Operating Costs and Non-underlying Items (Tables)

12 Months Ended

Dec. 31, 2017

€ million			€ million			€ million
	2017			2016			2015
Turnover		53,715			52,713			53,272
Cost of sales		(30,547	)		(30,229	)		(30,808	)
of which: Distribution costs		(3,241	)		(3,246	)		(3,358	)

Gross profit		23,168			22,484			22,464
Selling and administrative expenses		(14,311	)		(14,683	)		(14,949	)
of which: Brand and marketing investment		(7,566	)		(7,731	)		(8,003	)
Research and development		(900	)		(978	)		(1,005	)

Operating profit		8,857			7,801			7,515

Non-underlying Items

Non-underlying items are disclosed on the face of the income statement to provide additional information to users to help them better understand underlying business performance.


			€ million			€ million			€ million
	Notes		2017			2016			2015
Non-underlying items within operating profit before tax				(543	)		(823	)		(796	)
Acquisition and disposal-related costs				(159	)		(132	)		(105	)
Gain/(loss) on disposal of group companies^(b)				334			(95	)		(9	)
Restructuring costs				(638	)		(578	)		(446	)
Impairments and other one-off items^(c)				(80	)		(18	)		(236	)
Tax on non-underlying items within operating profit				77			213			180
Non-underlying items within operating profit after tax				(466	)		(610	)		(616	)
Non-underlying items not in operating profit but within net profit before tax
Premium paid on buy back of preference shares		25		(382	)		-			-
Tax impact of non-underlying items not in operating profit but within net profit				578			-			-
Tax on premium paid on buy back of preference shares (non deductible)				-			-			-
Impact of US tax reform		6A		578			-			-
Non-underlying items not in operating profit but within net profit after tax				196			-			-
Non-underlying items after tax^(d)				(270	)		(610	)		(616	)

Attributable to:
Non-controlling interest				(8	)		(9	)		(11	)
Shareholders’ equity				(262	)		(601	)		(605	)

^(a)	Previously we have reported non-core items. From 2017 we report non-underlying items and have revised the presentation of 2016 and 2015 information.

^(b)	2017 includes a gain of €309 million from the sale of AdeS soy beverage business in Latin America.

^(c)

2017 includes an €80 million charge for legal cases in relation to investigations by national competition authorities including those within Italy and South Africa. 2016 includes €18 million in foreign exchange losses resulting from remeasurement of the Argentinian business (2015: €52 million). 2015 includes an €86 million charge for legal cases related to a number of investigations by local competition regulators, a €14 million charge relating to other one-off legal cases, and €84 million in foreign exchange losses resulting from remeasurement of the Venezuelan business.

^(d)	Non-underlying items after tax is calculated as non-underlying items within operating profit after tax plus non-underlying items not in operating profit but within net profit after tax

Other Significant Cost

Other significant cost items within operating costs include:


			€ million			€ million			€ million
	Notes		2017			2016			2015
Staff costs		4A		(6,712	)		(6,523	)		(6,555	)
Raw and packaging materials and goods purchased for resale				(21,579	)		(21,122	)		(21,543	)
Amortisation of finite-life intangible assets and software		9		(365	)		(310	)		(273	)
Depreciation of property, plant and equipment		10		(1,173	)		(1,154	)		(1,097	)
Exchange gains/(losses):				(214	)		(209	)		(87	)
On underlying transactions				(51	)		(28	)		(118	)
On covering forward contracts				(163	)		(181	)		31
Lease rentals:				(557	)		(531	)		(534	)
Minimum operating lease payments				(568	)		(536	)		(546	)
Less: Sub-lease income relating to operating lease agreements				11			5			12