Interim Results
29 August 2002
Targets Increased Following Strong First Half
Results at a Glance Q2 % change Half Year % change
Net Revenues £901m +3 £1,756m +4
Operating Profit £149m +11 £257m +11
Net Income Normalized* £103m +21 £173m +21
Net Income Reported* £103m +2 £173m +12
*see financial review - basis of comparatives on
page 6.
* Net revenues grew by 3% (5% at constant exchange) to £901m in Q2, and by 4%
(6% constant) to £1,756m in H1. For continuing operations net revenue
growth was 4% (6% constant) in Q2 and 3% (6% constant) in H1.
* Operating profit increased by 11% both in Q2 to £149m and in H1 to £257m.
Half year operating margins improved 90 basis points (bps) to 14.6% behind
a 290 bps gross margin improvement, offset by a significant increase in
marketing investment.
* Normalized net income grew by 21% both in Q2 to £103m and in H1 to £173m.
Reported net income was also £103m in Q2 and £173m in H1.
* Strong cash generation and further reductions in net working capital of £
88m resulted in a £168m reduction in net borrowings in H1 2002 to £299m.
* Interim dividend of 12.7p, unchanged in line with previously communicated
dividend policy.
Commenting on these results, Bart Becht, Chief Executive Officer, said
'Reckitt Benckiser had a strong first half of 2002. Growth in Western Europe
and North America was particularly strong behind new product initiatives, more
than offsetting the anticipated slowdown in certain developing markets. Strong
gross margin expansion supported a significant increase in marketing investment
and drove profit growth faster than our previous target rate for the full year.
'As a result, we are increasing our financial targets for the full year at
constant exchange. For net revenue growth, we now target for the upper end of
the 4% to 6% range established earlier this year. For net income, our new
growth target is around 18% (before FRS 19 restatement of 2001), compared to
the 12% to 15% growth target established earlier this year.'
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.
Second Quarter 2002
Net revenues in Q2 grew by 3% (5% at constant exchange) to £901m (£879m in
2001) including the two 2001 acquisitions which contributed net revenues of £
25m. Net revenues from continuing operations rose 4% (6% constant) to £876m (£
846m); this higher growth rate is explained by the inclusion of £7m of Q1 2001
Indonesian net revenues in Q2 2001.
Operating profit for Q2 grew 11% (11% constant) to £149m (£134m). Gross margin
increased substantially, by 420 bps to 52.8% due to higher margin new products,
favorable purchase prices of raw and packaging materials, further benefits from
Squeeze 2-50 and the first benefits of Xtrim. Marketing investment,
particularly media, increased significantly during the period. Operating
margins increased by 130 basis points to 16.5%.
Net income was £103m. Normalized net income grew 21% (21% constant) to £103m (£
85m).
Half Year 2002
Net revenues grew by 4% (6% constant) to £1,756m (£1,696m). Net revenues from
continuing operations grew by 3% (6% constant) to £1,709m (£1,656m).
Acquisitions contributed £47m to net revenues in the half year (2001 £31m).
Operating profit increased 11% (12% constant) to £257m (£232m). Gross margins
rose 290 bps to 51.8% (48.9%) as a result of higher margin new products,
favourable purchase prices on raw and packaging materials, savings from the
Squeeze program and initial savings from the Xtrim program. Operating margins
increased by 90 bps to 14.6% (13.7%).
Net income for the half year was £173m. Normalized net income grew 21% (22%
constant) to £173m (£143m). Net interest expense of £20m (£28m) was lower due
to the strong cash inflow over the past year reducing the level of net
borrowings. The tax rate for the period on the normalized taxable profit was
27%, in line with the likely rate for the full year.
Category Review at constant exchange rates
Fabric Care. H1 net revenues grew 6% to £444m. In fabric treatment, Vanish grew
due to the roll out of Vanish Action Ball in Western Europe and the success of
Powershot carpet spot and stain treater in North America and Western Europe.
The fabric treatment category also benefited from a strong performance in
Korea. Calgon water softener grew strongly in Eastern Europe due to higher
investment and improved marketing execution, and continued to grow in Western
Europe. Woolite garment care grew strongly in North America and Western and
Eastern Europe, in part due to the launch of Woolite Black.
Q2 net revenues grew 4% to £228m.
Surface Care. H1 net revenues grew 2% to £397m. Lysol disinfectant cleaner
continued to capture market share in both 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 floor and heavy duty wipes. Harpic lavatory care
benefited from a number of initiatives, including flushable wipes. Category
growth was restrained by declines in Latin America for multipurpose cleaners in
the face of deteriorating market conditions.
Q2 net revenues grew 3% to £194m.
Dishwashing. H1 net revenues grew 11% to £240m. The launch of Finish/Calgonit
3-in-1 Total across Europe has continued the strong growth for the category
with market share continuing to benefit in UK, France, Spain and Belgium. In
North America, growth came from increased market share behind the launch of the
Powerball 2-in-1 product. Market share on Finish has also increased in
Australia.
Q2 net revenues grew 12% to £121m.
Home Care. H1 net revenues grew 15% to £266m due to continuing success for Air
Care offset by declines in 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,
plus the recently introduced innovations Crystal Auto and Click Spray. Pest
Control was lower than last year in Asia and Latin America due to prevailing
market conditions, intensified competition and the impact of organizational
changes to the Company's distributor network in India.
Q2 net revenues grew 4% to £130m.
Health & Personal Care H1 net revenues grew 11% to £227m. The main growth
drivers were depilatories and antiseptics. Depilatories grew behind the success
of the new Veet Mousse and continuing growth for the Veet Aqua System in
Western Europe. The category was launched in the USA, where distribution is
building, and in Colombia and Venezuela. Dettol antiseptic grew strongly in
Africa/Middle East but was affected by soft market conditions in parts of Asia.
The Health Care business performed strongly with notable growth on Gaviscon in
the UK and Continental Europe.
Q2 net revenues grew 13% to £127m.
Geographic Analysis at constant exchange
Western Europe : 42% of net revenues
Net revenues grew by 7% in H1 to £742m. This strong performance was due to the
success of automatic dishwashing, air care, depilatories, garment care and
healthcare. The successful launch of Finish/Calgonit 3-in-1 total in automatic
dishwashing has resulted in increased market share in UK, France, Spain and
Belgium. Air Wick Crystal Auto and Click Spray were successfully launched
across the region. Veet Mousse, supported by further growth for the Veet Aqua
System, has driven growth in depilatories. Garment care growth came behind
Woolite Black. Healthcare grew strongly behind the success of Gaviscon in the
UK and Continental Europe. H1 Operating margins increased by 160 bps to 21.3%
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
17% to £158m.
Net revenues grew 8% to £381m in Q2 and operating profits by 23% to £86m.
North America : 31% of net revenues.
Net revenues grew 9% in H1 to £547m. The growth came from the continuing
success of air care and automatic dishwashing. In air care, Airwick Electricals
and Crystal Air boosted net revenues and market share. The launch of Electrasol
Powerball 2-in-1 has continued to increase market share and net revenues. Lysol
disinfecting cleaner continued to gain share in spray and wipes, with new floor
and heavy duty wipes rolled out in the period. Food was flat against last year.
North American operating margins expanded 230 bps to 13.2% (10.9%) behind a
significant gross margin expansion, due to new products, lower input costs and
Squeeze and Xtrim benefits, offset by higher marketing investment. Operating
profit increased 31% to £72m.
Net revenues grew 7% to £279m in Q2 and operating profit rose 35% to £46m.
Latin America : 5% of net revenues.
Net revenues declined 6% in H1 to £92m. Adverse market conditions in Argentina
and Brazil were compounded by substantial devaluation of local currencies
against the equivalent period last year. Operating margin deteriorated in the
face of lower volumes and the exchange rate impact on input costs. H1 operating
loss was £3m (2001 profit of £1m).
Net revenues declined 6% to £45m in Q2 and operating loss was £1m (profit of £
5m).
Asia Pacific : 11% of net revenues.
Net revenues declined 5% in H1 to £193m including a £47m contribution from the
acquisitions in Korea and Indonesia. On continuing operations, net revenues
declined 15%. Net revenues were down due to China and India. In China, the
business is running at much reduced levels due to the strategic repositioning
and downsizing of the business which commenced in Q3 2001, resulting in reduced
operating losses. Net revenues in India were impacted by soft market
conditions, intensified competition and organizational changes to the Company's
distributor network which resulted in returned distributor stocks being netted
against net revenues. Outside China and India, net revenues progressed with
good results in Australia/New Zealand and Korea. Operating margins improved by
130 bps to 6.2% helped by the acquisitions, lower input costs, and further
Squeeze savings. Operating profits increased 9% to £12m of which £6m (£2m) came
from the acquisitions.
Net revenues declined 15% to £99m in Q2. Q2 2001 included £7m non-comparable
net revenues due to consolidation of Q1 2001 Indonesian results into Q2 2001.
Rest of World : 11% of net revenues.
Net revenues grew 20% in H1 to £182m. Growth came across both Eastern Europe
and Africa/Middle East. In Eastern Europe the growth was driven by Calgonit
automatic dishwashing, Calgon water softener, 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. H1 operating margins rose by 160
bps to 9.3% with higher gross margins benefiting from Squeeze programs partly
offset by increased marketing investment. Operating profit increased 55% to £
17m.
Net revenues grew 23% to £97m in Q2 and operating profit increased 67% to £10m.
New Initiatives Q2/Q3 2002
A large number of new products are being launched across the summer and autumn
of 2002. Finish/Calgonit gel caps (single dose gel) in automatic dishwashing
are being launched across Western Europe and in North America under the
Electrasol brand. In air care, Airwick Decosphere decorative liquid air
freshener and Airwick Les Eaux Perfumees perfumed room sprays are being
launched in Western Europe, and Airwick glowing candles are being launched
across Western Europe and North America. In North America, Airwick Click Spray
is also being rolled out. Calgon Aqua Pro water softener to protect not just
washing machines but also laundry from limescale is launched in Western Europe.
Harpic Powerons Gel and a new dual action in-toilet-bowl device, combining
cleaning with continuous fragrance, are being launched in Western Europe and
North America. In surface care, new launches include Mr Sheen wipes for wooden
floors, Easy Off heated microwave wipes and Lysol rapid dry floor cleaner.
Financial Review
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 £6m in Q2 2001 and £10m in H1 2001. The full year effect would have been
to reduce net income by £24m from £340m to £316m in 2001.
Reconciliation of Net Income 2001 Q2 2001 H1 2002 Q2 2002 H1
£m £m £m £m
Normalized Net Income as 85 143 103 +21% 173 +21%
Previously Reported
Disposal Profits after tax 22 22
Total Net Income as Previously 107 165
Reported
- of which FRS 19 Restatement (6) (10)
Total Net Income Restated as 101 155 103 + 2% 173 +12%
Reported in 2002
In the detailed commentary, unless otherwise specifically stated, comparisons
are made with 2001 results before restatement for FRS 19.
* Normalized. This excludes non-operating items. There are no non-operating
items in H1 2002 (£23m profit on disposal in Q2 and H1 2001).
* Continuing Operations. Excludes net revenues and operating profit relating
to businesses acquired or sold during the course of 2001. These are
individually disclosed in the profit and loss account for both Q2 and H1.
There were no acquisitions or disposals in H1 2002.
* 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.
Net Interest. Interest payable less receivable on the Company's outstanding net
borrowings was £20m (£28m) in H1. This reduction reflects substantially lower
net borrowings.
Profit before tax was £237m (£227m). Normalized profit before tax was £237m (£
204m), an increase of 16%.
Tax on the profit for the half year was £64m, an underlying rate of around 27%
on the taxable profit of £237m compared to a group rate of 31% (FRS 19
restated) in H1 2001.
Profit after tax was £173m (£155m FRS 19 restated). Normalized profit for the
period was £173m (£143m), an increase of 21%.
Cash Flow from operating activities rose by 30% to £327m (£251m) due to
increased operating profits, further release of cash from working capital and a
reduction in reorganization and integration costs paid. After lower interest
payments and lower capital expenditure, net cash flow from ordinary operations
increased by 35% to £264m (£195m).
Cash conversion continued to improve. The ration of cash flow from operating
activities to net revenues increased substantially to 18.6% (14.8%). Net cash
flow from ordinary operations represented 153% of net income (136%).
Balance Sheet and Financing (comparisons with 2001 year end restated for FRS
19). At the half year the Group had shareholders funds of £1,110m (£1,034m), an
increase of 7%. Net borrowings were £299m (£467m). Total capital employed in
the business was £1,417m (£1,517m).
This financed fixed assets of £2,346m (£2,342m) offset by negative net working
capital of £394m (£306m) and provisions & net long term liabilities of £535m (£
519m).
Exchange rate differences have increased net borrowings by £5m and reduced net
assets by £12m.
Financial Ratios. The Company's financial ratios have improved over the period.
Interest cover (operating profit over net interest) for the half year was 12.9
times (H1 2001 8.3x). Net borrowings represent 21% of capital employed (H1 2001
31%) 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 announces an interim dividend of 12.7 pence
(2001 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 1.9 times by normalized profit for the half year (1.6 times). The ex
dividend date will be 4th September, and the dividend will be paid on 17th
September to shareholders on the register at the record date of 6th September.
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 Group at a Glance (unaudited)
Quarter Ended June 30 Half Year Ended June 30
2002 2001# 2002 2001#
£m £m £m £m
From total ordinary
activities
901 879 Net revenues 1,756 1,696
3% 9% Net revenues growth 4% 9%
52.8% 48.6% Gross margin 51.8% 48.9%
167 152 EBITDA normalized* 295 268
18.5% 17.3% EBITDA margin normalized* 16.8% 15.8%
149 134 EBIT normalized* 257 232
16.5% 15.2% EBIT margin normalized* 14.6% 13.7%
141 122 Profit before tax normalized 237 204
*
15.6% 13.9% PBT margin normalized* 13.5% 12.0%
103 79 Net Income normalized* 173 133
11.4% 9.0% Net Income margin normalized 9.9% 7.8%
*
14.7p 11.4p EPS normalized* 24.6p 19.0p
14.1p 11.0p EPS normalized, diluted* 23.7p 18.6p
From continuing operations
(excluding acquisitions)
876 846 Net revenues 1,709 1,656
4% 8% Net revenues growth 3% 10%
162 149 EBITDA normalized* 286 264
18.5% 17.6% EBITDA margin normalized* 16.7% 15.9%
146 132 EBIT normalized* 251 229
16.7% 15.6% EBIT margin normalized* 14.7% 13.8%
* Normalized to exclude non-operating items.
# Restated following the adoption of Financial Reporting Standard 19
'Accounting for Deferred Tax'.
Group Balance Sheet Data June 30, December 31
2002 2001
£m £m
Net working capital** (394) (306)
Net borrowings (299) (467)
** Defined as stock, short term debtors and short term creditors excluding
borrowings.
Group profit and loss account
(unaudited)
Quarter Ended June 30 Half Year Ended June
30
2002 2001# % change 2002 2001# % change
£m £m £m £m
876 846 4% Net revenues from continuing 1,709 1,656 3%
operations excluding
acquisitions
25 31 Acquisitions 47 31
901 877 1,756 1,687
2 Discontinued operations 9
901 879 3% Total net revenues 1,756 1,696, 4%
(425) (452) (6%) Cost of sales (846) (867) (2%)
476 427 11% Gross profit 910 829 10%
(327) (293) 12% Net operating expenses (653) (597) 9%
146 132 11% Operating profit from continuing 251 229 10%
operations excluding
acquisitions
3 2 Acquisitions 6 2
149 134 257 231
0 Discontinued operations 1
149 134 11% Total operating profit 257 232 11%
Non-operating items:
23 - Profit on disposal of businesses 23 -
149 157 (5%) Profit on ordinary activities 257 255 1%
before interest
(8) (12) (33%) (20) (28) (29%)
Net interest expense
141 145 (3%) Profit on ordinary activities 237 227 4%
before taxation
(38) (43) (12%) (64) (71) (10%)
Tax on profit on ordinary
activities
103 102 1% Profit on ordinary activities 173 156 11%
after taxation
- (1) - - (1) -
Attributable to equity minority
interests
103 101 2% Profit for the period 173 155 12%
(90) (89) 1% Ordinary Dividends (90) (89) 1%
13 12 8% Retained profit for the period 83 66 26%
Earnings per ordinary share:
14.7p 14.5p On profit for the period 24.6p 22.2p
14.7p 11.4p On normalized profit for the 24.6p 19.0p
period
14.1p 14.0p 23.7p 21.6p
On profit for the period,
14.1p 11.0p diluted 23.7p 18.6p
On normalized profit, diluted
Average common shares
outstanding:
704.0 700.0 Basic 703.5 699.4
757.1 749.1 Diluted 756.2 748.3
# Restated following the adoption of Financial Reporting Standard 19
'Accounting for Deferred Tax'.
Group balance sheet
For the half year ended June 30, (unaudited)
1st Half Full Year 1st Half
2002 2001# 2001#
£m £m £m
Fixed assets:
Intangible assets 1,801 1,767 1,804
Tangible assets 545 575 551
2,346 2,342 2,355
Current assets:
Stocks 229 219 259
Debtors due within one year 582 586 637
Debtors due after more than one year 76 74 98
Investments 250 90 51
Cash at bank and in hand 87 89 76
1,224 1,058 1,121
Current liabilities:
Creditors due within one year:
Borrowings (181) (186) (242)
Other (1,205) (1,111) (1,167)
(1,386) (1,297) (1,409)
Net current liabilities (162) (239) (288)
Total assets less current liabilities 2,184 2,103 2,067
Non-current liabilities:
Creditors due after more than one year:
Borrowings (262) (267) (308)
Other (171) (156) (116)
Convertible capital bonds (193) (193) (193)
(626) (616) (617)
Provisions for liabilities and charges (440) (437) (442)
Equity minority interests (8) (16) (16)
Net Assets 1,110 1,034 992
Capital and reserves:
Called up share capital (including non-equity 71 71 71
capital of £5m)
Shares to be issued 7 7 7
Share premium account 187 182 175
Merger reserve 142 142 142
Profit and loss account 703 632 597
Total shareholders' funds (including non-equity 1,110 1,034 992
shareholders' funds of £5m)
# Restated following the adoption of Financial Reporting Standard 19
'Accounting for Deferred Tax'.
Group cash flow statement
For the half year ended June 30 (unaudited)
Reconciliation of operating profit to operating cash flows
2002 2001
£m £m
Operating activities:
Operating profit 257 232
Depreciation and amortisation 38 36
Increase in stocks (10) (6)
Increase in debtors (6) (19)
Increase in creditors and provisions 54 31
Reorganisation and merger integration costs paid (6) (23)
Cash flow from operating activities 327 251
Cash flow statement
Cash flow from operating activities 327 251
Return on investments and servicing of finance (22) (25)
Taxation (34) (22)
Capital expenditure and financial investment
* Purchase of tangible fixed assets (39) (32)
* Disposal of tangible fixed assets 26 -
(13) (32)
Acquisitions and disposals - (66)
Equity dividends paid (90) (89)
Cash inflow before use of liquid resources and 168 17
financing
(163) (12)
Management of liquid resources
3 (6)
Financing
Increase / (Decrease) in cash for the period 8 (1)
Reconciliation of net cash flow to movement in debt
Increase / (Decrease) in cash in period 8 (1)
Cash outflow from decrease in debt 2 16
Cash outflow from increase in liquid resources 163 12
Changes in net debt resulting from cash flows 173 27
Loans acquired with subsidiaries - (37)
Translation differences (5) (11)
Movement in net debt in period 168 (21)
Net debt at beginning of period (467) (595)
Net debt at end of period (299) (616)
Reconciliation of operating cash flow to net cash flow from ordinary operations
Operating cash flow 333 274
(excluding reorganisation and merger integration costs
paid)
Returns on investments and servicing of finance (22) (25)
Taxation (34) (22)
Capital expenditure (13) (32)
Net cash flow from ordinary operations 264 195
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 Half Year Ended June 30
2002 2001 % change 2002 2001 % change
£m £m exch. rates £m £m exch. rates
Actual const. Actual const.
Net revenues - by
geographical area
381 346 10% 8% Western Europe 742 695 7% 7%
279 269 4% 7% North America 547 504 9% 9%
45 59 (24%) (6%) Latin America 92 115 (20%) (6%)
99 117 (15%) (15%) Asia Pacific 193 204 (5%) (5%)
97 86 13% 23% Rest of World 182 169 8% 20%
901 887 3% 5% 1,756 1,687 4% 6%
- 2 - - Discontinued operations - 9 - -
901 879 3% 5% 1,756 1,696 4% 6%
Operating profit - by
geographical area
86 70 23% 23% Western Europe 158 137 15% 17%
46 35 31% 35% North America 72 55 31% 31%
(1) 5 (120%) (120%) Latin America (3) 1 (400%) (250%)
8 6 33% 0% Asia Pacific 12 10 20% 9%
10 7 43% 67% Rest of World 17 13 31% 55%
- 11 - - Corporate 1 15 - -
149 134 11% 11% 257 231 11% 12%
- - - - Discontinued operations - 1 - -
149 134 11% 11% 257 232 11% 12%
% % Operating margin - by % %
geographical area
22.6 20.2 Western Europe 21.3 19.7
16.5 13.0 North America 13.2 10.9
(2.2) 8.5 Latin America (3.3) 0.9
8.1 5.1 Asia Pacific 6.2 4.9
10.3 8.1 Rest of World 9.3 7.7
- - Corporate - -
16.5 15.3 14.6 13.7
- - Discontinued operations - -
16.5 15.2 14.6 13.7
Quarter Ended June 30 Half Year Ended June 30
2002 2001 % change 2002 2001 % change
£m £m exch. rates £m £m exch. rates
Actual const. actual const.
Net revenues - by
product segment
845 818 3% 5% Household and Health & 1,662 1,592 4% 7%
Personal Care
56 59 (5%) (3%) 94 95 (1%) (1%)
Food
901 877 3% 5% 1,756 1,687 4% 6%
- 2 - - Discontinued operations - 9 - -
901 879 3% 5% 1,756 1,696 4% 6%
Operating profit - by product
segment
139 112 24% 24% Household and Health & 245 207 18% 20%
Personal Care
10 11 (9%) (9%) 11 9 22% 22%
Food
0 11 - - 1 15 - -
Corporate
149 134 11% 11% 257 231 11% 12%
- - - - Discontinued operations - 1 - -
149 134 11% 11% 257 232 11% 12%
% % Operating margin - by % %
product segment
16.4 13.7 Household and Health & 14.7 13.0
Personal Care
17.9 18.6 11.7 9.5
Food
- - - -
Corporate
16.5 15.3 14.6 13.7
- - Discontinued operations - -
16.5 15.2 14.6 13.7
Net revenues - Household and
Health & Personal Care
228 221 3% 4% Fabric Care 444 430 3% 6%
194 201 (3%) 3% Surface Care 397 406 (2%) 2%
121 108 12% 12% Dishwashing 240 220 9% 11%
130 127 2% 4% Home Care 266 236 13% 15%
127 114 11% 13% Health & Personal Care 227 209 9% 11%
(Note 1)
800 771 4% 6% Core Business 1,574 1,501 5% 8%
45 47 (4%) (4%) Other Household 88 91 (3%) (3%)
845 818 3% 5% Net Revenues - 1,662 1,592 4% 7%
continuing operations
Note 1: 2001 comparatives for Health & Personal Care include an adjustment in
respect of the discontinued business of Reckitt Piramal (India).
Earnings per ordinary share
For the half year ended June 30, (unaudited)
The reconciliation between profit for the half year and the weighted average
number of shares used in the calculations of the diluted earnings per share are
set out below:
2002 2001#
Profit Average Earnings Profit Average Earnings
for for
Number of Per number of per
the share the share
half Shares half shares
year pence year pence
£m £m
Profit attributable to 173 703,540,108 24.6 155 699,364,984 22.2
shareholders
Dilution for Executive 12,186,732 8,892,406
options outstanding and
Executive Restricted
Share Plan
Dilution for Employee 1,510,793 1,067,324
Sharesave Scheme options
outstanding
Dilution for convertible 6 38,949,899 38,975,205
capital bonds outstanding
*
On a diluted basis 179 756,187,532 23.7 161 748,299,919 21.6
* After the appropriate tax adjustment, the profit adjustment represents the
coupon on 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 bonds.
Five times 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 the Reckitt Benckiser Holdings B.V. 'A' shares is
in substance the same as if it held five new Reckitt Benckiser plc ordinary
shares for every Reckitt Benckiser Holdings B.V. 'A' share held.
The reconciliation of profit for the half year and earnings per share on the
shares in issue between unadjusted and adjusted EPS calculation bases is as
follows:
2002 2001#
Profit Average Earnings Profit Average Earnings
for for
Number of per number of per
the share the share
half Shares half shares
year pence year pence
£m £m
Basic EPS 173 703,540,108 24.6 155 699,364,984 22.2
Non operating items - - - (23) - (3.2)
Taxation (including - - - 1 - -
deferred taxation)
173 703,540,108 24.6 133 699,364,984 19.0
Impact of dilution 6 52,647,424 (0.9) 6 48,934,935 (0.4)
On an adjusted, diluted 179 756,187,532 23.7 139 748,299,919 18.6
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.
# Restated following the adoption of Financial Reporting Standard 19
'Accounting for Deferred Tax'.
Note 1. Financial Review - FRS 19
Under the Group's accounting policies as disclosed in the 2001 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 full year effect on 2001 is to reduce normalized net income by £24m
from £340m to £316m. On a quarter by quarter view, the restatements for 2001
are:
Q1 Q2 Q3 Q4
Normalized net income (£m)
As reported 58 85 74 123
Restated 54 79 67 116
Earnings per Share (normalized,
diluted)
As reported 8.1p 11.9p 10.3p 16.8p
Restated 7.6p 11.1p 9.4p 15.9p
15
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