by employee share trusts and group companies
An employee share trust and group companies purchase and hold shares to satisfy performance shares granted and other share awards (see note
4C). The assets and liabilities of the trust and shares held by the trust and group companies are included in the consolidated financial statements.
The book value of shares held is deducted from other reserves, and the trust’s borrowings are included in the Group’s liabilities. The costs of the trust
are included in the results of the Group. The shares held by the trust and group companies are excluded from the calculation of earnings per share.

Financial liabilities
Financial liabilities are initially recognised at fair value, less any directly related transaction costs. When bonds are designated as being part of a
fair value hedge relationship in those cases bonds are carried at amortised cost, adjusted for the fair value of the risk being hedged, with changes
in value shown in profit and loss. Other financial liabilities, excluding derivatives, are subsequently carried at amortised cost, with the exception of:

■ financial liabilities which the Group has elected to measure at fair value through profit or loss;
■ derivative financial liabilities – see note 16 on page 149; and
■ contingent consideration recognised by an acquirer in a business combination to which IFRS 3 applies. Such contingent consideration is

subsequently measured at fair value through profit or loss.

Lease liabilities
Lease liabilities are initially measured at the present value of the lease payments that are not yet paid at the start of the lease term. This is
discounted using an appropriate borrowing rate determined by the Group, where none is readily available in the lease contract. The lease liability
is subsequently reduced by cash payments and increased by interest costs. The lease liability is remeasured when the Group assesses that there will
be a change in the amount expected to be paid during the lease term.

The Group’s Treasury activities are designed to:
■ maintain a competitive balance sheet in line with at least A/A2 rating (see below);
■ secure funding at lowest costs for the Group’s operations, M&A activity and external dividend payments (see below);
■ protect the Group’s financial results and position from financial risks (see note 16);
■ maintain market risks within acceptable parameters, while optimising returns (see note 16); and
■ protect the Group’s financial investments, while maximising returns (see note 17)

The Treasury department provides central deposit taking, funding and foreign exchange management services for the Group’s operations. The
department is governed by standards and processes which are approved by Unilever Leadership Executive (ULE). In addition to guidelines and
exposure limits, a system of authorities and extensive independent reporting covers all major areas of activity. Performance is monitored closely
by senior management. Reviews are undertaken periodically by corporate audit.

Key instruments used by the treasury department are:
■ short-term and long-term borrowings;
■ cash and cash equivalents; and
■ plain vanilla derivatives, including cross currency interest rate swaps and foreign exchange contracts.

The Treasury department maintains a list of approved financial instruments. The use of any new instrument must be approved by the Chief Financial
Officer. The use of leveraged instruments is not permitted.

Unilever considers the following components of its balance sheet to be managed capital:
■ total equity – retained profit, other reserves, share capital, share premium, non-controlling interests (notes 15A and 15B);
■ short-term debt – current financial liabilities (note 15C); and
■ long-term debt – non-current financial liabilities (note 15C).

The Group manages its capital so as to safeguard its ability to continue as a going concern and to optimise returns to our shareholders through an
appropriate balance of debt and equity. The capital structure of the Group is based on management’s judgement of the appropriate balance of
key elements in order to meet its strategic and day-to-day needs. We consider the amount of capital in proportion to risk and manage the capital
structure in light of changes in economic conditions and the risk characteristics of the underlying assets.

Our current long-term credit rating is A+/A1 and our short-term credit rating is A1/P1. We aim to maintain a competitive balance sheet which we
consider to be the equivalent of a credit rating of at least A/A2 in the long term. This provides us with:
■ appropriate access to the debt and equity markets;
■ sufficient flexibility for acquisitions;
■ sufficient resilience against economic and financial uncertainty while ensuring ample liquidity; and
■ optimal weighted average cost of capital, given the above constraints.

Unilever monitors the qualitative and quantitative factors utilised by the rating agencies. This information is publicly available and is updated by the
credit rating agencies on a regular basis.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS
144

Notes to the Consolidated Financial Statements Unilever Group continued

15. Capital and funding continued

15A. Share capital

Unilever N.V.

NV ordinary shares of €0.16 each

NV ordinary shares of €428.57 each
(shares numbered 1 to 2,400 – ‘Special Shares’)

Internal holdings eliminated on consolidation (€428.57 shares)

Cancellation of treasury shares(b)

Unilever PLC

PLC ordinary shares of 31/9p each

PLC deferred stock of £1 each

Internal holding eliminated on consolidation (£1 stock)

Shares issued to NV shareholders(c)

Cancellation of treasury shares(b)

Euro equivalent in millions(d)

Unilever Group

Ordinary share capital of NV(c)

Ordinary share capital of PLC(c)

Authorised
2020
€ million

Issued,
called up and
fully paid(a)
2020
€ million

Authorised
2019
€ million

Issued,
called up and
fully paid
2019
€ million

–

£ million

36.4

–

45.4

–

81.8

€ million

–

480

–

481

274

(1)

(41)

233

£ million

37.0

0.1

(0.1)

–

(0.6)

36.4

€ million

187

€ million

233

187

420

(a) At 31 December 2020, 2,629,243,772 of PLC ordinary shares were in issue, no NV shares were in issue. The NV special ordinary shares and PLC deferred stock were

cancelled before Unification. At 31 December 2019, 1,168,530,650 of PLC ordinary shares, 100,000 of PLC deferred stock, 1,460,714,804 of NV ordinary shares and 2,400
of NV special ordinary shares were in issue.

(b) At 31 December 2019, 254,012,896 of NV ordinary shares and 18,660,634 of PLC ordinary shares that were repurchased as part of the share buyback programme in 2018

and prior years were cancelled.

(c) As a result of Unification, the shareholders of NV were issued 1,460,713,122 PLC ordinary shares, and all NV shares in issue were cancelled.
(d) Prior to Unification, a conversion rate of £1 = €5.143 was used in accordance with the Equalisation Agreement, which ceased to exist as a result of Unification. The

ordinary share capital of PLC is now translated using the conversion rate at 29 November 2020 of £1 = € 1.121. The difference between the conversion rates was released
through Other Reserves as presented in the “Other effects of Unification” line in the Statement of Changes in Equity.

A nominal dividend of 6% was paid on the PLC deferred stock in 2020.

For information on the rights of shareholders of PLC see the Corporate Governance report on pages 61 to 69.

15B. Equity

Basis of consolidation
Unilever is the majority shareholder of all material subsidiaries and has control in all cases. Information in relation to significant subsidiaries is provided on page 167.

Subsidiaries with significant non-controlling interests
Unilever has one subsidiary company which has a material non-controlling interest, Hindustan Unilever Limited (HUL). Summary financial information in relation to HUL is
shown below.

HUL balance sheet as at 31 December

Non-current assets

Current assets

Current liabilities

Non-current liabilities

HUL comprehensive income for the year ended 31 December

Turnover

Profit after tax

Total comprehensive income

€ million
2020

6,173

1,258

(1,127)

(1,139)

4,957

866

374

€ million
2019

1,030

1,438

(1,117)

(332)

4,937

730

740

Unilever Annual Report and Accounts 2020
15B. Equity continued

HUL cash flow for the year ended 31 December

Net increase/(decrease) in cash and cash-equivalents

HUL non-controlling interest

1 January

Share of (profit)/loss for the year ended 31 December

Other comprehensive income

Dividend paid to the non-controlling interest

Currency translation

Net gain arising from Horlicks acquisition

31 December

Analysis of other reserves

Fair value reserves – see next page

Currency retranslation of group companies – see next page

Adjustment on translation of PLC's ordinary capital(b)

Capital redemption reserve

Book value of treasury shares – see following table

Other(a)

145

€ million
2020

€ million
2019

145

(328)

(319)

392

192

(1,918)

(1,978)

(299)

(239)

(6)

218

(2)

–

(328)

€ million
Total 2020

€ million
Total 2019

€ million
Total 2018

250

(7,068)

–

(483)

(202)

110

(4,712)

(148)

(703)

(158)

(123)

(4,694)

(150)

(10,181)

(102)

(7,482)

(5,574)

(15,218)

(a) Relates to the options to purchase non-controlling interest in subsidiaries and hyperinflation adjustment arising on current year profit translated at closing exchange rate.
(b) Prior to Unification, a conversion rate of £1 = €5.143 was used in accordance with the Equalisation Agreement, which ceased to exist as a result of Unification. The

Unilever acquired none of its own shares (2019: 3,754,000 shares) through purchases on the stock exchanges during the year and prior to Unification.
Out of the 7,266,666 shares held as treasury shares in connection with share-based compensation plans and which formed part of other reserves as
at 29 November 2020, 5,884,511 shares were transferred to an employee share trust at their carrying value, prior to Unification. The shares held by the
employee share trust are shown as deduction from other reserves.

At 31 December 2020, 5,884,511 shares were held by employee share ownership trust and 1,382,155 shares were held by other group companies in
connection with share-based compensation plans. The total number of treasury shares held in connection with share-based compensation plans at
31 December 2019 was 12,419,009 shares. (See note 4C on pages 129 and 130).

Treasury shares – movements during the year

1 January

Cancellation of NV and PLC shares

Other purchases and utilisations

Adjustment on translation of PLC’s ordinary capital

31 December(a)

€ million
2020

(703)

–

220

–

(483)

€ million
2019

(10,181)

9,416

(2)

(703)

(a) Shortly before Unification 4,523,367 NV and PLC ordinary shares, 892,155 NV NYRSs and 468,989 PLC ADSs held by NV in connection with share-based compensation

plans were transferred to an employee share ownership trust at their carrying value. See note 4C for details.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS

146

Notes to the Consolidated Financial Statements Unilever Group continued

15B. Equity continued

Currency retranslation reserve – movements during the year

1 January

Currency retranslation of group companies net assets and liabilities during the year

Movement in net investment hedges and exchange differences in net investments in foreign
operations

Recycled to income statement

31 December

Fair value reserves – movements during the year

1 January

Movements in Other comprehensive income, net of tax

Gains/(losses) on equity instruments

Gains/(losses) on cash flow hedges

Hedging gains/(losses) transferred to non-financial assets

31 December

€ million
2020

(4,712)

(1,490)

(866)

–

€ million
2019

(4,694)

(341)

326

(3)

(7,068)

(4,712)

€ million
2020

110

250

€ million
2019

(123)

176

110

Refer to the consolidated statement of comprehensive income on page 112, the consolidated statement of changes in equity on page 113, and note
6C on page 133.

Remeasurement of defined benefit pension plans net of tax

1 January

Movement during the year

31 December

€ million
2020

(1,146)

215

(931)

€ million
2019

(1,499)

353

(1,146)

Refer to the consolidated statement of comprehensive income on page 112, the consolidated statement of changes in equity on page 113, note 4B
from pages 123 to 129 and note 6C on page 133.

Currency retranslation gains/(losses) – movements during the year

1 January

Currency retranslation during the year:

Other reserves

Retained profit

Non-controlling interest

31 December

€ million
2020

(5,084)

(2,356)

(22)

(212)

€ million
2019

(5,069)

(18)

(7,674)

(5,084)

Unilever Annual Report and Accounts 202015C. Financial liabilities

Financial liabilities(a)

Bank loans and overdrafts(b)

Bonds and other loans

Lease liabilities

Derivatives

Other financial liabilities(c)

147

€ million
Current
2020

€ million
Non-current
2020

€ million
Total
2020

€ million
Current
2019

€ million
Non-current
2019

€ million
Total
2019

407

411

390

463

853

3,499

21,086

24,585

3,677

21,355

25,032

380

117

1,391

1,771

257

106

315

223

383

116

125

1,536

1,919

154

270

183

4,461

22,844

27,305

4,691

23,566

28,257

(a) For the purposes of this note and note 17A, financial assets and liabilities exclude trade and other current receivables and trade payables and other liabilities which

are covered in notes 13 and 14 respectively.

(b) Bank loans and overdrafts include €2.6 million (2019: €Nil) of secured liabilities.
(c) Includes options and other financial liabilities to acquire non-controlling interests in EAC Myanmar, USA, Japan, Italy and Hong Kong refer to note 21.

Reconciliation of liabilities arising from financing activities

Movements in 2020 and 2019

2020

Bank loans and overdrafts(a)

Bonds and other loans(a)

Lease liabilities(b)

Derivatives

Other financial liabilities(a)

Total

2019

Bank loans and overdrafts(a)

Bonds and other loans(a)

Lease liabilities(b)

Derivatives

Other financial liabilities(a)

Total

Non-cash movement

Opening
balance at
1 January
€ million

Cash
movement
€ million

Business
acquisi-
tions/
disposals
€ million

Foreign
exchange
changes
€ million

Fair
value
changes
€ million

Other
movements
€ million

Closing
balance at
31 Decem-
ber
€ million

(853)

(25,032)

(1,919)

(270)

(183)

386

(658)

473

–

(1)

–

(27)

–

1,131

142

–

(2)

(28,257)

201

(28)

1,325

(814)

(29)

(23,391)

(1,273)

(1,981)

452

(402)

(150)

–

(1)

(3)

(7)

–

(9)

(365)

(25)

–

(8)

(26,738)

(820)

(11)

(407)

–

(45)

(15)

–

(1)

–

132

–

131

(411)

(36)

(24,585)

(440)

(1,771)

–

(58)

(315)

(223)

(531)

(27,305)

–

(853)

(25,032)

(358)

(1,919)

–

(55)

(270)

(183)

(412)

(28,257)

(a) These cash movements are included within the following lines in the consolidated cash flow statement: net change in short-term borrowings, additional financial

liabilities and repayment of financial liabilities. The difference of €10 million (2019: €64 million) represents cash movements in overdrafts that are not included in
financing cash flows.

(b) Lease liabilities cash movement is included within capital element of lease payments in the consolidated cash flow statement. The difference of €30 million (2019: €17

million) represents gain or loss from termination and modification of lease contracts.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS148

Notes to the Consolidated Financial Statements Unilever Group continued

15C. Financial liabilities continued

Analysis of bonds and other loans

Unilever PLC

1.125% Notes 2022 (£)

1.375% Notes 2024 (£)

1.875% Notes 2029 (£)

1.500% Notes 2026 (£)

1.500% Notes 2039 (€)

Total PLC

Other group companies

The Netherlands(a)

1.625% Notes 2033 (€)

1.750% Bonds 2020 (€)

0.500% Notes 2022 (€)

1.375% Notes 2029 (€)

1.125% Bonds 2027 (€)

1.125% Bonds 2028 (€)

0.875% Notes 2025 (€)

0.500% Bonds 2025 (€)

1.375% Notes 2030 (€)

0.375% Notes 2023 (€)

1.000% Notes 2027 (€)

1.000% Notes 2023 (€)

0.000% Notes 2021 (€)

0.500% Notes 2023 (€)

0.500% Notes 2024 (€)

0.000% Notes 2020 (€)

1.250% Notes 2025 (€)

1.750% Notes 2030 (€)

Switzerland

Other

United States

4.250% Notes 2021 ($)

5.900% Bonds 2032 ($)

2.900% Notes 2027 ($)

2.200% Notes 2022 ($)

1.800% Notes 2020 ($)

3.500% Notes 2028 ($)

2.000% Notes 2026 ($)

1.375% Notes 2021 ($)(b)

3.125% Notes 2023 ($)

2.100% Notes 2020 ($)

3.000% Notes 2022 ($)

3.250% Notes 2024 ($)

3.100% Notes 2025 ($)

2.600% Notes 2024 ($)

3.500% Bonds 2028 ($)

2.750% Bonds 2021 ($)

3.375% Notes 2025 ($)

7.250% Bonds 2026 ($)

6.625% Bonds 2028 ($)

5.150% Notes 2020 ($)

5.600% Bonds 2097 ($)

2.125% Notes 2029 ($)

2.600% Notes 2024 ($)

1.375% Notes 2030 ($)

0.375% Notes 2023 ($)

Commercial paper ($)

Other countries

Total other group companies

Total bonds and other loans

€ million
Total 2020

€ million
Total 2019

387

276

274

550

646

408

292

290

580

646

2,133

2,216

793

–

749

744

697

695

648

645

643

599

598

498

499

498

496

–

999

994

812

809

803

689

–

641

563

–

445

–

406

404

403

404

402

324

283

238

189

–

683

415

395

405

792

750

747

743

697

694

647

644

642

599

598

498

495

300

–

892

883

879

755

714

703

616

489

488

446

444

443

442

441

356

309

260

206

135

749

457

–

1,848

22,452

24,585

1,276

22,816

25,032

(a) As part of Unification, these bonds which were previously issued by Unilever N.V. were transferred to Unilever Finance Netherlands B.V. with effect from 26 November 2020.
(b) Bond repaid (Make-Whole) on 9 October 2020.

Information in relation to the derivatives used to hedge bonds and other loans within a fair value hedge relationship is shown in note 16.

Unilever Annual Report and Accounts 2020
149

16. Treasury risk management

Derivatives and hedge accounting
Derivatives are measured at fair value with any related transaction costs expensed as incurred. The treatment of changes in the value of derivatives
depends on their use as explained below.

(i) Fair value hedges(a)
Certain derivatives are held to hedge the risk of changes in value of a specific bond or other loan. In these situations, the Group designates the
liability and related derivative to be part of a fair value hedge relationship. The carrying value of the bond is adjusted by the fair value of the risk
being hedged, with changes going to the income statement. Gains and losses on the corresponding derivative are also recognised in the income
statement. The amounts recognised are offset in the income statement to the extent that the hedge is effective. Ineffectiveness may occur if the
critical terms do not exactly match, or if there is a value adjustment resulting from a change in credit risk (in either the Group or the counter-party
to the derivative) that is not matched by the hedged item. When the relationship no longer meets the criteria for hedge accounting, the fair value
hedge adjustment made to the bond is amortised to the income statement using the effective interest method.

(ii) Cash flow hedges(a)
Derivatives are also held to hedge the uncertainty in timing or amount of future forecast cash flows. Such derivatives are classified as being part of
cash flow hedge relationships. For an effective hedge, gains and losses from changes in the fair value of derivatives are recognised in equity. Cost of
hedging, where material and opted for, is recorded in a separate account within equity. Any ineffective elements of the hedge are recognised in the
income statement. Ineffectiveness may occur if there are changes to the expected timing of the hedged transaction. If the hedged cash flow relates
to a non-financial asset, the amount accumulated in equity is subsequently included within the carrying value of that asset. For other cash flow
hedges, amounts deferred in equity are taken to the income statement at the same time as the related cash flow.

When a derivative no longer qualifies for hedge accounting, any cumulative gain or loss remains in equity until the related cash flow occurs. When
the cash flow takes place, the cumulative gain or loss is taken to the income statement. If the hedged cash flow is no longer expected to occur, the
cumulative gain or loss is taken to the income statement immediately.

(iii) Net investment hedges(a)
Certain derivatives are designated as hedges of the currency risk on the Group’s investment in foreign subsidiaries. The accounting policy for these
arrangements is set out in note 1.

(iv) Derivatives for which hedge accounting is not applied
Derivatives not classified as hedges are held in order to hedge certain balance sheet items and commodity exposures. No hedge accounting is
applied to these derivatives, which are carried at fair value with changes being recognised in the income statement.

(a) Applying hedge accounting has not led to material ineffectiveness being recognised in the income statement for both 2020 and 2019. Fair value changes on basis

spread is recorded in a separate account within equity.

The Group is exposed to the following risks that arise from its use of financial instruments, the management of which is described in the
following sections:
■ liquidity risk (see note 16A);
■ market risk (see note 16B); and
■ credit risk (see note 17B).

The Group’s risk management framework is established to set appropriate risk limits and controls, and to maintain adherence to these limits.

16A. Management of liquidity risk

Liquidity risk is the risk that the Group will face in meeting its obligations associated with its financial liabilities. The Group’s approach to managing
liquidity is to ensure that it will have sufficient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management
considers both normal and stressed conditions. A material and sustained shortfall in our cash flow could undermine the Group’s credit rating, impair
investor confidence and also restrict the Group’s ability to raise funds.

The Group’s funding strategy was supported by cash delivery from the business, coupled with the proceeds from bond issuances. Surplus cash
balance have been invested conservatively with low risk counter-parties at maturities of less than six months. In its liquidity assessment the Group
does not consider any supplier financing arrangements as these arrangements are non-recourse to Unilever and supplier payment dates and terms
for Unilever do not vary based on whether the supplier chooses to use such financing arrangements.

Cash flow from operating activities provides the funds to service the financing of financial liabilities on a day-to-day basis. The Group seeks to
manage its liquidity requirements by maintaining access to global debt markets through short-term and long-term debt programmes. In addition,
Unilever has committed credit facilities for general corporate use.

On 31 December 2020 Unilever had undrawn revolving 364-day bilateral credit facilities in aggregate of $7,965 million (2019: $7,865 million) with
a 364-day term out. As part of the regular annual process, the intention is that these facilities will again be renewed in 2021.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS150

Notes to the Consolidated Financial Statements Unilever Group continued

16A. Management of liquidity risk continued

The following table shows Unilever’s contractually agreed undiscounted cash flows, including expected interest payments, which are payable under
financial liabilities at the balance sheet date:

Undiscounted cash flows

2020

Non-derivative financial liabilities:

Bank loans and overdrafts

Bonds and other loans

Lease liabilities

Other financial liabilities

Trade payables, accruals and other
liabilities

Deferred consideration

Derivative financial liabilities:

Interest rate derivatives:

Derivative contracts – receipts

Derivative contracts – payments

Foreign exchange derivatives:

Derivative contracts – receipts

Derivative contracts – payments

Commodity derivatives:

Derivative contracts – receipts

Derivative contracts – payments

Total

2019

Non-derivative financial liabilities:

Bank loans and overdrafts

Bonds and other loans

Lease liabilities

Other financial liabilities

Trade payables, accruals and other
liabilities

Deferred consideration

Derivative financial liabilities:

Interest rate derivatives:

Derivative contracts – receipts

Derivative contracts – payments

Foreign exchange derivatives:

Derivative contracts – receipts

Derivative contracts – payments

Commodity derivatives:

Derivative contracts – receipts

Derivative contracts – payments

€ million

Due
within
1 year

Due
between
1 and
2 years

Due
between
2 and
3 years

Due
between
3 and
4 years

Due
between
4 and
5 years

Due
after
5 years

Total

€ million
Net carrying
amount as
shown in
balance
sheet

(413)

(2)

(1)

–

(1)

(417)

(411)

(3,926)

(2,626)

(2,824)

(2,326)

(3,278)

(13,020)

(28,000)

(24,585)

(442)

(117)

(13,585)

(60)

(352)

(12)

(46)

(12)

(292)

(33)

(15)

(76)

(234)

(23)

(17)

(35)

(187)

(51)

(4)

(8)

(591)

(2,098)

(1,771)

–

(236)

(223)

(32)

(13,699)

–

(191)

(164)

(18,543)

(3,050)

(3,241)

(2,635)

(3,528)

(13,644)

(44,641)

(40,853)

174

1,069

(134)

(1,148)

(21)

441

(479)

(19)

877

2,630

(977)

(2,778)

6,163

(6,333)

–

(3)

–

6,163

(6,333)

–

(3)

(257)

(158)

(3)

(133)

(79)

(38)

(100)

(321)

(418)

(18,676)

(3,129)

(3,222)

(2,673)

(3,518)

(13,744)

(44,962)

(41,271)

(399)

(9)

(289)

(164)

–

(2)

(863)

(853)

(4,169)

(2,661)

(2,745)

(2,449)

(2,454)

(14,431)

(28,909)

(25,032)

(432)

(125)

(14,166)

(39)

(392)

–

(93)

(124)

(302)

(24)

(13)

(8)

(242)

(31)

(8)

–

(191)

(26)

(14)

(64)

(720)

(2,279)

(1,919)

–

(206)

(183)

(42)

(14,336)

–

(235)

(208)

(19,330)

(3,279)

(3,381)

(2,894)

(2,749)

(15,195)

(46,828)

(42,531)

776

(756)

164

(141)

805

(797)

8,783

(8,952)

–

(4)

(153)

–

(17)

–

478

(473)

957

3,217

(949)

(3,133)

–

8,783

(8,952)

–

(4)

(89)

(154)

(168)

(4)

(326)

Total

(19,483)

(3,256)

(3,373)

(2,874)

(2,744)

(15,187)

(46,917)

(42,857)

The Group has sublet a small proportion of leased properties. Related future minimum sublease payments are €63 million (2019: €21 million).

Unilever Annual Report and Accounts 2020
151

16A. Management of liquidity risk continued

The following table shows cash flows for which cash flow hedge accounting is applied. The derivatives in the cash flow hedge relationships are
expected to have an impact on profit and loss in the same periods as the cash flows occur.

2020

Foreign exchange cash inflows

Foreign exchange cash outflows

Interest rate swaps cash inflows

Interest rate swaps cash outflows

Commodity contracts cash inflows

Commodity contracts cash outflows

2019

Foreign exchange cash inflows

Foreign exchange cash outflows

Interest rate swaps cash inflows

Interest rate swaps cash outflows

Commodity contracts cash inflows

Commodity contracts cash outflows

(a) See note 16C.

€ million

Due
within
1 year

€ million
Due
between
1 and
2 years

€ million
Due
between
2 and
3 years

€ million
Due
between
3 and
4 years

€ million
Due
between
4 and
5 years

€ million

Due
after
5 years

Total

€ million
Net carrying
amount of
related
derivatives(a)

3,136

(3,205)

–

403

1,077

(347)

(1,147)

(3)

2,254

(2,259)

811

(756)

(4)

–

442

(347)

–

488

(464)

–

1,182

(1,147)

–

436

(473)

–

536

(464)

–

(13)

–

478

(473)

–

3,136

(3,205)

849

3,277

–

(50)

–

(936)

(3,380)

(221)

–

957

(949)

–

(3)

2,254

(2,259)

4,406

(4,136)

(4)

(3)

–

(29)

(4)

16B. Management of market risk

Unilever’s size and operations result in it being exposed to the following market risks that arise from its use of financial instruments:
■ commodity price risk;
■ currency risk; and
■ interest rate risk.

The above risks may affect the Group’s income and expenses, or the value of its financial instruments. The objective of the Group’s management of
market risk is to maintain this risk within acceptable parameters, while optimising returns. Generally, the Group applies hedge accounting to manage
the volatility in profit and loss arising from market risk.

Where the Group uses hedge accounting to mitigate the above risks, it is normally implemented centrally by either the Treasury or Commodity
Risk Management teams, in line with their respective frameworks and strategies. Hedge effectiveness is determined at the inception of the hedge
relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship continues to exist between the
hedged item and hedging instrument. The Group generally enters into hedge relationships where the critical terms of the hedging instrument match
exactly with the hedged item, meaning that the economic relationship between the hedged item and hedging instrument is evident, so only a
qualitative assessment is performed. When a qualitative assessment is not considered sufficient, for example when the critical terms of the hedging
instrument do not match exactly with the hedged item, a quantitative assessment of hedge effectiveness will also be performed. The hedge ratio is
set on inception for all hedge relationships and is dependent on the alignment of the critical terms of the hedging instrument to the hedged item (in
most instances these are matched, so the hedge ratio is 1:1).

The Group’s exposure to, and management of, these risks is explained below. It often includes derivative financial instruments, the uses of which are
described in note 16C.

Potential impact of risk

(i) Commodity price risk

The Group is exposed to the risk of changes in
commodity prices in relation to its purchase of
certain raw materials.

At 31 December 2020, the Group had hedged its
exposure to future commodity purchases with
commodity derivatives valued at €276 million
(2019: €439 million).

Hedges of future commodity purchases resulted
in cumulative losses of €89 million (2019: losses
of €52 million ) being reclassified to the income
statement and losses of €66 million (2019:
losses of €28 million) being recognised as a
basis adjustment to inventory purchased.

Management policy and
hedging strategy

The Group uses commodity forwards, futures,
swaps and option contracts to hedge against
this risk. All commodity forward contracts
hedge future purchases of raw materials
and the contracts are settled either in cash
or by physical delivery.

The Group also hedges risk, components
of commodities where it is not possible to
hedge the commodity in full. This is done
with reference to the contract to purchase
the hedged commodity.

Commodity derivatives are generally
designated as hedging instruments in
cash flow hedge accounting relations. All
commodity derivative contracts are done
in line with approvals from the Global
Commodity Executive which is chaired by the
Unilever Chief Supply Chain Officer (CSCO) or
the Global Commodity Operating Team which
is chaired by the Chief Procurement Officer.

Sensitivity to the risk

A 10% increase in commodity prices as at
31 December 2020 would have led to a
€35 million gain on the commodity derivatives
in the cash flow hedge reserve (2019: €56 million
gain in the cash flow hedge reserve).

A decrease of 10% in commodity prices on
a full-year basis would have the equal but
opposite effect.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS

152

Notes to the Consolidated Financial Statements Unilever Group continued

Management policy and
hedging strategy

Sensitivity to the risk

The Group manages currency exposures
within prescribed limits, mainly through the
use of forward foreign currency exchange
contracts.

As an estimation of the approximate impact
of the residual risk, with respect to financial
instruments, the Group has calculated the
impact of a 10% change in exchange rates.

Operating companies manage foreign
exchange exposures within prescribed limits.

The aim of the Group’s approach to
management of currency risk is to leave the
Group with no material residual risk. This aim
has been achieved in all years presented.

Potential impact of risk

(ii) Currency risk

Currency risk on sales, purchases and
borrowings

Because of Unilever’s global reach, it is subject
to the risk that changes in foreign currency
values impact the Group’s sales, purchases
and borrowings.

The Group manages the foreign currency risk
by hedging forecasted sales and purchase
transactions that are expected to occur within
a maximum 12-month period through layered
hedging.

At 31 December 2020, the exposure to the
Group from companies holding financial assets
and liabilities other than in their functional
currency amounted to €274 million (2019:
€317 million).

Impact on income statement

A 10% strengthening of the respective
functional currencies of group companies
against the foreign currencies would have led
to an additional €27 million gain in the income
statement (2019: €32 million gain).

A 10% weakening of the respective functional
currencies of group companies against the
foreign currencies would have led to an equal
but opposite effect.

As at year end, the Group had the below
notional amount of currency derivatives
outstanding to which cash flow hedge
accounting is applied:

Currency

EUR*

GBP

USD

SEK

CAD

PLN

Others

Total

2020

(920)

(414)

588

(100)

(110)

(70)

(176)

(1,202)

2019

(743)

(325)

640

(94)

(108)

(67)

(192)

(889)

* Euro exposure relates to group companies having

non-euro functional currencies.

Impact on equity – trade-related cash flow
hedges

A 10% strengthening of foreign currencies
against the respective functional currencies
of group companies hedging future trade
cash flows and applying cash flow hedge
accounting, would have led to €120 million
loss (2019: €89 million loss).

A 10% weakening of the same would have led to
an equal but opposite effect.

Impact on equity – net investment hedges

A 10% strengthening of the euro against other
currencies would have led to a €404 million
(2019: €396 million) loss on the net investment
hedges used to manage the currency exposure
on the Group’s investments.

A 10% weakening of the euro against other
currencies would have led to an equal but
opposite effect.

Impact on equity – net investments in group
companies

A 10% strengthening of the euro against all
other currencies would have led to a €2,461
million negative retranslation effect (2019:
€2,203 million negative retranslation effect).

A 10% weakening of the euro against all other
currencies would have led to an equal but
opposite effect. In line with accepted hedge
accounting treatment and our accounting
policy for financial loans, the retranslation
differences would be recognised in equity.

Currency risk on the Group’s net investments

The Group is also subject to currency risk
in relation to the translation of the net
investments of its foreign operations into
euros for inclusion in its consolidated financial
statements.

These net investments include Group financial
loans, which are monetary items that form part
of our net investment in foreign operations,
of €9.2 billion (2019: €7.6 billion), of which €5.5
billion (2019: €3.5 billion) is denominated in
GBP. In accordance with IAS 21, the exchange
differences on these financial loans are booked
through reserves.

Part of the currency exposure on the Group’s
investments is also managed using US$ net
investment hedges with a nominal value of
€4.0 billion (2019: €4.0 billion) for US$.

At 31 December 2020, the net exposure of the
net investments in foreign currencies amounts
to €24.6 billion (2019: €22.0 billion).

Unilever aims to minimise this currency risk
on the Group’s net investment exposure by
borrowing in local currency in the operating
companies themselves. In some locations,
however, the Group’s ability to do this is
inhibited by local regulations, lack of local
liquidity or by local market conditions.

Where the residual risk from these countries
exceeds prescribed limits, Treasury may
decide on a case-by-case basis to actively
hedge the exposure. This is done either
through additional borrowings in the related
currency, or through the use of forward
foreign exchange contracts.

Where local currency borrowings, or forward
contracts, are used to hedge the currency risk
in relation to the Group’s net investment in
foreign subsidiaries, these relationships are
designated as net investment hedges
for accounting purposes.

Exchange risk related to the principal amount
of the US$ denominated debt either forms
part of hedging relationship itself, or is
hedged through forward contracts.

Unilever Annual Report and Accounts 2020

153

Management policy and
hedging strategy

Unilever’s interest rate management
approach aims for an optimal balance
between fixed and floating-rate interest rate
exposures on expected financial liabilities.
The objective of this approach is to minimise
annual interest costs.

This is achieved either by issuing fixed or
floating-rate long-term debt, or by modifying
interest rate exposure through the use of
interest rate swaps.

The majority of the Group’s existing interest
rate derivatives are designated as cash flow
hedges and are expected to be effective. The
fair value movement of these derivatives is
recognised in the income statement, along
with any changes in the relevant fair value
of the underlying hedged asset or liability.

Sensitivity to the risk

Impact on income statement

Assuming that all other variables remain
constant, a 1.0 percentage point increase in
floating interest rates on a full-year basis as
at 31 December 2020 would have led to an
additional €40 million of finance cost (2019:
€37 million additional finance costs).

A 1.0 percentage point decrease in floating
interest rates on a full-year basis would have
an equal but opposite effect.

Impact on equity – cash flow hedges

Assuming that all other variables remain
constant, a 1.0 percentage point increase
in interest rates on a full-year basis as at
31 December 2020 would have led to an
additional €11 million credit in equity from
derivatives in cash flow hedge relationships
(2019: €8 million credit).

A 1.0 percentage point decrease in interest
rates on a full-year basis would have led to
an additional €12 million debit in equity from
derivatives in cash flow hedge relationships
(2019: €8 million debit).

Potential impact of risk

(iii) Interest rate risk(a)

The Group is exposed to market interest rate
fluctuations on its floating rate debt. Increases
in benchmark interest rates could increase
the interest cost of our floating-rate debt and
increase the cost of future borrowings. The
Group’s ability to manage interest costs also
has an impact on reported results.

The Group does not have any material floating
interest bearing financial assets or any
significant long-term fixed interest bearing
financial assets. Consequently the Group’s
interest rate risk arises mainly from financial
liabilities other than lease liabilities.

Taking into account the impact of interest rate
swaps, at 31 December 2020, interest rates were
fixed on approximately 87% of the expected
financial liabilities (excluding lease liabilities)
for 2021, and 75% for 2022 (82% for 2020 and
73% for 2021 at 31 December 2019).

As at 31 December 2020, the Group had USD
3,700 million (2019: USD 4,500 million) of
outstanding cross currency interest rate swaps
(on which cash flow hedge accounting is
applied).

As at 31 December 2020, the Group had USD
500 million (2019: Nil) of outstanding fixed to
float interest rate swaps (on which fair value
hedge accounting is applied).

The carrying amount of the hedged item
recognised under ‘Bond and other loans’ is €395
million (2019: Nil), which includes accumulated
amount of fair value hedge adjustment of €(10)
million (2019: Nil).

For interest management purposes,
transactions with a maturity shorter than six
months from inception date are not included
as fixed interest transactions.

The average interest rate on short-term
borrowings in 2020 was 1.6% (2019: 2.5%).

(a) See the weighted average amount of financial liabilities with fixed rate interest shown in the following table.

The following table shows the split in fixed and floating-rate interest exposures, taking into account the impact of interest rate swaps and
cross-currency swaps:

Current financial liabilities

Non-current financial liabilities

Total financial liabilities

Less: lease liabilities

Financial liabilities (excluding lease liabilities)

Of which:

€ million
2020

(4,461)

(22,844)

(27,305)

(1,771)

(25,534)

€ million
2019

(4,691)

(23,566)

(28,257)

(1,919)

(26,338)

Fixed rate (weighted average amount of fixing for the following year)

(21,561)

(22,618)

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS

154

Notes to the Consolidated Financial Statements Unilever Group continued

16C. Derivatives and hedging

The Group does not use derivative financial instruments for speculative purposes. The uses of derivatives and the related values of derivatives are
summarised in the following table. Derivatives used to hedge:

31 December 2020

Foreign exchange derivatives

Fair value hedges

Cash flow hedges

Hedges of net investments in foreign operations

Hedge accounting not applied

Interest rate derivatives

Fair value hedges

Cash flow hedges

Hedge accounting not applied

Commodity contracts

Cash flow hedges

Hedge accounting not applied

31 December 2019

Foreign exchange derivatives

Fair value hedges

Cash flow hedges

Hedges of net investments in foreign operations

Hedge accounting not applied

Interest rate derivatives

Fair value hedges

Cash flow hedges

Hedge accounting not applied

Commodity contracts

Cash flow hedges

Hedge accounting not applied

€ million

Trade
and other
receivables

Current
financial
assets

€ million
Non-
current
financial
assets

€ million
Trade
payables
and other
liabilities

€ million

Current
financial
liabilities

€ million
Non-
current
financial
liabilities

–

54(a)

–

(74)

–

(149)(a)

(26)

91(a)

–

(3)

–

(10)

(247)

–

(103)

(58)

(257)

Total assets 158

Total liabilities (418)

–

30(a)

(10)(a)

–

114

–

114

–

(38)

–

(14)(a)

(14)

(102)(a)

–

(4)

–

(56)

–

(143)

(11)

–

Total assets 208

Total liabilities (326)

(116)

(154)

€ million

Total

–

(50)

(149)

133

(10)

(221)

–

(260)

–

(121)

–

(29)

(11)

–

(118)

(a) Swaps that hedge the currency risk on intra-group loans and offset ‘Hedges of net investments in foreign operations’ are included within ‘Hedge accounting not

applied’. See below for further details.

Unilever Annual Report and Accounts 2020155

16C. Derivatives and hedging continued

Master netting or similar agreements

A number of legal entities within our Group enter into derivative transactions under International Swap and Derivatives Association (ISDA) master
netting agreements. In general, under such agreements the amounts owed by each counter-party on a single day in respect of all transactions
outstanding in the same currency are aggregated into a single net amount that is payable by one party to the other. In certain circumstances, such
as when a credit event such as a default occurs, all outstanding transactions under the agreement are terminated, the termination value is assessed
and only a single net amount is payable in settlement of all transactions.

The ISDA agreements do not meet the criteria for offsetting the positive and negative values in the consolidated balance sheet. This is because the
Group does not have any currently legally enforceable right to offset recognised amounts, between various Group and bank affiliates, because the
right to offset is enforceable only on the occurrence of future credit events such as a default.

The column ‘Related amounts not set off in the balance sheet – Financial instruments’ shows the netting impact of our ISDA agreements, assuming
the agreements are respected in the relevant jurisdiction.

(i) Financial assets
The following financial assets are subject to offsetting, enforceable master netting arrangements and similar agreements.

As at 31 December 2020

Derivative financial assets

As at 31 December 2019

Derivative financial assets

Related amounts not set
off in the balance sheet

€ million

Gross amounts of
recognised
financial assets

€ million
Gross amounts
of recognised
financial assets
set off in the
balance sheet

306

(148)

253

(45)

€ million

Net amounts of
financial assets
presented in the
balance sheet

Financial
instruments

Cash collateral
received

Net amount

158

208

(91)

(130)

(16)

(24)

(ii) Financial liabilities
The following financial liabilities are subject to offsetting, enforceable master netting arrangements and similar agreements.

As at 31 December 2020

Derivative financial liabilities

As at 31 December 2019

Derivative financial liabilities

€ million

Gross amounts
of recognised
financial liabilities

€ million
Gross amounts
of recognised
financial liabilities
set off in the
balance sheet

€ million
Net amounts
of financial
liabilities
presented in the
balance sheet

Related amounts not set
off in the balance sheet

€ million

Financial
instruments

Cash collateral
received

Net amount

(566)

(371)

148

(418)

(326)

130

–

(327)

(196)

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS
156

Notes to the Consolidated Financial Statements Unilever Group continued

17. Investment and return

Cash and cash equivalents

Cash and cash equivalents in the balance sheet include deposits, investments in money market funds and highly liquid investments. To be
classified as cash and cash equivalents, an asset must:
■ be readily convertible into cash;
■ have an insignificant risk of changes in value; and
■ have a maturity period of typically three months or less at acquisition.

Cash and cash equivalents in the cash flow statement also include bank overdrafts and are recorded at amortised cost.

Other financial assets

The Group classifies its financial assets into the following measurement categories:
■ those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and
■ those to be measured at amortised cost.

This classification depends on our business model for managing the financial asset and the contractual terms of the cash flows.

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or
loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value
through profit or loss are expensed in profit or loss.

All financial assets are either debt instruments or equity instruments. Debt instruments are those that provide the Group with a contractual right to
receive cash or another asset. Equity instruments are those where the Group has no contractual right to receive cash or another asset.

Debt instruments
The subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow
characteristics of the asset. There are three measurement categories that debt instruments are classified as:
■ financial assets at amortised cost;
■ financial assets at fair value through other comprehensive income; or
■ financial assets at fair value through profit or loss.

(i) Amortised cost

Assets measured at amortised cost are those which are held to collect contractual cash flows on the repayment of principal or interest (SPPI). A
gain or loss on a debt investment recognised at amortised cost on de-recognition or impairment is recognised in profit or loss. Interest income is
recognised within finance income using the effective interest rate method.

(ii) Fair value through other comprehensive income

Assets that are held at fair value through other comprehensive income are those that are held to collect contractual cash flows on the repayment
of principal and interest and which are held to recognise a capital gain through the sale of the asset. Movements in the carrying amount are
recognised in other comprehensive income except for the recognition of impairment, interest income and foreign exchange gains or losses which
are recognised in profit or loss. On de-recognition, the cumulative gain or loss recognised in other comprehensive income is reclassified from equity
to profit or loss. Interest income is included in finance income using the effective interest rate method.

(iii) Fair value through profit or loss

Assets that do not meet the criteria for either amortised cost or fair value through other comprehensive income are measured as fair value through
profit or loss. Related transaction costs are expensed as incurred. Unless they form part of a hedging relationship, these assets are held at fair value,
with changes being recognised in the income statement. Interest income from these assets is included within finance income.

Equity instruments
The Group subsequently measures all equity instruments at fair value. Where the Group has elected to present fair value gains and losses on equity
investments in other comprehensive income, there is no subsequent reclassification of fair value gains or losses to profit or loss. Dividends from
these investments continue to be recognised in profit or loss.

Impairment of financial assets

Financial instruments classified as amortised cost and debt instruments classified as fair value through other comprehensive income are assessed
for impairment. The Group assesses the probability of default of an asset at initial recognition and then whether there has been a significant
increase in credit risk on an ongoing basis.

To assess whether there is a significant increase in credit risk the Group compares the risk of a default occurring on the asset as at the reporting
date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forwarding-looking information.
Macroeconomic information (such as market interest rates or growth rates) is also considered.

Financial assets are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with
the company. Impairment losses on assets classified as amortised cost are recognised in profit or loss. When a later event causes the impairment
losses to decrease, the reduction in impairment loss is also recognised in profit or loss. Permanent impairment losses on debt instruments classified
as fair value through other comprehensive income are recognised in profit or loss.

Unilever Annual Report and Accounts 2020157

17A. Financial assets

The Group’s Treasury function aims to protect the Group’s financial investments, while maximising returns. The fair value of financial assets is the
same as the carrying amount for 2020 and 2019. The Group’s cash resources and other financial assets are shown below.

Financial assets(a)

Cash and cash equivalents

Cash at bank and in hand

Short-term deposits(b)

Other cash equivalents

Other financial assets

Financial assets at amortised cost(c)

Financial assets at fair value through other comprehensive income(d)

Financial assets at fair value through profit or loss:

Derivatives

Other(e)

Total

€ million
Current
2020

€ million
Non-current
2020

€ million
Total
2020

€ million
Current
2019

€ million
Non-current
2019

€ million
Total
2019

2,764

5,548

468

272

808

6,356

–

138

361

356

876

2,764

5,548

606

370

628

1,684

7,232

2,457

1,693

4,185

578

–

309

907

5,092

–

220

266

114

274

874

2,457

1,693

4,185

798

266

134

583

1,781

5,966

(a) For the purposes of this note and note 15C, financial assets and liabilities exclude trade and other current receivables and trade payables and other liabilities which

are covered in notes 13 and 14 respectively.

(b) Short-term deposits typically have maturity of up to 3 months.
(c) Current financial assets at amortised cost include short term deposits with banks with maturities longer than three months excluding deposits which are part of a

recognised cash management process and loans to joint venture entities. Non-current financial assets at amortised cost include judicial deposits of €101 million (2019
€136 million) and investments in bonds of Nil (2019: €56 million).

(d) Included within non-current financial assets at fair value through other comprehensive income are equity investments of €356 million (2019: €244 million). These

investments are not held by Unilever for trading purposes and hence the Group has opted to recognise fair value movements through other comprehensive income.
The fair value movement in 2020 of these equity investments was €78 million (2019: €31 million).

(e) Current Other Financial assets at fair value through profit or loss include A- or higher rated money and capital market instruments. Included within non current

financial assets at fair value through profit or loss are assets in a trust to fund benefit obligations in the US (see also note 4B) of €44 million (2019: €54 million), option
over non controlling interest in a subsidiary in Hong Kong of €51 million (2019: NIL) and investments in a number of companies and financial institutions in North
America, North Asia, South Asia and Europe.

There were no significant changes on account of change in business model in classification of financial assets since 31 December 2019.

There are no financial assets that are designated at fair value through profit or loss, which would otherwise have been measured at fair value
through other comprehensive income.

Cash and cash equivalents reconciliation to the cash flow statement

Cash and cash equivalents per balance sheet

Less: bank overdrafts

Cash and cash equivalents per cash flow statement

€ million
2020

€ million
2019

5,548

(73)

5,475

4,185

(69)

4,116

The remaining €2.5 billion (or 46%) of the Group’s cash and cash equivalents are held in foreign subsidiaries which repatriate distributable reserves
on a regular basis. For most countries, this is done through dividends which are in some cases subject to withholding or distribution tax. This balance
includes €98 million (2019: €146 million, 2018: €154 million) of cash that is held in a few countries where we face cross-border foreign exchange
controls and/or other legal restrictions that inhibit our ability to make these balances available for general use by the wider business. The cash will
generally be invested or held in the relevant country and, given the other capital resources available to the Group, does not significantly affect the
ability of the Group to meet its cash obligations.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS158

Notes to the Consolidated Financial Statements Unilever Group continued

17B. Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counter-party fails to meet its contractual obligations. Additional information in
relation to credit risk on trade receivables is given in note 13. These risks are generally managed by local controllers. Credit risk related to the use
of treasury instruments, including those held at amortised cost and at fair value through other comprehensive income, is managed on a Group
basis. This risk arises from transactions with financial institutions involving cash and cash equivalents, deposits and derivative financial instruments.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. To reduce this risk, Unilever has
concentrated its main activities with a limited number of counter-parties which have secure credit ratings. Individual risk limits are set for each
counter-party based on financial position, credit rating and past experience. Credit limits and concentration of exposures are actively monitored by
the Group’s treasury department. Netting agreements are also put in place with Unilever’s principal counter-parties. In the case of a default, these
arrangements would allow Unilever to net assets and liabilities across transactions with that counter-party. To further reduce the Group’s credit
exposures on derivative financial instruments, Unilever has collateral agreements with Unilever’s principal counter-parties in relation to derivative
financial instruments. Under these arrangements, counter-parties are required to deposit securities and/or cash as a collateral for their obligations
in respect of derivative financial instruments. At 31 December 2020 the collateral held by Unilever under such arrangements amounted to €18 million
(2019: €24 million), of which €16 million (2019: €24 million) was in cash, and €2 million (2019: €Nil) was in the form of bond securities. The non-cash
collateral has not been recognised as an asset in the Group’s balance sheet.

Further details in relation to the Group’s exposure to credit risk are shown in note 13 and note 16A.

18. Financial instruments fair value risk

The Group is exposed to the risks of changes in fair value of its financial assets and liabilities. The following table summarises the fair values and
carrying amounts of financial instruments.

Fair values of financial assets and financial liabilities

Financial assets

Cash and cash equivalents

Financial assets at amortised cost

Financial assets at fair value through other comprehensive income

Financial assets at fair value through profit or loss:

Derivatives

Other

Financial liabilities

Bank loans and overdrafts

Bonds and other loans

Lease liabilities

Derivatives

Other financial liabilities

€ million

Fair value
2020

Fair value
2019

€ million
Carrying
amount
2020

€ million
Carrying
amount
2019

5,548

4,185

5,548

4,185

606

370

628

798

266

134

583

606

370

628

798

266

134

583

7,232

5,966

7,232

5,966

(411)

(853)

(411)

(853)

(26,936)

(26,525)

(24,585)

(25,032)

(1,771)

(1,919)

(1,771)

(1,919)

(315)

(223)

(270)

(183)

(315)

(223)

(270)

(183)

(29,656)

(29,750)

(27,305)

(28,257)

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 for both 2019 and 2020.

Fair value hierarchy

The fair values shown in notes 15C and 17A have been classified into three categories depending on the inputs used in the valuation technique.
The categories used are as follows:
■ Level 1: quoted prices for identical instruments;
■ Level 2: directly or indirectly observable market inputs, other than Level 1 inputs; and
■ Level 3: inputs which are not based on observable market data.

Unilever Annual Report and Accounts 2020
159

18. Financial instruments fair value risk continued

For assets and liabilities which are carried at fair value, the classification of fair value calculations by category is summarised below:

€ million

Notes

Level 1
2020

Level 1
2019

Level 2
2020

Level 2
2019

Level 3
2020

Level 3
2019

€ million
Total fair
value
2020

€ million
Total fair
value
2019

Assets at fair value

Financial assets at fair value through other

comprehensive income

Financial assets at fair value through profit

or loss:

Derivatives(a)

Other

Liabilities at fair value

Derivatives(b)

Contingent consideration

17A

16C

17A

16C

–

300

311

362

255

370

266

158

–

208

–

328

–

272

158

628

208

583

–

(418)

(326)

–

(140)

(154)

(418)

(140)

(326)

(154)

(a) Includes €78 million (2019: €74 million) derivatives, reported within trade receivables, that hedge trading activities.
(b) Includes €(103) million (2019: €(56) 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 2019. There were also no
significant movements between the fair value levels since 31 December 2019.

The impact in 2020 income statement due to Level 3 instruments is a loss of €22 million (2019: loss of €9 million).

Reconciliation of Level 3 fair value measurements of financial assets and financial liabilities is given below:

Reconciliation of movements in Level 3 valuations

1 January

Gains and losses recognised in income statement

Gains and losses recognised in other comprehensive income

Purchases and new issues

Sales and settlements

31 December

€ million
2020

€ million
2019

373

(22)

550

241

(9)

373

Significant unobservable inputs used in Level 3 fair values

Assets valued using Level 3 techniques include €494 million (2019: €403 million) relating to a number of unlisted investments within Unilever Ventures
companies, none of which are individually material; €51 million (2019: €nil) for an option over a non-controlling interest; and €106 million (2019: €114
million) of long-term cash receivables under life insurance policies. Valuation techniques used are specific to each asset and for all assets a change in
one or more of the inputs to reasonably possible alternative assumptions would not change the value significantly.

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 2019.

Assets and liabilities carried at fair value
■ The fair values of quoted investments falling into Level 1 are based on current bid prices.
■ The fair values of unquoted financial assets at fair value through other comprehensive income and at fair value through profit or loss are based
on recent trades in liquid markets, observable market rates, discounted cash flow analysis and statistical modelling techniques such as the
Monte Carlo simulation. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2. If one
or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.

■ Derivatives are valued using valuation techniques with market observable inputs. The models incorporate various inputs including the credit

quality of counter-parties, foreign exchange spot and forward rates, interest rate curves and forward rate curves of the underlying commodities.

■ For listed securities where the market is not liquid, and for unlisted securities, valuation techniques are used. These include the use of recent

arm’s length transactions, reference to other instruments that are substantially the same and discounted cash flow calculations.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS
160

Notes to the Consolidated Financial Statements Unilever Group continued

18. Financial instruments fair value risk continued

Other financial assets and liabilities (fair values for disclosure purposes only)
■ Cash and cash equivalents, trade and other current receivables, bank loans and overdrafts, trade payables and other current liabilities have

fair values that approximate to their carrying amounts due to their short-term nature.

■ The fair values of listed bonds are based on their market value.
■ Non-listed bonds, other loans, bank loans and non-current receivables and payables are based on the net present value of the anticipated

future cash flows associated with these instruments using rates currently available for debt on similar terms, credit risk and remaining
maturities.

Policies and processes used in relation to the calculation of level 3 fair values
Assets valued using Level 3 valuation techniques are primarily made up of long-term cash receivables and unlisted investments. Valuation
techniques used are specific to the circumstances involved. Unlisted investments include €494 million (2019: €403 million) of investments within
Unilever Ventures companies.

19. Provisions

Provisions are recognised where a legal or constructive obligation exists at the balance sheet date, as a result of a past event, where the amount
of the obligation can be reliably estimated and where the outflow of economic benefit is probable.

Provisions

Due within one year

Due after one year

Total provisions

Movements during 2020

1 January 2020

Additions through business combinations

Income Statement:

Charges

Releases

Utilisation

Currency translation

31 December 2020

€ million
2020

547

583

1,130

€ million
2019

620

664

1,284

€ million

Other

537

140

(59)

(44)

(66)

565

Total

1,284

424

(171)

(324)

(144)

1,130

€ million

Restructuring

470

–

151

(87)

(252)

(18)

264

Legal

149

129

(5)

(27)

(23)

227

€ million
Brazil
indirect taxes

128

–

(20)

(1)

(37)

Restructuring provisions primarily include people costs such as redundancy costs and the cost of compensation where manufacturing, distribution,
service or selling agreements are to be terminated. The Group expects these provisions to be substantially utilised within the next few years.

The Group is involved from time to time in legal and arbitration proceedings arising in the ordinary course of business. As previously disclosed, along
with other consumer products companies and retail customers, Unilever is involved in a number of ongoing investigations by national competition
authorities. These proceedings and investigations are at various stages and concern a variety of product markets. Where specific issues arise,
provisions are made to the extent appropriate. Due to the nature of the legal cases, the timing of utilisation of these provisions is uncertain.

Provisions for Brazil indirect taxes are comprised of disputes with Brazilian authorities, in particular relating to tax credits that can be taken for the PIS
and COFINS indirect taxes. These provisions are separate from the matters listed as contingent liabilities in note 20. Unilever does not have provisions
and contingent liabilities for the same matters. Due to the nature of disputed indirect taxes, the timing of utilisation of these provisions is uncertain.

Other includes provisions for indirect taxes in countries other than Brazil, interest on tax provisions and provisions for various other matters. The
timing of utilisation of these provisions is uncertain.

Unilever Annual Report and Accounts 2020161

20. Commitments and contingent liabilities

Commitments

Lease commitments are the future cash out flows from the lease contracts which are not recorded in the measurement of lease liabilities. These
include potential future payments related to leases of low value assets, leases which are less than twelve months, variable leases, extension and
termination options and leases not yet commenced but which we have committed to.

Other commitments principally comprise commitments under contract to purchase materials and services. They do not include commitments to
purchase property, plant and equipment, which are reported in note 10 on pages 137 to 139.

Lease commitments and other commitments fall due as follows:

Within 1 year

Later than 1 year but not later than 5 years

Later than 5 years

Contingent liabilities

€ million

Leases
2020

158

Leases
2019

111

223

€ million
Other
commitments
2020

€ million
Other
commitments
2019

844

694

791

684

1,556

1,498

Contingent liabilities are either possible obligations that will probably not require a transfer of economic benefits, or present obligations that may,
but probably will not, require a transfer of economic benefits. It is not appropriate to make provisions for contingent liabilities, but there is a chance
that they will result in an obligation in the future. Assessing the amount of liabilities that are not probable is highly judgemental, so contingent
liabilities are disclosed on the basis of the known maximum exposure.

Contingent liabilities arise in respect of litigations against group companies, investigations by competition, regulatory and fiscal authorities and
obligations arising under environmental legislation. In many markets, there is a high degree of complexity involved in the local tax regimes. The
majority of contingent liabilities are in respect of fiscal matters in Brazil.

In case of fiscal matters, the known maximum exposure is the amount included in a tax assessment.

Summary of contingent liabilities

Corporate reorganisation – IPI, PIS and COFINS taxes and penalties

Inputs for PIS and COFINS taxes

Goodwill amortisation

Other tax assessments – approximately 600 cases

Total Brazil tax

Other contingent liabilities

Total contingent liabilities

€ million
2020

2,040

137

650

2,862

648

3,510

€ million
2019

2,235

184

959

3,421

789

4,210

Brazil tax
During 2004, and in common with many other businesses operating in Brazil, one of our Brazilian subsidiaries received a notice of infringement from
the Federal Revenue Service in respect of indirect taxes regarding corporate reorganisation. The notice alleges that a 2001 reorganisation of our local
corporate structure was undertaken without a valid business purpose. The 2001 reorganisation was comparable with restructuring done by many
companies in Brazil. The original dispute was resolved in the courts in the Group’s favour. However, in 2013 a new assessment was raised in respect of
a similar matter. Additionally, during the course of 2014 and between 2017 and 2020, other notices of infringement were issued based on the same
grounds argued in the previous assessments. The total amount of the tax assessments in respect of this matter is €2,040 million (2019: €2,235 million).

The Group believes that the likelihood that the Brazilian tax authorities will ultimately prevail is low, however there can be no guarantee of success
in court. In each case we believe our position is strong, so they have not been provided for and are considered to be contingent liabilities. Due to the
fiscal environment in Brazil, the possibility of further tax assessments related to the same matters cannot be ruled out. We expect that two of our
largest tax litigation cases, which represent around €863 million of contingent liabilities, will move from the Administrative to the Judicial Courts
during 2021, although the exact timing is uncertain. When this happens, we will be required to make a judicial deposit or provide a guarantee in
respect of the disputed tax, interest and penalties. The judicial process in Brazil is likely to take a number of years to conclude.

The contingent liabilities reported for indirect taxes relating to disputes with the Brazilian authorities are separate from the provisions listed in note
19. Unilever does not have provision and contingent liabilities for the same matters.

Other contingent liabilities
In 2019, a tax assessment was issued in connection with a UK tax audit that commenced in 2015. The total amount of the tax assessment in respect
of this matter was €141 million and was included in other contingent liabilities at 31 December 2019. The UK tax authorities were reviewing the
allocation of taxable income related to intangible assets and centralised group services as between Unilever N.V. and Unilever PLC and whether
Unilever N.V. had a permanent establishment in the UK. During 2020 the UK tax audit was concluded, and we have included the outcome of the tax
assessment in this year’s profit and loss account, hence there is no contingent liability as at 31 December 2020. As noted last year, we will be pursuing
a Mutual Agreement Procedure with the Dutch and UK tax authorities to ensure we are not subject to double taxation.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS
162

Notes to the Consolidated Financial Statements Unilever Group continued

21. Acquisitions and disposals

Business combinations are accounted for using the acquisition accounting method as at the acquisition date, which is the date at which control is
transferred to the Group.

Goodwill is measured at the acquisition date as the fair value of consideration transferred, plus non-controlling interests and the fair value of any
previously held equity interests less the net recognised amount (which is generally fair value) of the identifiable assets and liabilities assumed.
Goodwill is subject to an annual review for impairment (or more frequently if necessary) in accordance with our accounting policies. Any impairment
is charged to the income statement as it arises. Detailed information relating to goodwill is provided in note 9 on pages 134 to 136.

Transaction costs are expensed as incurred, within non-underlying items.

Changes in ownership that do not result in a change of control are accounted for as equity transactions and therefore do not have any impact on
goodwill. The difference between consideration and the non-controlling share of net assets acquired is recognised within equity.

2020

In 2020, the Group completed the business acquisitions and disposals as listed below. In each case, 100% of the businesses were acquired unless
stated otherwise. Total consideration for 2020 acquisitions is €6,337 million (2019: €1,167 million for acquisitions completed during that year). More
information related to the 2020 acquisitions is provided on page 163 to 164.

Deal completion date

Acquired/disposed business

1 April 2020

25 June 2020

30 June 2020

15 July 2020

1 October 2020

23 December 2020

Acquired the health food drinks business of GlaxoSmithKline plc in India and 20 other
predominantly Asian markets (“the Main Horlicks Acquisition”). The acquisition added leading
brands such as Horlicks and Boost in certain markets, increasing Unilever’s presence in
functional nutrition. As a significant acquisition for the Group, further details are disclosed
separately below.

Acquired Vwash, a leading intimate hygiene business in India. The acquisition complements our
beauty and personal care portfolio and increase our presence in fast-growing segments in India.

The Group acquired 82% of GlaxoSmithKline Bangladesh Limited, a health food drink business
in Bangladesh. The Bangladesh Horlicks Acquisition was a separate transaction to the Main
Horlicks Acquisition.

Sold the Ice Cream business in Chile to Carozzi.

Acquired Liquid IV, a US-based health-science nutrition and wellness company, known for its
portfolio of electrolyte drink mixes that enhance rapid hydration. This acquisition increases our
presence in functional nutrition.

Acquired SmartyPants Vitamins, a vitamin, mineral and supplement company based in the US.
The acquisition complements Unilever’s existing portfolio in functional nutrition.

Horlicks Acquisitions
The Main Horlicks Acquisition was composed of the following related transactions on 1 April 2020:
■ Hindustan Unilever Limited (HUL), a subsidiary of the Group, obtained control of the business of GlaxoSmithKline Consumer Healthcare Limited

(GSKCH) via an all equity merger under which 4.39 shares of HUL were allotted for every share of GSKCH;

■ HUL purchased the Horlicks intellectual property rights, being mainly legal rights to the Horlicks brand (the ‘HFD IP’) for India and Unilever N.V.

and Unilever PLC purchased the HFD IP outside of India and Bangladesh (subsequently the Bangladesh HFD IP was acquired by Unilever PLC in a
separate transaction); and

■ Unilever Foods (Malaysia) Sdn Bhd and Unilever Asia Pacific Limited (Singapore) purchased the Horlicks commercial operations of GSK in 20

other predominantly Asian markets (“Local Distribution Assets”).

The Bangladesh Horlicks Acquisition is separate to the Main Horlicks Acquisition and completed on 30 June 2020. Unilever Overseas Holding B.V.
purchased 82% of GSK Bangladesh Limited and Unilever PLC purchased the HFD IP in Bangladesh. The following disclosures relate only to the Main
Horlicks Acquisition.

Main Horlicks Acquisition
The purpose of the acquisition was to add the Horlicks and Boost brands in certain geographical markets to Unilever’s portfolio to increase presence
in healthy nutrition and in high-growth emerging markets.

The total consideration paid was €5,294 million comprised of €449 million in cash and €4,845 million in shares of Hindustan Unilever Limited valued
based on the share price of HUL on the completion date and the exchange rate on the same date (83.05 INR/€).

The provisional fair value of net assets for the acquisition that is recognised on the balance sheet is €3,204 million. Balances are provisional as we
are finalising our review of the asset valuations. The main assets acquired were brands which were valued using an income approach model by
estimating future cashflows generated by the brand and discounting them to present value using rates in line with a market participant expectation.
The key assumptions in the brand valuations are revenue growth and discount rates. More information related to each major class of assets and
liabilities acquired is provided on page 164.

At the date of acquisition we expected around €1.3 billion of the goodwill to be deductible for tax purposes. While we believe there is legal basis
to claim the Horlicks goodwill as tax deductible, we note that the Indian Budget on 1 February 2021 includes a proposal to exclude goodwill from
the definition of tax depreciable assets effective 1 April 2020. If enacted this would have no material impact on the income statement. Since the
acquisition date, foreign exchange has decreased this goodwill in euros by €159 million.

The gross contractual value of trade and other receivables as at the dates of acquisition amounted to €77 million which is expected to be fully recoverable.

Within the acquired net assets, contingent liabilities amounting to €123 million in respect of ongoing litigation against GlaxoSmithKline Consumer
Healthcare Limited have been recognised based on management’s estimate of the values of exposures and their assessment of the probability of the
related claims being settled by the Group. The contingent liabilities mainly relate to direct and indirect tax disputes with the Indian tax authorities.
There are several matters being disputed and in each case we believe that the likelihood that the Indian tax authorities will ultimately prevail is no
higher than moderate, however we expect that most of these disputes will not be resolved for several years. Contingent assets of €73 million are
also recognised, measured on the same basis, for the Group’s right to future indemnification by GlaxoSmithKline Pte Limited and Horlicks Limited in
relation to certain claims.

Unilever Annual Report and Accounts 2020163

21. Acquisitions and disposals continued

Impact of dilution of Group interest in Hindustan Unilever Limited
The acquisition of GSKCH by HUL was settled through the issue of (184.6 million) new shares of Hindustan Unilever Limited and so resulted in dilution
of Unilever’s interest in Hindustan Unilever Limited from 67.2% to 61.9%. The table below shows the impact of the decrease in shareholding on the
equity attributable to shareholders of the Group.

67.2% share of HUL’s net assets acquired before acquisition of GSKCH

61.9% share of HUL’s net assets acquired after acquisition of GSKCH

Loss recognised in equity due to dilution

Gain arising from proportionate share of GSKCH’s net assets acquired

Net gain arising from the Main Horlicks Acquisition recognised in equity

€ million
2020

718

661

(57)

3,001

2,944

Acquisition-related costs related to Horlicks of €42 million have been recorded within non-underlying items in the consolidated income statement
for 2020 (2019: €12 million). Total costs relating to the issuance of shares amounting to €5 million have been recognised against equity by Hindustan
Unilever Limited.

The Main Horlicks Acquisition contributed €415 million to Group turnover and €119 million to Group operating profit since the acquisition date. If the
acquisition had taken place at the beginning of the year, Group turnover would have been €50,867 million and Group operating profit would have

been €8,342 million.

Effect on consolidated income statement

The overall impact of the Main Horlicks Acquisition and the other acquisitions on the consolidated income statement is as follows: The acquisition
deals completed in 2020 have contributed €476 million to Group revenue and €124 million to Group operating profit since the relevant acquisition
dates. If the acquisition deals completed in 2020 had all taken place at the beginning of the year, Group turnover would have been €51,116 million
and Group operating profit would have been €8,371 million.

2019

In 2019 the Group completed the following business acquisitions and disposals as listed below. For all businesses acquired, the acquisition
accounting has been finalised. Subsequent changes to the provisional numbers published last year are immaterial.

Deal completion date

Acquired/disposed business

28 January 2019

5 February 2019

1 March 2019

5 April 2019

21 May 2019

28 June 2019

26 July 2019

30 August 2019

1 October 2019

Acquired the Laundress, a global premium eco-friendly laundry care business in the US. The
acquisition expands our portfolio into the premium home care market.

Acquired Graze, the leading healthy snacking business in the UK. The acquisition accelerates our
presence in the healthy snacking and out of home markets.

Sold the global Alsa baking and dessert business to Dr. Oetker.

Acquired Garancia, a derma-cosmetic business in France. The acquisition strengthens our
prestige portfolio in the pharmacy channel.

Acquired Olly Nutrition, a US based vitamins, minerals and supplements business that
accelerates our presence and competitiveness in the wellness market.

Acquired Fluocaril and Parogencyl oral care businesses in France and Spain. The acquisition
complements our existing oral care portfolio and strengthens our distribution in the European
pharmacy channel.

Acquired 95% of Tatcha, a leading prestige skin care business in the US. Tatcha is a modern
skin care brand with a focus on natural ingredients, product experience, premium design and
packaging quality.

Acquired Astrix, a personal and home care business in Bolivia that further strengthens our local
market competitiveness.

Acquired 70% of Lenor, a premium skin care business based in Japan. The acquisition expands
our portfolio into Japanese beauty, premium face and derma care in Japan and China.

Acquired 75% of FruFru, a healthy food business in Romania which accelerates our local
presence and competitiveness in the healthy food market.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS164

Notes to the Consolidated Financial Statements Unilever Group continued

21. Acquisitions and disposals continued

Effect on consolidated balance sheet

Acquisitions

The following table sets out the overall effect of the Main Horlicks Acquisition and the other acquisitions in 2020, 2019 and 2018 on the consolidated
balance sheet. The fair values currently used for opening balances of all acquisitions made in 2020 are provisional. Balances remain provisional due
to missing relevant information about facts and circumstances that existed as of the acquisition date and where valuation work is still ongoing.

€ million
2020

€ million
2019

€ million
2018

Net assets acquired

Non-controlling interest

Goodwill

Total payment for acquisition

Exchange rate gain/(loss) on cash flow hedge

Total consideration

In 2020 the net assets acquired and total payment for acquisitions consist of:

3,857

(27)

2,507

6,337

–

6,337

771

(25)

421

1,167

–

1,167

Main Horlicks
Acquisition

Other
acquisitions

Intangible assets

Other non-current assets

Trade and other receivables

Other current assets(a)

Non-current liabilities(b)

Current liabilities

Net assets acquired

Non-controlling interest

Goodwill

Exchange rate gain/(loss) on cash flow hedges

Total consideration

Of which

Consideration paid(c)

Deferred consideration

3,345

249

560

(905)

(122)

3,204

–

2,090

–

5,294

–

815

(17)

496

1,294

(100)

1,194

€ million
2020

4,082

284

103

655

737

(202)

(1,107)

(38)

653

(27)

417

–

1,043

1,019

(160)

3,857

(27)

2,507

–

6,337

6,313

(a) Other current assets include finacial assets of €463 million and cash of €36 million related to the Main Horlicks Acquisition.
(b) Non-current liabilities include deferred tax of €746 million related to the Main Horlicks Acquisition.
(c) For the Main Horlick Acquisition consideration paid was €449 million in cash and €4,845 million in equity shares. For the other acquisitions all consideration was paid in

cash.

Goodwill represents the future value which the Group believes it will obtain through operational synergies and the application of acquired company
ideas to existing Unilever channels and businesses. Detailed information relating to goodwill is provided in note 9 on pages 134 to 136.

No material contingent liabilities were acquired in the other acquisitions described above.

Unilever Annual Report and Accounts 2020165

21. Acquisitions and disposals continued

Disposals

Total consideration for 2020 disposals is €35 million (2019: €169 million for disposals completed during that year). The following table sets out the
effect of the disposals in 2020, 2019 and 2018 on the consolidated balance sheet. The results of disposed businesses are included in the consolidated
financial statements up to their date of disposal.

Goodwill and intangible assets

Other non-current assets

Current assets

Trade creditors and other payables

Net assets sold

(Gain)/loss on recycling of currency retranslation on disposal

Profit/(loss) on sale attributable to Unilever

Consideration

Cash

Cash balances of businesses sold

Non-cash items and deferred consideration

€ million
2020

€ million
2019

(1)

–

(12)

104

–

169

168

–

169

€ million
2018

2,510

666

261

(107)

3,330

(71)

4,331

7,590

7,135

321

134

7,590

In 2020 business disposal was mainly related to the sale of Unilever Ice Cream business in Chile to Carozzi.

22. Assets and liabilities held for sale

Non-current assets and groups of assets and liabilities which comprise disposal groups are classified as ‘held for sale’ when all of the following criteria
are met: a decision has been made to sell; the assets are available for sale immediately; the assets are being actively marketed; and a sale has been
agreed or is expected to be concluded within 12 months of the balance sheet date.

Immediately prior to classification as held for sale, the assets or groups of assets are remeasured in accordance with the Group’s accounting policies.
Subsequently, assets and disposal groups classified as held for sale are valued at the lower of book value or fair value less disposal costs. Assets held
for sale are neither depreciated nor amortised.

Disposal groups held for sale(a)

Goodwill and intangibles

Property, plant and equipment

Inventories

Trade and other receivables

Other

Property, plant and equipment held for sale(b)

Assets held for sale

Liabilities held for sale

(a) In 2020, disposal groups held for sale consists of assets mainly relating to manufacturing assets.
(b) 2019 includes manufacturing assets held for sale in various countries.

€ million
2020
Total

€ million
2019
Total

–

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS166

Notes to the Consolidated Financial Statements Unilever Group continued

23. Related party transactions

A related party is a person or entity that is related to the Group. These include both people and entities that have, or are subject to, the influence or
control of the Group.

Joint ventures

The following related party balances existed with associate or joint venture businesses at 31 December:

Related party balances

Sales to joint ventures

Purchases from joint ventures

Receivables from joint ventures

Payables to joint ventures

Loans to joint ventures

Royalties and service fees

€ million
2020
Total

1,004

118

255

€ million
2019
Total

839

113

289

Significant joint ventures are Unilever FIMA Lda for Portugal, Binzagr Unilever Distribution and Al Gurg Unilever for Middle East, the Pepsi/Lipton
Partnership for the US and Pepsi Lipton International Ltd for the rest of the world.

Associates

There are no trading balances from/to associates.

Langholm Capital II was launched in 2009. Unilever has invested €64 million in Langholm II, with an outstanding commitment at the end of 2020 of
€2 million (2019: € 11 million). During 2020, Unilever received €nil (2019: €nil) from its investment in Langholm Capital II.

24. Remuneration of auditors

Fees payable to the Group’s auditors for the audit of the consolidated and parent

Company Accounts of Unilever N.V. and Unilever PLC(a)

Fees payable to the Group’s auditors for the audit of accounts of subsidiaries of

Unilever N.V. and Unilever PLC pursuant to legislation(b)(c)

Total statutory audit fees

Fees payable to the Group’s auditors for the audit of non-statutory

financial statements

Audit-related assurance services

Other taxation advisory services

Services relating to corporate finance transactions

Other assurance services

All other non-audit services

Total fees payable

€ million
2020

€ million
2019

€ million
2018

6(d)

–(e)

–

1(f)

–(e)

–

–(e)

–

–(e)

4(d)

–(e)

–

1(f)

–(e)

(a) Of which €nil million was payable to KPMG Accountants N.V. (2019: €1 million; 2018: €1 million) and €6 million was payable to KPMG LLP (2019: €4 million; 2018:

€5 million).

(b) Comprises fees payable to the KPMG network of independent member firms affiliated with KPMG International Cooperative for audit work on statutory financial

statements and Group reporting returns of subsidiary companies.

(c) Amount payable to KPMG in respect of services supplied to associated pension schemes was less than €1 million individually and in aggregate (2019: less than

€1 million individually and in aggregate; 2018: less than €1 million individually and in aggregate).

(d) 2020 includes €6 million for the audit of carve-out financial statements of the Tea business. 2018 includes €4 million for audits of carve-out financial statements of the

Spreads business.

(e) Amounts paid in relation to each type of service are less than €1 million individually and in aggregate (2019: less than €1 million and in aggregate; 2018: less than

€1 million).
2020 includes €1 million for assurance work on Unification. 2018 includes €1 million for assurance work on Simplification.

(f)

25. Events after the balance sheet date

Where events occurring after the balance sheet date provide evidence of conditions that existed at the end of the reporting period, the impact
of these events is adjusted within the financial statements. Otherwise, events after the balance sheet date of a material size or nature are
disclosed below.

Dividend

On 4 February 2021 Unilever announced a quarterly dividend with the 2020 fourth quarter results of £0.3760 per PLC ordinary share. The total value of
the announced dividend is €1,125 million.

Unilever Annual Report and Accounts 2020
167

26. Significant subsidiaries

The following represents the significant subsidiaries of the Group at 31 December 2020, that principally affect the turnover, profit and net assets
of the Group. The percentage of share capital is shown below represents the aggregate percentage of equity capital directly or indirectly held by
Unilever PLC in the company. The companies are incorporated and principally operated in the countries under which they are shown except where
stated otherwise.

Country

Argentina

Australia

Bangladesh

Brazil

Canada

China

Name of company

Unilever de Argentina S.A.

Unilever Australia Limited

Unilever Bangladesh Limited

Unilever Brasil Ltda.

Unilever Canada Inc.

Unilever Services (Hefei) Co. Ltd

Walls (China) Co. Limited

England and Wales

Unilever UK & CN Holdings Limited

England and Wales

Unilever Global IP Ltd

England and Wales

Unilever U.K. Holdings Limited

England and Wales

Unilever UK Limited

England and Wales

Unilever U.K. Central Resources Limited

France

Germany

India

Indonesia

Italy

Korea

Mexico

Netherlands

Pakistan

Philippines

Russia

Singapore

South Africa

Switzerland

Thailand

Turkey

Unilever France S.A.S

Unilever Deutschland GmbH

Unilever Deutschland Holding GmbH

Hindustan Unilever Limited

PT Unilever Indonesia Tbk

Unilever Italia Mkt Operations S.R.L.

Carver Korea Co., Ltd

Unilever de Mexico, S. de R.I. de C.V.

Mixhold B.V.

Unilever Finance International B.V.

Unilever Finance Netherlands B.V.

Unilever IP Holdings B.V.

Unilever Nederland B.V.

Unilever Europe B.V.

UNUS Holding B.V.

Unilever Pakistan Limited

Unilever Philippines, Inc.

OOO Unilever Rus

Unilever Asia Private Limited

Unilever South Africa (Pty) Limited

Unilever ASCC AG

Unilever Finance International AG

Unilever Supply Chain Company AG

Unilever Thai Trading Limited

Unilever Sanayi ve Ticaret Turk A.S

United States of America

Conopco, Inc.

United States of America

Unilever Capital Corporation

United States of America

Unilever North America Supply Chain Company LLC

United States of America

Unilever United States, Inc.

United States of America

Ben & Jerry’s Homemade, Inc.

Vietnam

Unilever Vietnam International Company Limited

Shareholding%

100.00

60.75

100.00

99.99

100.00

61.90

84.99

100.00

99.28

100.00

99.98

100.00

Due to the inclusion of certain partnerships in the consolidated group financial statements of Unilever, para 264(b) of the German trade law grants
an exemption from the duty to prepare individual statutory financial statements and management reports in accordance with the requirements for
limited liability companies and to have these audited and published.

See pages 184 to 190 for a complete list of subsidiary undertakings, associates and joint ventures.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS168

Company Accounts
Unilever PLC

Income statement

for the year ended 31 December

Turnover

Royalties and services charged out to group companies

Incurred costs and royalties paid

Amortisation of finite-life intangible assets and software

Other (expenses)/income

Operating profit

Net finance costs

Finance income

Finance costs

Income from shares in group companies

(Impairment)/Reversal of impairment of intangible assets

Profit before taxation

Taxation

Net profit

Statement of comprehensive income

Net profit

Other comprehensive income

Items that will not be reclassified to profit or loss, net of tax:

Remeasurement of defined benefit pension plans

Items that may be reclassified subsequently to profit or loss, net of tax

Total comprehensive income

Statement of changes in equity

1 January 2019

Profit or loss for the period

Other comprehensive income net of tax:

Remeasurement of defined benefit pension plan net of tax

Total comprehensive income

Dividends on ordinary capital

Cancellation of treasury shares

Other movements in equity

31 December 2019

Profit or loss for the period

Other comprehensive income net of tax:

Remeasurement of defined benefit pension plan net of tax

Total comprehensive income

Dividends on ordinary capital

Issuance of shares(a)

Cancellation of treasury shares

Other movements in treasury shares(b)

Other movements in equity

31 December 2020

Notes

£ million
2020

2,281

(2,024)

(11)

(5)

241

(58)

(89)

456

(12)

627

(173)

454

£ million
2019

2,193

(1,909)

(11)

279

(53)

(85)

5,223

–

5,449

(24)

5,425

£ million
2020

454

£ million
2019

5,425

–

455

–

5,425

£ million

Legal
reserves

Other
reserves

Retained
profit

Total
equity

3,448

5,425

4,083

5,425

–

5,425

(1,649)

(782)

(6)

7,071

454

455

(2)

(6)

7,216

454

455

(1,698)

–

65,477

–

(271)

–

(777)

–

777

–

(271)

–

£ million
Called
up share
capital

£ million
Share
premium
account

–

(1)

–

65,431

–

(a) As part of Unification the shareholders of NV were issued PLC ordinary shares, and all NV shares in issue were cancelled. Further details are given in note 1 and note 10.
(b) As part of Unification, treasury shares held by NV were transferred to PLC. At 31 December 2020 5,884,511 shares (2019: nil) are held at an employee share trust and

50,000 shares (2019: nil) are held by PLC (see critical accounting estimates and judgements for more information).

65,525

(271)

5,828

71,179

Unilever Annual Report and Accounts 2020
169

Notes

£ million
31 Dec 2020

£ million
31 Dec 2019

£ million
1 Jan 2019

146

73,798

1,578

183

8,365

1,544

–

165

8,365

496

–

75,533

10,106

9,044

1,770

77,303

4,196

1,926

1,928

6,124

65,525

(271)

5,828

71,179

77,303

4,103

14,209

5,099

1,892

1,894

6,993

–

7,071

7,216

14,209

1,659

10,703

6,410

843

845

7,255

(777)

4,083

3,448

10,703

Balance sheet

as at 31 December

Assets

Non-current assets

Intangible assets

Investments in subsidiaries

Other non-current assets

Deferred tax assets

Pension assets

Current assets

Trade and other current receivables

Total assets

Liabilities

Current liabilities

Trade payables and other current liabilities

Non-current liabilities

Financial liabilities

Provisions

Total liabilities

Equity

Shareholders’ equity

Called up share capital

Share premium account

Capital redemption reserve

Other reserves

Retained profit

Total liabilities and shareholders’ equity

For the information required by Part 7 of Book 2 of the Dutch Civil Code, refer to pages 112 to 167 (which are part of the consolidated financial
statements) and pages 176 to 183 (which are part of the notes to the Unilever PLC company accounts).

The financial statements on pages 168 to 183 were approved by the Board of Directors on 3 March 2021.

On behalf of the Board of Directors

A Jope
Chief Executive Officer

G Pitkethly
Chief Financial Officer

3 March 2021

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS

170

Statement of cash flows
For the year ended 31 December

Net profit

Taxation

Net finance costs

Impairment and intangibles

Income from shares in group companies

Operating profit

Amortisation

Changes in working capital

Trade and other current receivables

Trade payables and other current liabilities

Cash flow from operating activities

Income tax paid

Net cash flow from operating activities

Interest received

Purchase of intangible assets

Loans given to subsidiaries

Dividends from subsidiaries

Net cash flow from investing activities

Dividends paid on ordinary share capital

Interest paid

Additional financial liabilities

Repayment of financial liabilities

Other movements on treasury shares

Net cash flow from financing activities

Net increase/(decrease) in current account(a)

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

Notes

£ million
2020

454

173

(456)

241

1,174

2,683

(1,509)

1,426

(84)

1,342

(42)

–

456

445

(1,698)

(89)

–

(1,787)

–

£ million
2019

5,425

(5,223)

279

(3,682)

(2,444)

(1,238)

(3,392)

(21)

(3,413)

(29)

(1,048)

5,223

4,178

(1,649)

(85)

1,049

(72)

(8)

(765)

–

(a) Unilever PLC does not have cash and cash equivalents. Instead Unilever PLC has a current account with Unilever UK Central Resources Limited and Unilever UK Central

Resources Limited makes and collects payments on behalf of Unilever PLC.

Unilever Annual Report and Accounts 2020Notes to the Company Accounts
Unilever PLC

171

Accounting information and policies

Accounting policies

Cross-border merger between Unilever PLC and Unilever
N.V. (Unification)

The accounting policies of PLC and NV company accounts are the
same as the Unilever Group, refer to pages 116 to 118, except for the
accounting policies included below.

On 29 November 2020 (the ‘effective date’) a cross-border merger
between Unilever PLC (PLC or the Company) and Unilever N.V. (NV) was
implemented under UK Cross-Border Merger Regulations and Title 7,
Book 2 of the Dutch Civil Code. This is referred to as “Unification” in the
PLC financial statements. As a result (i) PLC acquired all of the assets,
liabilities and legal relationships of NV by universal succession of title;
(ii) NV was dissolved; and (iii) PLC issued and allotted shares in its
capital to former NV Shareholders, except for a very small minority of
NV Shareholders that chose to receive cash instead of PLC shares. The
shareholders of NV received one new PLC share in exchange for each
NV share held, consistent with the 1 to 1 equalisation ratio as set out
in the Equalisation Agreement.

As a result of the cross-border merger, PLC mainly acquired investments
in subsidiaries. These investments have been recognised in accordance
with the Company’s accounting policy for investments in subsidiaries
which is cost (less any amounts written off to reflect any impairment).
Refer to critical accounting estimates and judgements and note 5 for
further explanation on the determination of the cost.

In accordance with the provisions of Title 7 Book 2 of the Dutch Civil
Code, the transactions of NV are included in the Company’s consolidated
financial statements from 1 January 2020, and the company accounts of
NV from 1 January 2020 to the effective date are set out in note 17 of PLC’s
company accounts on page 176 to 183.

Basis of preparation

The company accounts of PLC are prepared on the going concern basis
and in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006, international financial
reporting standards (IFRS) adopted pursuant to Regulation (EC) No.
1606/2002 as it applies in the European Union and IFRS as issued by the
International Accounting Standards Board.

The accounts are prepared under the historical cost convention, except
for the revaluation of financial assets classified as ‘fair value through
other comprehensive income’ or ‘fair value through profit or loss’, as well
as derivative financial instruments, which are reported in accordance
with the accounting policies set out below.

Unilever PLC is included within the consolidated financial statements
of the Group. The consolidated financial statements of the Group are
prepared in accordance with IFRS.

First-time adoption of International Financial
Reporting Standards

In 2019 PLC prepared its Company Accounts in accordance with Financial
Reporting Standard 101 ‘Reduced Disclosure Framework’ (FRS 101) and
the UK Companies Act 2006. In 2020 PLC has prepared its company
accounts in accordance with IFRS and the UK Companies Act 2006. The
transition date to IFRS is 1 January 2019.

In accordance with IFRS 1, PLC has applied IFRS retrospectively. The
recognition and measurement principles of FRS 101 are to a large extent
the same as IFRS. Management have reviewed these principles and
concluded that there is no impact. As a result, the conversion from UK
Financial Reporting Standard 101 (FRS 101) to IFRS does not change
the financial position, financial performance and cash flows of PLC.
Accordingly, we have not presented a reconciliation at the transition
date, at 31 December 2019 and for the year 2019 from FRS 101 to IFRS.
Since IFRS-EU does not contain the same disclosure exemptions as FRS
101, the disclosures are more extensive.

The implications of the transition from FRS 101 to IFRS are also applicable
for NV. Refer to note 17 for the NV company accounts.

Foreign currency
The Company’s functional and presentational currency is pound sterling.
Transactions in foreign currencies are translated to the Company’s
functional currency at the foreign exchange rate ruling at the date of
the transaction. Monetary assets and liabilities denominated in foreign
currencies at the balance sheet date are retranslated to the functional
currency at the foreign exchange rate ruling at that date. Non-monetary
assets and liabilities that are measured in terms of historical cost in a
foreign currency are translated using the exchange rate at the date of the
transaction. Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are retranslated to the functional
currency at foreign exchange rates ruling at the date the fair value was
determined. Foreign exchange differences arising on translation of
monetary assets and liabilities are recognised in the income statement.

The functional and presentation currency of NV is the euro.

Turnover
Turnover excludes value added tax and includes royalties and service
fees received from group companies. Royalty income from brand and
technology licence arrangements is recognised at the time sales are
made by group companies. Revenue from services is recognised over
time based on the usage of these services by group companies.

Operating profit
The operating profit is stated after deducting the costs that are mainly
related to the royalties and delivered services. Expenses are allocated to
the period in which they relate.

Investment in subsidiaries
Shares in group companies are stated at cost less any amounts written
off to reflect an impairment.

Retirement benefits
NV was the sponsoring employer to several pension schemes. There were
formal agreements in place for how the contributions due to the schemes
are split between participating companies. Accordingly, NV recognised
the assets and liabilities of the schemes for which it was a sponsoring
employer in full on its company balance sheet. The recovery of
contributions from other employing entities was in line with these existing
agreements. NV accounted for pensions and similar benefits under IAS 19
‘Employee Benefits’. The operating and financing costs of defined benefit
plans were recognised separately in the income statement; service
costs were systematically spread over the service lives of employees;
and financing costs were recognised in the periods in which they arose.
Variations from expected costs, arising from the experience of the plans
or changes in actuarial assumptions, were recognised immediately
in other comprehensive income. The costs of individual events such
as past benefits, enhancements, settlements and curtailments were
recognised immediately in the income statement. The liabilities and,
where applicable, the assets of defined benefit plans were recognised at
fair value in the balance sheet. The charges to the income statement for
defined contribution plans were NV contributions payable and
the assets of such plans were not included in NV’s balance sheet.
On 26 November 2020 NV demerged these pension commitments to
Unilever PL Netherlands B.V.

Financial guarantees
Where PLC and NV enter into financial guarantee contracts to guarantee
the indebtedness of other companies within its group, they consider
these to be insurance arrangements and account for them as such. In
this respect, PLC and NV treat the guarantee contracts as a contingent
liability until such time as it becomes probable that they will be required
to make a payment under the guarantee.

Capital Redemption Reserve
The nominal value of shares cancelled is transferred from share capital
to the capital redemption reserve.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS172

Notes to the Company Accounts Unilever PLC continued

Critical accounting estimates and judgements

The preparation of financial statements requires management to make
judgements and estimates in the application of accounting policies that
affect the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates. Estimates and judgements
are periodically evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to
be reasonable. Revisions to accounting estimates are recognised in the
period in which the estimate is revised and in any future period affected.

The following judgements are what management believe have the
most significant effect on the amounts recognised in the PLC and NV
company accounts as indicated below:
■ Value of assets acquired as a result of Unification (PLC) - PLC has
recognised the net assets acquired in the cross-border merger,
primarily investments in subsidiaries, at cost in accordance with IAS
27 ‘Separate financial statements’. The consideration paid by PLC
to acquire these net assets is the ordinary shares that were issued
to NV shareholders. The consideration has been measured at fair
value based on the number of shares issued and the share price at
the effective date of the cross-border merger. We have valued the
assets by reference to the shares that have been issued instead
of calculating the fair value based on a discounted cash flow
model since the cross-border merger is a transaction with market
participants for which the consideration is based on a quoted share
price in accordance with IFRS 13 ‘ Fair value measurement’.

The total value of the assets acquired has been allocated to each asset
based on the relative proportion of their individual fair values.

The fair value has been allocated to each investment acquired based
on the relative proportion of their individual fair values.

■ Transfer of IP economic substance (PLC) – On 1 December 2020 PLC

contributed its intellectual property for the divisions Home Care and
Beauty & Personal Care as a contribution in kind to Unilever Global
IP Limited, a direct subsidiary of PLC. Management assessed if the
transaction should be recognised at fair value or book value based
on the economic substance of the transaction. Since no consideration
was payable, management judged the transaction had no economic
substance for reporting purposes and concluded the transaction should
be recognised at book value. PLC recognises investments in subsidiaries
at cost and reflected the transaction by an increase in its investment in
Unilever Global IP Limited. Therefore, PLC recognised an increase in the
cost of Unilever Global IP Limited and the derecognition of the cost of
the intellectual property, both at book value.

■ Legal demerger economic substance (NV) – On 26 November 2020
a legal demerger occurred where NV incorporated Unilever Finance
Netherlands B.V. (Unilever Finance), Unilever IP Holdings B.V. (Unilever
IP) and Unilever PL Netherlands B.V. (Unilever PL) as its direct
subsidiaries. Under the demerger these three entities received the
following assets and liabilities of NV under universal succession of title:
■ Unilever Finance received the euro bonds including the rights,

obligations and liabilities in respect of the bonds and all intra-group
receivables which resulted from the on-lending of the funds received
on the bonds.

■ Unilever IP received the IP rights for the Foods & Refreshments,

Home Care and Beauty & Personal Care divisions and the beneficial
ownership of the Unilever logo, including all intragroup or third
party licenses, other agreements, goodwill, tax related receivables
and payables (including deferred tax liabilities), intercompany
receivables and payables, other existing claims obligations and
registration rights related to the IP rights.

■ Unilever PL received the pension commitments including the related

rights, obligations and liabilities and deferred tax liabilities.

Management used judgement to assess if the legal demerger had
economic substance for reporting purposes. The three entities issued
one share each to NV with a nominal value of €1 in exchange for the
assets and liabilities received so management judged the transaction
as a reorganisation without economic substance which should be
recognised at book value. NV recognised an investment value in
Unilever Finance and Unilever IP for the same amount as the book
value of the net assets acquired by those entities of respectively
€2 million and €690 million.

■ Contribution of investments in subsidiaries and related receivables

and payables economic substance (NV) – On 25 November 2020 and
27 November 2020 NV contributed investments in several subsidiaries
and related receivables and payables into its subsidiary Unilever
International Holdings B.V. (UIH) for no consideration. Management
used judgement to assess if the contribution in kind from NV to

UIH had economic substance for reporting purposes. Since no
consideration was paid by UIH, management considered the
transaction a reorganisation without economic substance which
should be recognised at book value. NV recognises investments
in subsidiaries at cost and chose to reflect the transaction in
the investment value of UIH on the balance sheet. Therefore, NV
recognised an increase in the cost of UIH and the derecognition
of the cost of investments in other subsidiaries and the related
receivables and payables at book value.

■ Recognition of shares transferred to an employee share ownership
trust (PLC and NV) – On 17 November 2020 NV and PLC established
an employee share ownership trust and on 20 November 2020 NV
transferred 4,523,367 (PLC and NV) ordinary shares, 892,155 NV
NYRSs and 468,989 PLC ADSs that it held to the trust. Management
assessed if the shares should be derecognised from NV’s balance
sheet. Although the shares were transferred to the trust, NV retained
the majority of the risks and rewards of the funding arrangement
because the trust was acting with regard to the recommendations
of NV in respect of the delivery of such shares to satisfy share award
obligations. Management concluded that the trust was acting
on behalf of NV and PLC and was acting as an agent instead of a
principal. Therefore management considered it appropriate that
there was no change in the recognition of the NV shares as treasury
shares and PLC shares as an investment on NV’s balance sheet.

As a result of the cross-border merger, the NV shares were cancelled
and new PLC shares were issued to the trust in respect of these shares.
Management assessed if the shares should be recorded at fair value or
book value. Since the acquisition of the investments in the cross-border
merger was recorded at cost, being the fair value of the shares issued
by PLC, management considered it to be consistent to recognise the
shares at fair value in the other reserves.

1. Turnover

Royalties (point in time)

Services (over time)

Turnover

£ million
2020

£ million
2019

562

1,719

2,281

571

1,622

2,193

2. Income from shares in group companies

Dividends received from shares in group
companies

3. Taxation

Tax charge in income statement

Current tax

Current year

Double taxation relief

Adjustments in respect of prior years

Deferred tax

Current year

Change in tax rate

Adjustments in respect of prior years

£ million
2020

£ million
2019

456

5,223

£ million
2020

£ million
2019

(133)

(67)

(175)

(5)

(82)

(20)

(4)

–

(4)

Tax (charge)/credit on profits
on ordinary activities

(173)

(24)

Unilever Annual Report and Accounts 2020

173

£ million

8,370

65,433

–

73,803

(5)

73,798

8,365

Reconciliation of tax expense

Profit for the year

£ million
2020

£ million
2019

627

5,449

5. Investments in subsidiaries

Tax using the UK statutory corporate income tax
rate of 19% (2019: 19%)

(119)

(1,035)

Tax effects of:

Income not subject to tax (primarily
tax-exempt dividends)

Non-deductible expenses

Effects of tax rates in foreign jurisdictions

Deferred tax on intangibles

(Under)/over provided in prior years(a)

Impact of change in tax rate on deferred tax
balances

Total tax expense

(13)

(57)

–

(72)

(173)

992

(11)

(6)

–

(24)

(a) During 2020 the UK tax audit in respect of the allocation of taxable income

related to intangible assets and centralised group services was concluded. An
adjustment was made of £79 million relating to prior years.

4. Intangible assets

Cost

At 1 January 2019

Additions

At 31 December 2019

Additions

Disposals(a)

At 31 December 2020

Amortisation and impairment

At 1 January 2019

Amortisation for the year

At 31 December 2019

Amortisation/impairment
for the year

At 31 December 2020

Net book value at
31 December 2020

Net book value at
31 December 2019

£ million
Indefinite-
life
intangible
Goodwill

102

(53)

–

102

£ million

Finite-life
intangible
assets

166

–

166

–

(3)

163

(74)

(11)

(85)

(23)

(108)

Total

239

268

(56)

254

(74)

(11)

(85)

(23)

(108)

146

183

Cost

At 1 January 2019

At 31 December 2019

Additions

Disposals

At 31 December 2020

Impairment losses

At 1 January 2019

At 31 December 2019

At 31 December 2020

Net book value at 31 December 2020

Net book value at 31 December 2019

The movements in investments in subsidiaries were the result of the
following transactions:
■ As a result of the cross-border merger, PLC acquired investments in

subsidiaries by universal succession of title and in exchange PLC issued
shares to former NV shareholders in a 1-for-1 ratio. The PLC ordinary
shares that were issued to NV shareholders represent the consideration
paid to acquire the investments in subsidiaries and should be measured
at fair value. In total PLC issued 1,460,713,122 ordinary shares at the
effective date for total consideration of £65,288 million. This value has
been allocated to the investments in subsidiaries that PLC acquired
based on the relative proportion of their individual fair values to the
total value of net assets acquired by means of Unification.

■ On 1 December 2020 PLC contributed its intellectual property and

other assets directly related to the divisions Home Care and Beauty &
Personal Care as a contribution in kind to Unilever Global IP Limited,
a direct subsidiary of PLC. With the contribution PLC recognised a
disposal of the intellectual property of £56 million, disposal of £6
million other assets, recognised an intragroup liability of £81 million
and a corresponding £143 million increase in the investment in
Unilever Global IP Limited.

Investments include the subsidiary company Hindustan Unilever Limited
(HUL), with a cost of £2,197 million (2019: £2,197 million). The shares of
HUL are listed on the Bombay Stock Exchange and have a market value of
£26,789 million (2019: £22,900 million) as at 31 December 2020. Information
on the non-controlling interest in HUL is given in note 15B of the
consolidated financial statements. Investments in subsidiaries comprise
equity shares of group companies. These investments only generate cash
inflows in combination with other assets within the group. Accordingly cash
inflows are not independent at any level below the cash generating units
(CGUs) used for group impairment testing purposes. There have been no
impairments recorded against the group CGUs at the end of the reporting
periods and therefore there is no indication that any of the investments in
subsidiaries would be subject to impairment.

(a) On 1 December 2020 the Company transferred IP to Unilever Global IP Limited.

Refer to note 5 for a further explanation.

6. Other non-current assets

Impairment testing has been performed for indefinite life intangible assets.
Value in use of these assets is calculated as the present value of future
cash flows and is based on the expected royalty income taken from our
annual forecast and strategic plans over the next five to ten years.

For details of the indefinite useful life assessment and details of
the impairment testing, refer to note 9 to the consolidated financial
statements on page 134.

Loans to group companies(b)

£ million
31 Dec 2020

£ million
31 Dec 2019

£ million
1 Jan 2019

1,578

1,544

496

(b) Loans to group companies are interest bearing at market rates and are

unsecured and repayable on demand.

PLC does not consider the fair value of loans to group companies to be
significantly different from their carrying values. As these are amounts
due from other entities within the Group, PLC has estimated the expected
credit losses to be immaterial. Our historical experience of collecting these
balances supported by the level of default confirms that the credit risk is low.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS174

Notes to the Company Accounts Unilever PLC continued

7. Trade and other current receivables

10B. Share premium account

£ million
31 Dec 2020

£ million
31 Dec 2019

£ million
1 Jan 2019

Amounts due from group
companies(c)

1,770

4,103

1,659

Change during the year:

Issuance of ordinary shares

1 January

(c) Amounts due from group companies are mainly interest bearing amounts that
are repayable on demand. Other amounts are interest free and settled monthly.

31 December

£ million
2020

£ million
2019

65,431

65,525

–

PLC does not consider the fair value of amounts due from group companies
to be significantly different from their carrying values. As these are amounts
due from other entities within the Group, PLC has estimated the expected
credit losses to be immaterial. Our historical experience of collecting these
balances supported by the level of default confirms that the credit risk is low.

8. Trade payables and other current liabilities

Loans from group companies(d)

3,000

3,072

£ million
31 Dec 2020

£ million
31 Dec 2019

£ million
1 Jan 2019

Amounts owed to group
companies(d)

Taxation and social security

Accruals and deferred income

1,070

2,074

3,321

102

4,196

5,099

6,410

(d) Amounts due to group companies are mainly interest bearing amounts that are
repayable on demand. Other amounts are interest free and settled monthly.
Loans from group companies are all interest bearing at market rates and are
unsecured, repayable on demand and supported by formal agreements.

9. Financial liabilities

Non-current

£ million
31 Dec 2020

£ million
31 Dec 2019

£ million
1 Jan 2019

Share premium is the excess of the consideration received over the
nominal value of the shares issued. On 29 November 2020 PLC issued
1,460,713,122 PLC ordinary shares to former NV shareholders in return
for the assets and liabilities of NV. The fair value of the consideration
received has been determined as the sterling equivalent of the NV market
capitalisation at Unification and the excess over the nominal value of the
shares that were issued is recognised as share premium.

10C. Other reserves
Other reserves relate to treasury shares and shares held in trust.

Treasury shares

1 January

Change during the year:

Acquired as part of Unification

Buy back of shares

Cancellation of shares

31 December

£ million
2020

£ million
2019

–

(777)

(2)

–

(2)

–

777

–

During 2020 100,000 deferred shares were repurchased and cancelled
(2019: 18,660,634 ordinary shares were cancelled). The amount paid to
repurchase these shares was initially recognised in other reserves and
was transferred to retained profit on cancellation.

At 31 December 2020 PLC held interests in 50,000 (2019: nil) of its own
ordinary shares. These are recognised as treasury shares within other
reserves.

Bonds and other loans(e)

1,926

1,892

843

(e) This includes £500 million 1.5% notes (year-end amortised cost £496 million),
£650 million 1.5% notes (year-end amortised cost £584 million), £250 million
1.875% notes (year-end amortised cost £248 million), £250 million 1.375% note
(year-end amortised cost £249 million) and £350 million 1.125% notes (year-
end amortised cost £349 million) maturing in 2026, 2039, 2029, 2024 and 2022
respectively.

Shares held in trust

1 January

Change during the year:

Transferred from NV

The fair value of the bonds at 31 December 2020 was £2,124 million (2019:
£1,952 million; 2018: £833 million).

Other purchases and utilisations

31 December

£ million
2020

£ million
2019

–

(269)

–

(269)

–

10. Capital and funding

The Company’s capital and funding strategy is described in note 15 of the
consolidated financial statements.

10A. Called up share capital
The called up share capital amounting to £82 million at 31 December
2020 (31 December 2019: £36 million) consists of 2,629,243,772 (2019:
1,168,530,650) ordinary shares and nil (2019: 100,000) deferred shares.
50% of the deferred stock was held by N.V. Elma – a subsidiary of NV
and 50% of the deferred stock was held by United Holdings Limited –
a subsidiary of PLC. Shortly before Unification, PLC bought back the
deferred shares for £100,000 and subsequently these shares were
cancelled immediately prior to the implementation of Unification.

As a result of the cross-border merger with NV, PLC issued 1,460,713,122
new ordinary shares to NV shareholders. A statutory withdrawal mechanism
was provided for NV shareholders who voted against Unification and
who did not wish to hold PLC shares. These shareholders have received
a cash compensation instead which has been settled by PLC.

Information on the called up and paid up capital is given in note 15A of
the consolidated financial statements.

At 31 December 2020 PLC held 5,884,511 (2019: nil) of its own ordinary
shares via the employee share ownership trust. These are recognised as
treasury shares within other reserves. Further details are given in critical
accounting estimates and judgements on page 172.

10D. Retained profit

1 January

Profit for the year

Cancellation of shares(f)

Other movements

Dividends paid(g)

31 December

£ million
2020

£ million
2019

7,071

454

–

4,083

5,425

(782)

(6)

(1,698)

(1,649)

5,828

7,071

(f) During 2019 18,660,634 ordinary shares held in treasury were cancelled. The
amount paid to repurchase these shares was initially recognised in other
reserves and was transferred to retained profit on cancellation.

(g) Further details are given in note 8 to the consolidated financial statements on

page 134.

Unilever Annual Report and Accounts 2020175

10E. Profit appropriation

The following related party balances existed with group companies at
31 December.

Profit for the year (available for distribution)

454

5,425

£ million
2020

£ million
2019

£ million
31 Dec 2020

£ million
31 Dec 2019

£ million
1 Jan 2019

Dividends(h)

To profit retained

(1,292)

(1,258)

(838)

4,167

Trading and other balances due
from/(to) subsidiaries

681

2,029

(4,239)

Loans due from/(to) subsidiaries

(1,423)

(1,456)

–

(h) The dividend to be paid in March 2021 (see note 17) is not included in the 2020

dividend amount.

Refer to notes 6, 7, 8 and 9 for an explanation of these balances.

The following related party transactions took place during the year with
subsidiaries:

Turnover

Royalties

Services

Others

Dividends received

Loans and related
interest

Incurred costs and
royalties paid

£ million
2020

562

1,719

456

£ million
2019

571

1,622

5,223

1,150

(2,024)

(1,909)

Information on guarantees given by PLC to group companies is given in
note 13 below.

13. Contingent liabilities and financial commitments

The total amount of guarantees is £30,734 million (2019: £22,688 million).
This consists of guarantees relating to:
■ The long-term debt and commercial paper issued by group companies

such as Unilever Finance Netherlands BV and Unilever Capital
Corporation, which are joint guarantees with Unilever United States, Inc.;
■ Group companies’ obligations to the UK and Netherlands pension funds

and of the Group’s captive insurance company; and

■ Certain borrowings and derivatives of other group companies.

There are also certain financial commitments which are not included in
the total amount of guarantees because they do not currently relate to
existing liabilities or cannot be quantified:
■ PLC and Unilever United States, Inc. have guaranteed the standby

facilities of $7,965 million (2019: $7,865 million) which were undrawn as
at 31 December 2020 and 2019;

■ The joint and several liability undertakings issued by NV in accordance

with Article 2:403 of the Dutch Civil Code for almost all of its Dutch group
companies were withdrawn by means of filings with the Dutch Trade
Register on 27 November 2020, being the last practicable date prior to
the effective date of the cross-border merger between NV and PLC. With
effect from the date of the cross-border merger, PLC issued a guarantee
confirming PLC’s liability for any residual liability referred to in Article
2:404 (2) of the Dutch Civil Code of NV remaining after the withdrawal of
such undertakings, to the extent that such liability did not transfer in the
cross-border merger; and

■ PLC has guaranteed some contingent consideration of Group

companies relating to past business acquisitions and financial
commitments including indemnities arising from past business
disposals; and certain global and regional contracts.

The likelihood of all of these guarantees and financial commitments
being called upon is considered to be remote and so the fair value is
deemed to be immaterial.

11. Treasury and risk management

Financial assets and liabilities in the Company’s balance sheet comprise
amounts due from and due to group companies, loans due from and
due to group companies and bonds. The Company does not consider the
fair value of financial assets and liabilities at 31 December 2020 to be
significantly different to their carrying value.

The Company is exposed to market risks from its use of financial
instruments, the management of which is described in note 16B on pages
151 to 153 in the consolidated financial statements.

Market risks
Currency risk
The Company’s functional and presentational currency is pound sterling,
however the Company is exposed to intercompany loans receivable,
intercompany loans payable and bonds that are denominated in other
currencies. The Company’s exposure for holding financial assets and
liabilities in currencies other than its functional currency is £180 million
(2019: £211 million). The Company entered into derivatives to mitigate the
foreign currency risk but does not apply hedge accounting.

Currency sensitivity analysis
The sensitivity analysis below details the company’s sensitivity to a 10%
increase (2019: 10% increase) in the pound sterling against the foreign
currencies. These percentages represent management’s assessment of
the possible changes in the foreign exchange rates at the respective year-
ends. The sensitivity analysis includes only outstanding foreign currency
denominated monetary items and adjusts their translation at the period-
end for the above percentage change in foreign currency rates.

A 10% strengthening of the foreign currencies against the pound sterling
would have led to approximately an additional £18 million gain in the
income statement (2019: £21 million gain).

A 10% weakening of the foreign currencies against the pound sterling
would have led to an equal but opposite effect.

Interest rate risk
The Company is exposed to interest rate risks on its intercompany loans
receivable and intercompany loans payables as these are floating.
Increases in benchmark interest rates could increase the interest
income and interest cost. The intercompany loans receivables and loans
payables were initially recognised at their fair value. The fair value of
these assets is the same as their carrying amount at 31 December 2020.

Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on the
exposure to interest rates at the statement of financial position date.
The following changes in the interest rates represent management’s
assessment of the possible change in interest rates at the respective
year-ends:

Assuming that all variables remain constant, a 1.0 percentage point
increase in floating interest rates on a full-year basis as at 31 December
2020 would have led to an additional £30 million of finance cost (2019:
£30 million additional finance cost).

A 1.0 percentage point decrease in floating interest on a full-year basis
would have an equal but opposite effect.

12. Transactions with related parties

A related party is a person or entity that is related to PLC. These include
both people and entities that have, or are subject to, the influence or
control of PLC. Information on key management personnel has been
given in note 4A of the consolidated financial statements.

Information on the cross-border merger between PLC and NV is given in
notes 1, 5 and 10.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS176

Notes to the Company Accounts Unilever PLC continued

14. Remuneration of auditors

16. Post-balance sheet events

The parent company accounts of Unilever PLC are required to
comply with the Companies (Disclosure of Auditor Remuneration
and Liability Limitation Agreements) Regulations 2008. For details
of the remuneration of the auditors please refer to note 24 of the
consolidated financial statements.

15. Remuneration of Directors

Information about the remuneration of Directors is given in the tables
noted as audited in the Directors’ Remuneration report on pages 76 to
103. Information on key management compensation is provided in note
4A to the consolidated financial statements on page 122.

On 1 January 2021 a swap transaction of intellectual property occurred
between PLC, Unilever Global IP Limited and Unilever IP Holdings B.V.
where:
■ PLC transferred its intellectual property related to Foods and

Refreshment to Unilever IP Holdings B.V. and in exchange received
intellectual property related to Home Care and Beauty and Personal
Care (HC BPC). Accordingly, PLC will derecognise £139 million of
intangible assets, recognise the acquired intellectual property at a
fair value of £2,954 million and recognise an unrealised gain in the
income statement of £2,815 million for the difference.

■ PLC then transferred the intellectual property related to HC and BPC
to Unilever Global IP Limited. For this transfer PLC will derecognise
the intangible assets of £2,954 million and increase the investment
in Unilever Global IP Limited by the same amount.

In addition, on 1 January 2021, PLC entered into new agreements to
facilitate cross-licenses between PLC, Unilever Global IP Limited and
Unilever IP Holdings B.V.

On 4 February 2021 the Directors announced a dividend of £0.3760 per
PLC ordinary share. Dividends will be paid out of retained profit. The
dividend is payable on 17 March 2021 to shareholders registered at the
close of business on 26 February 2021.

17. Unilever N.V. company accounts

Income statement

Turnover

Royalties and services charged out to group companies

Incurred costs and royalties paid

Amortisation of finite-life intangible assets and software

Other expenses

Operating profit

Net finance costs

Finance income

Finance costs

Pensions and similar obligations

Income from shares in group companies

Profit on disposal of intangible assets

Impairment on intangible assets

Profit before taxation

Taxation

Net profit

Notes

€ million
For the period ended 29 Nov 2020

€ million
For the year ended 31 Dec 2019

2,586

(1,594)

(90)

(114)

788

(32)

151

(182)

(1)

262

–

1,029

(87)

942

2,824

(1,743)

(95)

(153)

833

(30)

115

(143)

(2)

347

(8)

1,151

(136)

1,015

Unilever Annual Report and Accounts 202017. Unilever N.V. company accounts continued

Statement of comprehensive income

Net profit

Other comprehensive income

Items that will not be reclassified to profit or loss, net of tax:

Remeasurement of defined benefit pension plans

Items that may be reclassified subsequently to profit or loss,
net of tax:

Other

Total comprehensive income

Statement of changes in equity

1 January 2019

Profit or loss for the period

Other comprehensive income net of tax:

Remeasurement of defined benefit pension plan net of tax

Other

Total comprehensive income

Dividends on ordinary capital

Cancellation of treasury shares

Movements in treasury shares

Share-based payment credit

31 December 2019

Profit or loss for the period

Other comprehensive income net of tax:

Remeasurement of defined benefit pension plan net of tax

Other

Total comprehensive income

Dividends on ordinary capital

Movements in treasury shares

Cancellation of special shares

Cancellation of treasury shares

Share-based payment credit

29 November 2020

177

€ million
For the period ended 29 Nov 2020

€ million
For the year ended 31 Dec 2019

942

–

943

1,015

(6)

1,012

€ million

Legal
reserves

Other
reserves

Retained
profit

Total
equity

23,992

1,015

(6)

1,012

(2,352)

–

8,516

–

1,015

(6)

1,012

(2,352)

(8,476)

–

(354)

22,814

22,731

–

(121)

321

–

942

–

943

(2,389)

–

(320)

–

(121)

–

(40)

–

235

–

(1)

–

€ million
Called
up share
capital

€ million
Share
premium
account

275

(8,896)

32,577

234

(154)

21,069

21,185

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS
178

Notes to the Company Accounts Unilever PLC continued

17. Unilever N.V. Company Accounts continued

Balance sheet

Assets

Non-current assets

Intangible assets

Investments in subsidiaries

Other non-current assets

Pension assets

Other financial assets

Current assets

Trade and other current receivables

Cash and cash equivalents

Other financial assets

Total assets

Liabilities

Current liabilities

Trade payables and other current liabilities

Financial liabilities

Provisions

Non-current liabilities

Financial liabilities

Pensions and similar obligations

Provisions

Deferred tax liabilities

Total liabilities

Equity

Shareholders’ equity

Called up share capital

Share premium account

Legal reserves

Other reserves

Retained profit

Total liabilities and shareholders’ equity

Notes

€ million
29 Nov 2020

€ million
31 Dec 2019

€ million
1 Jan 2019

–

21,279

–

2,927

29,504

8,793

–

2,875

29,551

9,829

–

21,280

41,224

42,269

398

–

398

21,678

477

–

493

–

493

234

(154)

21,069

21,185

21,678

10,555

10,166

–

10,635

51,859

18,748

1,164

–

19,912

10,235

52,504

18,137

132

18,270

8,795

9,845

–

339

9,216

29,128

235

(354)

22,814

22,731

51,859

305

10,242

28,512

275

(8,896)

32,577

23,992

52,504

Unilever Annual Report and Accounts 202017. Unilever N.V. Company Accounts continued

Statement of cash flows
For the period ended 29 November

Net profit

Taxation

Net finance costs

Income from shares in group companies

Profit on sale of intangible assets

Impairment on intangible assets

Operating profit

Amortisation on intangible assets

Changes in working capital

Trade and other current receivables

Trade payables and other current liabilities

Pensions and similar obligations less payments

Provisions less payments

Cash flow from operating activities

Income tax paid

Net cash flow from operating activities

Interest received

Purchase of intangible assets

Proceeds on sale of intangible assets

(Investment)/ proceeds from sale in subsidiaries

Loans given to subsidiaries

Repayment of loan to subsidiaries

Dividends from subsidiaries

Net cash flow from investing activities

Dividends paid on ordinary share capital

Interest paid

Additional financial liabilities

Repayment of financial liabilities

Buyback of special shares

Other movements on treasury shares

Net cash flow from financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

a. Turnover

Royalties (point in time)

Services (over time)

Turnover

b. Income from share in group companies

179

Notes

€ million
For the period ended 29 Nov 2020

€ million
For the year ended 31 Dec 2019

942

(262)

(11)

788

5,383

4,685

698

(13)

–

6,248

(102)

6,146

151

(2)

(3,518)

(2,000)

1,047

262

(4,049)

(2,389)

(182)

2,000

(1,418)

(321)

213

(2,097)

–

1,015

136

(347)

(9)

833

1,857

642

1,215

(10)

(3)

2,772

(109)

2,663

115

(155)

–

347

363

(2,352)

(143)

–

(617)

–

(3,033)

(7)

–

€ million
For the period ended 29 Nov 2020

€ million
For the year ended 31 Dec 2019

1,887

699

2,586

1,921

903

2,824

€ million
For the period ended 29 Nov 2020

€ million
For the year ended 31 Dec 2019

Dividends received from shares in group companies

262

347

c. Profit on disposal of intangible assets

Profit on disposal of intangible assets

€ million
For the period ended
29 Nov 2020

€ million
For the year ended
31 Dec 2019

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS180

Notes to the Company Accounts Unilever PLC continued

17. Unilever N.V. Company Accounts continued

d. Taxation

Tax charge in income statement

Current tax

Utilisation of prior year tax credits

Adjustments in respect of prior years

Deferred tax

Origination and reversal of temporary differences

Adjustments in respect of prior years

Total tax expense

Reconciliation of tax expense

Profit/(loss) for the year

Tax using the Dutch statutory corporate income tax rate of 25% (2019: 25%)

Tax effects of:

Income not subject to tax (primarily tax exempt dividends)

Non recoverable withholding tax

(Under)/over provided in prior years

Reduction in tax rate on deferred
tax balances

Utilisation of prior year tax credit

Other

Total tax expense

€ million
For the period
ended
29 Nov 2020

€ million
For the year
ended
31 Dec 2019

(125)

(3)

(71)

(11)

(5)

(16)

(87)

(180)

(12)

(107)

(18)

(11)

(29)

(136)

€ million
For the period
ended
29 Nov 2020

1,029

(257)

€ million
For the year
ended
31 Dec 2019

1,151

(288)

(16)

(8)

–

(87)

(27)

(10)

(12)

(136)

Until the effective date of the cross-border merger, NV was the head of the fiscal unity in the Netherlands of a number of Dutch group companies for
income tax purposes. The members of the fiscal unity are jointly and severally liable for payment of any Dutch corporate income tax liability of the
fiscal unity. After the cross-border merger, Unilever International Holdings B.V. became the head of the fiscal unity in the Netherlands.

e. Intangible assets

Cost

At 1 January 2019

Additions

At 31 December 2019

Additions

Disposals(a)

At 29 November 2020

Amortisation and impairment

At 1 January 2019

Amortisation/impairment for the year

At 31 December 2019

Amortisation/impairment for the year

(Reversal of) Impairment

Disposals(a)

At 29 November 2020

Net book value at 29 November 2020

Net book value at 31 December 2019

€ million

Goodwill

€ million
Indefinite-life
intangible
assets

€ million
Finite-life
intangible assets
Software

€ million
Finite-life
intangible assets
Other

399

–

399

–

1,637

129

1,766

(399)

(1,768)

–

(11)

(8)

(19)

–

399

1,747

137

–

137

–

(137)

–

(137)

–

(137)

–

137

–

€ million

Total

3,477

155

3,632

1,304

1,330

–

(1,330)

(3,634)

–

(454)

(95)

(549)

(90)

–

639

–

781

(602)

(103)

(705)

(90)

–

795

–

2,927

(a) On 26 November 2020 NV transferred IP to Unilever IP Holdings B.V. Refer to note 17f for a further explanation.

Impairment testing has been performed for goodwill and indefinite life intangible assets. Value in use of these assets is calculated as the present value
of future cash flows and is based on the expected royalty income taken from our annual forecast and strategic plans over the next five years. We consider
each acquisition separately to determine the most appropriate timescale before applying a fixed terminal value multiple to the final year net cash flows.

For details of the indefinite useful life assessment, reference is made to note 9 to the consolidated financial statements on page 134.

Unilever Annual Report and Accounts 202017. Unilever N.V. Company Accounts continued

f. Investment in subsidiaries

Cost

At 1 January 2019

Disposals

At 31 December 2019

Additions(b)

Disposals

Transferred as a result of demerger(b)

At 29 November 2020

Impairment losses

At 1 January 2019

At 31 December 2019

At 29 November 2020

Net book value 29 November 2020

Net book value 31 December 2019

181

€ million

29,551

(47)

29,504

11,628

(82)

(19,771)

21,279

–

21,279

29,504

(b) The movements in investments in subsidiaries were the result of the following transactions:

■ On 25 November 2020 and 27 November 2020 NV contributed the majority of its investments in subsidiaries and related receivables and payables to

Unilever International Holdings B.V. (UIH), a direct subsidiary of NV. With the contribution NV recognised a disposal of the investments in subsidiaries and
related receivables and payables at book value of €7,403 million and a corresponding increase for the same amount in the investment value of UIH.

■ On 26 November 2020 NV incorporated Unilever Finance Netherlands B.V., Unilever IP Holdings B.V. and Unilever PL Netherlands B.V. and

recognised these investments for €625 million as a result of the legal demerger that was effectuated. The investment value recognised for
Unilever Finance Netherlands B.V. and Unilever IP Holdings B.V. is equal to the book value of the net assets transferred to these entities.

Further information is given in Critical accounting estimates and judgements on page 172.

g. Financial assets and liabilities

Assets

Non-current

Loans to group companies(c)

Other financial assets

Current

Loans to group companies(c)

Amounts due from group companies(c)

Other financial assets

Taxation

Other

Total assets

Liabilities

Current

Bonds and other loans(d)

Loans from group companies(e)

Amounts due to group companies(e)

Other financial liabilities

Other

Non-current

Bonds and other loans(d)

Accruals and deferred income

Other

Total liabilities

€ million
29 Nov 2020

€ million
31 Dec 2019

€ million
1 Jan 2019

–

383

–

398

–

477

–

493

–

493

8,793

–

8,793

1,048

9,403

10,635

19,428

1,050

5,394

13,131

114

223

9,829

9,843

10,024

10,228

20,071

–

6,012

11,907

132

218

19,912

18,269

8,795

9,831

–

8,795

28,707

9,845

28,114

(c) Amounts due from group companies were mainly interest bearing amounts that were repayable on demand. Other amounts were interest free and settled monthly.

Loans to group companies were all interest bearing at market rates and were unsecured, repayable on demand and supported by formal agreements.

(d) Bonds and other loans were issued at coupon rates ranging between 0% and 1.75% and with maturity dates between 2020 and 2033. Further details are given in note

15C to the consolidated financial statements on page 147.

(e) Amounts due to group companies were mainly interest bearing amounts that were repayable on demand. Other amounts were interest free and settled monthly.

Loans from group companies were all interest bearing at market rates and were unsecured, repayable and supported by formal agreements.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS182

Notes to the Company Accounts Unilever PLC continued

17. Unilever N.V. Company Accounts continued

As part of the legal demerger effectuated and transfer of investments and subsidiaries and related receivables and payables (refer to critical
accounting estimates and judgements on page 172) NV transferred the majority of its financial assets and liabilities to its direct subsidiaries.

h. Cash and cash equivalents
There was no cash at bank and in hand for which payment notice was required at either 29 November 2020, 31 December 2019 or 1 January 2019.

i. Deferred tax liabilities

At 1 January 2020

Income statement:

Charges

Transferred as a result of demerger

At 29 November 2020

Due within one year

Due after one year

€ million

339

(354)

–

At the balance sheet date NV has no unused tax credits (2019: €250 million) available for offset against future tax profits as the deferred tax liabilities
have been transferred with the legal demerger. Deferred tax assets have not been recognised as it is not probable that there will be future taxable
profits against which the credits will be utilised.

j. Capital and funding
Called up share capital
The called up share capital amounted to €234 million at 29 November 2020 (31 December 2019: €235 million), consisted of 1,460,714,804 (2019:
1,460,714,804) NV ordinary shares and nil (2019: 2,400) special ordinary shares. These special ordinary shares numbered 1 to 2,400 were held 50%
by N.V. Elma – a subsidiary of NV and 50% by United Holdings Limited – a subsidiary of PLC. Shortly before Unification, NV bought back the special
ordinary shares for €321 million and subsequently these shares were cancelled upon implementation of Unification.

Information on the called up and paid up capital is given in note 15A of the consolidated financial statements.

Share premium
Share premium is the excess of the consideration received over the nominal value of shares issued. The share premium shown in the balance sheet
was not available during the year for the issue of bonus shares or for repayment without incurring withholding tax payable by NV.

Legal reserves
In 2006 the NV ordinary shares were split in the ratio 3 to 1 and at the same time the share capital, previously denominated in Dutch guilders, was
converted into euros. Due to rounding the then nominal value per share differed from the value expressed in Dutch guilders. As a result, the reported
share capital issued at 31 December 2006 was €16 million lower than in 2005.

Other reserves

Treasury shares

Beginning of the year

Change during the year:

Buy back of shares

Cancellation of shares

Movement in treasury shares

Transferred to employee share ownership trust

Year-end

€ million
For the period
ended
29 Nov 2020

€ million
For the year
ended
31 Dec 2019

(354)

(8,896)

–

321

(121)

154

–

8,516

–

(354)

During 2020, 2,400 special shares were repurchased and cancelled (2019: 254,012,896 ordinary shares were cancelled). The amount paid to
repurchase these shares was initially recognised in other reserves and was transferred to retained profit on cancellation.

At 31 December 2019 NV held 8,018,615 of its own shares as treasury shares in within other reserves. Shortly before Unification (see note 1 for more
information on Unification) 2,556,151 NV ordinary shares and 892,155 NV NYRSs held by NV in connection with share-based compensation plans were
transferred to an employee share ownership trust. At 29 November 2020 NV held 3,448,306 of its own ordinary shares via the employee share ownership
trust, which are held as treasury shares within other reserves. Details are given in Critical accounting estimates and judgements on page 172.

Shares held in trust

1 January

Change during the year:

Transferred from NV

Other purchases and utilisations

29 November

€ million
For the period
ended
29 Nov 2020

€ million
For the year
ended
31 Dec 2019

–

(154)

–

(154)

–

Unilever Annual Report and Accounts 202017. Unilever N.V. Company Accounts continued

Retained profit

Beginning of the period/year

Profit for the period/year

Dividends

Realised profit on shares/certificates held to meet

employee share options

Share cancellation

Other credits/(charges)

Year-end

183

€ million
For the period
ended
29 Nov 2020

€ million
For the year
ended
31 Dec 2019

22,814

942

(2,389)

(320)

21,069

32,577

1,015

(2,352)

(8,476)

(3)

22,814

NV approved the waiver by one of its subsidiaries of dividends receivable of €3,047 million in 2019. The profits for the year in that subsidiary were
reduced by this amount.

k. Transactions with related parties
A related party is a person or entity that is related to NV. These include both people and entities that have, or are subject to, the influence or control
of NV. Information on key management personnel has been given in note 4A of the consolidated financial statements.

Information on the cross-border merger between PLC and NV is given in notes 1 and 17j.

The following related party balances existed with group companies at 29 November 2020.

Trading and other balances due from/(to) subsidiaries

Loans due from/(to) subsidiaries

Refer to note 17g for an explanation of these balances.

The following related party transactions took place during the year.

Turnover

Royalties

Services

Others

Dividends received

Loans and related interest

Incurred costs and royalties paid

€ million
29 Nov 2020

€ million
31 Dec 2019

€ million
1 Jan 2019

(94)

–

(3,728)

4,447

(1,883)

3,837

€ million
For the period
ended
29 Nov 2020

€ million
For the year
ended
31 Dec 2019

2,581

1,882

699

262

1,333

(1,594)

2,819

1,916

903

347

610

(1,743)

Until Unification, NV had the following guarantees that were recognised as contingent liabilities:
■ Jointly and several liability undertakings, as defined in Article 2:403 of the Dutch Civil Code, for almost all Dutch group companies. Further

details are given in note 14 of the Company Accounts on page 142.

■ Guarantees with PLC and Unilever United States, Inc. relating to long-term debt and commercial paper issued by PLC and/or Unilever Capital

Corporation.

■ Joint guarantees with PLC and Unilever United States, Inc. for standby facilities of $7,965 million (2019: $7,865 million) which remained undrawn

as per 29 November 2020 and 31 December 2019.

■ Guarantees in relation to derivatives taken out by group companies, financial liabilities including indemnities arising from past business

disposals and certain global contracts.

These guarantees have been transferred by virtue of law to PLC as a result of the cross-border merger.

l. Distribution of profits in the articles of association of NV (as stated before the cross-border merger)
Until the effective date of the cross-border merger, the following applied for the profit appropriation of NV.

The profit for the year is applied firstly to the reserves required by law or by the Equalisation Agreement, secondly to cover losses of previous years,
if any, and thirdly to the reserves deemed necessary by the Board of Directors. Any profit remaining thereafter shall be distributed to the holders of
ordinary shares in proportion to the nominal value of their respective holdings of ordinary shares. The General Meeting can only decide to make
distributions from reserves on the basis of a proposal by the Board and in compliance with the law and the Equalisation Agreement.

In 2020 no profit (2019: €774 million) will be distributed as dividends or added to retained profits (2019: €1,789 million) because NV ceased to exist as a
legal entity on the effective date of the cross-border merger.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS184

Group Companies

As at 31 December 2020

In accordance with Section 409 of the Companies Act 2006, a list of subsidiaries, partnerships, associates and joint ventures as at 31 December 2020
is set out below. All subsidiary undertakings are subsidiary undertakings of their immediate parent undertaking(s) pursuant to section 1162 (2) (a) of
the Companies Act 2006 unless otherwise indicated – see the notes on page 190. All subsidiary undertakings not included in the consolidation are not
included because they are not material for such purposes. All associated undertakings are included in the Unilever Group’s financial statements using
the equity method of accounting unless otherwise indicated – see the notes on page 190.

See page 167 of the Annual Report and Accounts for a list of the significant subsidiaries.

Companies are listed by country and under their registered office address. The aggregate percentage of capital held by the Unilever Group is shown
after the subsidiary company name, except where it is 100%. If the Nominal Value field is blank, then the Share Class Note will identify the type of
interest held in the entity.

Subsidiary undertakings included in the consolidation

Name of
Undertaking

Nominal
Value

Share
Class
Note

Name of
Undertaking

Nominal
Value

Share
Class
Note

Algeria – Zone Industrielle Hassi Ameur Oran 31000

Unilever Algérie SPA (72.50)

Argentina – Tucumán 1, Piso 4°, Cdad. de Buenos Aires

DZD1,000.00

Arisco S.A.

Unilever De Argentina S.A.

Club de beneficios S.A.U.

Argentina – Mendoza km 7/8 – Pocitos, San Juan

Helket S.A.

Australia – 219 North Rocks Road, North Rocks NSW 2151

Ben & Jerry’s Franchising Australia Limited

Tea Too Pty Limited

TIGI Australia Pty Limited

Unilever Australia (Holdings) Pty Limited

Unilever Australia Group Pty Limited

Unilever Australia Limited

Unilever Australia Supply Services Limited

Unilever Australia Trading Limited

Australia – 111 Chandos Street, Crows Nest, NSW 2065

Dermalogica Holdings Pty Limited

Dermalogica Pty Limited

Austria - Stella-Klein-Löw Weg 13, 1023 Wien

Delico Handels GmbH

Kuner Nahrungsmittel GmbH

TIGI Handels GmbH

ULPC Handels GmbH

Unilever Austria GmbH

ARA1.00

AUD1.00

AUD2.00

EUR36,337.00

EUR36,336.00

EUR218,019.00

EUR10,000,000.00

Bangladesh – 51 Kalurghat Heavy Industrial Area, Kalurghat, Chittagong

Unilever Bangladesh Limited (60.75)

Bangladesh - Fouzderhat Industrial Area, North Kattali, Chattogram 4217

Unilever Consumer Care Limited (81.98)

Belgium – Industrielaan 9, 1070 Brussels

Unilever Belgium NV/SA

Unilever Lipton Tea NV/SA

Bolivia – Av. Blanco Galindo Km. 10.4 Cochabamba

Unilever Andina Bolivia S.A.

BDT100.00

BDT10.00

No Par Value

BS1000.00

Brazil - Rua dos Macunis, nº 140, Vila Madalena, São Paulo/SP, CEP 05444-000

Mãe Terra Produtos Naturais Limitada.

BRL1.00

Brazil - Rua Tenente Pena, No. 156, Bom Retiro, CEP 01127-020, São Paulo
Smart Home Comércio E Locação De Equipamentos S.A (50.01)

No Par Value

Brazil - São Paulo, Estado de São Paulo na Rua Demóstenes nº 1072,
bairro Campo Belo CEP 04614-010

Ole Locação De Equipamentos Para Lavanderias Limitda

BRL1.00

Ole Franquia Limitda
Brazil - Cidade de Mogi das Cruzes, Estado de São Paulo, Rua Dirceu Alves Rodrigues, 123, Vila Sarah
Avignon, Zip Code 087730459.
Mania de Passar Franchising S.A.

No Par Value

BRL1.00

Brazil - Rua Tito, 479, Vila Romana, CEP 05051-000, São Paulo

Compra Agora Serviços Digitais Ltda

BRL1.00

Bulgaria - City of Sofia, Borough Mladost, 1, Business Park, Building 3, Floor 1

Unilever Bulgaria EOOD

BGN1,000.00

Cambodia – No. 443A Street 105, Sangkat Boeung Pralit, Khan 7 Makara Phnom Penh Capital

Unilever (Cambodia) Limited

Canada – 3081, 3rd Avenue, Whitehorse, Yukon Territory, Y1A 4Z7

Dermalogica Canada Limited

Canada – P.O. Box 49130, 2900 – 595 Burrard Street, Vancouver BC V7X 1J5

Dollar Shave Club Canada, Inc

Canada - 800-885 West Georgia Street, Vancouver BC V6C 3H1

Seventh Generation Family & Home ULC

KHR20,000.00

No Par Value

CAD0.01

No Par Value

Canada – 1000 rue de la Gauchetière Ouest, Bureau 2500, Montreal H3B 0A2

4012208 Canada Inc.

Canada – 160 Bloor Street East, Suite 1400, Toronto ON M4W 3R2

Unilever Canada Inc.

No Par Value

Canada – McCarthy Tetrault LLP, 745 Thurlow Street, Suite 2400, Vancouver, BC, V6E 0C5
No Par Value

Hourglass Cosmetics Canada Limited

Chile - Av. Las Condes 11.000 Piso 4-5, Vitacura

Unilever Chile Limitada

China – 10th floor No.398, North Cao Xi Road, Xuhui District, Shanghai

Bolivia – Av. Blanco Galindo Km 6,9, Los Pinos Street No. 121, Colcapirhua, Quillacollo, Cochabamba

Blueair Shanghai Sales Co. Limited

CNY1.00

Astrix S.A.

BS1000.00

Brazil – Rua Oscar Freire, n. 957, mezanino, room 1, Cerqueira Cesar, Zip Code 01426-003, São Paulo/SP

China – 1st Floor, No. 78 Binhai 2nd Road, Hangzhou Bay, New District, Ningbo City,
Zhejiang Province

Euphoria Ice Cream Comercio de Alimentos Limitada

Brazil – Rod. BR 101-Norte, s/n, km. 43,6 – Room 4, Igarassu /PE

Cicanorte Industria de Conservas Alimenticas S.A.

BRL1.00

BRL2.80

Brazil – Cidade de São Paulo, Estado de São Paulo, na Avenida Presidente Juscelino Kubitscheck,
1.309, 13o andar, Zip Code 04543-011

RGG – Comércio E Representações De Produtos De Higiene Pessoal
Limitada

BRL1.00

Brazil – Rua Professor José Leite e Oticica, nº 530, Vila Gertrudes, CEP 04.705-080, São Paulo/SP

E-UB Comércio Limitada

BRL1.00

Brazil – Av. das Nações Unidas, n. 14.261, 8th floor, qd 7, Wing B, Vila Gertrudes,
ZIP Code 04794-000 – São Paulo/SP

UBA 2 – Comércio e Representação de Alimentos Limitada

BRL1.00

Brazil – Cidade de Valinhos, Estado de São Paulo Rua Campos Salles, nº 20, Parte, Centro, Zip Code
13.271-900

Ningbo Hengjing Inspection Technology Co., Ltd (67.71)
China – Seaside Avenue, Cixi Economic and Technical Development Zone (Hangzhou Bay New Zone)

CNY1.00

Qinyuan Group Co. Limited (67.71)

CNY1.00

China - Room 23, Hall 5, No. 38, Lane 168, Xing Fu Li Road, Fenjing Town, Jinsham District, Shanghai
201100

Shanghai Qinyuan Environment Protection Technology Co. Limited (67.71)
China – No.33 North Fuquan Road, Shanghai, 200335

Unilever (China) Investing Company Limited

CNY1.00

USD1.00

China - 88 Jinxiu Avenue, Hefei Economic and Technology Development Zone, Hefei, 230601

Unilever (China) Limited

Unilever Services (Hefei) Co. Limited

China – No. 225 Jingyi Road, Tianjin Airport Economic Area, Tianjin

Unilever (Tianjin) Company Limited

USD1.00

CNY1.00

USD1.00

China – 1068 Ting Wei Road, Jinshanzui Industrial Region, Jinshan District, Shanghai

Unilever Logistica Serviços Limitada

BRL1.00

Unilever Foods (China) Co. Limited

USD1.00

Brazil – Cidade de São Paulo, Estado de São Paulo, Rua Engenheiro Antônio Pônzio Ippólito, 124 e
132, Jaguará, Zip Code 05117-090

Massau Comercio De Alimentos Limitada

Brazil – Av. das Nações Unidas, n. 14.261, 8th floor, qd 9, Wing B, Vila Gertrudes,
ZIP Code 04794-000 – São Paulo/SP

UBI 4 – Comércio de Alimentos Limitada

Brazil – Rod. BR 232, s/n, km. 13 – Jaboatão dos Guararapes/PE

Unilever Brasil Gelados do Nordeste S.A.

BRL1.00

No Par Value

Brazil – Av. das Nações Unidas, n. 14.261, 3rd floor, Parte - Gelados SP, Wing B, Vila Gertrudes,
Zip Code 04794-000, São Paulo/SP

Unilever Brasil Gelados Limitada

BRL1.00

Brazil – Av. das Nações Unidas, n. 14.261, 3rd to 6th and 8th to 10th floors, Wing B Vila Gertrudes,
Zip Code 04794-000, São Paulo/SP

Unilever Brasil Limitada

BRL1.00

Brazil – Av. das Nações Unidas, n. 14.261, 3rd floor, Wing A, Vila Gertrudes, ZIP Code 04794-000, São Paulo/SP
5

Unilever Brasil Industrial Limitada

BRL1.00

Brazil – Rua Sabiá, 45, Jardim Marieta, Osasco/SP

SOLO ATS Participações do Brasil S.A

No Par Value

China – No. 166 Unilever Avenue West, Qinglong Town, Pengshan Country, Meishan City,
Sichuan Province 610016

Unilever (Sichuan) Company Limited

China – No.16 Wanyuan Road, Beijing E&T Development, Beijing 100076

Walls (China) Co. Limited

China – 358, Ci Yi Road, Hangzhou Bay New Zone

Zhejiang Qinyuan Water Treatment Technology Co. Limited (67.71)

USD1.00

CNY1.00

China – Room 326, 3rd Floor, Xinmao Building, No.2 South Taizhong Road South, Shanghai Free Trade Zone

Unilever Trading (Shanghai) Co. Ltd

China – Floor 1, Building 2, No.33 North Fuquan Road, Shanghai, 200335

Shanghai CarverKorea Limited

CNY1.00

USD1.00

Colombia – Av. El Dorado, No. 69B-45. Bogota Corporate Center Piso 7, Bogotá

Unilever Colombia SCC S.A.S.

Unilever Andina Colombia Limitada

Colombia - Cl 93 # 19-55, Bogota,Colombia

ULeX Colombia S.A.S.

COP100.00

Costa Rica – La Asunción de Belén, Planta Industrial Lizano, Autopista Bernardo Soto

Unilever de Centroamerica S.A.

CRC1.00

Unilever Annual Report and Accounts 2020185

Nominal
Value

GBP1.00

GBP500.00

Share
Class
Note

Name of
Undertaking

Nominal
Value

Share
Class
Note

Name of
Undertaking

Costa Rica – Provincia de Heredia, Cantón Belén, Distrito de la Asunción, de la intersección
Cariari- Belén, 400 Mts. Oeste, 800 Mts., al Norte

UL Costa Rica SCC S.A.

Cote D’Ivoire -01 BP 1751 Abidjan 01, Boulevard de Vridi

Unilever-Cote D’Ivoire (99.78)

CRC1.00

XOF5,000.00

Cote D’Ivoire – Abidjan-Marcory, Boulevard Valery Giscard d’Estaing, Immeuble Plein Ciel,
Business Center, 26 BP 1377, Abidjan 26

Unilever Afrique de l’Ouest

Croatia – Strojarska cesta 20, 10000 Zagreb

Unilever Hrvatska d.o.o.

Cuba – Zona Especial de Desarrollo Mariel, Provincia Artemisa

Unilever Suchel, S.A. (60)

XOF10,000.00

HRK1.00

USD1,000.00

Cyprus – Head Offices, 195C Old Road Nicosia Limassol, CY-2540 Idalion Industrial Zone – Nicosia

Unilever Tseriotis Cyprus Limited (84)

Czech Republic – Voctářova 2497/18, 180 00 Praha 8

Unilever ČR, spol. s r.o.

UNILEVER RETAIL ČR, spol. s r.o.

Denmark – Ørestads Boulevard 73, 2300 København S

Unilever Danmark A/S

Denmark – Petersmindevej 30, 5000 Odense C

Unilever Produktion ApS

Djibouti-Haramous, BP 169

Unilever Djibouti FZCO Limited

EUR1.00

CZK210,000.00

CZK100,000.0

DKK1,000.00

DKK100.00

USD20.00

Dominican Republic – Av. Winston Churchill, Torre Acropolis, Piso 16, Santo Domingo

Unilever Caribe, S.A.

Ecuador – Km 25 Vía a Daule, Guayaquil

DOP1,000.00

Unilever Andina Ecuador S.A.
Egypt – Galleria 40 Business Complex, 26th of July Corridor, Sheikh Zayed, 6th of October, Giza - 5th
and 6th floors, North Tower
Unilever Mashreq for Manufacturing and Trading (SAE)

EGP10.00

USD1.00

Egypt – the Public Free Zone, Alexandria

Unilever Mashreq International Company

Egypt – Industrial Zone – the first Industrial Zone – beside 14th of May Bridge, Smouha, Sidi Gaber,
Alexandria

Unilever Mashreq Trading LLC (60) (in liquidation)

Commercial United for Import and Export

Egypt – 15 Sphinx Square, 6th Floor, El-Agouza, Giza

Unilever Mashreq for Import and Export LLC

EGP10.00

EGP1000.00

EGP100.00

El Salvador – Nivel 19 Edificio Torre Futura, 87 av. Norte y calle El Mirador, Colonia Escalón,
San Salvador

Unilever El Salvador SCC S.A. de C.V.

Unilever de Centro America S.A. de C.V

USD11.00

USD1.00

England and Wales – Unilever House, 100 Victoria Embankment, London, EC4Y 0DY

Unilever US Investments Limited°

United Holdings Limited°

England and Wales – Unilever House, Springfield Drive, Leatherhead, KT22 7GR

Alberto-Culver Company (U.K.) Limited

TIGI International Limited

Unilever Pension Trust Limited

Unilever UK Limited

Unilever UK Pension Fund Trustees Limited

USF Nominees Limited

GBP1.00

England and Wales – The Manser Building, Thorncroft Manor, Thorncroft Drive, Dorking, KT22 8JB

Dermalogica (UK) Limited

England and Wales – 1st Floor, 16 Charles II Street, London, SW1Y 4QU

Unilever Ventures III Limited Partnership (86.25)

England and Wales – Union House, 182-194 Union Street, London, SE1 0LH

REN Skincare Limited

REN Limited

Murad Europe Limited

England and Wales - Palm Court, 4 Heron Square, Richmond, Surrey, TW9 1EW

Nature Delivered Limited

England and Wales – Tolldown Barn, Dyrham, Wiltshire, SN14 8HZ

Marshfield Bakery Limited

England and Wales – 1 More Place, London, SE1 2AF

Accantia Health and Beauty Limited (In Liquidation)

Unidis Sixty Four Limited (In Liquidation)

Unilever Bestfoods UK Limited (In Liquidation)

GBP1.00

GBP0.032

GBP1.00

GBP0.001

GBP0.01

GBP0.25

GBP1.00

USD1,000.00

England and Wales – C/O TMF Group, 8th Floor, 20 Farringdon Street, London, EC4A 4AB

1
1

Unilever Ventures Limited

England and Wales - Port Sunlight, Wirral, Merseyside, CH62 4ZD

Unilever Global IP Limited °

Estonia – Kalmistu tee 28a, Tallinna linn, Harju maakond, 11216

Unilever Eesti AS

Ethiopia – Bole Sub City, Kebele 03/05, Lidiya Building, Addis Ababa

Unilever Manufacturing PLC

Finland – Post Box 254, 00101 Helsinki

Unilever Finland Oy

Unilever Ingman Production Oy

France – 20, rue des Deux Gares, 92500, Rueil-Malmaison

Bestfoods France Industries S.A.S. (99.99)

Cogesal-Miko S.A.S. (99.99)

Fralib Sourcing Unit S.A.S. (99.99)

Saphir S.A.S. (99.99)

U-Labs S.A.S. (99.99)

Tigi Services France S.A.S. (99.99)

Unilever France S.A.S. (99.99)

Unilever France Holdings S.A.S. (99.99)

Unilever France HPC Industries S.A.S. (99.99)

Unilever Retail Operations France (99.99)

France – Parc Activillage des Fontaines – Bernin 38926 Crolles Cedex

Intuiskin S.A.S.(95.81)

France – ZI de la Norge – Chevigny Saint-Sauveur, 21800 Quetigny

Amora Maille Societe Industrielle S.A.S. (99.99)

France – 10-12, avenue du Recteur Poincare, Paris, 75016

Laboratoire Garancia

Germany – Wiesenstraße 21. 40549 Düsseldorf

Dermalogica GmbH

Germany - Spitaler Straße 16, 20095 Hamburg

ProCepta Service GmbH

Germany – Neue Burg 1, 20457 Hamburg

DU Gesellschaft für Arbeitnehmerüberlassung mbH (99.99)
NU Business GmbH

Unilever Deutschland GmbH

Unilever Deutschland Holding GmbH

Unilever Deutschland Produktions GmbH & Co. OHG∞

Unilever Deutschland Produktions Verwaltungs GmbH

Unilever Deutschland Supply Chain Services GmbH

Dollar Shave Club GmbH

T2 Germany GmbH

Germany – Schultetusstraße 37, 17153 Stavenhagen

Maizena Grundstücksverwaltung GmbH & Co. OHG∞

Pfanni GmbH & Co. OHG Stavenhagen∞

Rizofoor Gesellschaft mit beschränkter Haftung

GBP1.00

EUR6.30

ETB1,000.00

EUR16.82

EUR100.00

No Par Value

EUR1.00

No Par Value

EUR1.00

No Par Value

EUR1.00

No Par Value

EUR62.50

EUR25,000.00

EUR28,340.00

EUR2.00

DEM50,000.00
EUR25,000.00

EUR90,000,000.00

EUR2,000,000.00

EUR1,000,000.00

EUR39,000.00

EUR18,000.00

EUR14,300.00

EUR5.200.00

EUR6,500.00

EUR179,000.00

EUR51,150.00

EUR25,000.00

EUR15,350.00

EUR138,150.00

EUR63,920.00

EUR100,000.00

GBP0.01

GBP1.00

GBP5.00

GBP1.00

GBP0.25

GBP1.00

GBP0.01

GBP1.00

GBP0.001

GBP1.00

GBP1.00
GBP1.00

GBP1.00

GBP0.10

GBP1.00

GBP10.00

GBP1.00

Schafft GmbH

Accantia Group Holdings (unlimited company)

Alberto-Culver (Europe) Limited

Alberto-Culver Group Limited

Alberto-Culver UK Holdings Limited

Alberto-Culver UK Products Limited

Associated Enterprises Limited°

BBG Investments (France) Limited

Brooke Bond Assam Estates Limited

Brooke Bond Group Limited°

Brooke Bond South India Estates Limited°

CPC (UK) Pension Trust Limited

Dollar Shave Club Limited

Hourglass Cosmetics UK Limited

Margarine Union (1930) Limited°

MBUK Trading Limited

Mixhold Investments Limited

ND4A Limited

Pukka Herbs Limited

T2 Tea (UK) Limited

TIGI Limited

TIGI Holdings Limited

Toni & Guy Products Limited°

UAC International Limited

UML Limited

Unidis Forty Nine Limited

Unilever Australia Investments Limited

Unilever Australia Partnership Limited

Unilever Australia Services Limited

Unilever Company for Industrial Development Limited
Unilever Company for Regional Marketing and Research Limited

Unilever Corporate Holdings Limited°

Unilever Employee Benefit Trustees Limited

Unilever S.K. Holdings Limited

Unilever Innovations Limited

Unilever Overseas Holdings Limited°

Unilever Superannuation Trustees Limited

Unilever U.K. Central Resources Limited

Unilever U.K. Holdings Limited°

Unilever UK & CN Holdings Limited

Unilever UK Group Limited

1
1

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS186

Group Companies continued

Name of
Undertaking

UBG Vermietungs GmbH

Unilever Deutschland Immobilien Leasing GmbH & Co. OHG∞

Unilever Deutschland IPR GmbH & Co. OHG∞

Germany – Rotebühlplatz 21, 70178 Stuttgart

TIGI Eurologistic GmbH

TIGI Haircare GmbH

Ghana - Swanmill, Kwame Nkrumah Avenue, Accra

Millers Swanzy (Ghana) Limited

Ghana – Plot No. Ind/A/3A-4, Heavy Industrial Area, Tema

Unilever Ghana PLC (74.50)

Ghana - Plot No. Ind/A/3A-4, P O Box 721, Tema

Unilever Oleo Ghana Limited

Greece – Kymis ave & 10, Seneka str. GR-145 64 Kifissia

Elais Unilever Hellas SA

Unilever Knorr SA

Unilever Logistics SA

Nominal
Value

Share
Class
Note

EUR8,090,190.00

EUR 136.377,489,00

EUR100.00

EUR24,900.00

EUR25,600.00

GHC1.00

GHC0.0192

GHC2.50

EUR10.00

Name of
Undertaking

Gromart S.R.L.

Italy – Via Crea 10, 10095, Grugliasco

G.L.L. S.R.L. (51)

Italy - Via Tortona 25, cap 20144 – Milano

Intuiskin S.R.L. (95.81)

Italy – Viale Sarca 235, 20126 Milan

Unilever Italia Administrative Services S.R.L.

Italy – Via Paolo di Dono 3/A 00142 Roma

Unilever Italia Logistics S.R.L.

Unilever Italia Manufacturing S.R.L.

Unilever Italia Mkt Operations S.R.L.

Unilever Italy Holdings S.R.L.

Italy – Via Plava, 74 10135 Torino

Equilibra S.R.L. (75)

Nominal
Value

Share
Class
Note

EUR1,815,800.00

EUR40,000.00

EUR10,000.00

EUR70,000.00

EUR600,000.00

EUR10,000,000.00

EUR25,000,000.00

EUR1,000.00

EUR7.80

Guatemala – Diagonal 6. 10-50 zona 10, Ciudad de Guatemala. Nivel 17 Torre Norte Ed.
Interamericas World Financial Center

Unilever de Centroamerica S.A.

GTQ60.00

Guatemala – 24 Avenida, Calzada Atanacio Tzul, 35-87 Zona 12 Ciudad de Guatemala

Unilever Guatemala SCC S.A.

Haiti - 115, Rue Panamericaine, Estabissement Número 1, Petion Ville

Les Condiments Alimentaires, S.A. (61)

GTQ100.00

HTG1000.00

Honduras – Anillo Periférico 600 metros después de la colonia, Residencial, Las Uvas contigua
acceso de residencial Roble Oeste, Tegucigalpa M.D.C.

Unilever de Centroamerica S.A.

Hong Kong - Suite 1106-8, 11/F, Tai Yau Building, 181 Johnston Road, Wanchai

Blueair Asia Limited

Hong Kong – 6/F Alexandra House, 18 Charter Road, Central

T2 Hong Kong

Hong Kong – 6 Dai Fu Street, Tai Po Industrial Estate, N.T.

Unilever Hong Kong Limited

HNL10.00

HKD0.01

HKD1.00

HKD0.10

Hong Kong – Suite 907, 9/F, Silvercord Tower 2, 30 Canton Road, Tsim Sha Tsui, Kowloon

Hourglass Cosmetics Hong Kong Limited

HKD 1.00

Hong Kong – Room 1808, 18/F, Tower II Admiralty Centre, 18 Harcourt Road, Admiralty

Hong Kong CarverKorea Limited

Hong Kong - 14th Floor, One Taikoo Place, 979 King’s Road, Quarry Bay

UPD Hong Kong Limited

Hong Kong - 14/F, One Taikoo Place, 979 King’s Road, Quarry Bay

HKD1.00

HKD100.00

Go-Uni Limited

Hungary – 1138-Budapest, Váci út 121-127.

Unilever Magyarország Kft

USD14,376,000.00

HUF1.00

India – Unilever House, B. D. Sawant Marg, Chakala, Andheri (E), Mumbai 400 099

Daverashola Estates Private Limited (61.90)

Hindlever Trust Limited (61.90)

Hindustan Unilever Limited° (61.90)

Jamnagar Properties Private Limited (61.90)

Lakme Lever Private Limited (61.90)

Levers Associated Trust Limited (61.90)

Levindra Trust Limited (61.90)

Pond’s Exports Limited (61.90)

Unilever India Limited (61.90)

Unilever India Exports Limited (61.90)

Unilever Industries Private Limited°

Unilever Ventures India Advisory Private Limited

India – S-327, Greater Kailash – II, New Delhi – 110048, Delhi

Blueair India Pvt. Limited

INR10.00

INR1.00

INR10.00

INR1.00

INR10.00

INR1.00

INR10. 00

Indonesia – Grha Unilever, Green Office Park Kav 3, Jalan BSD Boulevard Barat, BSD City, Tangerang, 15345
1

PT Unilever Indonesia Tbk (84.99)

IDR2.00

PT Unilever Enterprises Indonesia (99.50)

PT Unilever Trading Indonesia

IDR1,000.00

IDR1,003,875.00

Indonesia – KEK Sei Mangkei, Nagori Sei Mangkei, Kecamatan Bosar Maligas, Kabupaten
Simalungun 21183, Sumatera Utara

PT Unilever Oleochemical Indonesia

IDR1,000,000.00

Iran – No. 23, Corner of 3rd Street, Zagros Street, Argentina Square, Tehran

Unilever Iran (Private Joint Stock Company)

IRR1,000,000.00

Ireland – 20 Riverwalk, National Digital Park, Citywest Business Campus, Dublin 24

Lipton Soft Drinks (Ireland) Limited

Unilever Ireland (Holdings) Limited

Unilever Ireland Limited

Isle of Man – Bridge Chambers, West Quay, Ramsey, Isle of Man, IM8 1DL

Rational International Enterprises Limited

Israel – 3 Gilboa St. Airport City, Ben Gurion Airport

Beigel & Beigel Mazon (1985) Limited

Israel – 52 Julius Simon Street, Haifa, 3296279

Bestfoods TAMI Holdings Ltd

Israel Vegetable Oil Company Ltd

Unilever Israel Foods Ltd

Unilever Israel Home and Personal Care Limited

Unilever Israel Marketing Ltd

Unilever Shefa Israel Ltd

Israel – Haharoshet 1, PO Box 2288, Akko, 2451704

Glidat Strauss Limited

Italy – Piazza Paleocapa 1/D, 10100, Torino

EUR1.26

USD1.00

ILS1.00

ILS0.001

ILS0.0001

ILS0.10

ILS0.0002

ILS1.00

ILS0.0001

ILS1.00

Italy – Business Center Monte Napoleone, Via Monte Napoleone 8, 20121 – Milano

UPD Italia

Japan – 2-1-1, Kamimeguro, Meguro-ku, Tokyo 153-8578

Unilever Japan Customer Marketing K.K.

Unilever Japan Holdings K.K.

Unilever Japan K.K.

Unilever Japan Service K.K.

Japan - 1-8-1 Shinjuku, Shinjuku-ku, Tokyo

Rafra Japan K.K. (70)

EUR10,000.00

JPY100,000,001.00

JPY10,000,000.00

JPY100,000,001.00

JPY50,000,000.00

JPY20,000,000.00

Japan - Ark Hills Sengokuyama Mori Tower 28F, 1-9-10 Roppongi, Minato-ku, Tokyo

UPD Japan K.K.

Jersey – 13 Castle Street, St Helier, Jersey, JE4 5UT

Unilever Chile Investments Limited

Jordan – King Hussein Business Park, Building no. 24, ground floor, Amman

Unilever Jordan LLC

Kazakhstan – Raimbek, Avenue 160 A, Office 401, Almaty

Unilever Kazakhstan LLP

Kenya – Head Office, Kericho-Nakuru Road, P.O. BOX 20, 20200, Kericho

Brooke Bond Mombasa Limited (99.99)

Mabroukie Tea & Coffee Estates Limited (99.99)

The Limuru Tea PLC (51.99)

Unilever Tea Kenya Limited (98.56)

Kenya – Commercial Street, Industrial Area, P.O. BOX 30062-00100, Nairobi

Unilever Kenya Limited°

Korea – 443 Taeheran-ro, Samsung-dong, Kangnam-gu, Seoul

JPY50,000.00

GBP1.00

JOD1000.00

KES1.00

KES20.00

KES1.00

KES20.00

Unilever Korea Chusik Hoesa

Korea – 81, Tojeong 31-gil, Mapo-gu, Seoul

CARVERKOREA Co., Ltd

KRW10,000.00

KRW500.00

Laos – Viengvang Tower, 4th Floor, Room no. 402A, Boulichan Road, Dongpalan Thong Village,
Sisattanak District, Vientiane Capital

Unilever Services (Lao) Sole Co Limited

Latvia – Kronvalda bulvāris 3-10, Rīga, LV-1010

Unilever Baltic LLC

Lebanon – Sin El Fil, Zakher Building, Floor 4, Beirut

Unilever Levant s.a.r.l.

Lithuania – Skuodo st. 28, Mazeikiai, LT-89100

UAB Unilever Lietuva distribucija

UAB Unilever Lietuva ledu gamyba

Malawi – Room 33, Gateway Mall, Area 47, Lilongwe Malawi

Unilever South East Africa (Private) Limited

Malaysia – Level 34, Menara TM, Jalan Pantai Baru, 59200 Kuala Lumpur

Unilever (Malaysia) Holdings Sdn. Bhd.

Unilever (Malaysia) Services Sdn. Bhd.

Unilever Foods (Malaysia) Sdn. Bhd.

Unilever Malaysia Aviance Sdn. Bhd.

LAK80,000.00

EUR1.00

LBP1,000,000.00

EUR3,620.25

MWK2.00

No Par Value

Mexico – Av. Tepalcapa No.2, Col. Rancho Santo Domingo, C.P. 54900 Tultitlán, Estado de México

Unilever de Mexico S.de R.l. de C.V.

Unilever Holding Mexico S.de R.L. de C.V.

Unilever Manufacturera S.de R.L. de C.V.

Servicios Professionales Unilever S.de R.L. de C.V.

Unilever Mexicana S.de R.L. de C.V.

Unilever Real Estate Mexico S.de R.L. de C.V.

Unilever Servicios de Promotoria, S.de R.L. de C.V.

Moldova – 6A Uzinelor Street, Kishinev, MD -2023

Betty Ice Moldova S.R.L.

MDL7,809,036.00

Morocco – Km 10, Route Cotiere, Ain Sebaa, Casablanca

Unilever Maghreb S.A. (99.98)

Mozambique – Avenida 24 de Julho, Edifício 24, nº 1097, 4º andar, Maputo

Unilever Mocambique Limitada

MAD100.00

USD0.01

Myanmar – No (40,41,47), Min Thate Hti Kyaw Swar Street, 39 Ward, Shwe Pyi Thar Industrial Zone
(2), Shwe Pyi Thar Township, Yangon

Unilever (Myanmar) Limited

No Par Value

Myanmar – No (196), West Shwe Gone Dine 5th Street, Bahan Township, Yangon

Unilever (Myanmar) Services Limited

No Par Value

Myanmar – Lot No.28,30,31, Hlaing Thar Yar Industrial Zone (3), Hlaing Thar Yar Township, Yangon
1

Unilever EAC Myanmar Company Limited (60)

No Par Value

Nepal – Basamadi, Hetanda – 3, Makwanpur

Unilever Nepal Limited (53.75)

Netherlands - Weena 455, 3013 AL Rotterdam

Alberto-Culver Netherlands B.V.

Argentina Investments B.V.

BFO Holdings B.V.

BFO TWO B.V.

Brazinvest B.V.

Chico-invest B.V.

Doma B.V.

NPR100.00

EUR1.00

EUR454.00

EUR1.00

EUR455.00

NLG1,000.00

Unilever Annual Report and Accounts 2020Name of
Undertaking

Handelmaatschappij Noorda B.V.

Unilever Foods & Refreshments Global B.V.

Itaho B.V.

Lipoma B.V.

Marga B.V.

Mavibel (Maatschappij voor Internationale Beleggingen) B.V.

Mexinvest B.V.

Mixhold B.V.°

N.V. Elma

New Asia B.V.

Nommexar B.V.

Ortiz Finance B.V.

Pabulum B.V.

Rizofoor B.V.

Rolf von den Baumen’s Vetsmelterij B.V.

Rolon B.V.

Saponia B.V.

ThaiB1 B.V.

ThaiB2 B.V.

Unilever Administration Centre B.V.

Unilever Alser B.V.

Unilever Berran B.V.

Unilever Canada Investments B.V.

Unilever Caribbean Holdings B.V.

Unilever Employee Benefits Management B.V.

Unilever Employment Services B.V.

Unilever Europe B.V.

Unilever Europe Business Center B.V.

Unilever Finance International B.V.

Unilever Finance Netherlands B.V.

FoodServiceHub B.V.

Unilever Global Services B.V.

Unilever Holdings B.V.

Unilever Home & Personal Care Nederland B.V.

Unilever IP Holdings B.V.

Unilever Indonesia Holding B.V.

Unilever Insurances N.V.

Unilever International Holdings B.V. °

Unilever International Holding B.V.

Unilever International Holdings N.V.

Unilever Netherlands Retail Operations B.V.

Unilever Nederland Holdings B.V.

Unilever Nederland Services B.V.

Unilever PL Netherlands B.V.

Unilever Pilot B.V.

Unilever Turkey Holdings B.V.

Unilever US Investments B.V.°

Unilever Ventures Holdings B.V.

Unilever UK Holdings B.V.

Univest Company B.V.

UNUS Holding B.V.

Verenigde Zeepfabrieken B.V.

Wemado B.V.

Nominal
Value

NLG1,000.00

EUR453.78

EUR1.00

NLG1,000.00

EUR1.00

NLG1,000.00

EUR1.00

NLG100.00

NLG1,000.00

EUR454.00

NLG1,000.00

EUR1.00

EUR1,800.00

NLG1,000.00

EUR1.00

EUR454.00

EUR1.00

EUR454.00

EUR100.00

EUR1.00

EUR454.00

EUR1.00

EUR454.00

EUR460.00

EUR1.00

EUR453.79

EUR1.00

EUR0.10

Non-voting†

NLG1,000.00

Netherlands - Mr. Treublaan 7, Spaces Amstel Suites 2.30, 1097DP Amsterdam

187

Nominal
Value

Share
Class
Note

PKR10.00

PKR50.00

PKR100.00

JOD1.00

Share
Class
Note

Name of
Undertaking

Pakistan – Avari Plaza, Fatima Jinnah Road, Karachi – 75530

Unilever Pakistan Foods Limited (76.57)

Unilever Pakistan Limited (99.28)

(71.78)

Palestine – Ersal St. Awad Center P.O.B 3801 Al-Beireh, Ramallah

Unilever Market Development Company

Panama – Punta Pacífica, Calle Isaac Hanoro Missri, P.H. Torre de las Américas, Torre C, Oficina 32,
corregimiento de San Francisco, Distrito y Provincia de Panamá

Unilever Regional Services Panama S.A.

USD1.00

Panama – Calle Isaac Honoro, Torre de las Americas, torre C, piso 32, corregimiento de San
Francisco, distrito y provincia de Panamá

Unilever de Centroamerica S.A.

No Par Value

Paraguay – 4544 Roque Centurión Miranda N° 1635 casi San Martin. Edificio Aymac II, Asunción

Unilever de Paraguay S.A.

Peru – Av. Paseo de la Republica 5895 OF. 401, Miraflores, Lima 18

Unilever Andina Perú S.A.

Philippines – Linares Road, Gateway Business Park, Gen. Trias, Cavite

PYG1,000,000.00

PEN1.00

Metrolab Industries, Inc.

PHP1.00

PHP10.00

Philippines – 7th Floor, Bonifacio Stopover Corporate Center, 31st Street corner 2nd Avenue,
Bonifacio Global City, Taguig City

Unilever Philippines, Inc.

PHP50.00

Philippines – 11th Avenue corner 39th Street, Bonifacio Triangle, Bonifacio Global City, Taguig City
7

Universal Philippines Body Care, Inc

PHP100.00

Philippines – Manggahan Light Industrial Compound, A. Rodriguez Avenue, Bo. Manggahan, Pasig City
29

Unilever RFM Ice Cream, Inc. (50)

PHP1.00

Poland – Jerozolimskie 134, 02-305, Warszawa

Unilever Polska Sp. z o.o.

Unilever Poland Services Sp. z o.o.

Unilever Polska S.A.

PLN50.00

PLN10.00

Puerto Rico – Professional Services Park 997, San Roberto St., Suite 7, San Juan

Unilever de Puerto Rico, Inc°

USD100.00

Rwanda – Nyarugenge, Nyarungenge, Umujyi wa Kigali, Rwanda, P.O. BOX 6428 Kigali

Unilever Tea Rwanda Limited

Romania – Ploiesti, 291 Republicii Avenue, Prahova County

Unilever Romania S.A. (99)

Unilever South Central Europe S.A.

Romania - 121 Cernăuți Street, Suceava 720089

Betty Ice SRL

RWF1000.00

ROL0.10

ROL260.50

RON10.00

Romania - 9-9A Dimitrie Pompei Blvd, Iride Business Park Buildings 5 and 6, 2nd District, Bucuresti

Good People SA (75)

Russia – 644031, 205, 10 let Oktyabrya, Omsk

Inmarko Trade LLC

Russia – 123022, 13, Sergeya Makeeva Street, Moscow

OOO Unilever Rus

Saudi Arabia – P.O. Box 5694, Jeddah 21432
Binzagr Unilever LimitedX (49)

RON10.00

RUB1,000,000.00

RUB28,847,390, 269.19

SAR1,000.00

Serbia – Belgrade, Serbia, Omladinskih brigada 90b – Novi Beograd

Unilever Beograd d.o.o.

Singapore – 20 Pasir Panjang Road, #06-22 Mapletree Business City, 117439

T2 Singapore Pte. Limited

Unilever Asia Private Limited

Unilever Singapore Pte. Limited

UPD Singapore Private Pte Limited

Slovakia – Karadzicova 10, 821 08 Bratislava

Unilever Slovensko spol. s r.o.

No Par Value

SGD1.00

EUR1.00

South Africa -15 Nollsworth Crescent, Nollsworth Park, La Lucia Ridge Office Estate, La Lucia, 4051
1

Nollsworth Park Properties (Pty) Limited (in liquidation)

ZAR2.00

Unilever Market Development (Pty) Limited

Unilever South Africa (Pty) Limited

Unilever South Africa Holdings (Pty) Limited

ZAR1.00

ZAR2.00

ZAR1.00

South Africa – 4 Merchant Place, CNR Fredman Drive and Rivonia Road Sandton, 2196

Dollar Shave Club B.V.

Netherlands – Hofplein 19 3032 AC Rotterdam

Lever Faberge Europe-Sourcing Unit Vlaardingen B.V.

Tessa B.V.

Unilever Nederland B.V.

Unilever Nederland Foods Factories B.V.

Netherlands – Valkweg 2 7447JL Hellendoorn

Ben en Jerry’s Hellendoorn B.V.

Netherlands – Markhek 5, 4824 AV Breda

De Korte Weg B.V.

EUR1.00

NLG1,000.00

EUR1.00

EUR454.00

EUR46.00

EUR453.78

Aconcagua 14 Investments (RF) (Pty) Limited

Spain – PA / Reding, 43, Izda 1, 29016 Malaga

Intuiskin S.L.U. (95.81)

Spain – C/ Tecnología 19, 08840 Viladecans

Unilever Espana S.A.

Unilever Services Espana S.A.

EUR1.00

Spain – C/ Felipe del Río, 14 – 48940 Leioa

Unilever Foods Industrial Espana, S.L.U.

Netherlands – Bronland 14, 6708 WH Wageningen

Unilever Innovation Centre Wageningen B.V.

EUR460.00

Brooke Bond Ceylon (Pvt) Limited

Sri Lanka – 258 M Vincent Perera Mawatha, Colombo 14

Netherlands – Unilever House, 100 Victoria Embankment, London, EC4Y 0DY
(Registered Seat: Rotterdam)

Ceytea (Pvt) Limited

Lever Brothers (Exports and Marketing) (Pvt) Limited°

Unilever Overseas Holdings B.V.

Unilever UK Holdings N.V.

New Zealand – Level 4, 103 Carlton Gore Rd, Newmarket, Auckland 1023

Ben & Jerry’s Franchising New Zealand Limited

T2 NZ Limited

Unilever New Zealand Limited

NLG1,000.00

EUR1.00

No Par Value

NZD1.00

NZD2.00

Maddema Trading Company (Pvt) Limited

Premium Exports Ceylon (Pvt) Limited

R.O. Mennell & Co. (Ceylon) (Pvt) Limited

Unilever Ceylon Services (Pvt) Limited

Unilever Lipton Ceylon Limited

Unilever Sri Lanka Limited°

Nicaragua – Km 11.5, Carretera Vieja a León, 800 Mts Norte, 100 Mts Este, 300 Mts Norte, Managua
1

Unilever de Centroamerica S.A.

NIC50.00

Niger – BP 10272 Niamey

Unilever Niger S.A. (88.42)

Nigeria – 1 Billings Way, Oregun, Ikeja, Lagos

Unilever Nigeria Plc (75.96)

West Africa Popular Foods Nigeria Limited (51)

Norway – Martin Linges vei 25, Postbox 1, 1331 Fornebu

Unilever Norge AS

XOF10,000.00

NGN0.50

NGN1.00

NOK100.00

Sweden – Box 1056, Svetsarevägen 15, 171 22, Solna Stockholm

Alberto Culver AB

Unilever Holding AB

Unilever Produktion AB

Unilever Sverige AB

Sweden - Karlavagen 108, 115 26 Stockholm

Blueair AB

Sweden – Karlavagen 108, 115 26, Stockholm

Jonborsten AB

ZAR1.00

EUR1.00

EUR48.00

EUR60.00

EUR600.00

LKR100.00

LKR10.00

LKR2.00

LKR10.00

SEK100.00

SEK50.00

SEK100.00

SEK1.00

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS

188

Group Companies continued

Name of
Undertaking

Sweden – Nordenskioldgatan 19, 413 09 Goteborg

Nature Delivered Sweden AB

Switzerland – Bahnhofstrasse 19, CH 8240 Thayngen

Knorr-Nährmittel Aktiengesellschaft

Unilever Schweiz GmbH

Switzerland – Spitalstrasse 5, 8200, Schaffhausen

Helmsman Capital AG

Unilever Supply Chain Company AG

Unilever ASCC AG

Unilever Finance International AG

Unilever Business and Marketing Support AG

Unilever Overseas Holdings AG

Unilever Schaffhausen Service AG

Unilever Swiss Holdings AG

Switzerland – Hinterbergstr. 30, CH-6312 Steinhausen

Oswald Nahrungsmittel GmbH

Switzerland – Bahnhofstrasse 28, 6300 Zug

Unilever Reinsurance AG

Sudan – Kafoury, Area (4), Industrial Zone, Khartoum

Unilever Sudanese Investment Company

Taiwan – 3F., No. 550, Sec. 4, Zhongxiao East Rd., Xinyi District, Taipei City

Unilever Taiwan Limited (99.92)

Tanzania – Plot No.4A Pugu Road, Dar Es Salaam

Unilever Tanzania Limited

Tanzania – P.O. Box 40, Mufindi

Unilever Tea Tanzania Limited

Thailand – 161 Rama 9 Road, Huay Kwang, Bangkok 10310

Unilever Thai Holdings Limited

Unilever Thai Services Limited

Unilever Thai Trading Limited

SEK1.00

CHF1,000.00

CHF100,000.00

CHF1,000.00

CHF800,000.00

CHF1,000.00

SDF10.00

TWD10.00

TZS20.00

THB100.00

Thailand - 12 A Floor Unit B1-B2, Office No. 1225, Siam Piwat Tower, 989 Rama I Road, Pathumwan,
Bangkok 10330

UPD (Thailand) Co., Limited

Trinidad & Tobago – Eastern Main Road, Champs Fleurs

Unilever Caribbean Limited (50.01)

Tunisia – Z.I. Voie Z4-2014 Mégrine Erriadh – Tunis

Unilever Tunisia S.A. (97.35)

Unilever Maghreb Export S.A. (97.33)

Tunisia – Z.I. Voie Z4, Megrine Riadh, Tunis, 2014
UTIC Distribution S.A.X (47.70)

USD1.00

TTD1.00

TND6.00

TND5.00

TND10.00

Turkey – Saray Mahallesi Dr. Adnan Büyükdeniz Cad. No.13 34768 Ümraniye – İstanbul

Unilever Gida Sanayi ve Ticaret AŞ° (99.98)

Unilever Sanayi Ve Ticaret Türk Aş° (99.98)

Besan Besin Sanayi ve Ticaret AŞ (99.99)

Dosan Konserve Sanayi ve Ticaret AŞ (99.64)

Unilever Hizli Tuketim Urunleri Satis Pazarlama ve Ticaret Anonim
Sirketi (99.98)

Uganda – Plot 10/12 Nyondo Close, Industrial Area, P.O. Box 3515 Kampala

Unilever Uganda Limited

Ukraine – 04119, 27-T, Dehtyarivska Str., Kyiv

Pallada Ukraine LLC (In Liquidation)

Unilever Ukraine LLC

United Arab Emirates – PO Box 17053, Jebel Ali, Dubai

Severn Gulf FZCOX (50)

Unilever Gulf FZE

TRY0.01

UGX20.00

UAH335,010,360.00

UAH1,151,329,850

AED100,000.00

AED1,000,000.00

United Arab Emirates - Al Hebiah Fourth - Dubai Sports City- office 410- The Bridge - P.O. Box 17055
1
Unilever Binzagr Gulf General Trading LLCX (50)
United Arab Emirates – Easa Saleh Al Gurg Building, Karama, Office M01, P.O. Box 17055, Dubai

AED1,000.00

Unilever General Trading LLC

AED1,000.00

United Arab Emirates – Warehouse No. 1.2, Dubai Industrial Park – Seeh Shwaib 2

Unilever Home & Personal Care Products Manufacturing LLCX (49)

AED1,000.00

United States – 700 Sylvan Avenue, Englewood Cliffs, New Jersey 07632-3201

Alberto-Culver Company

Alberto-Culver International, Inc

Alberto-Culver (P.R.), Inc

Alberto-Culver USA, Inc

Ben & Jerry’s Franchising, Inc

Ben & Jerry’s Gift Card, LLC

Ben & Jerry’s Homemade, Inc

Chesebrough-Pond’s Manufacturing Company

Conopco, Inc

Dermalogica, LLC

Kate Somerville Holdings, LLC

Kate Somerville Skincare LLC

The Laundress, LLC

Lipton Industries, Inc

Murad LLC

Pantresse, Inc

REN USA Inc

Skin Health Experts, LLC

Kensington & Sons, LLC

St. Ives Laboratories, Inc

Kirei Intermediate Holdings, LLC

T2 US LLC

TIGI Linea Corp

Unilever AC Canada Holding, Inc

Unilever Bestfoods (Holdings) LLC

Unilever Capital Corporation

Unilever Illinois Manufacturing, LLC

Unilever Manufacturing (US), Inc

Unilever Trumbull Holdings, Inc

No Par Value

USD1.00

No Par Value

USD1.00

USD0.01

No Par Value

USD1.00

USD120.00

No Par Value

USD0.01

No Par Value

USD10.00

USD1.00

Nominal
Value

Share
Class
Note

Name of
Undertaking

Unilever Trumbull Research Services, Inc

Unilever United States Foundation, Inc

Unilever United States, Inc

Unilever Ventures Advisory LLC

United States – 125 S Clark, Suite 2000, Chicago, IL 60603

Blueair Inc.

United States – 233 Bleecker Street, New York, 10014

Carapina LLC (In Liquidation)

Grom Columbus LLC (In Liquidation)

Grom Malibu LLC (In Liquidation)

Grom USA LLC (In Liquidation)

Hollywood LLC (In Liquidation)

Spatula LLC (In Liquidation)

Nominal
Value

USD1.00

USD0.3333

No Par Value

Share
Class
Note

United States – 60 Lake Street, Suite 3N, Burlington, VT 05401

Seventh Generation Canada, Inc.

Seventh Generation, Inc.

United States – 13335 Maxella Ave. Marina del Rey, CA 90292

Dollar Shave Club, Inc.

Personal Care Marketing & Research Inc

United States – 2711 Centerville Road, Suite 400, Wilmington, Delaware

Grom Franchising LLC (In Liquidation)

United States – 55 East 59th Street, New York, 10022

Intuiskin Inc (95.81)

United States – CTC 1209 Orange Street Wilmington, DE19801

Living Proof, Inc.

Nature Delivered, Inc.

United States – 1241 Electric Avenue, Venice CA 90291

Kingdom Animalia, LLC

No Par Value

USD.001

USD 1.00

No Par Value

USD0.01

United States – 2711 Centreville Road, Suite 400, Wilmington, New Castle County, Delaware 19808
7

USD0.001

Pukka Herbs Inc

United States – 11 Ranick Drive South, Amityville, NY 11701

BC Cadence Holdings, Inc

Sundial Brands LLC

Madam C.J. Walker Enterprises, LLC

Nyakio LLC

USD0.01

No Par Value

United States – 1169 Gorgas Avenue, Suite A, San Francisco CA 94129

Olly Public Benefit Corporation

USD0.00001

United States - 208 Utah Street, Suite 300, San Francisco, CA, 94103

Tatcha, LLC

United States - 127 Nevada Street, El Segundo, CA 90245

The LIV Group, Inc.

No Par Value

United States - 1209 Orange Street, Wilmington, DE 19801

Unilever North America Suply Chain Company, LLC

United States - 4056 Del Rey Avenue, Marina Del Rey, CA 90292

SmartyPants, Inc

Uruguay – Camino Carrasco 5975, Montevideu

Unilever Uruguay SCC S.A.

Lever S.A.

Unilever del Uruguay S.R.L.

USD0.00001

UYU1.00

UYP0.10

UYU1.00

Venezuela - Edificio Torre Corp Banca, Piso 15, entre Avenidas Blandín y Los Chaguaramos,
Urbanización La Castellana, Caracas

Unilever Andina Venezuela S.A.

VEB1000.00

Vietnam – Lot A2-3, Tay Bac Cu Chi Industry Zone, Tan An Hoi Ward, Cu Chi District, Ho Chi Minh City

Unilever Vietnam International Company Limited

Zambia – Stand 2375, Corner Addis Ababa Drive & Great East Road, Show Grounds, Lusaka

Unilever South East Africa Zambia Limited

ZMK2.00

Zimbabwe – 2 Stirling Road, Workington, Harare

Unilever – Zimbabwe (Pvt) Limited∆
SUBSIDIARY UNDERTAKINGS NOT INCLUDED IN THE CONSOLIDATION
Austria - Rochusgasse 4, 5020, Salzburg

ZWD2.00

NATURAL EVOLUTION gmbH

EUR100.00

Brazil - Av Das Nacoes Unidas, 14261 4º Andar Ala B, Vila Gertrudes, Cep 04792-000, Sao Paulo

Unileverprev Sociedade De Previdencia Privada

Bulgaria – Debelets city, Promishlena zona st. 5030 Veliko Tarnovo

Sladoledena Fabrika EOOD

BGN50.00

China - Room 604-48, Building 1, No. 38 Debao Road, Waigaoqiao bonded zone, Shanghai

UPD China

Ecuador – Km 25 Vía a Daule, Guayaquil

Visanuasa S.A.

England and Wales – 100 Victoria Embankment, Blackfriars, London, EC4Y 0DY

Uflexreward Limited

Uflexreward Holdings Limited

Jech Limited°

CNY1.00

USD1.00

GBP0.001

GBP1.00

England and Wales – Nightingale House, 46-48 East Street, Epsom, Surrey, KT17 1HQ

Brand Evangelist for Beauty Limited Δ◊ (79.47)

(100)

England and Wales – 1 More London Place, London, SE1 2AF

Unidis Twenty Six Limited (In Liquidation)

Lever Brothers Port Sunlight Limited (in liquidation)

GBP1.00

England and Wales – c/o TMF Group, 8th Floor, 20 Farringdon Street, London, EC4A 4AB

Unilever Ventures General Partner Limited◊

Greece – Kymis ave & 10, Seneka str. GR-145 64 Kifissia

Lipoma Management Consulting SA

ULBCS Logistics Consulting SA

Haiti – Port-au-Prince

Unilever Haiti S.A.

GBP1.00

EUR10.00

HTG500,000

India – Unilever House, B. D. Sawant Marg, Chakala, Andheri (E), Mumbai 400 099

Bhavishya Alliance Child Nutrition Initiatives (61.90)

INR10.00

Unilever Annual Report and Accounts 2020189

Share
Class
Note

Name of
Undertaking

Nominal
Value

Share
Class
Note

Name of
Undertaking

Hindustan Unilever Foundation (61.90)

Nominal
Value

INR10.00

Israel – Park Zvaim Industrial Area, Beit Shean / Correspondance: P.O.B. 787, Beit Shean, 1090000

PCMR International Limited

Jamaica – White Marl Street, Spanish Town, PO Box 809, Parish Saint Catherine

Unilever Jamaica Limited

Kenya – Commercial Street, P.O. BOX 40592-00100, Nairobi

Union East African Trust Limited*

Morocco – Km 10, Route Cotiere, Ain Sebaa, Casablanca

Societe Commerciale du Rif

Societe Tangeroise de Parfumerie et d’Hygiene S.A.R.L.

NIS0.10

JMD1.00

KES20.00

MAD50.00

Nürnberger Kloßteig NK GmbH & Co. KG◊ (50)

Germany – Bad Bribaer Straße, 06647 Klosterhäseler

Henglein GmbH◊ (50)

DEM50,000.00

Germany – Beerbachstruße 37, 17153 Stavenhagen
Hochreiter Frischteigwaren GmbH ◊ (50)
India – Plot No B-9-10 - Near Huda Market, Sector 32, Gurugram, Gurgaon HR 122001

DEM250,000.00

AAIDEA Solutions Private Limited∆◊ (1.08)

(100)

(5.72)

(8.19)

(31.13)

(18.20)

INR10.00

INR100.00

Myanmar - Shwe Gon Daing (West) 5th Street, No. 196, Mimosa Tower, Shwe Gon Daing (West) Ward,
Bahan Township, Yangon, Myanmar 11201

Lever Brothers (Burma) Limited

Netherlands – Weena 455, 3013 AL Rotterdam

Unilever Tea HoldCo Netherlands B.V.

Unilever Tea TopCo Netherlands B.V.

Palestine – Jamil Center, Al-Beireh, Ramallah

Unilever Agencies Limited (99)

Qatar - Zone 43, Street 340, Doha

Unilever Qatar

Scotland – c/o Brodies LLP, 15 Atholl Crescent, Edinburgh, EH3 8HA

Unilever Ventures (SLP) General Partner Limited

United States – 13335 Maxella Ave. Marina del Rey, CA 90292

DSC Distribution, Inc.

MMK500,000.00

EUR1.00

JOD1.00

QAR200.00

GBP1.00

India – 1st & 2nd Floor, Kagalwala House, Plot No. 175, CST Road, Kalina, Bandra Kurla,
Santacruz East Mumbai, Mumbai 400098

Peel-Works Private Limited∆◊ (48.15)

(16.67)

(14.65)

INR30.00

India – 403 Valentina, Hiranandani Estate Thane, Thane West, 400607, Maharashtra

Pureplay Skin Sciences (India) Private Limited◊ (0.01)

(100)

(6.54)

INR10.00

INR100.00

India – 135 Hubtown Solaris, N.S. Phadke Marg, Andheri East-West Flyover Junction,
Andheri (East) Mumbai 400069

United States – 233 Bleecker Street, New York, 10014

O(1) India Private Limited◊ (0.001)

Grom WTC LLC

Grom Century City LLC

(29.15)

(31.75)

INR10.00

INR100.00

United States – c/o The Corporation Trust Company, Coporation Trust Center, 1209 Orange Street,
Wilmington, Delaware, 19801. New Castle County

Indonesia - Wisma Bango Lt.05, Jl.Sulaiman No.32 Sukabumi Utara Kec. Kebon Jeruk,
Jakarta Barat 11540

USD0.001

PT Anugrah Mutu Bersama◊ (40)

IDR1,000,000.00

Indonesia - Gedung Pasaraya Blok M Gedung B Lantai 6 dan 7 Jalan Iskandarsyah II no. 2, DKI
Jakarta

PT Gerai Cepat Untung◊ (40)

RP100.00

Iran –Iran – Second floor, No. 23, Corner of 3rd Street, Zagros Street, Argentina Square, Tehran

Cocotier, Inc
ASSOCIATED UNDERTAKINGS
Australia – 47 Dover Street, Cremorne, VIC, 3121, Australia

SNDR PTY LTD∆◊ (100)

Australia – 3 Moss Place, North Melbourne, Victoria 3051

Group Fourteen Holdings Pty Ltd ∆◊

Bahrain – 161, Road 328, Block 358, Zinj, Manama

Unilever Bahrain Co. W.L.L. (49)

No Par Value

BHD50.00

Brazil – Avenue Engenheiro Luiz Carlos Berrini, 105, 16º andar, Ed. Berrini One, Itaim Bibi, CEP
0471/001-00, City of São Paulo, State of São Paulo

Gallo Brasil Distribuição e comércio Limitada (55)

BRL1.00

Canada – Suite 300-171 West Esplanade, North Vancouver, British Columbia Canada V7M 3K9
A&W Root Beer Beverages Canada Inc ◊ (40)
Cyprus – 2 Marcou Dracou str., Engomi Industrial Estate, 2409 Nicosia

No Par Value

Unilever PMT Limited∆ (49)

EUR1.71

England and Wales – Chesterford Research Park, Little Chesterford, Saffron Waldon CB10 1XL

Arecor Limited∆◊ (18.37)

(36.23)

England and Wales - 85 Great Portland Street, London, England, W1W 7LT

Blis Global Limited∆◊ (30.67)

(0.20)

GBP0.01

GBP0.00001

England and Wales – 5 Dickenson Road, Crouch End, London, United Kingdom, N8 9EN

Blow Limited◊ (5.30)

(81.58)

England and Wales – First Floor, 59-61 High Street West, Glossop SK13 8AZ

CDDM Technology Limited∆◊ (49.53)

England and Wales – 2nd Floor, 17 Waterloo Place, London, SW1Y 4AR

Langholm Capital II L.P. (46.30)

GBP0.001

GBP0.01

England and Wales – Unit 1.8 & 1.9 The Shepherds Building, Charecroft Way, London, W14 0EE

SCA Investments Limited∆◊ (60.49)

(25.19)

(3.65)

GBP0.001

England and Wales – Unit 2.2 Second Floor, 11-29 Fashion Street, London E1 6PX

THENUDECO LIMITEDΔ◊ (38.95)

(12.71)

GBP0.001

GBP0.000001

England and Wales - 2nd Floor, 5 Jubilee Place, Chelsea, London, SW3 3TD

Trinny London LimitedΔ◊ (59.43)

(32.32)

England and Wales – 127 North Milton Park, Abingdon, Oxfordshire OX14 4SA

P2i Limited∆◊ (12.89)

(5.44)

(50)

(4.20)

GBP0.01

GBP0.0001

GBP1.00

GBP0.0001

England and Wales – Level 1 Brockbourne House, 77 Mount Ephraim, Tunbridge Wells,
Kent, England, TN4 8BS

Clean Beauty Co Ltd∆◊ (99.66)

(26.72)

England and Wales – 170 Finchley Road, London, NW3 6BP

GALLINEE LTD∆◊ (51.89)

GBP0.0001

GBP0.01

Unilever-Golestan (Private Joint Stock Company)(50.66)

Ireland – 70 Sir John Rogersons Quay, Dublin 2

Pepsi Lipton International Limited∆

Israel – Kochav Yokneam Building, 4th Floor, P.O. Box 14, Yokneam Illit 20692

IB Ventures Limited∆◊ (99.74)

Japan – #308, 5–4–1, Minami Azabu, Tokyo

Grom Japan K.K◊ (34)

Luxembourg – 5 Heienhaff, L-1736 Senningerberg

Helpling Group Holding S.à r.l.∆◊ (98.57)

(2.43)

EUR1.00

ILS1.00

JPY50,000.00

EUR1.00

Mauritius – c/o Apex Fund Services (Mauritius) Ltd, 4th Floor, 19 Bank Street, Cyber City, Ebene 72201
78

Capvent Asia Consumer Fund Limited∆ (40.41)

USD0.01

Oman – Po Box 1711, Ruwi, Postal code 112

Towell Unilever LLC (49)

OMR10.00

Philippines – 11th Avenue corner 39th Street, Bonifacio Triangle, Bonifacio Global City, Taguig City, M.M
7

Sto Tomas Paco Land Corp∆◊ (40)

PHP1.00

Cavite Horizons Land, Inc.◊ (35.10)

PHP1.00

PHP10,000.00

Philippines – Manggahan Light Industrial Compound, A. Rodriguez Avenue, Bo. Manggahan, Pasig City
29

WS Holdings Inc.∆◊

PHP1.00

Selecta Walls Land Corp∆◊

PHP10.00

Portugal – Largo Monterroio Mascarenhas, 1,1099–081 Lisboa

Fima Ola – Produtos Alimentares, S.A. (55)

Gallo Worldwide, Limitada(55)

Grop – Gelado Retail Operation Portugal, Unipessoal, LDA (55)

Transportadora Central do Infante, Limitada (54)

Unilever Fima, Limitada (55)

Victor Guedes – Industria e Comercio, S.A. (55)

EUR4,125,000

EUR550,000

EUR27,500

EUR27,000

EUR14,462,336.00

EUR275.00

Saudi Arabia – 8770 King Abudlaziz Branch Road, Ash Shati, Jeddah 23514-3261

Binzagr Unilever Distribution Company Limited (49)

Sweden – No 18 Office & Lounge, Briger Jarlsgatan 18,114 34 Stockholm

SachaJuan Haircare AB∆◊ (69.5)

United Arab Emirates – P.O. Box 49, Dubai

Al Gurg Unilever LLC (49)

United Arab Emirates – Po Box 49, Abu Dhabi

Thani Murshid Unilever LLC (49)

SAR1,000.00

SEK1.00

AED1,000.00

United States -1679 South Dupont Highway, Suite 100, Dover, Kent County, Delaware 19901

Beauty Bakerie Cosmetics Brand Inc∆◊

(50.05)

(16.24)

(24.88)

United States – 2600 Tenth St #101, Berkeley CA 94710

USD0.001

England and Wales - C4 Lab Psc Building Unilever R&D Port Sunlight, Quarry Road East, Bebington,
Wirral, CH63 3JW

Machine Vantage◊ (9.86)

(49.93)

Penhros Bio Limited◊ (50)

France – 6 rus des Freres Caudron, 78140 Velizy Villacoublay

Pegase S.A.S. (25)

France – 7 rue Armand Peugeot, 92500 Rueil-Malmaison

Relais D’or Centrale S.A.S. (49.99)

Germany – Beerbachstraße 19, 91183 Abenberg
Hans Henglein & Sohn GmbH ◊ (50)
Henglein & Co. Handels-und Beteiligungs GmbH & Co. KG◊ (50)

Henglein Geschäftsführungs GmbH◊ (50)

GBP1.00

EUR5,000.00

No Par Value

EUR100,000.00

DEM50,000.00

United States – c/o Resident Agents Inc. 8 The Green, STE R, Dover, Kent, Delaware, 19901

Discuss.io Inc◊ (7.94)

(17.83)

(50.53)

USD0.0001

United States – 700 Sylvan Avenue, Englewood Cliffs, New Jersey 07632-3201

Pepsi Lipton Tea Partnership (50)

Food Service Direct Logistics, LLC

United States – 548 Market St #70998, San Francisco, CA 94104-5401

Physic Ventures L.P.◊ (57.27)

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS190

Group Companies continued

Name of
Undertaking

Nominal
Value

Share
Class
Note

Name of
Undertaking

Nominal
Value

Share
Class
Note

United States - c/o Cogency Global Inc, 850 New Burton Road, in the City of Dover, County of Kent,
Delaware
Zitsticka Inc ∆◊ (26.63)

USD0.0001

United States - 251 Little Falls Drive, City of Wilmington, County of New Castle, Delaware 19808

FabFitFun Inc ∆◊(68.18)

(7.48)

United States - c/o New Voices Partners, LLC. 7 Witch Lane. Rowayton, Connecticut 06853

New Voices Fund LP ◊(32.90)

United States - c/o Paracorp Incorporated, 2140 S Dupont HWY, Camden, Kent, DE, 19934
USD0.0001

Keli Network, Inc ∆◊(30.30)

United States – c/o Cogency Global Inc, 850 New Burton Road, Suite 201, Dover, Kent County, DE 19904

Sun Basket Inc∆◊(2.84)

(89.03)

(1.92)

USD0.0001

(8.33)
United States – c/o The Company Corporation, 251 Little Falls Drive, Wilmington, DE, New Castle
19808
Nutraceutical Wellness Inc∆◊ (41.70)

USD0.0001

(56.82)

(10.95)

(49.72)

True Botanicals, Inc∆◊ (3.75)

(41.97)

(14.62)

(28.17)

USD0.0001

(16.63)
United States - c/o Cogency Global Inc, 850 New Burton Road, in the City of Dover, County of Kent,
Delaware
Volition Beauty Inc∆◊ (66.44)
United States - c/o The Corporation Trust Company, Coporation Trust Center, 1209 Orange Street,
Wilmington, Delaware, 19801. New Castle County
Koco Life LLC ∆◊ (23.81)

USD0.0001

(39.24)

Notes:

1: Ordinary, 2: Ordinary-A, 3: Ordinary-B, 4: Partnership, 5: Quotas, 6: Class-A Common, 7: Common, 8: Class A, 9: Class B, 10: Class C, 11: Class II Common, 12: Class III
Common, 13: Membership Interest, 14: Preference, 15: Redeemable Preference, 16: Limited by Guarantee, 17: C Ordinary Shares, 18: Viscountcy, 19: B3 Ordinary, 20: Series
C-1 Pref, 21: Ordinary-C, 22: Preferred, 23: Redeemable Preference Class A, 24: Redeemable Preference Class B, 25: Special, 26: Cumulative Preference, 27: 5% Cumulative
Preference, 28: Non-Voting Ordinary B, 29: Common B, 30: Management, 31: Dormant, 32: Series C1 Preference, 33: Series D-2, 34: Cumulative Redeemable Preference, 35:
A-Ordinary, 36: Preferred Ordinary, 37: Com, 38: Class Common-B, 39: Series A Participating Preference, 40: H-Ordinary, 41: I-Ordinary, 42: J-Ordinary, 43: Series A Preferred
Convertible, 44: A Preferred, 45: Series B1 CPPS, 46: B Preferred, 47: Not In Use, 48: Series C-2 Preferred, 49: A-4 Com, 50: D Preferred, 51: Series A-3 Preferred, 52: C Preferred,
53: E Ordinary, 54: G Preferred, 55: Series Seed, 56: Nominal, 57: Preferred A, 58: Series A Preferred, 59: Series Seed-2 Preferred, 60: Series C-2, 61: Series D, 62: Series A1
Preferred, 63: Series B-2 Preference, 64: Pre Series B CPPS, 65: Series B CPPS, 66: Series C1 CPPS, 67: Series C2, 68: Office Holders, 69: Security, 70: Series B-3 Preference,
71: Series B Preferred, 72: Series Seed B CPPS, 73: Series A CPPS, 74: Series A2 CPPS, 75: Equity, 76: Series B CPPS, 77: Series B Preferred Convertible, 78: Class A Ordinary
Redeemable Non Voting Ordinary, 79: B Ordinary, 80: N Ordinary, 81: A-1 Com, 82: A-2 Com, 83: A-3 Com, 84: Series A EIS, 85: Series A Convertible Preferred, 86: Series A
Preferred, 87: Series B Preferred, 88: Series C Preferred, 89: Series A1 CPPS, 90: D1 Preferred, 91: Series E, 92: Series C-2 Pref, 93: Series B-1 Preferred, 94: Series B-2 Preferred.

o Indicates an undertaking directly held by PLC. All other undertakings are indirectly held. In the case of Hindustan Unilever Limited 47.43% is directly held and the

remainder of 14.47% is indirectly held. In the case of Unilever Kenya Limited 39.13% is directly held and the remainder of 60.87% is indirectly held. In the case of Unilever
Sri Lanka Limited 5.49% is directly held and the remainder of 94.51% is indirectly held. In the case of Mixhold B.V. 27.71% is directly held and the remainder of 72.29% is
indirectly held. In the cases of each of Unilever Gida Sarayi ve Ticaret A.Ş. and Unilever Sarayi ve Ticaret Turk A.Ş. a fractional amount is directly held and the remainder is
indirectly held. In the case of Mixhold B.V., 55.37% of the ordinary – A shares are directly held, the remainder of 44.63% are indirectly held and the other share classes are
indirectly held.

† Shares the undertaking holds in itself.

∆ Denotes an undertaking where other classes of shares are held by a third party.

X Binzagr Unilever Limited, Severn Gulf FZCO, Unilever Binzagr Gulf General Trading LLC, Unilever Home and Personal Care Products Manufacturing LLC and UTIC

Distribution S.A. are subsidiary undertakings pursuant to section 1162(2)(b) Companies Act 2006. The Unilever Group is entitled to 50% of the profits made by Binzagr
Unilever Limited. The Unilever Group is entitled to 80% of the profits made by Unilever Home and Personal Care Products Manufacturing LLC .

◊ Accounted for as non-current investments within non-current financial assets.

∞ Exemption pursuant to Section 264b German Commercial Code.

In addition, we have revenues either from our own operations or otherwise in the following locations: Afghanistan, Albania, Aland Islands, American, Samoa, Andorra,
Angola, Antigua, Anguilla, Armenia, Aruba,Azerbaijan, Bahamas, Barbuda, Barbados, Belarus, Belize, Benin, Bhutan, Bosnia and Herzegovina, Botswana, British Virgin
Islands, Brunei Darussalam, Burkina Faso, Burundi, Cameroon, Cape Verde, Cayman Islands, Central African Republic, Chad, Comoros, Congo, Cook Islands, Curacao,
Democratic Republic of Congo, Dominica, Equatorial Guinea, Eritrea, Fiji, French Guiana, French Polynesia, Gabon, Gambia, Georgia, Gibraltar, Greenland, Grenada,
Guam, Guinea, Guinea-Bissau, Guyana, Iceland, Iraq, Kiribati, Kosovo, Kuwait, Kyrgyzstan, Lesotho, Liberia, Libya, Liechtenstein, Luxembourg, Macao, Macedonia,
Madagascar, Maldives, Mali, Malta, Martinique, Mauritania, Mauritius, Monaco, Mongolia, Montenegro, Montserrat, Namibia, New Caledonia, Niue, Norfolk Islands,
Papua New Guinea, Qatar, Saint Kitts and Nevis, Saint Lucia, Saint Maarten, Saint Vincent and the Grenadines, Samoa, San Marino, Senegal, Seychelles, Sierra Leone,
Slovenia, Solomon Islands, Somalia, South Sudan, Sudan, Suriname, Swaziland, Syrian Arab Republic, Tajikistan, Timor Leste, Togo, Tokelau, Tonga, Turkmenistan, Tuvalu,
Uzbekistan, Vanuatu, Western Sahara and Yemen.

The Unilever Group has established branches in Azerbaijan, Bosnia-Herzegovina, Cote d’Ivoire, Cuba, Jordan, Kazakhstan, Lebanon, Northern Ireland, the Philippines,
Turkey and the UK.

Unilever Annual Report and Accounts 2020191

Shareholder information
Financial calendar

Annual general meeting

Date

Voting and Registration date

Quarterly dividends

5 May 2021

3 May 2021

Dates listed below are applicable to all Unilever listings (PLC ordinary shares and PLC ADSs).

Quarterly dividend announced
with the Q4 2020 results

Quarterly dividend announced
with the Q1 2021 results

Quarterly dividend announced
with the Q2 2021 results

Quarterly dividend announced
with the Q3 2021 results

Contact details

Unilever PLC
100 Victoria Embankment
London EC4Y 0DY
United Kingdom
Institutional Investors telephone +44 (0)20 7822 6830
Any queries can also be sent to us electronically via

www.unilever.com/contact/contact-form

Private Shareholders telephone +44 (0)20 7822 5500
Private Shareholders can email us at
shareholder.services@unilever.com

Shareholder Services

Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
Telephone
Website
FAQ and Contact Form

+44 (0)370 600 3977
www.investorcentre.co.uk
computershare.co.uk/contactus

The Netherlands

ABN AMRO Bank N.V.
Gustav Mahlerlaan 10
1082 PP Amsterdam
Telephone

+31 (0)20 344 2000

Announcement date

Ex-dividend date

Record date

Payment date

4 February 2021

25 February 2021

26 February 2021

17 March 2021

29 April 2021

20 May 2021

21 May 2021

10 June 2021

22 July 2021

5 August 2021

6 August 2021

8 September 2021

21 October 2021

4 November 2021

5 November 2021

1 December 2021

Website

Shareholders are encouraged to visit our website which has a wealth of
information about Unilever.

There is a section on our website designed specifically for investors. It
includes detailed coverage of the Unilever share price, our quarterly and
annual results, performance charts, financial news and investor relations
speeches and presentations. It also includes details of the conference
and investor/analyst presentations.

You can also view the Unilever Annual Report and Accounts 2020 (and the
Additional Information for US Listing Purposes) on our website, and those
for prior years.

www.unilever.com

www.unilever.com/investorrelations

www.unilever.com/investor-relations/annual-report-and-accounts/

Publications

Copies of the Unilever Annual Report and Accounts 2020 (and the
Additional Information for US Listing Purposes) and the Annual Report on
Form 20-F 2020 can be accessed directly or ordered via the website.

www.unilever.com/investorrelations

Unilever Annual Report and Accounts 2020

The Unilever Annual Report and Accounts 2020 (and the Additional
Information for US Listing Purposes) forms the basis for the Annual Report
on Form 20-F that is filed with the United States Securities and Exchange
Commission, which is also available free of charge from their website.

corporate.broking@nl.abnamro.com

www.sec.gov

American Stock Transfer & Trust Company
Operations Center
6201 15th Avenue
Brooklyn, NY 11219
Toll-free number
Direct dial
Email

+1 866 249 2593
+1 718 921 8124
db@astfinancial.com

Quarterly results announcements

Unilever’s quarterly results announcements are in English with figures
in euros.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS192

Index

Accounting policies ...................................................................................... 116-118, 171-172
Acquisitions ............................................................................................................................ 162-165
Annual General Meetings ........................................................................................................191
Asia/AMET/RUB ....................................................................................................................120, 122
Associates ............................................................................................... 119-120, 139-140, 166
Audit Committee ....................................................................................................................... 70-71
Auditors ......................................................................................................................70-71, 105-111
Balance sheet ....................................................................................................38, 114, 169, 178
Beauty & Personal Care ..............................................3, 20-21, 35-37, 40, 43, 118-119
Biographies ..................................................................................................................................64-67
Board committees ...................................................................................................................62-55
Board ....................................................................................................................4-7, 61-65, 70-103
Bonds and other loans ..............................................................................................................148
Brands .........................................................................................................................................2, 20-23
Capital expenditure .................................................................................................. 38, 137-138
Cash ..................................................................................................................35, 38, 115, 170, 179
Cash flow statement .............................................................................................115, 170, 179
Cautionary statement /safe harbour ..............................................................................204
Chairman ................................................................................................................................................. 4
Chief Executive Officer ........................................................................................................6-7, 64
Commitments ...............................................................................................................39, 161, 175
Company accounts ............................................................................................................ 168-183
Compensation Committee ............................................................................................. 76-103
Comprehensive income ......................................................................................112, 168, 177
Constant underlying earnings per share .........................................................................41
Contingent liabilities ........................................................................................................161, 175
Corporate governance ...................................................................................................... 61-103
Corporate Responsibility Committee .......................................................................... 72-73
Deferred tax ................................................................................................................132, 172, 180
Depreciation ........................................................................................................38, 115, 137-139
Directors’ remuneration ......................................................................................... 76-103, 123
Directors’ responsibilities .........................................................................................................104
Disposals .................................................................................................................................. 162-165
Diversity ...........................................................................................................................................19, 73
Dividends .................................................................................................................2, 134, 191, 196
Divisions ............................................................................................. 20-23, 35, 36-37, 118-119
Earnings per share .............................................................................................................112, 133
Employees ................................................................................................16-19, 63, 78, 122-130
Equalisation Agreement ..................................................................................................61, 116
Equity ................................................................................................................................113-114, 168
Europe ........................................................................................................................................120, 122
Exchange rates .................................................................................................39, 116, 152, 171
Executive Directors .................................................................................... 62, 64, 76-103, 123
Finance and liquidity .........................................................................................38-39, 143-148
Finance costs and finance income .........................................................................112, 130
Financial assets ..............................................................................................................................157
Financial calendar ........................................................................................................................191
Financial instruments ................................................................................. 149-155, 158-160
Financial liabilities ...........................................................................................42, 147-148, 174
Financial review .........................................................................................................................36-43
Foods & Refreshment ....................................................3, 21-22, 35-37, 40, 43, 118-119
Free cash flow .............................................................................................................35-36, 38, 42
Geographies .....................................................................................................................................120
Goodwill ..........................................................................................................................134-136, 164
Gross profit .........................................................................................................................................121

Group companies ............................................................................................................... 184-190
Home Care ..................................................................................3, 23, 35-37, 40, 43, 118-119
Impairment ........................................................................................................134-135, 156, 173
Income statement ..............................................................................................................112, 168
Innovation ............................................................................................................................... 8, 10, 12
Intangible assets ................................................................................134-136, 156, 164, 173
International Financial Reporting Standards ......................................104, 116, 171
Inventories ..........................................................................................................................................140
Joint ventures ...................................................................................................119-120, 140, 166
Key management ............................................................................................................... 122-123
Key Performance Indicators ..............................................................................................34-35
Leases ..............................................................................................................................137-139, 161
Net debt ..................................................................................................................................................42
Nominating and Corporate Governance Committee ...................................... 74-75
Non-Executive Directors ..........................................................................64-65, 76-103, 123
Non-GAAP measures ..............................................................................................................39-43
Non-underlying items ............................................................................................. 40, 121-122
Operating costs ................................................................................................................... 121-122
Operating profit .....................................................................................36, 112, 119-120, 168
Organisational Structure ............................................................................................................61
Payables ..............................................................................................................................................142
Pensions and similar obligations ............................................................................ 123-129
Property, plant and equipment .................................................................................137-139
Provisions ............................................................................................................................................160
Receivables ........................................................................................................................................141
Related party transactions ..........................................................................................166, 196
Research and development ...................................................................................................121
Reserves ...............................................................................................................113, 143-146, 168
Restructuring .......................................................................................................36, 121-122, 160
Return on assets ....................................................................................................................... 36, 43
Return on invested capital .........................................................................................................42
Revenue ...............................................................................................................................................118
Risk management and control ........................................................................44-50, 70-71
Risks ...................................................................................................................................................44-50
Segment information ...................................................................................................... 118-120
Share-based payments .................................................................................................. 129-130
Share capital ......................................................................................................68, 113, 144, 168
Shareholders .........................................................................................................32, 68, 191, 196
Significant subsidiaries .............................................................................................................167
Staff costs ................................................................................................................................ 122-123
Strategy ..............................................................................................................................................8-11
Taxation .................................................................................................................................... 131-133
The Americas ........................................................................................................................120, 122
Total shareholder return ...........................................................................................................102
Treasury ............................................................................................................................. 50, 143-155
Turnover .......................................................................................................36, 112, 119-120, 168
Underlying earnings per share .....................................................................................41, 133
Underlying effective tax rate .........................................................................................41, 131
Underlying operating margin ......................................................................................... 36, 41
Underlying operating profit ........................................................................ 36, 41, 118-120
Underlying sales growth ..............................................................................................36, 39-40
Underlying volume growth ............................................................................................... 36, 40
Unification ..........................................................................................................4, 61-62, 116, 171
Unilever Leadership Executive .........................................................................................66-67
Voting ...............................................................................................................................................68-69
Website .................................................................................................................................................191

Unilever Annual Report and Accounts 2020Additional information for
US listing purposes

193

Form 20-F references

Item 1

Identity of Directors, Senior Management and Advisers ................................................................................................................................................................................................... n/a

Item 2 Offer Statistics and Expected Timetable ...................................................................................................................................................................................................................................... n/a

Item 3

Key Information

A.
B.
C.
D.

Selected Financial Data ................................................................................................................................................................................................................ 144, 196, 202 – 203
Capitalisation and Indebtedness .............................................................................................................................................................................................................................. n/a
Reasons for the offer and use of proceeds .......................................................................................................................................................................................................... n/a
Risk factors .........................................................................................................................................................................................................................................................................44 – 50

Item 4

Information on the Company

A.
B.
C.
D.

History and development of the company ..................................................................................................36 – 43, 61, 68 - 69, 115, 137 – 139, 162 – 165, 191
Business overview ........................................................................................................................................................................................................36 – 43, 50, 61, 118 – 120, 197
Organisational structure ......................................................................................................................................................................................................................................... 61, 167
Property, plant and equipment .......................................................................................................................................................................................................... 137 – 139, 198

Item 4A Unresolved Staff Comments ................................................................................................................................................................................................................................................................. n/a

Item 5 Operating and Financial Review and Prospects

A.
B.
C.
D.
E.
F.
G.

Operating results ...................................................................................................................................................................................................................6 – 8, 35, 43 – 44, 50, 152
Liquidity and capital resources ...........................................................................................................................................38 – 39, 104, 115, 137 – 139, 143, 147 – 161
Research and development, patents and licences, etc. ...................................................................................................................................12 – 13, 121 – 122, 197
Trend information .......................................................................................................................................................................................................................... 6 – 7, 36 – 43, 46 – 50
Off-balance sheet arrangements ........................................................................................................................................................................................149 – 155, 158 – 161
Tabular disclosure of contractual obligations .....................................................................................................................................................................................................39
Safe harbour ............................................................................................................................................................................................................................................ inside back cover

Item 6

Directors, Senior Management and Employees

A.
B.
C.
D.
E.

Directors and senior management ........................................................................................................................................................................................................64 – 77, 195
Compensation ......................................................................................................................................................................................................................................76 – 103, 122 – 130
Board practices ...............................................................................................................................................................................................61 – 63, 70 – 71, 74, 76, 97 – 98, 195
Employees .........................................................................................................................................................................................................................................................122 – 123, 195
Share ownership ......................................................................................................................................................................................................................88 – 103, 129 – 130, 195

Item 7 Major Shareholders and Related Party Transactions

A.
B.
C.

Major shareholders ..................................................................................................................................................................................................................................................... 68, 196
Related party transactions .................................................................................................................................................................................................................................. 166, 196
Interest of experts and counsel ................................................................................................................................................................................................................................... n/a

Item 8

Financial Information

A.
B.

Consolidated statements and other financial information ...................................................................................... 39, 104 – 105, 112 – 167, 191, 196, 203
Significant changes ............................................................................................................................................................................................................................................................. 166

Item 9

The Offer and Listing

A.
B.
C.
D.
E.
F.

Offer and listing details .......................................................................................................................................................................................................................................................68
Plan of distribution .............................................................................................................................................................................................................................................................. n/a
Markets ...........................................................................................................................................................................................................................................................................................68
Selling shareholders ........................................................................................................................................................................................................................................................... n/a
Dilution ........................................................................................................................................................................................................................................................................................ n/a
Expenses of the issue ......................................................................................................................................................................................................................................................... n/a

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS

194

Additional information for US listing purposes continued

Item 10 Additional Information

A.
B.
C.
D.
E.
F.
G.
H.
I.

Share capital ............................................................................................................................................................................................................................................................................ n/a
Articles of association .................................................................................................................................................................................................................................61 – 69, 74, 95
Material contracts ........................................................................................................................................................................................................................................................ 61, 197
Exchange controls ................................................................................................................................................................................................................................................................ 197
Taxation ..........................................................................................................................................................................................................................................................................198 – 199
Dividends and paying agents ...................................................................................................................................................................................................................................... n/a
Statement by experts ......................................................................................................................................................................................................................................................... n/a
Documents on display ............................................................................................................................................................................................................................................191, 197
Subsidiary information ..................................................................................................................................................................................................................................................... n/a

Item 11 Quantitative and Qualitative Disclosures About Market Risk ...................................................................................................123 – 129, 141 – 143, 149 – 156, 158 – 160

Item 12 Description of Securities Other than Equity Securities

A.
B.
C.
D.1
D.2
D.3
D.4

Description of debt securities ....................................................................................................................................................................................................................................... n/a
Description of warrants and rights ........................................................................................................................................................................................................................... n/a
Description of other securities ..................................................................................................................................................................................................................................... n/a
Name of depositary and address of principal executive ........................................................................................................................................................................... n/a
Title of ADRS and brief description of provisions ............................................................................................................................................................................................. n/a
Depositary fees and charges ...........................................................................................................................................................................................................................199 – 200
Depositary payments ...........................................................................................................................................................................................................................................199 – 200

Item 13 Defaults, Dividend Arrearages and Delinquencies

A.
B.

Defaults ....................................................................................................................................................................................................................................................................................... 200
Dividend arrearages and delinquencies .............................................................................................................................................................................................................. 200

Item 14 Material Modifications to the Rights of Security Holders and Use of Proceeds .................................................................................................................................................. n/a

Item 15 Controls and Procedures ................................................................................................................................................................................................................................... 44, 69 – 71, 105, 201

Item 16 Reserved

A.
B.
C.
D.
E.
F.
G.
H.

Audit Committee Financial Expert ...............................................................................................................................................................................................................................70
Code of Ethics ...................................................................................................................................................................................................................................18, 44, 50, 69, 71 – 72
Principal Accountant Fees and Services ..............................................................................................................................................................................................70 – 71, 201
Exemptions From The Listing Standards For Audit Committees ........................................................................................................................................................... n/a
Purchases Of Equity Securities By The Issuer and Affiliated Purchasers .................................................................................................................................. 68, 201
Change in Registrant’s Certifying Accountant .................................................................................................................................................................................................. n/a
Corporate Governance ........................................................................................................................................................................................................................................................69
Mine Safety Disclosures .................................................................................................................................................................................................................................................... n/a

Item 17 Financial Statements ............................................................................................................................................................................................................................................104 – 105, 112 – 167

Item 18 Financial Statements ............................................................................................................................................................................................................................................104 – 105, 112 – 167

Item 19 Exhibits Please refer to the Exhibit list located immediately following the signature page for this document as filed with the SEC.

Unilever Annual Report and Accounts 2020

195

Directors, senior management and employees

Employees

The average number of employees for the last three years is provided in note 4A on page 122. The average number of employees during 2020
included 8,704 seasonal workers. We believe our relationship with our employees and any labour unions of which they may be part is satisfactory
in all material respects.

Global employee share plans (shares)

In November 2014, Unilever’s global employee plan ‘SHARES’ was launched in 17 countries. SHARES gives eligible Unilever employees below
management level the opportunity to invest between €10 and €200 per month from their net salary in Unilever shares. For every three shares our
employees buy (Investment Shares), Unilever will give them one free Matching Share, which will vest if employees hold their Investment Shares for at
least three years. The Matching Shares are not subject to any performance conditions. In 2015, SHARES was rolled out globally and is now offered in
more than 100 countries. Executive Directors are not eligible to participate in SHARES. As of 23 February 2021 (the latest practicable date for inclusion
in this report), awards for 427,810 PLC shares were outstanding under SHARES.

North American share plans

Unilever also maintains share plans for its North American employees that are governed by an umbrella plan referred to as the Unilever North
America Omnibus Equity Compensation Plan. These plans are the North American equivalents of the Unilever Share Plan 2017 and SHARES plans, as
amended from time to time. The rules governing these share plans are materially the same as the rules governing the Unilever Share Plan 2017 and
SHARES plans, respectively. However, the plans contain non-competition and non-solicitation covenants and they are subject to US and Canadian
employment and tax laws. The plans are administered by the North America Compensation Committee of Unilever United States, Inc. and they are
governed by New York law.

The foregoing description of the Unilever North America Omnibus Equity Compensation Plan does not purport to be complete and is qualified in its
entirety by reference to the Unilever North America Omnibus Equity Compensation Plan, including all amendments thereto, filed as Exhibit 99.1 to the
Form S-8 (File No. 333-185299) filed with the SEC on 6 December 2012, which is incorporated herein by reference.

Compensation committee

The Committee is concerned with the remuneration of the Executive and Non-Executive Directors and the tier of management directly below the
Boards. The Committee also has responsibility for the cash and executive and all-employee share-based incentive plans, the Remuneration Policy and
performance evaluation of the Unilever Leadership Executive and the periodic review of the remuneration and related policies of the wider workforce
to assess alignment to PLC’s purpose, value and strategy.

Directors and senior management

Family relationship

There are no family relationships between any of our Executive Directors, members of the ULE or Non-Executive Directors.

Other arrangements

None of our Non-Executive Directors, Executive Directors or other key management personnel are elected or appointed under any arrangement
or understanding with any major shareholder, customer, supplier or others.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS196

Additional information for US listing purposes continued

Major shareholders and related party transactions

Major shareholders

The voting rights of the significant shareholders of PLC are the same as for other holders of the class of share held by such significant shareholder.

The principal trading market upon which PLC ordinary shares are listed is the London Stock Exchange. PLC ordinary shares are also listed and traded
on Euronext Amsterdam.

In the United States, PLC American Depositary Receipts are traded on the New York Stock Exchange. Deutsche Bank Trust Company Americas
(Deutsche Bank) acts for PLC as depositary.

At 23 February 2021 (the latest practicable date for inclusion in this report), there were 2,153 registered holders of PLC American Depositary Receipts
in the United States. We estimate that approximately 11% of PLC’s ordinary shares (including shares underlying PLC American Depositary Receipts)
were held in the United States (approximately 11% in 2019).

If you are a shareholder of PLC, your interest is in a UK legal entity, your dividends will be paid in pound sterling (converted into US dollars if you have
American Depositary Receipts) and you may be subject to UK tax.

To Unilever’s knowledge, PLC is not owned or controlled, directly or indirectly, by another corporation, any foreign government or by any other legal
or natural person, severally or jointly. PLC is not aware of any arrangements the operation of which may at any subsequent date result in a change of
control of PLC.

Related party transactions

Transactions with related parties are conducted in accordance with agreed transfer pricing policies and include sales to joint ventures and associates.
Other than those disclosed in note 23 to the consolidated financial statements (and incorporated herein as above), there were no related party
transactions that were material to the Group or to the related parties concerned that are required to be reported in 2020 up to 23 February 2021 (the
latest practicable date for inclusion in this report).

Dividend record

The following tables show the dividends declared and dividends paid by PLC for the last five years, expressed in terms of the revised share
denominations which became effective from 22 May 2006.

Dividends declared for the year

PLC dividends

Dividend per 31/9p

Dividend per 31/9p (US Registry)

Dividends paid during the year

PLC dividends

Dividend per 31/9p

Dividend per 31/9p (US Registry)

2020

2019

2018

2017

2016

£1.48

$1.91

£1.45

$1.85

£1.43

$1.83

£1.42

$1.82

£1.35

$1.82

£1.33

$1.83

£1.26

$1.66

£1.22

$1.56

£1.09

$1.42

£1.04

$1.40

Unilever Annual Report and Accounts 2020197

Material contracts

Raw materials

At the date of this Annual Report and Accounts, Unilever is not party to
any contracts that are considered material to its results or operations.

Exchange controls

Other than certain economic sanctions which may be in place from time
to time, there are currently no UK laws, decrees or regulations restricting
the import or export of capital or affecting the remittance of dividends
or other payments to holders of the PLC’s shares who are non-residents
of the UK. Similarly, other than certain economic sanctions which may
be in force from time to time, there are no limitations relating only
to non-residents of the UK under English law or the PLC’s Articles of
Association on the right to be a holder of, and to vote in respect of,
the company’s shares.

Unilever Annual Report on Form 20-F 2020

Our products use a wide variety of raw and packaging materials which
we source internationally and which may be subject to price volatility
either directly or as a result of movements in foreign exchange rates.

In 2020, we witnessed significant Covid-19 induced volatility both in the
commodity prices and foreign exchange rates. A sharp fall in demand
during the early days of the pandemic saw many commodities hit their
historic lows. However, pick-up in economic activity and production
shortfalls in certain agricultural commodities fuelled significant inflation
in few materials towards the end of the year. Palm oil, vegetable oils
and Indian origin tea was most impacted. Crude linked raw and packing
materials remained subdued. Prices were also negatively impacted
following foreign exchange rates deterioration across many emerging
markets, with significant impact from Brazil, Mexico, Argentina, India,
South Africa, and Turkey.

Looking ahead to 2021, we expect continued volatility in commodity and
foreign exchange markets. We remain watchful of any further spread of
the virus and the success of vaccination programmes across the world.

Filed with the SEC on the SEC’s website. Printed copies are available, free
of charge, upon request to Unilever PLC, Investor Relations department,
100 Victoria Embankment, London, EC4Y 0DY United Kingdom.

Seasonality

Documents on display in the United States

Unilever files and furnishes reports and information with the United
States SEC. Certain of our reports and other information that we file
or furnish to the SEC are also available to the public over the internet
on the SEC’s website.

Other information on the Company

Innovation, Research and Development

Innovation is at the heart of Unilever’s ambition to grow sustainably.
Science, technology and product development are central to our plans
to keep providing consumers with great brands that improve their lives
while having a positive impact on the environment and society.

All our innovations are based on key insights into what consumers
want and need. We aim to develop products that have purpose, so that
consumers choose them again and again. We work on a wide portfolio
of projects, combining the search for breakthrough technologies with the
constant drive to respond to competitors, move into new markets, and
make our products more sustainable. The products we develop through
innovation, whether by ourselves or through our extensive partnerships
with leading scientists, academic institutions, suppliers and specialist
businesses, play an essential role in our ambition to make a positive
impact on the world around us. Science and Technology will be key in
improving health, wellbeing, nutrition and reducing environmental
impact, and we want to be at the forefront of this work.

Our six main R&D centres are in the US, UK, the Netherlands, India and
China. Our research aims to bring together the best thinking and ideas
from wherever they exist – not only do we pull together the best scientific
expertise from within Unilever, but we also work closely with universities
and specialist companies.

Global Design teams take our breakthroughs in Science and Technology
one step further, turning unique insights into the products that
consumers want and need. Development and testing of new technology
takes place until it fits the product description.

Our Cluster and Category Design teams draw on local knowledge – such
as consumer preference, the regulatory framework, legal considerations
and competitor products – as they ready a product for launch into a new
market. They work closely with colleagues in marketing and supply chain
to make sure the new product can be manufactured efficiently.

More than 5,000 Unilever R&D professionals are building our brands
through innovation. We invest around €1 billion in R&D each year,
and we hold a portfolio of more than 20,000 patents and patent
applications.

Certain of our businesses, such as ice cream, are subject to significant
seasonal fluctuations in sales. However, Unilever operates globally
in many different markets and product categories, and no individual
element of seasonality is likely to be material to the results of the Group
as a whole.

Intellectual property

We have a large portfolio of patents and trademarks, and we conduct
some of our operations under licences that are based on patents or
trademarks owned or controlled by others. We are not dependent on any
one patent or group of patents. We use all appropriate efforts to protect
our brands and technology.

Competition

As a fast-moving consumer goods (FMCG) company, we are competing
with a diverse set of competitors. Some of these operate on an
international scale like ourselves, while others have a more regional
or local focus. Our business model centres on building brands which
consumers know, trust, like and buy in conscious preference to those of
our competitors. Our brands command loyalty and affinity and deliver
superior performance.

Information on market share

Unless otherwise stated, market share refers to value share as
opposed to volume share. The market data and competitive position
classifications are taken from independent industry sources in the
markets in which Unilever operates.

Iran-related required disclosure

Unilever operates in Iran through a non-US subsidiary. In 2020, sales in
Iran were significantly less than one per cent of Unilever’s worldwide
turnover. During the year, this non-US subsidiary had approximately
€10,735,176 in gross revenues and less than €5,131,414 in net profits
attributable to the sale of food, personal care and home care products
to entities affiliated with the Government of Iran. These entities were the
Hotel Homa Group, which is owned by the Social Security Organisation
of Iran; Kowsar, which is affiliated with the Bank of Industry and Mine
of Iran; Refah, which is a chain of 200 state-owned department stores,
and ETKA, which is a trading organisation with over 400 chain stores
affiliated with the Iranian Ministry of Defence for Armed Forces Logistics.
Our non-US subsidiary has chosen to discontinue selling consumer
products to Kowsar, Refah and ETKA. Income, payroll and other taxes,
duties and fees (including for utilities) were payable to the Government
of Iran and affiliated entities in connection with our operations. Our
non-US subsidiary maintains bank accounts in Iran with various banks to
facilitate our business in the country and make any required payments
to the Government of Iran and affiliated entities. While we currently
continue our activities in Iran, we are continuously evaluating such
activities in light of the evolving regulatory environment.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS198

Additional information for US listing purposes continued

Property, plant and equipment

The Group has interests in properties in most of the countries where
there are Unilever operations. None of these interests are individually
material in the context of the Group as a whole. The properties are used
predominantly to house production and distribution activities and as
offices. There is a mixture of leased and owned property throughout
the Group. We are not aware of any environmental issues affecting the
properties which would have a material impact upon the Group, and
there are no material encumbrances on our properties. Any difference
between the market value of properties held by the Group and the
amount at which they are included in the balance sheet is not significant.
We believe our existing facilities are satisfactory for our current business
and we currently have no plans to construct new facilities or expand or
improve our current facilities in a manner that is material to the Group.

Taxation
The comments below in relation to United Kingdom and United States
taxation are based on current United Kingdom and United States federal
income tax law as applied in England and Wales and the United States
respectively, and HM Revenue & Customs (“HMRC”) and Internal Revenue
Service (“IRS”) practice (which may not be binding on HMRC or the IRS)
respectively, in each case as at the latest practicable date before the
date of this document.

Taxation for US persons holding shares or American
Depositary Shares in PLC

The following notes are provided for guidance. US persons should consult
their local tax advisers, particularly in connection with potential liability
to pay US taxes on disposal, lifetime gift or bequest of their shares or
American Depositary Shares (“ADS”s). A US person is a US individual
citizen or resident, a corporation organised under the laws of the United
States, any state or the District of Columbia, or any other legal person
subject to US Federal Income Tax on its worldwide income.

United Kingdom taxation on dividends

Under United Kingdom law, income tax is not withheld from dividends
paid by most United Kingdom companies, including PLC. Shareholders
of PLC, whether resident in the United Kingdom or not, receive the full
amount of the dividend actually declared.

A non-UK resident shareholder or ADS holder holding their shares or
ADSs otherwise than in connection with any trade, profession or vocation
carried on through a branch, agency or permanent establishment in
the UK will not generally be subject to UK tax in respect of dividends
paid by PLC.

United States taxation on dividends

If you are a US person, the distribution up to the amount of PLC’s
earnings and profits for US Federal Income Tax purposes will be ordinary
dividend income. In addition, an additional tax of 3.8% will apply to
dividends and other investment income received by individuals with
incomes exceeding certain thresholds.

Any portion of the distribution that exceeds PLC’s earnings and profits
is subject to different rules. This portion is a tax-free return of capital to
the extent of your basis in PLC’s shares or ADSs, and thereafter is treated
as a gain on a disposition of the shares or ADSs. PLC does not maintain
calculations of its earnings and profits in accordance with US Federal
Income Tax accounting principles. You should therefore assume that any
distribution by PLC with respect to the shares will be reported as ordinary
dividend income. You should consult your own tax advisers with respect
to the appropriate US Federal Income Tax treatment of any distribution
received from us.

Dividends received by an individual will be taxed at a maximum rate of
15% or 20%, depending on the income level of the individual, provided
the individual has held the shares or ADSs for more than 60 days during
the 121-day period beginning 60 days before the ex-dividend date, that
PLC is a qualified foreign corporation and certain other conditions are
satisfied. PLC is a qualified foreign corporation for this purpose. The
dividend is not eligible for the dividends received deduction allowable
to corporations. The dividend is foreign source income for US foreign tax
credit purposes.

For US Federal Income Tax purposes, the amount of any dividend paid
in a non-US currency will be included in income in a US dollar amount
calculated by reference to the exchange rate in effect on the date the
dividends are received by you or the depositary (in the case of ADSs),
regardless of whether they are converted into US dollars at that time.
If the non-US currency is converted into US dollars on the day they are
received, you generally will not be required to recognise foreign currency
gain or loss in respect of this dividend income.

UK taxation on capital gains

Under United Kingdom law, when you dispose of shares or ADSs you may
be liable to pay United Kingdom tax in respect of any gain accruing on
the disposal.

However, if you are either:
■ an individual who is not resident in the United Kingdom for the year

in question; or

■ a company which is not resident in the United Kingdom when the

gain accrues

you will generally not be liable to United Kingdom tax on any gains made
on disposal of your shares or ADSs.

There are exceptions to this general rule, two of which are: if the shares or
ADSs are held in connection with a trade or business which is conducted
in the United Kingdom through a branch, agency or permanent
establishment; or if the shares or ADSs are held by an individual who
becomes resident in the UK having left the UK for a period of non-
residence of five years or less and who was resident for at least four of the
seven tax years prior to leaving the UK. In such cases, you may be liable
to United Kingdom tax in respect of the disposal of shares or ADSs.

United States taxation on capital gains

A US person generally will recognise capital gain or loss for US Federal
Income Tax purposes equal to the difference, if any, between the amount
realised on the sale and the US person’s adjusted tax basis in the shares
or ADSs, in each case as determined in US dollars. US persons should
consult their own tax advisers about how to determine the US dollar
value of any foreign currency received as proceeds on the sale of shares
or ADSs and the treatment of any foreign currency gain or loss upon
conversion of the foreign currency into US dollars. The capital gain
or loss recognised on the sale will be long-term capital gain or loss if
the US person’s holding period in the shares or ADSs exceeds one year.
Non-corporate US persons are subject to tax on long-term capital gain at
reduced rates. The deductibility of capital losses is subject to limitations.

UK inheritance tax

Under the current estate and gift tax convention between the United
States and the United Kingdom, shares or ADSs (regardless of whether
they are situated in the United Kingdom for inheritance tax purposes)
held by an individual shareholder who is:
■ domiciled for the purposes of the convention in the United States;

and

■ not for the purposes of the convention a national of the United

Kingdom

will generally not be subject to United Kingdom inheritance tax:
■ on the individual’s death; or
■ on a gift of the shares during the individual’s lifetime.

Where shares or ADSs are held on trust, they will generally not be
subject to United Kingdom inheritance tax where the settlor at the time
of the settlement:
■ was domiciled for the purposes of the convention in the United

States; and

■ was not for the purposes of the convention a national of the United

Kingdom.

An exception is if the shares or ADSs are part of the business property of a
permanent establishment of the shareholder in the United Kingdom or, in
the case of a shareholder who performs independent personal services,
pertain to a fixed base situated in the United Kingdom.

Where shares or ADSs are subject to United Kingdom inheritance tax and
United States federal gift or federal estate tax, the amount of the tax
paid in one jurisdiction can generally be credited against the tax due in
the other jurisdiction.

Unilever Annual Report and Accounts 2020199

Where a United Kingdom inheritance tax liability is prima facie not
payable by virtue of the convention, that tax can become payable if any
applicable federal gift or federal estate tax on the shares or ADSs in the
United States is not paid.

Where shares are dealt with through a clearing system or in the form of
ADSs, the situs of the shares may not be determinative of the situs of the
interests held by holders through such system or of such ADSs for United
Kingdom inheritance tax purposes. Where shares are dealt with through
Euroclear Nederland there are arguments that the interests of participants
in Euroclear Nederland will be situated outside the United Kingdom for
the purposes of United Kingdom inheritance tax so long as Euroclear
Nederland maintains the book-entry register of such participants’ interests
outside the United Kingdom, although HMRC may not accept this analysis.
Similarly, there are arguments that ADSs registered on a register outside
the United Kingdom will be situated outside the United Kingdom for the
purposes of United Kingdom inheritance tax, although again HMRC may
not accept this analysis. Shareholders to whom this may be relevant
should consult an appropriate professional adviser.

If the ADSs or the shares dealt with through Euroclear Nederland or
both are not situated in the United Kingdom, a gift of such ADSs or
such shares by, or the death of, an individual holder of such assets who
is neither domiciled nor deemed to be domiciled (under certain rules
relating to long residence or previous domicile) in the United Kingdom
will not generally give rise to a liability to United Kingdom inheritance
tax regardless of whether the estate and gift tax convention between
the United States and the United Kingdom applies. Special rules may
also apply to such ADSs or such shares dealt with through Euroclear
Nederland which are held on trust.

UK stamp duty and stamp duty reserve tax

The statements in this section are intended as a general guide to the current
United Kingdom stamp duty and stamp duty reserve tax (“SDRT”) position.
Special rules apply to certain transactions such as transfers of the shares to
a company connected with the transferor and those rules are not described
below. Investors should also note that certain categories of person are not
liable to stamp duty or SDRT and others may be liable at a higher rate or
may, although not primarily liable for tax, be required to notify and account
for SDRT under the Stamp Duty Reserve Tax Regulations 1986.

Issue of shares

Subject to the points noted below in respect of shares issued to
clearance services (such as Euroclear Nederland) or which are issued
into a depositary receipt system where the shares are to be held in ADS
form, no stamp duty or SDRT will arise on the issue of shares in registered
form by PLC.

Transfer of shares

Except in relation to clearance services and depositary receipt systems
(to which special rules outlined below apply) stamp duty at the rate of 0.5
per cent. (rounded up to the next multiple of £5) of the amount or value
of the consideration given will generally be payable on an instrument
transferring PLC shares. A charge to SDRT will also generally arise on an
unconditional agreement to transfer PLC shares (at the rate of 0.5 per
cent. of the amount or value of the consideration payable). However, if
within six years of the date of the agreement becoming unconditional
an instrument of transfer is executed pursuant to the agreement, and
stamp duty is paid on that instrument, any SDRT already paid will be
refunded (generally, but not necessarily, with interest) provided that a
claim for repayment is made, and any outstanding liability to SDRT will
be cancelled. The liability to pay stamp duty or SDRT is generally satisfied
by the purchaser or transferee.

Shares held through clearance services including
Euroclear Nederland

Special rules apply where shares are issued or transferred to, or to a
nominee or agent for, a person providing a clearance service. In such
circumstances, SDRT or stamp duty may be charged at a rate of 1.5 per
cent., with subsequent transfers within the clearance service then being
free from SDRT and stamp duty (except in relation to clearance service
providers that have made an election under section 97A(1) of the Finance
Act 1986 which has been approved by HM Revenue & Customs, to which
the special rules apply).

In light of EU case law, HMRC accepted that the 1.5 per cent. charge is
in breach of EU law so far as it applies to issues of shares or to transfers
of shares that are an integral part of a share issue. This EU case law will
continue to be recognised and followed pursuant to the provisions of the
European Union (Withdrawal) Act 2018 (the “EUWA”).

HMRC’s published view is that the 1.5 per cent. SDRT or stamp duty charge
continues to apply to other transfers of shares into a clearance service,
although this has been disputed. In view of the continuing uncertainty,
specific professional advice should be sought before incurring a 1.5 per
cent. stamp duty or SDRT charge in any circumstances. Any liability for
stamp duty or SDRT in respect of a transfer of shares into a clearance
service, or in respect of a transfer of shares within such a service, which
does arise will strictly be accountable by the clearance service or its
nominee but may, in practice, be payable by the relevant participant in
the clearance service.

Shares held in ADS form

On the basis of EU case law referred to above and the EUWA, there
should be no stamp duty or SDRT on an issuance of shares into a
depositary receipt system where such transfer is an integral part of the
raising of capital by the company concerned. A transfer of shares into a
depositary receipt system may be subject to SDRT or stamp duty may be
charged at a rate of 1.5 per cent., with subsequent transfers of depositary
receipts then being free from SDRT.

Any liability for stamp duty or SDRT in respect of a transfer of shares into
a depositary receipt system which does arise will strictly be accountable
by the depositary receipt system operator or its nominee but may, in
practice, be payable by the relevant holder of the depositary receipts.

An issue of ADSs by Deutsche Bank Trust Company Americas as
depositary in respect of the ADSs will not be subject to stamp duty or
SDRT. An agreement for the transfer of ADSs will not be subject to SDRT
but a charge to stamp duty will technically arise on the transfer of ADSs
if it is executed in the UK or relates to any property situated, or to any
matter or thing done or to be done, in the UK. However, the only sanction
for failing to pay such stamp duty is that the instrument of transfer
cannot be produced as evidence in a UK court. Therefore, no UK stamp
duty should in practice be payable on the acquisition or transfer of
existing ADSs or transfer of beneficial ownership of ADSs.

Backup withholding and information reporting

Payments of dividends and other proceeds with respect to ordinary
shares or ADSs by US persons will be reported to you and to the IRS as
may be required under applicable regulations. Backup withholding
may apply to these payments if you fail to provide an accurate taxpayer
identification number or certification of exempt status or fail to comply
with applicable certification requirements. Some holders are not subject
to backup withholding. You should consult your tax adviser as to your
qualification for an exemption from backup withholding and the
procedure for obtaining an exemption.

Disclosure requirements for US individual holders

US individuals that hold certain specified non-US financial assets,
including stock in a non-US corporation, with values in excess of certain
thresholds are required to file Form 8938 with their US Federal Income
Tax return. Such Form requires disclosure of information concerning
such non-US assets, including the value of the assets. Failure to file the
Form when required is subject to penalties. An exemption from reporting
applies to non-US assets held through a US financial institution generally
including a non-US branch or subsidiary of a US institution and a US
branch of a non-US institution. Investors are encouraged to consult
with their own tax advisers regarding the possible application of this
disclosure requirement to their investment in the shares or ADSs.

Description of securities other than equity securities

Deutsche Bank serves as the depositary (Depositary) for PLC’s American
Depositary Receipt Programme.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS200

Additional information for US listing purposes continued

Depositary fees and charges for PLC

Depositary payments – fiscal year 2020

Under the terms of the Deposit Agreement for the PLC American
Depositary Shares (ADSs), an ADS holder may have to pay the following
service fees to the depositary bank:
■ Issuance of ADSs: up to US 5¢ per ADS issued.
■ Cancellation of ADSs: up to US 5¢ per ADS cancelled.
■ Processing of dividend and other cash distributions not made

pursuant to a cancellation or withdrawal: up to US 5¢ per ADS held.

An ADS holder will also be responsible for paying certain fees and
expenses incurred by the depositary bank and certain taxes and
governmental charges such as:
■ fees for the transfer and registration of shares charged by the

registrar and transfer agent for the shares in the United Kingdom
(ie upon deposit and withdrawal of shares);

■ expenses incurred for converting foreign currency into US dollars;
■ expenses for cable, telex and fax transmissions and for delivery

of securities;

■ taxes and duties upon the transfer of securities (ie when shares

are deposited or withdrawn from deposit);

■ fees and expenses incurred in connection with the delivery or

servicing of shares on deposit; and

■ fees incurred in connection with the distribution of dividends.

Depositary fees payable upon the issuance and cancellation of ADSs
are typically paid to the depositary bank by the brokers (on behalf of
their clients) receiving the newly-issued ADSs from the depositary bank
and by the brokers (on behalf of their clients) delivering the ADSs to
the depositary bank for cancellation. The brokers in turn charge these
transaction fees to their clients.

Note that the fees and charges an investor may be required to pay may
vary over time and may be changed by us and by the depositary bank.
Notice of any changes will be given to investors.

Deutsche Bank has been the depositary bank for its American Depositary
Receipt Programme since 1 July 2014. Under the terms of the Deposit
Agreement, PLC is entitled to certain reimbursements, including processing
of cash distributions, reimbursement of listing fees (NYSE), reimbursement
of settlement infrastructure fees (including DTC feeds), reimbursement of
proxy process expenses (printing, postage and distribution), dividend fees
and program-related expenses (that include expenses incurred from the
requirements of the Sarbanes-Oxley Act of 2002). In relation to 2020, PLC
did not receive payments from Deutsche Bank.

Defaults, dividend arrearages and delinquencies

Defaults Programme

There has been no material default in the payment of principal, interest,
a sinking or purchase fund instalment or any other material default
relating to indebtedness of the Group.

Dividend arrearages and delinquencies

There have been no arrears in payment of dividends on, and material
delinquency with respect to, any class of preferred stock of any significant
subsidiary of the Group.

Unilever Annual Report and Accounts 2020201

Additional information for US listing purposes continued

Purchases of equity securities

Share purchases during 2020

Please also refer to ‘Our shares’ section on page 68.

No PLC ordinary shares or ADSs were purchased by or on behalf of PLC or any “affiliated purchaser”, as defined in Section 10b-18(a)(3) of the US
Securities Exchange Act of 1934, during the period covered by this annual report on Form 20-F.

Between 31 December 2020 and 23 February 2021 (the latest practicable date for inclusion in this report) PLC did not conduct any share repurchases.

Management’s report on internal control over financial reporting

In accordance with the requirements of Section 404 of the US Sarbanes-Oxley Act of 2002, the following report is provided by management in
respect of the Group’s internal control over financial reporting (as defined in rule 13a–15(f) or rule 15d–15(f) under the US Securities Exchange Act
of 1934):
■ Unilever’s management is responsible for establishing and maintaining adequate internal control over financial reporting for the Group;
■ Unilever’s management has used the Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework (2013) to evaluate
the effectiveness of our internal control over financial reporting. Management believes that the COSO framework (2013) is a suitable framework for
its evaluation of our internal control over financial reporting because it is free from bias, permits reasonably consistent qualitative and quantitative
measurements of internal controls, is sufficiently complete so that those relevant factors that would alter a conclusion about the effectiveness of
internal controls are not omitted and is relevant to an evaluation of internal control over financial reporting;

■ Management has assessed the effectiveness of internal control over financial reporting as of 31 December 2020, and has concluded that

such internal control over financial reporting is effective. Management’s assessment and conclusion excludes the Main Horlicks Acquisition,
Horlicks Bangladesh, Liquid IV and SmartyPants from this assessment, as they were acquired on 1 April 2020, 30 June 2020, 1 October 2020,
and 23 December 2020 respectively. These entities are included in our 2020 consolidated financial statements, and together they constituted
approximately 11% of our total assets as at 31 December 2020 (of which 10% represented goodwill and intangible assets acquired) and
approximately 1% of total turnover for the year ended 31 December 2020; and

■ KPMG LLP, who have audited the consolidated financial statements of the Group for the year ended 31 December 2020, have also audited the
effectiveness of internal control over financial reporting as at 31 December 2020 and have issued an attestation report on internal control over
financial reporting.

Principal accountant fees and services

Audit fees(a)

Audit-related fees(b)

Tax fees

All other fees

€ million
2020

€ million
2019

€ million
2018

7(d)

–(c)

–(d)

–(c)

5(d)

–(c)

(a) Amount payable to KPMG in respect of services supplied to associated pension schemes was less than €1 million individually and in aggregate (2019: less than

€1 million individually and in aggregate; 2018: less than €1 million individually and in aggregate).

(b) Includes other audit services which comprise audit and similar work that regulations or agreements with third parties require the auditors to undertake.
(c) Amounts paid in relation to each type of service are individually less than €1 million. In aggregate the fees paid were less than €1 million (2019: less than €1 million,

2018: less than €1 million).

(d) 2020 includes €6 million for audits and reviews of carve-out financial statements of the Tea business and €1 million for assurance work on Unification. 2018 includes

€4 million for audits and reviews of carve-out financial statements of the Spreads business and €1 million for assurance work on Simplification.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS202

Selected financial data

The schedules below provide the Group’s selected financial data for the five most recent financial years. 2016 numbers are not comparable as the
Group adopted IFRS 16 in 2019 and restated only 2018 and 2017.

Consolidated income statement

Turnover

Operating profit

Net finance costs

Net monetary gain arising from hyperinflationary economies

Share of net profit/(loss) of joint ventures and associates and
other income/(loss) from non-current investments

Profit before taxation

Taxation

Net profit

Attributable to:

Non-controlling interests

Shareholders’ equity

Combined earnings per share

Basic earnings per share

Diluted earnings per share

€ million
2020

50,724

€ million
2019

51,980

€ million
2018

50,982

€ million
2017

53,715

€ million
2016

52,713

8,303

8,708

12,639

8,957

7,801

(505)

178

(627)

176

(608)

122

207

7,996

(1,923)

8,289

(2,263)

12,360

(2,572)

(1,004)

–

173

8,126

(1,670)

(563)

–

231

7,469

(1,922)

6,073

6,026

9,788

6,456

5,547

492

5,581

€ million
2020

2.13

2.12

401

5,625

€ million
2019

2.15

2.14

419

9,369

€ million
2018

3.49

3.48

For the basis of the calculations of combined earnings per share see note 7 ‘Combined earnings per share’ on page 133.

Consolidated balance sheet

Non-current assets

Current assets

Total assets

Current liabilities

Non-current liabilities

Total liabilities

Share Capital

Reserves

Non-controlling interests

Total equity

Total liabilities and equity

€ million
2020

51,502

16,157

67,659

20,592

29,412

50,004

15,174

2,389

17,655

67,659

€ million
2019

48,376

16,430

64,806

20,978

29,942

50,920

420

12,772

694

13,886

64,806

€ million
2018

45,633

15,478

61,111

20,150

28,844

48,994

464

10,933

720

12,117

61,111

433

6,023

€ million
2017

2.15

2.14

€ million
2017

45,078

16,980

62,058

23,587

24,273

47,860

484

12,956

758

14,198

62,058

363

5,184

€ million
2016

1.83

1.82

€ million
2016

42,545

13,884

56,429

20,556

18,893

39,449

484

15,870

626

16,980

56,429

Unilever Annual Report and Accounts 2020203

€ million
2016

7,047

(3,188)

(3,073)

786

2,128

284

3,198

2016

14.8

9.8

Additional information for US listing purposes continued

Consolidated cash flow statement

Net cash flow from operating activities

Net cash flow from/(used in) investing activities

Net cash flow from/(used in) financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Effect of foreign exchange rates

Cash and cash equivalents at the end of the year

Ratios and other metrics

Operating margin (%)

Net profit margin (%)(a)

Number of Shares PLC ordinary shares issued
(Millions of units)

€ million
2020

9,058

(1,481)

(5,804)

1,773

4,116

(414)

5,475

2020

16.4

11.0

€ million
2019

8,109

(2,237)

(4,667)

1,205

3,090

(179)

4,116

2019

16.8

10.8

€ million
2018

7,318

4,644

(12,113)

(151)

3,169

3,090

2018

24.8

18.4

€ million
2017

7,879

(5,879)

(2,020)

(20)

3,198

(9)

3,169

2017

16.7

11.2

2,629

1,169

1,187

1,310

(a) Net profit margin is expressed as net profit attributable to shareholders’ equity as a percentage of turnover.

Guarantor statements

On 13 August 2020, Unilever N.V. (NV) and Unilever Capital Corporation (UCC) filed a US Shelf registration, which was unconditionally and fully
guaranteed, jointly and severally, by NV, Unilever PLC (PLC) and Unilever United States, Inc. (UNUS) and that updated the NV and UCC US Shelf
registration filed on 27 July 2017, which was unconditionally and fully guaranteed, jointly and severally, by NV, PLC and UNUS.

As a result of Unification, PLC assumed NV’s liabilities in relation to debt issued under the US shelf registration programme. UCC and UNUS are each
indirectly 100% owned by PLC and consolidated in the financial statements of the Unilever Group. In relation to the US Shelf registration, US$11.5
billion of Notes were outstanding at 31 December 2020 (2019: US$12.35 billion; 2018: US$12.5 billion) with coupons ranging from 0.375% to 5.900%.
These Notes are repayable between 10 February 2021 and 15 November 2032.

All debt securities issued by UCC are senior, unsecured, and unsubordinated and are fully and unconditionally guaranteed, on a joint and several
basis, by PLC and UNUS.

In March 2020, the SEC amended Rule 3-10 of Regulation S-X and created Rule 13-01 to simplify disclosure requirements related to certain registered
securities, which we have adopted effective immediately. As noted above UCC and UNUS are 100% subsidiaries of Unilever PLC and are consolidated
in the financial statements of the Unilever Group. In addition, there are no material assets in the guarantor entities apart from intercompany
investments and balances. Therefore, as allowed under Rule 13-01, we have excluded the summarised information for each issuer and guarantor.

The guarantees provide that, in case of the failure of the relevant issuer to punctually make payment of any principal, premium or interest, each
guarantor agrees to ensure such payment is made when due whether at the stated maturity or by declaration of acceleration, call for redemption
or otherwise. The guarantees also provide that the Trustee shall be paid any and all amounts due to it under the guarantee upon which the debt
securities are endorsed.

Unilever Annual Report and Accounts 2020FINANCIAL STATEMENTS204

Cautionary Statement

This document may contain forward-looking statements, including ‘forward-looking statements’ within the meaning of the United States Private
Securities Litigation Reform Act of 1995. Words such as ‘will’, ‘aim’, ‘expects’, ‘anticipates’, ‘intends’, ‘looks’, ‘believes’, ‘vision’, or the negative of these
terms and other similar expressions of future performance or results, and their negatives, are intended to identify such forward-looking statements.
These forward-looking statements are based upon current expectations and assumptions regarding anticipated developments and other factors
affecting the Unilever Group (the ‘Group’). They are not historical facts, nor are they guarantees of future performance.

Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ
materially from those expressed or implied by these forward-looking statements. Among other risks and uncertainties, the material or principal
factors which could cause actual results to differ materially are: Unilever’s global brands not meeting consumer preferences; Unilever’s ability to
innovate and remain competitive; Unilever’s investment choices in its portfolio management; the effect of climate change on Unilever’s business;
Unilever’s ability to find sustainable solutions to its plastic packaging; significant changes or deterioration in customer relationships; the recruitment
and retention of talented employees; disruptions in our supply chain and distribution; increases or volatility in the cost of raw materials and
commodities; the production of safe and high quality products; secure and reliable IT infrastructure; execution of acquisitions, divestitures and
business transformation projects; economic, social and political risks and natural disasters; financial risks; failure to meet high and ethical standards;
and managing regulatory, tax and legal matters. A number of these risks have increased as a result of the current Covid-19 pandemic.

These forward-looking statements speak only as of the date of this document. Except as required by any applicable law or regulation, the Group
expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to
reflect any change in the Group’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement
is based.

Further details of potential risks and uncertainties affecting the Group are described in the Group’s filings with the London Stock Exchange, Euronext
Amsterdam and the US Securities and Exchange Commission, including in the Annual Report on Form 20-F 2020 and the Unilever Annual Report and
Accounts 2020.

This document is not prepared in accordance with US GAAP and should not therefore be relied upon by readers as such. The Annual Report on Form
20-F 2020 is separately filed with the US Securities and Exchange Commission and is available on our corporate website

www.unilever.com

In addition, a printed copy of the Annual Report on Form 20-F 2020 is available, free of charge, upon request to Unilever, Investor Relations
Department, 100 Victoria Embankment, London EC4Y 0DY, United Kingdom.

This document comprises regulated information within the meaning of Sections 1:1 and 5:25c of the Act on Financial Supervision (‘Wet op het
financieel toezicht (Wft)’) in the Netherlands.

The brand names shown in this report are trademarks owned by or licensed to companies within the Group.

References in this document to information on websites (and/or social media sites) are included as an aid to their location and such information is
not incorporated in, and does not form part of, the Unilever Annual Report and Accounts 2020 or the Annual Report on Form 20-F 2020.

Unilever Annual Report and Accounts 2020Cautionary Statement
Cautionary Statement

Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially
from those expressed or implied by these forward-looking statements. Among other risks and uncertainties, the material or principal factors which
could cause actual results to differ materially are: Unilever’s global brands not meeting consumer preferences; Unilever’s ability to innovate and remain
competitive; Unilever’s investment choices in its portfolio management; the effect of climate change on Unilever’s business; Unilever's ability to find
sustainable solutions to its plastic packaging; significant changes or deterioration in customer relationships; the recruitment and retention of talented
employees; disruptions in our supply chain and distribution; increases or volatility in the cost of raw materials and commodities; the production of safe
and high quality products; secure and reliable IT infrastructure; execution of acquisitions, divestitures and business transformation projects; economic,
social and political risks and natural disasters; financial risks; failure to meet high and ethical standards; and managing regulatory, tax and legal
matters.

Further details of potential risks and uncertainties affecting the Group are described in the Group’s filings with the London Stock Exchange, Euronext
Amsterdam and the US Securities and Exchange Commission, including in the Annual Report on Form 20-F 2019 and the Unilever Annual Report and
Accounts 2019.

This document is not prepared in accordance with US GAAP and should not therefore be relied upon by readers as such. The Annual Report
on Form 20-F 2019 is separately filed with the US Securities and Exchange Commission and is available on our corporate website

www.unilever.com

In addition, a printed copy of the Annual Report on Form 20-F 2019 is available, free of charge, upon request to Unilever, Investor Relations Department,
100 Victoria Embankment, London EC4Y 0DY, United Kingdom.

This document comprises regulated information within the meaning of Sections 1:1 and 5:25c of the Act on Financial Supervision (‘Wet op het financieel
toezicht (Wft)’) in the Netherlands.

The brand names shown in this report are trademarks owned by or licensed to companies within the Group.

References in this document to information on websites (and/or social media sites) are included as an aid to their location and such information is not
incorporated in, and does not form part of, the Unilever Annual Report and Accounts 2019 or the Annual Report on Form 20-F 2019.

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Unilever PLC
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