FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

REPORT OF FOREIGN ISSUER

Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934

For the month of November, 2010

UNILEVER N.V.

(Translation of registrant’s name into English)

WEENA 455, 3013 AL, P.O. BOX 760, 3000 DK, ROTTERDAM, THE NETHERLANDS
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F þ      Form 40-F o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):                    

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):                    

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes o     No þ

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-                    

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: 5 November, 2010

Half year highlights

•		Turnover up 9.7% at €21.9 billion.
•		Underlying volume growth 6.6%. Underlying sales growth 3.8% and underlying price growth (2.6)%; in-year pricing was stable.
•		Underlying operating margin up 30bps with continuing strong gross margins offset by significant investment in advertising and promotional expenditure, up 180bps.
•		Net cash flow from operating activities €2.2 billion, up €0.2 billion. Average trading working capital again reduced as a percentage of turnover and it is now negative.
•		Fully diluted earnings per share €0.70 up 36% reflecting improved operating profit, lower restructuring and the favourable impact of foreign exchange.

Chief Executive Officer

“We have delivered robust volume growth with improved volume market shares in all of our regions. This is an encouraging result given the challenging economic and competitive environment and reflects the continuing investment behind our brands, better in-market execution, successful innovations and the extension of our brands into new markets. There was consistent strong performance of our personal care business.

We continue to operate under the assumption of slow economic growth, particularly in developed markets where consumer confidence remains fragile. We do not expect competitive pressures to ease and our ability to increase prices will remain constrained despite rising commodity costs in the second half. We still expect underlying price growth to turn positive towards the end of the year.

Notwithstanding this difficult environment and comparators which get tougher as the year progresses, the results confirm again that our strategy to focus on the consumer and to accelerate growth is working. Our priority remains to drive profitable volume growth and strong cash flow along with steady and sustainable improvement in operating margin for the year as a whole.”

Key Financials (unaudited)

Half Year 2010

Current rates

Turnover

€21,895m

+9.7%

Underlying sales growth*

+3.8%

Operating profit

€3,066m

+20%

Net profit

€2,209m

+35%

Diluted Earnings per share

€0.70

+36%

(*) Underlying sales growth is a non-GAAP measure, see note 2 on Page 11 for further explanation.

OPERATIONAL REVIEW: REGIONS

				Half Year 2010
																								Change in
	(unaudited)			Turnover					USG					Volume					Price					Underlying
																								Op Margin
					€m					%					%					%				bps
	Unilever Total				21,895					3.8					6.6					(2.6	)				30
	Asia Africa CEE				8,668					7.9					11.6					(3.3	)				10
	Americas				7,199					3.8					5.6					(1.7	)				(10	)
	Western Europe				6,028					(1.1	)				1.7					(2.7	)				130

Market growth in developed economies remains depressed whilst emerging market growth remains strong. The high intensity of competition has continued but we have remained competitive and delivered strong volume growth, with volume share gains across all regions. Whilst underlying price growth remains negative, in-period pricing was again stable, despite increased competitive pricing and promotional activity, especially in Laundry and Hair. Gross margins continued to improve allowing us to increase advertising & promotions investment whilst delivering improved underlying operating margin.

Asia Africa CEE – Half year USG +7.9%, Volume +11.6%, Underlying Operating Margin +10 bps
The region continued its strong momentum in underlying volume and sales growth, ahead of the market. There was double digit volume growth with all the main countries and key categories positive despite intense competitive activity.

Half year underlying sales growth in Asia and Africa Middle East was strong, driven by double digit underlying volume growth which more than compensated for price action taken to ensure that our products remain fully competitive; volume shares progressed well. CEE performance was more mixed but again volume shares improved.

Underlying operating margin was slightly positive in the half year with improved gross margins offset by a significant step-up in advertising and support behind our brands. The rollout of the regional IT platform continued with successful go-lives in China, Hong Kong, Taiwan and Australasia.

The Americas – Half year USG +3.8%, Volume +5.6%, Underlying Operating Margin (10) bps
Despite the continued sluggish markets in North America, our business grew underlying volume at more than 2% in the half year on the back of successful new product launches and improved in-market execution. Dressings gained share through strong innovation and merchandising support and Skin Cleansing grew strongly.

Latin American markets are generally much stronger and our underlying volume growth for the half year was just under 10% on the back of strong performances from Deodorants, Hair, Ice Cream and soy-based drinks under the AdeS brand.

Underlying operating margin, down 10bps in the half year, again reflected the significant increase in brand support levels.

Western Europe – Half year USG (1.1)%, Volume 1.7%, Underlying Operating Margin +130 bps
Markets were difficult, particularly in southern European countries such as Greece, Spain and, to a lesser extent, Italy. We continue to pursue our strategy of investing behind our brands and bringing strong innovations to market. This approach is delivering good results, with both volume and value shares up.

Excluding Greece, where market volumes were down substantially, underlying volume growth in Western Europe was positive. However, our Greek business responded quickly to the crisis with €1 promotions crafted to reflect the new economic reality. In Paris we opened the second Customer Insight and Innovation Centre in the region following the opening of the first such centre in the UK.

Gross margin and indirects improved in the half year, driven by strong savings programmes. Underlying operating margin increased alongside increased advertising and promotions investment.

OPERATIONAL REVIEW: CATEGORIES

				Half Year 2010
	(unaudited)			Turnover					USG
					€m					%
	Unilever Total				21,895					3.8
	Savoury, Dressings & Spreads				6,910					0.3
	Ice Cream & Beverages				4,494					5.1
	Personal Care				6,700					7.9
	Home Care & other				3,791					2.4

We maintained our volume growth momentum with strong performances from Deodorants, Skin Cleansing and Homecare. We continue to focus on bigger innovations, rolled out faster and to more countries. Dove Men + Care is now in 29 markets and Knorr jelly bouillon has been extended from China to 18 markets, the latest being Brazil and Mexico. Magnum Gold?! has been launched in 29 markets and Cornetto Enigma is in 12 European markets. We are also extending our iconic brands into new markets more quickly than ever before.

Savoury, Dressings and Spreads – Half year USG +0.3%
Spreads volume share increased again but markets remain weak. Significant events included the ‘no hydrogenated oils’ relaunches of I Can’t Believe its not Butter and Country Crock in the US and the re-launch of the pro.activ brand in Europe. The new Rama margarine specifically formulated for spreading continues to make good progress in Central and South Africa based on the attractive proposition of nutrition at an affordable price. In Europe we still have more to do to convince butter users of the benefits of our products. Dressings benefited from the campaign to tackle the negative health perceptions of mayonnaise and to inspire new uses through recipe ideas.

Savoury growth picked up on the continuing success and rollout of Knorr jelly bouillon and the introduction of Knorr seasoning for beans in Brazil and Mexico. The success of the Knorr cook-in bags gave us category leadership in Australasia. The PF Chang premium restaurant-quality frozen Asian meals have started well in the US despite supply difficulties. Knorr soups in France performed strongly after we introduced new varieties.

Ice Cream and Beverages – Half year USG +5.1%
Ice Cream delivered a strong performance irrespective of the poor weather in Europe and China. Magnum Gold?!, Cornetto Enigma and Fruttare are all exceeding expectations. The new Klondike variants continue to drive growth in the US whilst the new Ben & Jerry’s and Breyer’s Smooth and Dreamy ranges have been well received. Strong growth in South East Asia and Latin America came from distribution gains, strong point-of-purchase activity and great innovation.

Tea volume growth slowed but overall performance remains good. The innovations across the price points, from Brooke Bond Sehatmand in India at a low price to the Lipton premium fruit and herbal infusions doing well in markets like Australia and Russia, are helping drive balanced growth. The Lipton Green Tea launches in USA and France are delivering good growth. The launches of the Lipton brand in Spain and the UK continue to do well.

Personal Care – Half year USG +7.9%
Personal Care again delivered strong growth, powered by Deodorants. Notable successes include Degree in the US, Dove in Brazil and the relaunch of Rexona in Japan. Hair growth accelerated and we saw volume share gains despite the increased competitive environment. Dove Hair Damage Repair gained good initial acceptance and there were also strong performances by Sunsilk Co-Creations in Asia and Suave in the US. TiGi has just launched Sleek Mystique which completes the new range from Catwalk.

Skin Cleansing is growing strongly on the back of the success of Dove Nutrium moisture and the good results from the launches of Citra bar soap in Indonesia and Lifebuoy in Argentina, Brazil, Bolivia, Peru and Australia. Hand and body creams continue to grow despite Vaseline Sheer Infusions being off to a slow start. Oral is doing well with notable successes for the anti-age variant in Europe and the launch of Pepsodent in the Philippines.

Home Care and other – Half year USG +2.4%
Despite high levels of competitive intensity we maintained volume growth momentum. Notable was the continuing success of liquid detergents with recent introductions in Turkey and Vietnam, the successful Wheel relaunch in India and the launch of the Surf brand position in Indonesia and Thailand.

Household Cleaning has continued to deliver strong results with Cif Active-Shield technology doing well in Western Europe, now launched into Poland and Argentina. The Cif launch in Vietnam has had an encouraging start and we have just launched in Indonesia. Domestos, recently launched in Italy, is performing strongly.

ADDITIONAL COMMENTARY ON THE FINANCIAL STATEMENTS – FIRST HALF YEAR

Finance costs and tax

The cost of financing net borrowings in the half year was €214 million, €30 million less than the same period last year mainly reflecting lower average net debt in the first half. The interest rate on net borrowing was 6.3% reflecting the low interest rates on cash deposits. The charge for pensions financing was a credit of €8m compared with a net charge of €90m in the prior year.

The effective tax rate was 26.3% compared with 29.4% for 2009 primarily reflecting favourable prior year tax settlements and lower one-off items.

Joint ventures, associates and other income from non-current investments

Net profit from joint ventures and associates, together with other income from non-current investments contributed €116 million compared to €72 million last year. The main factors behind the increase were the partial redemption of a portion of the preferred shares that had been held as consideration for the sale of Unilever’s US laundry business in 2008 and a fair value adjustment on the warrants in Johnson Diversey.

Earnings per share

Fully diluted earnings per share for the half year were €0.70, up 36% on the previous year.

Restructuring

Restructuring in the first half year was around 120 bps of Turnover, at €253 million. This reflects action being taken to make the business fit to compete in the current environment. Full year restructuring is expected at similar levels.

Cash Flow and Net Debt

Strong management focus led to further reductions in average trading working capital as a percentage of turnover, which was negative. The working capital outflow reflected the normal seasonal pattern with the levels at end of June higher than at the start of the year.

Capital expenditure increased by €247 million to €753 million in support of future growth in emerging markets such as Russia and Indonesia.

Free cash flow (see note 2, page 11 for further explanation) at €1.3 billion was broadly stable versus the prior year. This reflected improved net cash flow from operating activities at €2.2 billion, up €218 million versus the prior year. The improved operating profit was offset by the absolute increase in working capital and the higher level of capital expenditure.

Net debt at €7.6 billion was up from €6.4 billion as at 31^st December 2009, primarily reflecting the impact of the changes in foreign exchange rates.

Pensions

The net deficit in pension schemes was €4.0bn at the end of June up from €2.6bn at the end of 2009. This is mainly due to the impact of lower discount rate assumptions on the liabilities.

Acquisitions and disposals (full details can be found in note 12, page 16)

After the period end we announced the disposal of our frozen foods business in Italy for €805m to Birds Eye Iglo. We expect to complete the acquisition of Sara Lee’s personal care business in Q4 2010.

Unilever NV Preference Shares

The period for the creditors of Unilever NV to object to the cancellation of the 4% preference shares has now closed and cancellation will take place shortly with a record date of August 12^th and payment on August 23^rd. It is our intention to launch a tender offer in respect of the 6% and 7% preference shares in due course.

Principal Risk Factors

On pages 30 to 34 of our 2009 Report and Accounts we set out our assessment of the principal risk issues that would face the business through 2010 under the headings: economic; markets; brand; customer; financial/treasury; consumer safety and environmental sustainability; operations; people and talent; legal and regulatory; restructuring and change management; and other risks. In our view, the nature and potential impact of such risks remain essentially unchanged as regards our performance over the second half of 2010.

COMPETITION INVESTIGATIONS

As previously reported, in June 2008 the European Commission initiated an investigation into potential competition law infringements in the European Union in relation to consumer detergents. The investigation is ongoing although no statement of objections against Unilever has been issued to date.

In December 2009, as previously reported, Unilever received separate statements of objection from the French competition authority and from the Italian competition authority in connection with investigations into certain product markets in France and Italy respectively. In April 2010, Unilever received a statement of objections from the Dutch competition authority in relation to its investigation into certain product markets in The Netherlands. An earlier decision by the Greek authority fining Unilever in relation to alleged restrictions on parallel trade within certain of its contracts with retailers in Greece is under appeal.

In addition and as previously disclosed, Unilever is involved in a number of other ongoing investigations by national competition authorities. These include investigations in Belgium, France and Germany. These investigations are at various stages and concern a variety of product markets.

Substantial fines can be levied as a result of competition and antitrust investigations especially at the European Union level. Fines imposed by the European Commission in other sectors for violations of the competition rules have amounted to hundreds of millions of euros. It is too early reliably to estimate the total amount of fines to which Unilever will be subject as a result of all of these investigations. However, provisions have been made, to the extent appropriate, in relation to the national investigations.

It is Unilever’s policy to co-operate fully with the competition authorities in the context of all ongoing investigations. In addition, Unilever reinforces and enhances its internal competition law compliance procedures on an ongoing basis.

CAUTIONARY STATEMENT

This announcement 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 ‘expects’, ‘anticipates’, ‘intends’, ‘believes’ 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 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, including, among others, competitive pricing and activities, economic slowdown, industry consolidation, access to credit markets, recruitment levels, reputational risks, commodity prices, continued availability of raw materials, prioritisation of projects, consumption levels, costs, the ability to maintain and manage key customer relationships and supply chain sources, consumer demands, currency values, interest rates, the ability to integrate acquisitions and complete planned divestitures, the ability to complete planned restructuring activities, physical risks, environmental risks, the ability to manage regulatory, tax and legal matters and resolve pending matters within current estimates, legislative, fiscal and regulatory developments, political, economic and social conditions in the geographic markets where the Group operates and new or changed priorities of the Boards. 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 the 20-F Report and the Annual Report and Accounts 2009. 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.

ENQUIRIES

Media: Media Relations Team		Investors: Investor Relations Team
UK +44 20 7822 6805 stephen.pain@unilever.com		+44 20 7822 6830 investor.relations@unilever.com
or +44 20 7822 6010 trevor.gorin@unilever.com
NL +31 10 217 4844 flip.dotsch@unilever.com

There will be a web cast of the results presentation available at:
www.unilever.com/ourcompany/investorcentre/results/quarterlyresults/default.asp

INCOME STATEMENT

(unaudited)

	€ million		Half Year
					2010					2009				Increase/
													(Decrease)
														Current rates					Constant rates
	Continuing operations:
	Turnover				21,895					19,963					9.7	%				3.9	%
	Operating profit				3,066					2,554					20	%				15	%
	Restructuring, business disposals and other (RDIs) (see note 3)				(204	)				(361	)
	Underlying operating profit				3,270					2,915					12	%				7	%
	Net finance costs				(206	)				(334	)
	Finance income				41					44
	Finance costs				(255	)				(288	)
	Pensions and similar obligations				8					(90	)
	Share in net profit/(loss) of joint ventures				68					63
	Share in net profit/(loss) of associates				(5	)				(3	)
	Other income from non-current investments				53					12
	Profit before taxation				2,976					2,292					30	%				24	%
	Taxation				(767	)				(656	)
	Net profit				2,209					1,636					35	%				29	%
	Attributable to:
	Non-controlling interests				174					147
	Shareholders’ equity				2,035					1,489					37	%				30	%
	Combined earnings per share
	Total operations (Euros)				0.72					0.53					36	%				29	%
	Total operations – diluted (Euros)				0.70					0.52					36	%				29	%

STATEMENT OF COMPREHENSIVE INCOME

(unaudited)

	€ million		Half Year
				2010					2009
	Net profit				2,209					1,636
	Other comprehensive income
	Fair value gains/(losses) on financial instruments net of tax				(68	)				85
	Actuarial gains/(losses) on pension schemes net of tax				(935	)				(270	)
	Currency retranslation gains/(losses) net of tax				444					142
	Total comprehensive income				1,650					1,593
	Attributable to:
	Non-controlling interests				253					152
	Shareholders’ equity				1,397					1,441

STATEMENT OF CHANGES IN EQUITY

(unaudited)

	€ million		Half Year
				2010					2009
	Equity at 1 January				12,536					10,372
	Total comprehensive income for the period				1,650					1,593
	Dividends on ordinary capital				(1,134	)				(1,361	)
	Movement in treasury stock				(2	)				18
	Share-based payment credit				74					65
	Dividends paid to non-controlling interests				(88	)				(70	)
	Currency retranslation gains/(losses) net of tax				12					(6	)
	Other movements in equity				32					(33	)
	Equity at the end of the period				13,080					10,578

CASH FLOW STATEMENT

(unaudited)

	€ million		Half Year
				2010					2009
	Cash flow from operating activities				2,809					2,450
	Income tax paid				(572	)				(431	)
	Net cash flow from operating activities				2,237					2,019
	Interest received				33					38
	Net capital expenditure				(753	)				(506	)
	Acquisitions and disposals				70					(365	)
	Other investing activities				740					(5	)
	Net cash flow from/(used in) investing activities				90					(838	)
	Dividends paid on ordinary share capital				(1,148	)				(1,302	)
	Interest and preference dividends paid				(257	)				(258	)
	Change in financial liabilities				(289	)				130
	Other movements on treasury stock				8					17
	Other financing activities				(87	)				(43	)
	Net cash flow from/(used in) financing activities				(1,773	)				(1,456	)
	Net increase/(decrease) in cash and cash equivalents				554					(275	)
	Cash and cash equivalents at the beginning of the period				2,397					2,360
	Effect of foreign exchange rate changes				(201	)				(176	)
	Cash and cash equivalents at the end of the period				2,750					1,909

BALANCE SHEET

(unaudited)

	€ million			As at					As at					As at
				30 June					31 December					30 June
				2010					2009					2009
	Goodwill				13,371					12,464					12,338
	Intangible assets				5,031					4,583					4,598
	Property, plant and equipment				7,504					6,644					6,261
	Pension asset for funded schemes in surplus				536					759					413
	Deferred tax assets				1,045					738					1,083
	Other non-current assets				1,106					1,017					1,591
	Total non-current assets				28,593					26,205					26,284
	Inventories				4,398					3,578					3,759
	Trade and other current receivables				4,922					3,429					4,813
	Current tax assets				125					173					167
	Cash and cash equivalents				3,105					2,642					2,082
	Other financial assets				415					972					334
	Non-current assets held for sale				398					17					13
	Total current assets				13,363					10,811					11,168
	Financial liabilities				(2,895	)				(2,279	)				(2,470	)
	Trade payables and other current liabilities				(10,336	)				(8,413	)				(8,428	)
	Current tax liabilities				(534	)				(487	)				(408	)
	Provisions				(312	)				(420	)				(698	)
	Liabilities associated with assets held for sale				(21	)				-					-
	Total current liabilities				(14,098	)				(11,599	)				(12,004	)
	Net current assets/(liabilities)				(735	)				(788	)				(836	)
	Total assets less current liabilities				27,858					25,417					25,448
	Financial liabilities due after one year				8,188					7,692					8,826
	Non-current tax liabilities				153					107					231
	Pensions and post-retirement healthcare liabilities:
	Funded schemes in deficit				2,428					1,519					2,052
	Unfunded schemes				2,061					1,822					2,011
	Provisions				848					729					695
	Deferred tax liabilities				807					764					796
	Other non-current liabilities				293					248					259
	Total non-current liabilities				14,778					12,881					14,870
	Shareholders’ equity				12,428					12,065					10,085
	Non-controlling interests				652					471					493
	Total equity				13,080					12,536					10,578
	Total capital employed				27,858					25,417					25,448

NOTES TO THE FINANCIAL STATEMENTS

(unaudited)

1   ACCOUNTING INFORMATION AND POLICIES

The condensed interim financial statements are based on International Financial Reporting Standards (IFRS) as adopted by the EU and IFRS as issued by the International Accounting Standards Board. The accounting policies and methods of computation are consistent with the year ended 31 December 2009 and are in compliance with IAS34 ‘Interim Financial reporting’.

The condensed interim financial statements are shown at current exchange rates, while percentage year-on-year changes are shown at both current and constant exchange rates to facilitate comparison.

The income statement on page 7, the statements of comprehensive income and changes in equity on page 8, the cash flow statement on page 9, and the analysis of free cash flow on page 14 are translated at rates current in each period.

The balance sheet on page 10 and the analysis of net debt on page 15 are translated at period-end rates of exchange.

The financial statements attached do not constitute the full financial statements within the meaning of Section 434 of the UK Companies Act 2006. Full accounts for Unilever for the year ended 31 December 2009 have been delivered to the Registrar of Companies. The auditors’ report on these accounts was unqualified and did not contain a statement under Section 498 (2) or Section 498 (3) of the UK Companies Act 2006.

Recent accounting developments

With effect from 1 January 2010 the Group has adopted the following new and amended IFRSs and IFRIC interpretations with no material impact:

	•		IFRS 3 ‘Business Combinations (Revised)’ and IAS 27 ‘Consolidated and Separate Financial Statements (Revised)’ (effective for periods beginning on or after 1 July 2009).
	•		Amendments to IFRS 2 ‘Group Cash-settled Share-based Payment Transactions’ (effective for periods beginning on or after 1 January 2010).
	•		Amendment to IAS 39 ‘Financial Instruments: Recognition and Measurement - Eligible Hedged Items’ (effective for periods beginning on or after 1 July 2009.
	•		IFRIC 17 ‘Distributions of Non-cash Assets to Owners’ (effective for periods beginning on or after 1 July 2009).
	•		Improvements to IFRSs (issued April 2009) (effective for periods beginning on or after 1 January 2010).

2   NON-GAAP MEASURES

In our financial reporting we use certain measures that are not recognised under IFRS or other generally accepted accounting principles (GAAP). We do this because we believe that these measures are useful to investors and other users of our financial statements in helping them to understand underlying business performance. Wherever we use such measures, we make clear that these are not intended as a substitute for recognised GAAP measures. Wherever appropriate and practical, we provide reconciliations to relevant GAAP measures. Unilever uses ‘constant rate’ and ‘underlying’ measures primarily for internal performance analysis and targeting purposes.

The principal non-GAAP measure which we apply in our reporting is underlying sales growth, which we reconcile to changes in the GAAP measure turnover in notes 4 and 5. Underlying sales growth (abbreviated to ‘USG’ or ‘growth’) reports turnover growth at constant exchange rates, excluding the effects of acquisitions and disposals. Turnover includes the impact of exchange rates, acquisitions and disposals.

We also comment on underlying trends in operating margin before the impact of restructuring, disposals and other one-off items, which we collectively term RDIs, on the grounds that the incidence of these items is uneven between reporting periods. Further detail on RDIs can be found in note 3. We also discuss free cash flow, which we reconcile in note 8 to the amounts in the cash flow statement, and net debt, which we reconcile in note 9 to the amounts reported in our balance sheet and cash flow statement.

In explaining cash flow performance we refer to the trend of average trading working capital. This metric is used internally, focusing on average rather than closing positions to ensure consistent performance, whilst excluding the elements of working capital that operational management cannot influence.

Further information about these measures and their reconciliation to GAAP measures is given on our website at www.unilever.com/investorrelations

NOTES TO THE FINANCIAL STATEMENTS

(unaudited)

3   SIGNIFICANT ITEMS WITHIN THE INCOME STATEMENT

In our income statement reporting we recognise restructuring costs, profits and losses on business disposals and certain other one-off items, which we collectively term RDIs. We disclose on the face of our income statement the total value of such items that arise within operating profit. In our operating review by region and in note 4 we highlight the impact of these items on our operating margin.

	€ million			Half Year
				2010					2009
	RDIs within operating profit:
	Restructuring				(253	)				(361	)
	Business disposals				49					-
	Impairments and other one-off items				-					-
	Total RDIs within operating profit				(204	)				(361	)

4   SEGMENT INFORMATION

	Continuing operations – Half Year			Asia Africa					Americas					Western Europe					Total
	€ million			CEE
	Turnover
	2009				7,431					6,491					6,041					19,963
	2010				8,668					7,199					6,028					21,895
	Change				16.7%					10.9%					(0.2)%					9.7%
	Impact of:
	Exchange rates				8.0%					6.7%					1.0%					5.6%
	Acquisitions				0.3%					0.6%					0.3%					0.4%
	Disposals				(0.2)%					(0.4)%					(0.5)%					(0.3)%
	Underlying sales growth				7.9%					3.8%					(1.1)%					3.8%
	Price				(3.3)%					(1.7)%					(2.7)%					(2.6)%
	Volume				11.6%					5.6%					1.7%					6.6%
	Operating profit
	2009				966					883					705					2,554
	2010				1,149					1,013					904					3,066
	Underlying operating profit
	2009				1,017					977					921					2,915
	2010				1,196					1,080					994					3,270
	Operating margin
	2009				13.0%					13.6%					11.7%					12.8%
	2010				13.3%					14.1%					15.0%					14.0%
	Underlying operating margin
	2009				13.7%					15.1%					15.2%					14.6%
	2010				13.8%					15.0%					16.5%					14.9%

NOTES TO THE FINANCIAL STATEMENTS

(unaudited)

5   ADDITIONAL INFORMATION BY CATEGORY

				Savoury					Ice Cream and Beverages					Personal Care					Home Care					Total
	Continuing operations – Half Year			Dressings and															and
	€ million			Spreads															other
	Turnover
	2009				6,544					4,132					5,803					3,484					19,963
	2010				6,910					4,494					6,700					3,791					21,895
	Change				5.6%					8.8%					15.5%					8.8%					9.7%
	Impact of:
	Exchange rates				4.4%					5.3%					6.3%					6.9%					5.6%
	Acquisitions				0.5%					0.0%					0.7%					0.0%					0.4%
	Disposals				0.4%					(1.7)%					0.0%					(0.5)%					(0.3)%
	Underlying sales growth				0.3%					5.1%					7.9%					2.4%					3.8%
	Operating profit
	2009				857					493					901					303					2,554
	2010				1,142					526					1,082					316					3,066
	Operating margin
	2009				13.1%					11.9%					15.5%					8.7%					12.8%
	2010				16.5%					11.7%					16.1%					8.3%					14.0%

NOTES TO THE FINANCIAL STATEMENTS

(unaudited)

 6   TAXATION

The effective tax rate for the half year was 26.3% compared with 29.4% for 2009. The tax rate is calculated by dividing the tax charge by pre-tax profit excluding the contribution of joint ventures and associates.

Tax effects of components of other comprehensive income were as follows:

	€ million			Half Year 2010															Half Year 2009
				Before tax					Tax (charge)/ credit					After tax					Before tax					Tax (charge)/ credit					After tax
	Fair value gains/(losses) on financial instruments net of tax				(77	)				9					(68	)				133					(48	)				85
	Actuarial gains/(losses) on pension schemes net of tax				(1,290	)				355					(935	)				(373	)				103					(270	)
	Currency retranslation gains/(losses) net of tax				444					–					444					142					–					142
	Other comprehensive income				(923	)				364					(559	)				(98	)				55					(43	)

 7   RECONCILIATION OF NET PROFIT TO CASH FLOW FROM OPERATING ACTIVITIES

	€ million			Half Year
				2010					2009
	Net profit				2,209					1,636
	Taxation				767					656
	Share of net profit of joint ventures/associates and other income
	from non-current investments				(116	)				(72	)
	Net finance costs				206					334
	Operating profit				3,066					2,554
	Depreciation, amortisation and impairment				498					497
	Changes in working capital				(489	)				(260	)
	Pensions and similar provisions less payments				(204	)				(333	)
	Restructuring and other provisions less payments				(70	)				(123	)
	Elimination of (profits)/losses on disposals				(56	)				(2	)
	Non-cash charge for share-based compensation				74					65
	Other adjustments				(10	)				52
	Cash flow from operating activities				2,809					2,450

 8   FREE CASH FLOW

	€ million			Half Year
				2010					2009
	Cash flow from operating activities				2,809					2,450
	Income tax paid				(572	)				(431	)
	Net capital expenditure				(753	)				(506	)
	Net interest and preference dividends paid				(224	)				(220	)
	Free cash flow				1,260					1,293

NOTES TO THE FINANCIAL STATEMENTS

(unaudited)

 9   NET DEBT

	€ million			As at 30					As at 31					As at 30
				June					December					June
				2010					2009					2009
	Total financial liabilities				(11,083	)				(9,971	)				(11,296	)
	Financial liabilities due within one year				(2,895	)				(2,279	)				(2,470	)
	Financial liabilities due after one year				(8,188	)				(7,692	)				(8,826	)
	Cash and cash equivalents as per balance sheet				3,105					2,642					2,082
	Cash and cash equivalents as per cash flow statement				2,750					2,397					1,909
	Add bank overdrafts deducted therein				355					245					173
	Other financial assets				415					972					334
	Net debt				(7,563	)				(6,357	)				(8,880	)

 10  COMBINED EARNINGS PER SHARE

The combined earnings per share calculations are based on the average number of share units representing the combined ordinary shares of NV and PLC in issue during the period, less the average number of shares held as treasury stock.

In calculating diluted earnings per share, a number of adjustments are made to the number of shares, principally the following: (i) conversion into PLC ordinary shares in the year 2038 of shares in a group company under the arrangements for the variation of the Leverhulme Trust and (ii) the exercise of share options by employees.

Earnings per share for total operations for the six months were calculated as follows:

				2010					2009
	Combined EPS – Basic
	Average number of combined share units (Millions of units)				2,810.6					2,792.4
	Net profit attributable to shareholders’ equity				2,035					1,489
	Combined EPS				0.72					0.53
	Combined EPS – Diluted
	Adjusted average number of combined share units (Millions of units)				2,905.0					2,881.5
	Combined EPS – diluted				0.70					0.52