Final Results

19th February 2003 RECORD RESULTS IN 2002 2003 TARGETS FURTHER SUSTAINED GROWTH Results at a Glance Q4 % change % change Full Year % change % change actual constant actual constant exchange exchange exchange exchange Net Revenues £899m +0 +6 £3,531m +3 +7 Operating Profit £182m +3 +6 £577m +10 +12 Net Income Normalized £140m +14 +17 £408m +20 +22 * Net Income Actual £140m +28 +31 £408m +23 +25 Net Cash Flow £576m +38 * Excluding FRS 19 Restatement - see basis of comparatives note on page 6 * Q4 Net revenues were level (+6% at constant exchange) at £899m as a much weaker US dollar countered the underlying business growth on translation into sterling. For the full year (FY), net revenues grew 3% (7% constant) to £3,531m. * Operating profit increased by 3% in Q4 to £182m and by 10% FY to £577m. Full Year operating margins improved 100 basis points (bps) to 16.3% behind a 290 bps gross margin improvement, offset by a substantial increase in marketing investment. * Normalized net income grew by 14% in Q4 to £140m, and by 20% in FY to £ 408m. * Net cash flow increased 38% to £576m. There was a further reduction of £ 185m in net working capital. Due to strong cash flow, net borrowings reduced by £362m to £105m at the year-end. * The Board is recommending a final dividend of 12.8 pence, unchanged, to maintain the full year dividend at 25.5 pence, in line with previously communicated policy. The dividend is covered 2.3 times by 2002 net income. Commenting on these results and prospects for 2003, Bart Becht, Chief Executive Officer, said 'Reckitt Benckiser had another good year in 2002. Net Revenues and profits grew to new record levels. Growth was particularly strong on our core 15 Power Brands behind the success of our new products and increased investment. 'Our targets for 2003 are for net revenue growth of 4% to 6% and for net income growth in the low double digits, both at constant exchange. These targets demonstrate our commitment to shareholder value.' Detailed Operating Review The financial schedules attached to the release contain full details of the results as reported and as adjusted for non-recurring factors. Specific terms are defined separately in the financial review. Fourth Quarter 2002 Net revenues in Q4 were level with last year (+6% at constant exchange) at £ 899m. Net revenues from continuing operations were also level (+6% constant) at £899m (£896m in 2001). Operating profit for Q4 grew 3% (6% constant) to £182m. Gross margin increased by 230 bps to 53.6% due to higher margin new products, some favourable purchase prices of raw and packaging materials and further benefits from Squeeze 2-50 and Xtrim. Marketing investment, particularly media, increased substantially in the quarter behind the strong program of new initiatives launched in the autumn. Operating margins increased by 50 basis points to 20.2%. Net income was £140m after the release of £8m of tax provisions no longer required which reduced the tax charge in the quarter to 21%. Normalized net income grew 14% (17% constant) to £140m (2001 £123m). Without the non-recurring tax credit, net income would have risen by 8% (10% constant) to £132m and the tax charge would have been 26%. Full Year 2002 Net revenues grew by 3% (7% constant) to £3,531m. Net revenues from continuing operations rose by 3% (7% constant) to £3,518m. Operating profit increased 10% (12% constant) to £577m. Gross margins rose 290 bps to 52.5% as a result of higher margin new products, favourable purchase prices on raw and packaging materials, savings from the Squeeze program and first year savings from the Xtrim program. Marketing investment, particularly media, increased substantially. Operating margins increased by 100 bps to 16.3%. Net income was £408m. Normalized net income grew 20% (22% constant). Net interest expense of £32m (2001 £51m) was lower due to the strong cash inflow over the past year reducing the level of net borrowings. The underlying tax rate for the year on the normalized taxable profit was 27%. Category Review at constant exchange rates Fabric Care FY net revenues grew 5% to £895m driven by a strong performance in fabric treatment and garment care. In fabric treatment, the in-wash segment benefited from the rollout of Vanish ActionBall in Western Europe and a strong performance on the base business in Korea. Additionally, the carpet cleaner segment grew strongly behind the success of Vanish Powershot spot and stain treater both in North America and Western Europe. In garment care, Woolite grew strongly in North America and Europe behind better marketing execution on the base brand and the success of Woolite Black. Q4 net revenues grew 2% to £223m. Surface Care FY net revenues grew 4% to £769m. The main growth drivers were lavatory care, disinfectant cleaners and specialty cleaners, partially offset by declines on multipurpose cleaners in Latin America due to weaker market conditions. In lavatory care, growth came behind the success of the Lysol liquid in-toilet-bowl device in North America, Harpic wipes and better base Harpic business in Western Europe. In disinfectant cleaners, the growth was due to the roll-out of Lysol and Dettol floor wipes, the early benefit of Lysol and Dettol rapid dry floor cleaner and growth behind the base Lysol disinfectant spray brand. Q4 net revenues grew 5% to £184m. Dishwashing FY net revenues grew 11% to £490m benefiting from the success of the launch of Finish/Calgonit 3-in-1 Total across Europe and the 2-in-1 product in North America. The recent launch of Gelcaps in Western Europe and North America has been well received and initial sales are encouraging, while Calgonit Protector is providing incremental growth. Q4 net revenues grew 7% to £131m. Home Care FY net revenues grew 14% to £537m due to continuing success for Air Care somewhat offset by Pest Control. Air Care has seen further substantial growth behind the success of Airwick electrical oils and Crystal Air in North America. In Western Europe growth has come from Crystal Air and Electricals, and the more recent innovations of Crystal Auto and Click Spray. Pest Control was lower than last year in Asia and Latin America due to weaker market conditions and the effect of wholesaler consolidation in India. Q4 net revenues grew 15% to £142m. Health & Personal Care FY net revenues grew 13% to £455m. The main growth drivers were depilatories, antiseptics and health care. Depilatories grew behind the success of Veet Mousse and the Veet Aqua System in Western Europe and the launch of Veet in the USA. Dettol antiseptic performed well, most notably in Africa/Middle East. The Health Care business performed strongly with notable growth on Gaviscon in the UK and Continental Europe. Q4 net revenues grew 11% to £111m. Geographic Analysis at constant exchange Western Europe: 43% of net revenues. Net revenues grew by 8% to £1,513m. This strong performance was due to the success of automatic dishwashing, air care, depilatories, garment care and healthcare. The launch of Finish/Calgonit 3-in-1 Total in automatic dishwashing has resulted in good growth, enhanced towards the end of the year by Calgonit protector and initial sales of Gelcaps. Air Wick Crystal Auto and Click Spray were successfully launched across the region, building on the continuing growth of Crystal Air and Electricals. Veet Mousse, supported by further growth for the Veet Aqua System, has driven growth in depilatories. Garment care growth came behind innovations such as Woolite Black and new fragrance variants. Healthcare grew strongly due to the success of Gaviscon in the UK and Continental Europe. FY operating margins increased by 100 bps to 22.4% due to substantial gross margin expansion, resulting from higher margin new products, lower input costs and Squeeze and Xtrim initiatives, offset by significant increases in marketing investment. Operating profits increased by 14% to £339m. Net revenues grew 7% to £386m in Q4 and operating profits by 7% to £96m. North America: 32% of net revenues. Net revenues grew 8% to £1,109m. The growth came mainly from the continuing success of air care and automatic dishwashing. In air care, growth came behind Airwick Electricals and Crystal Air. The launch of Electrasol Powerball 2-in-1 has continued to increase net revenues in automatic dishwashing and towards the year-end the launch of Electrasol Gelpacs was well received. The Lysol disinfecting range performed well behind the liquid in-toilet-bowl device, the roll-out of floor wipes, the introduction of Rapid Dry floor cleaner and growth of the base disinfectant spray brand. Woolite fine fabric grew strongly behind growth of the core Woolite brand and the launch of Woolite Black. Food net revenues were ahead of last year by 3%. North American operating margins expanded 140 bps to 16.1% due to significant gross margin expansion, arising from new products, lower input costs and Squeeze and Xtrim benefits, offset by marketing investment. Operating profits increased 19% to £179m. Net revenues grew 5% to £287m in Q4 and operating profit rose 3% to £63m. Latin America: 5% of net revenues. Net revenues declined 4% to £167m. Adverse market conditions in Argentina and Brazil were compounded by rapidly rising costs of imported materials due to substantial currency devaluation. These factors have been seen increasingly across the whole region including Mexico. The crisis in Venezuela impacted towards the end of the year. Due to the lower volumes and the exchange rate impact on input costs, operating margin deteriorated. The operating loss was £ 1m (2001 profit of £3m). Net revenues declined 7% to £38m in Q4 but the region contributed an operating profit of £3m (2001 £3m). Asia Pacific: 11% of net revenues. Net revenues grew 3% to £401m. Excluding effect of the 2001 acquisitions, net revenues declined marginally, but saw a strong recovery by the region in H2. In China, the business achieved reduced operating losses on the planned lower net revenue base. Net revenues in India were impacted by soft market conditions, competitive issues and organizational changes during H1, but improved substantially in H2 post reorganization. Elsewhere, net revenues progressed largely due to strong results in Australia/New Zealand and in Korea. Operating margins improved by 320 bps to 8.7% helped by the acquisitions, lower input costs, and further Squeeze savings. Operating profits increased 52% to £35m. Net revenues grew 10% to £106m in Q4 and operating profits by 36% to £15m. Rest of World: 9% of net revenues. Net revenues grew 12% to £328m. Growth came across both Eastern Europe and Africa/Middle East. In Eastern Europe the growth was driven by Calgonit automatic dishwashing, Vanish fabric treatment and Veet depilatories. In Africa /Middle East, growth came mainly from Dettol, due to higher investment, from Air Care, behind the introduction of Crystal Air, from Harpic in lavatory care, and from Health Care. Operating margins were slightly below last year at 7.6% affected by economic conditions in Turkey. Operating profits increased 4% to £ 25m. Net revenues grew 11% in Q4 to £82m and operating profits were £7m (2001 £8m). New Initiatives H1 2003 Reckitt Benckiser is today announcing a number of new initiatives for the first half of 2003. Fabric Care: Vanish Oxy Action in-wash fabric treatment. Spray `n Wash in-wash tablets and liquid in North America. Woolite Modern Fibres in Europe and North America. Dettol Laundry Sanitizer in Europe and Asia. Surface Care: Dettol / Lysol NeutraAir air sanitizer in Europe and North America. Lysol Toilet Bowl Gel with Powerons in North America. Automatic Dishwashing: Calgonit/Finish 3-in-1 Brilliant formulation, a significant performance upgrade in Europe. Calgonit/Finish detergents with new orange and lemon fragrances. New Calgonit/Finish machine deodorizers. Home Care: Airwick Decosphere in North America. Airwick Crystal Air Special Selection, new shapes and new fragrances, in Europe. Health & Personal Care: New Veet Wax Strips for sensitive skin. Veet `No Heat' Aqua system, a new room temperature roll-on wax system. Dettol personal wipes. Financial Review - Full Year Non Operating Items. There were no non-operating items in 2002 (£16m profit on disposal in 2001 of which costs of £7m arose in Q4). Net Interest. The net interest expense of £32m (2001 £51m) was lower due to strong cash inflow over the past year reducing the level of net borrowings. Tax. The underlying tax rate for the period was 27% (2001 28%). In addition, there was a non-recurring release of tax provisions of £8m relating to a recent tax settlement, which reduced the effective rate for the year to 25%. Net Working Capital (defined as net current liabilities excluding current asset investments, cash and short term borrowings) reduced at the year end by £185m to minus £491m. Cash Flow. Operating cash flow increased 25% to £752m, due to higher operating profit and net working capital improvements. Net interest payments were lower at £30m (£50m). Capital expenditure was lower at £99m (£111m), offset by proceeds from disposal of fixed assets of £34m (£10m). Tax paid increased to £102m (£57m). After these items, net cash flow from operations increased by 38% to £576m. Cash conversion (net cash flow from operations as a percentage of net revenue) increased to 16% from 12% in 2001. Net Borrowings at the year-end were £105m (£467m), a reduction of £362m due to strong operating cash inflow, working capital release and improved cash management. Net borrowings consisted of the convertible capital bond of £193m (£193m) offset by net funds of £88m (2001: borrowings of £274m). This latter figure is made up of borrowings of £331m (£453m), offset by cash of £40m (£89m) and short-term investments of £379m (£90m). Balance Sheet. At the end of 2002, the Group had shareholders' funds of £1,201m (£1,034m restated), an increase of 16%. Net borrowings were £105m (£467m). Total capital employed in the business was £1,313m (£1,517m) a decrease in capital employed of 13%. The Company's financial ratios improved significantly during the year. Interest cover was 18 times (2001 normalized 10.3x). Net borrowings represented 8% of capital employed (31%), treating the convertible bond as borrowings. Dividends The Directors recommend a final dividend of 12.8 pence per share, unchanged, to give a full year dividend of 25.5 pence per share, also unchanged. This is in line with the previously communicated policy to maintain the dividend payout until the cover reached the average of the industry peer group. This dividend will be covered 2.3 times by net income for the year 2002. This compares to an industry peer group average of 2.5 times cover. The dividend, if approved by shareholders at the AGM on 7th May 2003, will be paid on 21st May to shareholders on the register on 28th February. The ex dividend date will be 21st February 2003. Share Capital On 19th and 23rd December 2002, the A shareholder exercised its right to exchange the 13,655,000 A shares into Reckitt Benckiser plc ordinary shares. Accordingly, 63,000,000 shares and 5,275,000 shares were issued and admitted to the Official List on 27th December 2002 and 31st December 2002 respectively. The rights attached to the special voting share ceased following exchange, and the share will be cancelled in due course. Basis of Comparatives For clarity in evaluating the underlying performance of the business, the following terminology is used. * FRS 19 Restatement (see note 1). In the financial statements, comparatives for 2001 have been restated following implementation of FRS 19 'Accounting for Deferred Tax'. The effect of the restatement was to reduce net income by £7m in Q4 2001 and £24m (from £340m to £316m) in the full year 2001. The reconciliation between the financial statements and the normalized and previously reported numbers used in the results commentary is set out in the reconciliation table below. Reconciliation of Net Income 2001 2001 2002 2002 Q4 FY Q4 £m £m £m FY £m Normalized Net Income as previously 123 340 140 +14% 408 +20% reported Non Operating Items after Tax (7) 16 Total Net Income as previously 116 356 140 +21% 408 +15% reported FRS 19 Restatement (7) (24) Actual Net Income Restated to 109 332 140 +28% 408 +23% Statutory Basis 2002 Actual Net Income Restated to 116 316 140 +21% 408 +29% Statutory Basis 2002 excluding non operating items Normalized. In the detailed commentary comparisons are made with 2001 results before restatement for FRS 19 and before non-operating items. This is designated the 'Normalized' basis as management believes it best equates to the underlying growth of the business. Actual. The actual results in the financial statements below include 2001 fully restated for FRS 19 and non-operating items. * Continuing Operations. Excludes net revenues and operating profit relating to businesses sold or deconsolidated during the course of 2001 or 2002. These are individually disclosed in the profit and loss account for both Q4 and the full year. There were no disposals in 2002. Zimbabwean operations have been deconsolidated from 1 July 2002 as detailed in Note 2. * Constant Exchange. Movements of exchange rates relative to sterling affect actual results as reported. The constant exchange rate basis adjusts comparatives to exclude such movements and show the underlying growth. For Further Information Tom Corran Reckitt Benckiser +44 (0)1753 217 800 Senior Vice President, Investor Relations & Corporate Communications Tim Spratt Financial Dynamics +44 (0) 207 831 3113 The preliminary results for the year ended 31 December 2002 are unaudited. The financial information set out in the announcement does not constitute the Company's statutory accounts for the years ended 31 December 2002 or 31 December 2001. The financial information for the year ended 31 December 2001 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not contain a statement under either Section 237 (2) or Section 237 (3) of the Companies Act 1985. The statutory accounts for the year ended 31 December 2002 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The Group at a Glance (unaudited) (2001: Pre - FRS 19 Restatement) Quarter Ended Dec 31 Year Ended Dec 31 2002 2001 2002 2001 £m £m £m £m From total ordinary activities 899 900 Net revenues 3,531 3,439 0% 5% Net revenues growth 3% 7% 53.6% 51.3% Gross margin 52.5% 49.6% 205 195 EBITDA normalized* 659 599 22.8% 21.7% EBITDA margin normalized* 18.7% 17.4% 182 177 EBIT normalized* 577 525 20.2% 19.7% EBIT margin normalized* 16.3% 15.3% 178 169 Profit before tax normalized 545 474 * 19.8% 18.8% PBT margin normalized* 15.4% 13.8% 140 123 Net Income normalized 408 340 15.6% 13.7% Net Income margin normalized 11.6% 9.9% 19.9p 17.5p EPS normalized 58.0p 48.6p 18.9p 16.8p EPS normalized, diluted 55.7p 47.1p * Normalized to exclude non-operating items - see page 7. Group profit and loss account (unaudited) Quarter Ended Dec 31 Year Ended Dec 31 2002 2001# % change 2002 2001# % change £m £m £m £m 899 896 0% Net revenues from continuing 3,518 3,416 3% operations 0 4 Discontinued and de-consolidated 13 23 operations 899 900 0% Total net revenues 3,531 3,439 3% (417) (438) (5%) Cost of sales (1,678) (1,734) (3%) 482 462 4% Gross profit 1,853 1,705 9% (300) (285) 5% Net operating expenses (1,276) (1,180) 8% 182 176 3% Operating profit from continuing 576 522 10% operations - 1 Discontinued and de-consolidated 1 3 operations 182 177 3% Total operating profit 577 525 10% Non-operating items: - (4) (Loss)/Profit on disposal of - 24 businesses 182 173 5% Profit on ordinary activities 577 549 5% before interest (4) (8) (50%) Net interest expense (32) (51) (37%) 178 165 8% Profit on ordinary activities 545 498 9% before taxation (38) (56) (32%) Tax on profit on ordinary (137) (165) (17%) activities 140 109 28% Profit on ordinary activities 408 333 23% after taxation 0 0 Attributable to equity minority 0 (1) interests 140 109 28% Profit for the period 408 332 23% (91) (90) Ordinary Dividends (181) (179) 49 19 158% Retained profit for the period 227 153 48% Earnings per ordinary share (pence): 19.9p 15.5p 28% On profit for the period 58.0p 47.4p 22% 19.9p 16.5p 21% On normalized profit for the 58.0p 45.1p 29% period 18.9p 14.9p 27% On profit for the period, 55.7p 46.0p 21% diluted 18.9p 15.9p 19% On normalized profit, diluted 55.7p 43.9p 27% Average common shares outstanding (millions): 705.6 701.8 Basic 704.4 700.4 757.3 750.3 Diluted 756.5 749.7 # Restated following the adoption of Financial Reporting Standard 19 'Accounting for Deferred Tax' Group balance sheet As at December 31 (unaudited) 2002 2001# £m £m Fixed assets: Intangible assets 1,764 1,767 Tangible assets 525 575 2,289 2,342 Current assets: Stocks 230 219 Debtors due within one year 489 586 Debtors due after more than one year 85 74 Investments 379 90 Cash at bank and in hand 40 89 1,223 1,058 Current liabilities: Creditors due within one year: Borrowings (106) (186) Other (1,210) (1,111) (1,316) (1,297) Net current liabilities (93) (239) Total assets less current liabilities 2,196 2,103 Non-current liabilities: Creditors due after more than one year: Borrowings (225) (267) Other (163) (156) Convertible capital bonds (193) (193) (581) (616) Provisions for liabilities and charges (407) (437) Equity minority interests (7) (16) Net Assets 1,201 1,034 Capital and reserves: Called up share capital (including non-equity capital 78 71 of £5m) Shares to be issued - 7 Share premium account 197 182 Merger reserve 142 142 Profit and loss account 784 632 Total shareholders' funds (including non-equity 1,201 1,034 shareholders' funds of £5m) # Restated following the adoption of Financial Reporting Standard 19 'Accounting for Deferred Tax Group cash flow statement For the year ended 31 December 2002 (unaudited) Reconciliation of operating profit to operating cash flow 2002 2001 £m £m Operating activities: Operating profit 577 525 Non-cash items: Depreciation and amortisation 82 74 Loss on sale of fixed assets 6 0 (Increase)/decrease in stocks (18) 26 Decrease in debtors 60 12 Increase/(decrease) in creditors 66 (13) Reorganisation and merger integration costs paid (21) (21) Cash flow from operating activities 752 603 Cash flow statement Cash flow from operating activities 752 603 Return on investments and servicing of finance (30) (50) Taxation (102) (57) Capital expenditure and financial investment Purchase of intangible fixed assets (6) - Purchase of tangible fixed assets (93) (111) Disposal of tangible fixed assets 34 10 (65) (101) Acquisitions and disposals Acquisition of businesses (47) (102) Cash acquired with subsidiary undertaking - 7 Disposal of businesses - 39 (47) (56) Equity dividends paid (181) (179) Cash inflow before use of liquid resources and 327 160 financing Management of liquid resources (293) (55) Financing (59) (119) Decrease in cash for the year (25) (14) Reconciliation of net cash flow to movement in debt Decrease in cash in year (25) (14) Cash outflow from decrease in debt 74 136 Cash outflow from increase in liquid resources 293 55 Changes in net debt resulting from cash flows 342 177 Loans acquired with subsidiaries - (37) Translation differences 20 (12) Movement in net debt in year 362 128 Net debt at beginning of year (467) (595) Net debt at end of year (105) (467) Reconciliation of operating cash flow to net cash flow from ordinary operations Operating cash flow 773 624 (excluding reorganisation and merger integration costs paid) Returns on investments and servicing of finance (30) (50) Taxation (102) (57) Capital expenditure (net) (65) (101) Net cash flow from ordinary operations 576 416 Segmental Analysis (unaudited) Analyses by geographical area and product segment of net revenues and operating profit are set out below. The figures for each geographic area show the net revenues and profit made by companies located in that area. Quarter Ended Dec 31 Year Ended Dec 31 2002 2001 % change 2002 2001 % change £m £m Exch. rates £m £m Exch. rates Actual Const. Actual Const. Net revenues - by geographical area 386 354 9% 7% Western Europe 1,513 1,390 9% 8% 287 298 (4%) 5% North America 1,109 1,073 3% 8% 38 64 (41%) (7%) Latin America 167 229 (27%) (4%) 106 98 8% 10% Asia Pacific 401 397 1% 3% 82 82 0% 11% Rest of World 328 327 0% 12% 899 896 0% 6% 3,518 3,416 3% 7% 0 4 - - Discontinued and 13 23 - - de-consolidated operations 899 900 0% 6% 3,531 3,439 3% 7% Operating profit - by geographical area 96 89 8% 7% Western Europe 339 297 14% 14% 63 66 (5%) 3% North America 179 158 13% 19% 3 3 0% (25%) Latin America (1) 3 - - 15 10 50% 36% Asia Pacific 35 22 59% 52% 7 8 (13%) 0% Rest of World 25 26 (4%) 4% (2) 0 - - Corporate (1) 16 - - 182 176 3% 6% 576 522 10% 13% 0 1 - - Discontinued and 1 3 - - de-consolidated operations 182 177 3% 6% 577 525 10% 12% % % Operating margin - by % % geographical area 24.9 25.1 Western Europe 22.4 21.4 22.0 22.1 North America 16.1 14.7 7.9 4.7 Latin America (0.6) 1.3 14.2 10.2 Asia Pacific 8.7 5.5 8.5 9.8 Rest of World 7.6 8.0 - - Corporate - - 20.2 19.6 16.4 15.3 - 25.0 Discontinued and 7.7 13.0 de-consolidated operations 20.2 19.7 16.3 15.3 Segmental Analysis (continued) Quarter Ended Dec 31 Year Ended Dec 31 2002 2001 % change 2002 2001 % change £m £m Exch. rates £m £m Exch. Rates Actual Const. Actual Const. Net revenues - by product segment 831 826 1% 6% Household and Health & 3,314 3,208 3% 7% Personal Care 68 70 (3%) 5% Food 204 208 (2%) 3% 899 896 0% 6% 3,518 3,416 3% 7% - 4 - - Discontinued and 13 23 - - de-consolidated operations 899 900 0% 6% 3,531 3,439 3% 7% Operating profit - by product segment 161 149 8% 9% Household and Health & 535 464 15% 16% Personal Care 23 27 (15%) (8%) Food 42 42 0% 5% (2) 0 - - Corporate (1) 16 - - 182 176 3% 6% 576 522 10% 13% - 1 - - Discontinued and 1 3 - - de-consolidated operations 182 177 3% 6% 577 525 10% 12% % % Operating margin - by % % product segment 19.4 18.0 Household and Health & 16.1 14.5 Personal Care 33.8 38.6 Food 20.6 20.2 - - Corporate - - 20.2 19.6 16.4 15.3 - 25.0 Discontinued and 7.7 13.0 de-consolidated operations 20.2 19.7 16.3 15.3 Net revenues - Household and Health & Personal Care 223 224 0% 2% Fabric Care 895 874 2% 5% 184 199 (8%) 5% Surface Care 769 800 (4%) 4% 131 123 7% 7% Dishwashing 490 449 9% 11% 142 133 7% 15% Home Care 537 492 9% 14% 111 103 8% 11% Health & Personal Care 455 411 11% 13% 791 782 1% 7% Core Business 3,146 3,026 4% 8% 40 44 (9%) (5%) Other Household 168 182 (8%) (6%) 831 826 1% 6% Net Revenues - 3,314 3,208 3% 7% continuing operations Earnings per ordinary share For the year ended December 31, (unaudited) The reconciliation between profit for the year and the weighted average number of shares used in the calculation of the diluted earnings per share is set out below: 2002 2001 FRS 19 restated Profit Average Earnings Profit Average Earnings for the number of per for number of per year £m shares share the shares share pence year £ pence m Profit attributable to 408 704,352,704 58.0 332 700,389,601 47.4 shareholders Dilution for Executive 11,788,985 9,235,337 options outstanding and Executive Restricted Share Plan Dilution for Employee 1,459,933 1,133,304 Sharesave Scheme options outstanding Dilution for convertible 13 38,929,275 13 38,964,597 capital bonds outstanding* On a diluted basis 421 756,530,897 55.7 345 749,722,839 46.0 * After the appropriate tax adjustment, the profit adjustments represent the coupon on the convertible capital bonds. The earnings per share impact reflects the effect of that profit and the assumption of the issue of shares on conversion of the bonds. Prior to exchange, five times the number of Reckitt Benckiser Holdings BV A shares have been included in the calculations of the weighted average number of shares, in order to present the effect of the Shareholders' Agreement, under the terms of which the position of the holder of the Reckitt Benckiser Holdings BV A shares is in substance the same as if it held five new Reckitt Benckiser plc ordinary shares for every Reckitt Benckiser Holdings BV A share held. The reconciliation of profit for the year and earnings per share on the shares in issue between unadjusted and adjusted EPS calculation bases is as follows: 2002 2001 FRS 19 restated Profit Average Earnings Profit Average Earnings for the number of per for number of per share year £m shares share the shares pence pence year £ m Basic EPS 408 704,352,704 58.0 332 700,389,601 47.4 Non operating items - - - (24) - - Taxation (including - - - 8 - - deferred taxation) 408 704,352,704 58.0 316 700,389,601 45.1 Impact of dilution 13 52,178,193 13 49,333,238 - On an adjusted, diluted 421 756,530,897 55.7 329 749,722,839 43.9 basis The Directors believe that a diluted earnings per ordinary share, adjusted for the distorting effects of non-operating items after the appropriate tax amount, provides the most meaningful measure of earnings per ordinary share in comparing the performance of the business over time. Note 1. Adoption of FRS 19 Under the Group's accounting policies as disclosed in the 2002 Annual Report & Accounts, the Group previously recognized deferred tax on timing differences that were expected to reverse in the foreseeable future. With effect from 1 January 2002, the Group has adopted Financial Reporting Standard 19 'Accounting for Deferred Tax' and accordingly now recognizes deferred tax on timing differences that have originated but not reversed by the balance sheet date. The prior year comparatives have been restated to comply with the above change in accounting policy. The effect of this restatement is to reduce profit after tax. The effect on Q4 2001 is to reduce normalized net income by £7m from £123m to £116m. The full year effect on 2001 is to reduce normalized net income by £ 24m from £340m to £316m. Note 2. De-consolidation of Zimbabwe The results and net assets of the Group's subsidiary in Zimbabwe have been excluded from the consolidated Group results with effect from 1st July 2002, on the basis that severe long term restrictions now exist that hinder the exercise of the Group's rights over the assets employed, in particular the remittance of funds. The results for the first half of 2002 are treated as discontinued business (net revenues of £13m, operating profit of £1m) and Zimbabwe has been excluded from results for Q3 and Q4.

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