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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