Interim Results

Reckitt Benckiser PLC 29 August 2001 Reckitt Benckiser 29 August 2001 Targets Increased following Strong First Half -------------------------------------------------------------------------------- Results at a Glance Q2 % ch Half Year % ch Net Revenues £879m +9 £1,696m +9 Operating Profit £134m +15 £232m +14 Net Income normalized £85m +20 £143m +23 Net Income £107m +49 £165m +40 -------------------------------------------------------------------------------- * Net revenues grew by 9% (7% at constant exchange) to £879m in Q2, and by 9% (6% constant) to £1,696m in H1. For continuing operations (excluding acquisitions and disposals) net revenue growth was 8% (6% constant) in Q2 and 10% (7% constant) in H1. * Operating profit increased by 15% to £134m in Q2 and by 14% to £232m in H1. Half year operating margins improved 60 basis points (bps) to 13.7% behind a 40 bps gross margin improvement. * Normalized net income grew by 20% in Q2 to £85m and by 23% in H1 to £ 143m. Including gains on disposals, H1 net income grew 40% to £165m. * Strong cash generation and further reductions in net working capital of £79m resulted in a £110m reduction in net borrowings, before the impact of acquisitions. Including the £131m cost of acquisitions, net borrowings increased £21m to £616m (£595m). Commenting on these results, Bart Becht, Chief Executive Officer, said 'Reckitt Benckiser had a good Q2 and first half of 2001. By focusing on our growth strategy, increasing our rate of innovation and investing heavily behind our core brands we are gaining market share and delivering consistent growth. At the same time, profit margins continue to expand behind our cost optimization programs while cash generation is improving. 'We are increasing our financial targets for the full year based on the strength of our results to date and planned programs for the balance of this year despite market conditions becoming more challenging. Specifically, we are now looking for net revenue growth from total operations (including the effect of acquired and discontinued businesses) of around 6% and for net income growth for total operations of around 18%, both at constant exchange. We are maintaining our net working capital reduction target of £50m. Delivering these targets will make 2001 another good year for Reckitt Benckiser, giving us confidence as we look forward to 2002.' Further detail on the revised targets for 2001 can be found below. Basis of Comparatives For clarity in evaluating the underlying performance of the business, the following terminology is used. * Continuing Operations. Excludes net revenues and operating profit relating to businesses acquired in 2001 or sold during the course of 2000 and to date in 2001. These items are individually disclosed in the profit and loss account for both Quarter 2 and Half Year. * Normalized. This excludes non-operating items. In Q2 and year to date 2001 profit on disposal of businesses was £23m. In Q2 2000, there was £1m profit on disposal of fixed assets, in the year to date 2000 the profit was £2m. * Constant Exchange. Movements of exchange rates relative to sterling affect actual results as reported. The constant exchange rate basis adjusts comparisons to exclude such movements and show the underlying growth. The detailed financial schedules attached to the release contain full details of the results as reported and as adjusted for these factors. Detailed Operating Review Second Quarter 2001 Net revenues in Q2 grew by 9% (7% at constant exchange) to £879m (£807m in 2000). Net revenues from continuing operations rose 8% (6% constant) to £847m (£783m). The two recent acquisitions, Oxy in Korea included from April and Tiga Roda in Indonesia included from January, contributed net revenues of £31m all of which were accounted for in the quarter. Operating profit for Q2 grew 15% (13% constant) to £134m (£117m). Normalized operating profit from continuing operations increased by 20% to £132m (£110m). Gross margin excluding acquisitions was level with last year. Including the two acquisitions, the reported gross margin was 48.6%. Marketing investment, particularly media, increased significantly during the period. Better leverage of fixed costs and merger savings contributed to higher margins. Operating margins increased by 70 basis points (bps) to 15.2% and on a continuing operations basis by 160 bps to 15.6%. Net income increased 49% to £107m (£72m). Normalized net income grew 20% (19% constant) to £85m (£71m). Half Year 2001 Net revenues grew by 9% (6% constant) to £1,696m (£1,555m). Net revenues from continuing operations grew by 10% (7% constant) to £1,658m (£1,507m). Acquisitions contributed £31m to net revenues in the half year. Operating profit increased 14% (12% constant) to £232m (£203m). Normalized operating profit from continuing operations increased 19% (16% constant) to £ 229m (£192m). Gross margins rose 40 bps to 48.9% (48.5%) mainly as a result of savings from the Squeeze program. To support the Company's active new product and roll-out program, marketing investment in the half year rose substantially, with media investment over 20% higher. Operating margins increased by 60 bps to 13.7% (13.1%). On a continuing operations basis, margins increased by 110 bps to 13.8% (12.7%). Net income for the half year was £165m (£118m). Normalized net income grew 23% (19% constant) to £143m (£116m). Net interest expense of £28m (£34m) was lower due to the strong cash inflow over the past year reducing the level of net borrowings offset by the cost of the two acquisitions. The tax rate for the period on the normalized taxable profit was 29.6%, in line with the likely rate for the year. Category Review at constant exchange rates Fabric Care. H1 net revenues grew 4% to £430m. Fabric treatment benefited from the roll-out of Vanish in Asia and Latin America and the relaunch in France. Calgon grew strongly in Eastern Europe due to higher investment and improved marketing execution. Resolve carpet cleaner gained share behind the success of the steam machine product launched in 2000. Laundry detergent grew strongly in Europe but declined due to deteriorating price conditions in China. Q2 net revenues grew 4% to £221m. Surface Care. H1 net revenues grew 8% to £406m. Lysol disinfectant cleaner continues to capture share both in spray and wipes segments in North America. The roll-out of surface care wipes into new segments is working well with the success of the new furniture and glass wipes. Harpic lavatory care benefited from a number of initiatives, including an in-bowl gel, Powerfoam and tablets. Veja multipurpose cleaner grew strongly in Brazil. Q2 net revenues grew 7% to £201m. Dishwashing. H1 net revenues grew 2% to £220m. The launch of Calgonit 3-in-1 across Europe has been an outstanding success so far, with strong net revenue growth and record market shares in Germany, UK, France, Belgium and Netherlands, and market leadership gained in Ireland. In North America, Electrasol automatic dishwashing saw stable market shares ahead of the launch of the new 2-in-1 product. Net revenues in North America were down however in comparison to a period of heavy promotion at the end of Q2 2000. Q2 net revenues were down 2% to £108m due to the year-on-year comparison in the USA. Home Care. H1 net revenues grew 40% to £236m due to continuing outstanding success for Air Care, further growth in Pest Control and the impact of the two acquisitions which mainly operate in the Home Care category - on a continuing operations basis, the category growth was 29%. Air Care has seen further substantial growth behind the success of Wizard electrical oils in North America where market share is close to triple its level of early 2000. Crystal Air and the re-launch of electricals led to substantial growth in Europe and the category was successfully launched in Eastern Europe. Mortein Pest control benefited from market share gains in India and Australia behind recent innovations, and the roll-out of the category in China and Eastern Europe. Q2 net revenues grew 57% to £127m. Health & Personal Care H1 net revenues grew 8% to £209m. The main growth drivers were depilatories and antiseptics. Depilatories grew behind the success of the new Veet Aqua system in Europe. The category was rolled out in Turkey and to new markets in Asia and Latin America. Dettol antiseptic grew strongly due to higher investment and better execution particularly in Asia and Africa/Middle East. The Health Care business had a slow start to the year in the absence of a major 'flu season in the UK, but performed strongly thereafter. Q2 net revenues grew 9% to £114m. Geographic Analysis at constant exchange from continuing operations Western Europe : 41% of net revenues Net revenues grew by 6% in H1 to £696m. This strong performance was due to the success of automatic dishwashing, air care, depilatories and lavatory care. The successful launch of Calgonit 3-in-1 in automatic dishwashing has resulted in record market shares in several major European markets. Air Wick Crystal Air has been a major success across the region. The Veet Acqua system, supported by increased marketing investment, has driven growth in depilatories. New product launches, notably Powerfoam and in-bowl gel have driven strong growth in lavatory care. H1 Operating margins increased by 60 bps to 19.7% behind better leveraging of fixed cost offset by increased marketing investment. Operating profits increased by 9% to £137m (£124m). Net revenues grew 5% to £347m in Q2 and operating profits by 15% to £70m. North America : 30% of net revenues. Net revenues grew 5% in H1 to £504m. The growth came from the continuing success of air care and surface care offset by automatic dishwashing. Wizard Electricals air care continued to substantially increase net revenues and market share. Lysol disinfecting cleaner continued to gain share in spray and wipes while the new Lysol fabric refresher has only just entered distribution. Electrasol automatic dishwashing compared with a period of heavy promotion in 2000 but saw shares stable ahead of the launch of the new 2-in-1. Food was behind 2000 due to heavy competition at the start of the year. North American operating margins expanded 80 bps to 10.9% (10.1%) due to substantial reductions in fixed costs partly offset by higher listing fees due to more aggressive phasing of new initiatives in 2001. Operating profit increased 15% to £55m (£44m). Net revenues grew 5% to £269m in Q2 and operating profit fell 5% to £35m. Latin America : 7% of net revenues. Net revenues grew 8% in H1 to £115m. Growth came from the continuing success of Veja multi purpose cleaner supported by the roll out of the pest control and depilatory categories. Market conditions deteriorated towards the end of the half year due to currency devaluation. Operating margin was flat after significantly higher marketing investment. H1 operating profit was £1m (profit of £1m). Net revenues grew 9% to £59m in Q2 and operating profit was £5m (£2m). Asia Pacific : 12% of net revenues. Net revenues grew 25% in H1 to £205m (£165m) including a £31m contribution from the acquisitions in Korea and Indonesia. On continuing operations, net revenues grew 6%. In Australia/New Zealand growth came from strong performance in Mortein pest control, from fabric treatment, automatic dishwashing and surface care. In Asia, growth came from Mortein pest control and from Dettol behind higher investment. Operating margins on continuing operations improved by 280 bps to 4.6% (1.8%) helped by cost savings in Australia/New Zealand and better leveraging of fixed costs. Including acquisitions, operating margins improved 310 bps to 4.9%. Operating profits increased substantially to £10m (£ 3m) of which £2m came from the acquisitions. These have traded in line with expectations, and integration with the existing Reckitt Benckiser business is proceeding. Net revenues grew 39% to £117m in Q2 and operating profit was £6m (£2m). Rest of World : 10% of net revenues. Net revenues grew 15% in H1 to £169m. Growth came across both Eastern Europe and Africa/Middle East. In Eastern Europe the growth was driven by the roll-out of furniture, pest control and air care, by strong growth behind Calgonit 2-in-1 automatic dishwashing, and by strong growth behind higher investment for Calgon water softener. In Africa/Middle East, growth came mainly from Dettol, due to higher investment and better execution in-market, and from Health Care. H1 operating margins rose by 100 bps to 7.7% with higher gross margins benefiting from Squeeze programs partly offset by increased marketing investment and by difficult conditions in Q2 in Turkey. Operating profit increased 30% to £13m (£10m). Net revenues grew 12% to £86m in Q2 and operating profit was £7m (£7m). New Initiatives 2001 New products launched since the publication of the Company's Q1 results for 2001 include Woolite Dye Magnet color protector sheets in Europe and North America. Vanish Powershot carpet spot and stain cleaner was launched in Europe. Harpic Power Tabs in selected markets and Harpic in-bowl gel was launched across Europe and in the USA as Lysol Cling. Airwick Click Spray air care has been launched in Europe. Major 2001 initiatives continue to be rolled out. Calgonit 3-in-1 tabs are being launched in Eastern Europe and Australia / New Zealand. Air Wick Electrical oils has been launched in Europe (following outstanding success in North America) while Crystal Air has been launched in North America, Australia /New Zealand, Eastern Europe and Turkey, South Africa and Asia following success in Western Europe. Geographical category expansion featured the launch of Mr Sheen furniture care, Mortein pest control and Air Wick air care across Eastern European markets. Veet depilatories are being launched in new markets in Asia and Latin America and re-launched in Australia/New Zealand. Outlook for Full Year - Increased Targets The Company has increased its targets for the full year 2001. * Net revenues - growth from total operations of around 6% at constant exchange against a base for 2000 of £3,202m. The previous target was for growth of 4% plus on continuing operations at constant exchange, against a base for 2000 of £3,137m. This previous target excluded the impact of acquired and discontinued businesses, which combined, are expected to add less than 1% to net revenues. Therefore the previous target equated to growth of less than 5% from total operations. * Net income - growth from total operations of around 18% at constant exchange against a normalized base for 2000 of £275m. The previous target was for growth of 18% on continuing operations at constant exchange, against a base for 2000 of £263m. This previous target excluded the impact of acquired and discontinued businesses, which combined, are expected to reduce net income by around 4%. Therefore the previous target equated to growth of around 14% from total operations. * Net Working Capital. The previously communicated target to reduce net working capital by £50m is maintained. Financial Review Non operating items. Profit on disposal of businesses of £23m (nil) relates to the disposal of the European Firelighters business in April. There were no profits on disposal of fixed assets (£2m in H1 2000). Net Interest. Interest payable less receivable on the Company's outstanding net borrowings was £28m (£34m). This reduction was due to strong operating cash inflow over the period plus cash released from working capital and minor disposals, offset by the investment in the two recent acquisitions. Interest rates on average were slightly below the levels of last year. Profit before tax was £227m (£171m). Normalized profit before tax was £204m (£ 169m), an increase of 21%. Tax on the profit for the half year was £61m, an underlying rate of around 29.6% on the normalized taxable profit of £204m compared to a rate of 30.0% in H1 2000. Profit after tax. After profit attributable to minority equity holders of £1m (£2m), the profit for the period was £165m (£118m). Normalized profit for the period was £143m (£116m) excluding non-operating items, an increase of 23%. Cash Flow Cash generation was strong in the half year. Operating cash flow rose by 9% to £251m (£230m) due to increased operating profits, further release of cash from working capital and a reduction in reorganization and integration costs. After lower interest payments, lower tax and lower capital expenditure, net cash flow from ordinary activities increased by 38% to £172m (£125m). Cash conversion continued to improve. Operating cash flow to net revenues was maintained at 14.8% (14.8%). Net cash flow from ordinary activities increased by 210 basis points to 10.1% of net revenues (8.0%). Balance Sheet and Financing (comparisons with 2000 year end). At the half year the Group had shareholders funds of £1,225m (£1,116m), an increase of 10%. Net borrowings were £616m (£595m) after funding acquisitions of £131m. Total capital employed in the business was £1,857m (£1,727m). This financed fixed assets of £2,355m (£2,173m) offset by net current liabilities (excluding short term borrowings, cash and investments) of £117m (£38m liability). Exchange rate differences have increased net borrowings by £11m and net assets by £34m. Financing Ratios The Company's financial ratios have improved over the period. Interest cover (operating profit over net interest) for the half year was 8.3 times (H1 2000 6.0x). Net borrowings represent 33% of capital employed (H1 2000 34%) treating convertible capital bonds as borrowings. Earnings per share. Details of the calculation of earnings per share are contained in the accompanying notes to the Profit & Loss Account. These take account of the holding of JAB in 'A' shares of Reckitt Benckiser Holdings B.V. Dividends. The Board of Directors recommends an interim dividend of 12.7 pence (2000 12.7 pence), unchanged on last year in line with the previously communicated policy of maintaining absolute dividend payments until cover reaches the average of the international peer group. The interim dividend is covered 1.6 times by normalized profit for the half year. The ex dividend date will be 5th September, and the dividend will be paid on 18th September to shareholders on the register at the record date of 7th September. For Further Information Tom Corran Reckitt Benckiser + 44 1753 446 548 Senior Vice President, Investor Relations & Corporate Communications Lydia Wilhelm Reckitt Benckiser + 44 1753 446 550 Investor Relations Manager ------------------------------------------------------------------------------ The Group at a Glance (unaudited) Quarter Ended Half Year Ended June 30 June 30 -------------------------------------------------------------------------------- 2001 2000 2001 2000 £m £m £m £m From total ordinary activities 879 807 Net revenues 1,696 1,555 9% 2% Net revenues growth 9% 3% 48.6% 49.2% Gross margin 48.9% 48.5% 152 137 EBITDA normalized* 268 242 17.3% 17.0% EBITDA margin normalized* 15.8% 15.6% 134 117 EBIT normalized* 232 203 15.2% 14.5% EBIT margin normalized* 13.7% 13.1% 122 102 Profit before tax normalized* 204 169 13.9% 12.6% PBT margin normalized* 12.0% 10.9% 85 71 Net Income normalized* 143 116 9.7% 8.8% Net Income margin normalized* 8.4% 7.5% 12.2p 10.3p EPS normalized* 20.5p 16.8p 11.9p 10.1p EPS normalized, diluted* 20.0p 16.6p From continuing operations (excluding acquisitions) 847 783 Net revenues 1,658 1,507 8% 3% Net revenues growth 10% 4% 149 129 EBITDA normalized* 264 230 17.6% 16.5% EBITDA margin normalized* 15.9% 15.3% 132 110 EBIT normalized* 229 192 15.6% 14.0% EBIT margin normalized* 13.8% 12.7% * Normalized to exclude non-operating items. Group profit and loss account (unaudited) Quarter Ended June 30 2001 2000 % change £m £m -------------------------------------------------------------------------------- Net revenues from continuing operations excluding acquisitions 847 783 8% Acquisitions 31 - - Discontinued operations 1 24 - -------------------------------------------------------------------------------- 879 807 9% Total net revenues (452) (410) 10% Cost of sales -------------------------------------------------------------------------------- 427 397 8% Gross profit (293) (280) 5% Net operating expenses -------------------------------------------------------------------------------- Operating profit from continuing operations excluding acquisitions 132 110 20% Acquisitions 2 - - Discontinued operations 0 7 - -------------------------------------------------------------------------------- 134 117 15% Total operating profit Non-operating items: 23 - - Profit on disposal of businesses - 1 - Profit on disposal of tangible fixed assets -------------------------------------------------------------------------------- 157 118 33% Profit on ordinary activities before interest (12) (14) (14%) Net interest expense -------------------------------------------------------------------------------- 145 104 39% Profit on ordinary activities before taxation (37) (31) 19% Tax on profit on ordinary activities -------------------------------------------------------------------------------- 108 73 48% Profit on ordinary activities after taxation (1) (1) - Attributable to equity minority interests -------------------------------------------------------------------------------- 107 72 49% Profit for the period (89) (88) 1% Ordinary Dividends -------------------------------------------------------------------------------- 18 (16) - Retained profit/(loss) for the period -------------------------------------------------------------------------------- Earnings per ordinary share: 15.4p 10.5p On profit for the period 12.2p 10.3p On normalized profit for the period 14.8p 10.3p On profit for the period, diluted 11.9p 10.1p On normalized profit, diluted Average common shares outstanding: 700.0 694.9 Basic 749.1 739.8 Diluted Half Year Ended June 30 2001 2000 % change £m £m -------------------------------------------------------------------------------- Net revenues from continuing operations excluding acquisitions 1,658 1,507 10% Acquisitions 31 - - Discontinued operations 7 48 - -------------------------------------------------------------------------------- Total net revenues 1,696 1,555 9% Cost of sales (867) (801) 8% -------------------------------------------------------------------------------- Gross profit 829 754 10% Net operating expenses (597) (551) 8% -------------------------------------------------------------------------------- Operating profit from continuing operations excluding acquisitions 229 192 19% Acquisitions 2 - - Discontinued operations 1 11 - -------------------------------------------------------------------------------- Total operating profit 232 203 14% Non-operating items: Profit on disposal of businesses 23 - - Profit on disposal of tangible fixed assets - 2 - -------------------------------------------------------------------------------- Profit on ordinary activities before interest 255 205 24% Net interest expense (28) (34) (18%) -------------------------------------------------------------------------------- Profit on ordinary activities before taxation 227 171 33% Tax on profit on ordinary activities (61) (51) 20% -------------------------------------------------------------------------------- Profit on ordinary activities after taxation 166 120 38% Attributable to equity minority interests (1) (2) (50%) -------------------------------------------------------------------------------- Profit for the period 165 118 40% Ordinary Dividends (89) (88) 1% -------------------------------------------------------------------------------- Retained profit/(loss) for the period 76 30 153% -------------------------------------------------------------------------------- Earnings per ordinary share: On profit for the period 23.6p 17.1p On normalized profit for the period 20.5p 16.8p On profit for the period, diluted 22.9p 16.9p On normalized profit, diluted 20.0p 16.6p Average common shares outstanding: Basic 699.4 694.1 Diluted 748.3 738.9 Group balance sheet For the half year ended June 30, (unaudited) 1st Full 1st Half Year Half 2001 2000 2000 £m £m £m -------------------------------------------------------------------------------- Fixed assets: Intangible assets 1,804 1,638 1,613 Tangible assets 551 535 521 -------------------------------------------------------------------------------- 2,355 2,173 2,134 -------------------------------------------------------------------------------- Current assets: Stocks 259 245 253 Debtors due within one year 637 622 667 Debtors due after more than one year 154 148 130 Investments 51 39 70 Cash at bank and in hand 76 94 56 -------------------------------------------------------------------------------- 1,177 1,148 1,176 -------------------------------------------------------------------------------- Current liabilities: Creditors due within one year: Borrowings (242) (245) (386) Other (1,167) (1,053) (979) -------------------------------------------------------------------------------- (1,409) (1,298)(1,365) -------------------------------------------------------------------------------- Net current liabilities (232) (150) (189) -------------------------------------------------------------------------------- Total assets less current liabilities 2,123 2,023 1,945 -------------------------------------------------------------------------------- Non-current liabilities: Creditors due after more than one year: Borrowings (308) (290) (300) Other (116) (129) (111) Convertible capital bonds (193) (193) (194) -------------------------------------------------------------------------------- (617) (612) (605) Provisions for liabilities and charges (265) (279) (317) Equity minority interests (16) (16) (19) -------------------------------------------------------------------------------- Net Assets 1,225 1,116 1,004 -------------------------------------------------------------------------------- Capital and reserves: Called up share capital (including non-equity capital of 71 71 71 £4.5m) Shares to be issued 7 7 7 Share premium account 175 165 154 Merger reserve 142 142 148 Profit and loss account 830 731 624 -------------------------------------------------------------------------------- Total shareholders' funds (including non-equity 1,225 1,116 1,004 shareholders' funds of £4.5m) -------------------------------------------------------------------------------- Group cash flow statement For the half year ended June 30, (unaudited) 2001 2000 £m £m -------------------------------------------------------------------------------- Operating activities: Operating profit 232 203 Non-cash items: Depreciation and amortisation 36 39 Other non-cash movements - (1) Changes in working capital 38 36 Changes in other provisions & non current liabilities (32) 13 Reorganisation and merger integration costs paid (23) (60) -------------------------------------------------------------------------------- Cash flow from operating activities 251 230 Return on investments and servicing of finance (25) (34) Taxation (22) (34) Capital expenditure and financial investment (32) (37) Acquisitions and disposals (66) 1 Equity dividends paid (89) (88) -------------------------------------------------------------------------------- Cash inflow before use of liquid resources and financing 17 38 Management of liquid resources (12) 41 Financing (6) (100) -------------------------------------------------------------------------------- Decrease in cash for the period (1) (21) -------------------------------------------------------------------------------- Reconciliation of operating cash flow to net cash flow from ordinary operations Operating cash flow 251 230 Returns on investments and servicing of finance (25) (34) Taxation (22) (34) Capital expenditure (32) (37) -------------------------------------------------------------------------------- Net cash flow from ordinary operations 172 125 -------------------------------------------------------------------------------- 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 June 30 -------------------------------------------------------------------------------- 2001 2000 % change £m £m exch. rates actual const. Net revenues - by geographical area 347 326 6% 5% Western Europe 269 236 14% 5% North America 59 56 5% 9% Latin America 117 86 36% 39% Asia Pacific 86 79 9% 12% Rest of World -------------------------------------------------------------------------------- 878 783 12% 10% 1 24 - - Discontinued operations -------------------------------------------------------------------------------- 879 807 9% 7% -------------------------------------------------------------------------------- Operating profit - by geographical area 70 60 17% 15% Western Europe 35 34 3% (5%) North America 5 2 150% 400% Latin America 6 2 200% 200% Asia Pacific 7 7 - - Rest of World 11 5 120% 120% Corporate -------------------------------------------------------------------------------- 134 110 22% 20% 0 7 - - Discontinued operations -------------------------------------------------------------------------------- 134 117 15% 13% -------------------------------------------------------------------------------- % Operating margin - by geographical area 20.2 18.4 Western Europe 13.0 14.4 North America 8.5 3.6 Latin America 5.1 2.3 Asia Pacific 8.2 8.9 Rest of World - - Corporate -------------------------------------------------------------------------------- 15.3 14.0 - 29.2 Discontinued operations -------------------------------------------------------------------------------- 15.2 14.5 -------------------------------------------------------------------------------- Half Year Ended June 30 -------------------------------------------------------------------------------- 2001 2000 % change £m £m exch. Rates actual Const. Net revenues - by geographical area Western Europe 696 648 7% 6% North America 504 437 15% 5% Latin America 115 108 6% 8% Asia Pacific 205 165 24% 25% Rest of World 169 149 13% 15% -------------------------------------------------------------------------------- 1,689 1,507 12% 9% Discontinued operations 7 48 - - -------------------------------------------------------------------------------- 1,696 1,555 9% 6% -------------------------------------------------------------------------------- Operating profit - by geographical area Western Europe 137 124 10% 9% North America 55 44 25% 15% Latin America 1 1 - - Asia Pacific 10 3 233% 150% Rest of World 13 10 30% 30% Corporate 15 10 50% 50% -------------------------------------------------------------------------------- 231 192 20% 16% Discontinued operations 1 11 - - -------------------------------------------------------------------------------- 232 203 14% 12% -------------------------------------------------------------------------------- Operating margin - by geographical area % % Western Europe 19.7 19.1 North America 10.9 10.1 Latin America 0.9 0.9 Asia Pacific 4.9 1.8 Rest of World 7.7 6.7 Corporate - - -------------------------------------------------------------------------------- 13.7 12.7 Discontinued operations 14.3 22.9 -------------------------------------------------------------------------------- 13.7 13.1 -------------------------------------------------------------------------------- Segmental Analysis (continued) Quarter Ended June 30 -------------------------------------------------------------------------------- 2001 2000 % change £m £m exch. rates actual const. Net revenues - by product segment 819 731 12% 10% Household and Health & Personal Care 59 52 13% 4% Food -------------------------------------------------------------------------------- 878 783 12% 10% 1 24 - - Discontinued operations -------------------------------------------------------------------------------- 879 807 9% 7% -------------------------------------------------------------------------------- Operating profit - by product segment 112 94 19% 17% Household and Health & Personal Care 11 11 - - Food 11 5 120% 120% Corporate -------------------------------------------------------------------------------- 134 110 22% 20% 0 7 - - Discontinued operations -------------------------------------------------------------------------------- 134 117 15% 13% -------------------------------------------------------------------------------- % Operating margin - by product segment 13.7 12.9 Household and Health & Personal Care 18.6 21.2 Food - - Corporate -------------------------------------------------------------------------------- 15.3 14.0 - 29.2 Discontinued operations -------------------------------------------------------------------------------- 15.2 14.5 -------------------------------------------------------------------------------- Net revenues - Household and Health & Personal Care 221 209 6% 4% Fabric Care 201 182 10% 7% Surface Care 108 108 0% (2%) Dishwashing 127 80 59% 57% Home Care 114 109 5% 9% Health & Personal Care -------------------------------------------------------------------------------- 771 688 12% 11% Core Business 48 43 12% 2% Other Household -------------------------------------------------------------------------------- 819 731 12% 10% Net Revenues - continuing operations -------------------------------------------------------------------------------- Half Year Ended June 30 -------------------------------------------------------------------------------- 2001 2000 % change £m £m exch. Rates actual const. Net revenues - by product segment Household and Health & Personal Care 1,594 1,419 12% 9% Food 95 88 8% (2%) -------------------------------------------------------------------------------- 1,689 1,507 12% 9% Discontinued operations 7 48 - - -------------------------------------------------------------------------------- 1,696 1,555 9% 6% -------------------------------------------------------------------------------- Operating profit - by product segment Household and Health & Personal Care 207 171 21% 16% Food 9 11 (18%) (10%) Corporate 15 10 50% 50% -------------------------------------------------------------------------------- 231 192 20% 16% Discontinued operations 1 11 - - -------------------------------------------------------------------------------- 232 203 14% 12% -------------------------------------------------------------------------------- Operating margin - by product segment % % Household and Health & Personal Care 13.0 12.1 Food 9.5 12.5 Corporate - - -------------------------------------------------------------------------------- 13.7 12.7 Discontinued operations 14.3 22.9 -------------------------------------------------------------------------------- 13.7 13.1 -------------------------------------------------------------------------------- Net revenues - Household and Health & Personal Care Fabric Care 430 402 7% 4% Surface Care 406 361 12% 8% Dishwashing 220 209 5% 2% Home Care 236 166 42% 40% Health & Personal Care 209 197 6% 8% -------------------------------------------------------------------------------- Core Business 1,501 1,335 12% 10% Other Household 93 84 11% 2% -------------------------------------------------------------------------------- Net Revenues - continuing operations 1,594 1,419 12% 9% -------------------------------------------------------------------------------- Earnings per ordinary share For the half year ended June 30, (unaudited) The reconciliation between profit for the period and the weighted average number of shares used in the calculations of the diluted earnings per share are set out below: 2001 -------------------------------------------------------------------------------- Profit Average Earnings for number per the of share period shares pence £m -------------------------------------------------------------------------------- Profit attributable to shareholders 165 699,364,984 23.6 Dilution for Executive options outstanding and 8,892,406 Executive Restricted Share Plan Dilution for Employee Sharesave Scheme options outstanding 1,067,324 Dilution for convertible capital bonds outstanding* 6 38,975,205 -------------------------------------------------------------------------------- On a diluted basis 171 748,299,919 22.9 -------------------------------------------------------------------------------- 2000 -------------------------------------------------------------------------------- Profit Average Earnings for number per the of share period shares pence £m -------------------------------------------------------------------------------- Profit attributable to shareholders 118 694,087,053 17.1 Dilution for Executive options outstanding and 5,614,278 Executive Restricted Share Plan Dilution for Employee Sharesave Scheme options outstanding 43,649 Dilution for convertible capital bonds outstanding* 7 39,190,899 -------------------------------------------------------------------------------- On a diluted basis 125 738,935,879 16.9 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- After the appropriate tax adjustment, the profit for the period impact represents 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 the conversion of the bonds. The reconciliation of profit for the period and earnings per share on the shares in issue between unadjusted and adjusted EPS calculation bases are as follows: 2001 -------------------------------------------------------------------------------- Profit for Average Earnings the period number of per share £m shares pence -------------------------------------------------------------------------------- Basic EPS 165 699,364,984 23.6 Non operating items (23) - (3.1) Taxation (including deferred taxation) 1 - - -------------------------------------------------------------------------------- Impact of dilution 143 699,364,984 20.5 6 49,934,935 (0.5) -------------------------------------------------------------------------------- On an adjusted, diluted basis 149 748,299,919 20.0 -------------------------------------------------------------------------------- 2000 -------------------------------------------------------------------------------- Profit for Average Earnings the period number of per share £m shares pence -------------------------------------------------------------------------------- Basic EPS 118 694,087,053 17.1 Non operating items (2) - (0.3) Taxation (including deferred taxation) 0 - - -------------------------------------------------------------------------------- Impact of dilution 116 694,087,053 16.8 7 44,848,826 (0.2) -------------------------------------------------------------------------------- On an adjusted, diluted basis 123 738,935,879 16.6 -------------------------------------------------------------------------------- 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. Five time the number of Reckitt Benckiser Holdings B.V. '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 Reckitt Benckiser Holdings B.V. 'A' shares is in substance the same as if it held five new Reckitt Benckiser shares for every Reckitt Benckiser Holdings B.V. 'A' share held.

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