Reckitt Benckiser

Business Case Study

Finance PresentationPresented by: Sumith John

Date: May 2010

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1999 2009

Net revenue (£bn)Per annum growth: +9% @ constant

Per annum LFL growth: +8% @ constant

More than doubling the size of RB

2004 restated following the adoption of IFRS

Ten straight years of double the industry average Net Revenue growth

3

Ten straight years of double the industry average Net Income growth

200 275 340408

489577

669786

905

1,143

1,418

0

200

400

600

800

1,000

1,200

1,400

1,600

1999 2009

Adj. net income* (£m)Per annum growth: +22% @ actual

Per annum growth: +19% @ constant

7-fold increase in RB’s net income

* Adjusted to exclude the impact of exceptional items

How do we achieve such outstanding results…

Reckitt Benckiser is about passionately delivering better solutions in Household, Health and Personal care to customers and consumers, wherever they may be, for the ultimate purpose of creating shareholder value.

What is our portfolio…

Finance Charter“The purpose of finance is to be a business partner that adds value to the organization”

1. Provide accurate and timely information

2. Challenge to enable better business decisions

3. Manage procedures that safeguard company’s assets

4. Maintain low cost transactional services

Reckitt Benckiser – Business Case Study

• Business Overview

• Annual Report and Financial Statements

• Comparison Ratios

• ANZ Finance Team

• Questions

Business Overview

Business Overview – Geographic Areas

Reckitt Benckiser is a truly global company: - Operations in 60+ countries - Sales in c. 180 countries world-wide - 49 Manufacturing facilities world-wide - c.22,000 employees

UK listed. Top 25 of FTSE 100Market Cap £ 24 bn

Business Overview – When you meet us…

• RB people are at the heart of the company's success.

• We come from all over the world and work all over the world

• We thrive on responsibility, take ownership, are straight speaking and have an intense drive for progress and action.

• We act fast and are compelled to outperform wherever we focus, even in corporate responsibility, where Reckitt Benckiser has the most ambitious carbon reduction programme in the industry.

• We bring together entrepreneurial people who want to make their mark and consumer products history.

• We execute our strategy by being brave, focused and driven. Always going further, faster and higher.

• 17 Powerbrands lead our portfolio of household, health and personal care products, and they have the No.1 or No. 2 position globally in most categories - a unique position. 

• Known, trusted and sought out, RB's brands are not just famous names, they are part of people's lives.

• The 17 Powerbrands are Vanish, Calgon, Woolite, Lysol, Bang, Harpic, Finish, Air Wick, Mortein, Strepsils, Mucinex, Nurofen, Gaviscon, Dettol, Veet, Clearasil, French's

Business Overview – What Brands…

Business Overview – Five Core Categories

• Fabric Care

• Surface & Dish

• Home Care

• Health Care

• Germ & Personal Care

Business Overview – Market Position

WORLD No.1Category BrandSurface Care Cillit Bang, LysolGerm Protection Dettol, LysolFabric Treatment VanishDepilatories VeetAutomatic Dishwashing Finish/CalgonitSore Throat (medicated) StrepsilsWater Softeners CalgonLavatory Care Harpic/Lysol

WORLD No.2Category BrandAir Care AirwickPest Control MorteinGarment Care Woolite

REGIONAL No.1/No.2Category BrandAnalgesics Nurofen (Europe)Cold/Flu Lemsip (UK)Upper GI Gaviscon (Europe)

Business Overview – Market Position

World champions17 Power Brands are either No.1 or No.2 worldwide

15

40

4651 53

57 5861 62

70 70

0

10

20

30

40

50

60

70

80

2001 2002 2003 2004 2005 2006 2007 2008 2008 2009

Old basis (18 Powerbrands)

New basis (17 Powerbrands*)

With Powerbrands as the clear growth driver

•Powerbrands have grown >12% pa compared to 7% pa for RB excluding RBP

•Powerbrands have represented 84% of RB’s

growth over the period 2001-2009

* Includes brands in transition

% o

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R f

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Pow

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Creating a great portfolio of brandsNet revenues (£m) & net revenue growth % in 2009

Total PB 75% % base business NR

Global Jewels 44% % base business NR

Global Jewels + HC 57% % base business NR

Mucinex growth 08-09 LFL

Fini

sh

Airwic

k Vanis

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Dett

olLy

sol

Nurof

en

Muc

ine

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Streps

ils

Gav

isco

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Veet

Calgo

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Cillit

BangMor

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Fren

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Harpi

c

Woo

lite

Clear

asil

^6% ^-4%^4%^6%̂ 28%̂ 10%̂ 17%̂10%̂ 17%̂ 10%̂ 4%^2%-4% ^2%^6%̂ 10%̂ 6%

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All internal areas have contributed to growth

Net revenue growth 1999-2009, at constant

CAGR: +13%

LFL: +13%

CAGR: +36%

LFL: +36%

CAGR: +9%

LFL: +7%

CAGR: +7%

LFL: +6%

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The power behind the Powerbrands

Business Overview - Summary• Geographical segments:

− Europe

− North America / Australia & New Zealand

− Developing Markets

• Category segments:

− Fabric Care

− Surface & Dish

− Home Care

− Health Care

− Germ & Personal Care

• 17 Power Brands

− Increasingly the focus of the business

− Makes up +75% of company net revenue

Annual Report and Financial Statements

Annual Report and Financial Statements 2009

Financial Statements

Annual Report and Financial Statements 2009

Reports available online

Annual Report and Shareholders’ Review available at:

http://www.rb.com

Investor Information

Financial Statements – Group Income Statementfor the year ended 31 December 2009

Profit & Loss Statement

Net Revenue

less: Cost of Goods Sold

= Gross Margin

less: Marketing expense and commercial overheads

= Operating Profit

less: Interest and Tax

= Profit for the year

Financial Statements – Group Balance Sheetas at 31 December 2007 Balance Sheet

Non-current assets

plus: Current Assets

= Total Assets

Current Liabilities

plus: Non-Current Liabilities

= Total Liabilities

Total Assets

less: Total Liabilities

= Net assets

= Total equity

Total equity £ 4 billionMarket Cap £ 24 billionInternally generated goodwill £ 20 billion

Financial Statements – Group Cash Flow Statementfor the year ended 31 December 2007

Cash Flow Statement

Net cash flows from operating activities

plus: Investing activities

plus: Financing activities

= Net cash flow for the year

Financial Statements – Independent Audit Report

the Group financial statements give a trueand fair view, in accordance with IFRS…

In our (‘PwC’) opinion…

Annual Report and Financial Statements - Summary

• Income Statement (Profit & Loss):

− records the Company’s financial performance between two points in time

• Balance Sheet:

− captures the Company’s financial position at a single point in time

− difference between market capitalisation and balance sheet equity is internally generated goodwill

• Cash Flow Statement

− operating activities

− investing activities

− financing activities

• Independent Audit Report

− independent third party opinion about the Company’s Financial Statements

Comparison Ratios

Comparison Ratios

Why use ratios?

• Understand business trends over time;

• Used to measure business performance;

• Understand and detect where problems may exist;

• Devise means to fix the problems;

• Drive accountability; and

• Benchmark against competitors.

Key Performance Indicators (KPI)

A good year in tough conditionsLeading to 10th straight year of above industry average growth

Consistent gross margin progressionFull year margins 2005-2009 (%)

Consistent operating margin progressionFull year margins 2005-2009 (%)

Total Dividends paid£m

Comparison Ratios - Summary

• Key Performance Indicators

− Net Revenue growth

− Gross Margin %

− Operating Margin %

− Net Working Capital Ratio

− Total Dividends paid

ANZ Finance Team

ANZ Finance Team

• Prepare Monthly Results• Submit to CHQ• Maintain General Ledger• Maintain Fixed Assets Ledger• Review & file Tax• Manage Insurance• Reconcile Bank Accounts• Liaison with HO Treasury• Prepare & report to Audit

Finance Director ANZIan Clark

Financial ControllerPeter Bryden

Supply ControllerMichael Biernat

Commercial ControllerTodd Shelly

Finance Director – NZKirstin Hayes

Financial AccountantGreg Montgomery

Financial AccountantJoel Lieschke

Assistant Financial AccountantTammy Nguyen

Accounts Payable / Rec Supervisor

Corrine Parsons

Accounts ClerkMelissa Stone

Accounts ClerkSushil Napier

Accounts ClerkKim Abbott

Supply Chain AnalysisManager

Karen Duong

Supply Business AnalystAhmed Hassan

Commercial Analysis ManagerSumith John

Commercial Business AnalystZankar Pandya

Commercial Analysis ManagerAlan Rogers

Commercial AnalystHeidi Johnson (Mat Leave)

Patti Schefter

Payroll & Remunerations Manager

Wayne Farlow

Payroll Officer – Part-time Ivana Anstey

Commercial Business AnalystMichael Ching

Accounts Clerk Part-timeIvana Anstey

Supply Business AnalystRobert Tuwera

• Prepare Factory Budgets• Prepare Supply Forecasts• Monthly Factory Reporting• COGS Information for NPD• Standard Cost Maintenance• Inventory Management

• Planning & forecasting• Pricing review & analysis• Review Marketing spend• Review Marketing ROI• Category finance review• Develop new product project review & analysis

Any Questions?