2nd Qtr & Interim Rslts-Part2

Reckitt Benckiser PLC 16 August 2000 PART TWO The Group at a Glance Quarter Ended June 30 Half Year Ended June 30 2000 1999 2000 1999 £m £m £m £m 807 792 Net revenues 1,555 1,511 2% - Net revenues growth 3% - 49.2% 48.1% Gross margin 48.5% 47.8% 137 129 EBITDA adjusted* 242 223 17.0% 16.3% EBITDA margin adjusted* 15.6% 14.8% 117 110 EBIT adjusted* 203 184 14.5% 13.9% EBIT margin adjusted* 13.1% 12.2% 102 94 Profit before tax adjusted* 169 150 12.6% 11.9% PBT margin adjusted* 10.9% 9.9% 71 65 Net Income adjusted* 116 103 8.8% 8.2% Net Income margin adjusted* 7.5% 6.8% 10.3p 9.5p EPS adjusted* 16.8p 15.3p EPS adjusted, diluted* 16.6p 15.1p * Adjusted to exclude non-operating items and reorganisation and merger integration costs. Following the discovery of a system error the full year EBITDA adjusted for exceptional items in 1999 has been restated to £431m. This had no impact on the reported profits for the year. Group profit and loss account (unaudited) Quarter Ended June 30 ----------------------------------------------------------------------- 2000 1999 % change £m £m ------- ----- -------- Net revenues 807 792 2% Cost of sales (410) (411) 0% ------- ----- -------- Gross profit 397 381 4% Net operating expenses (280) (296) (5%) ------- ----- -------- Operating profit: Continuing operations before reorganisation and merger integration costs 117 110 6% Reorganisation and merger integration costs - (25) Operating profit 117 85 38% Non-operating items: Profit/(Loss) on disposal of businesses - (3) Profit on disposal of tangible fixed assets 1 1 --------------------------------------------- ------- ----- -------- Profit on ordinary activities before interest 118 83 42% Net interest expense (14) (16) (13%) --------------------------------------------- ------- ----- -------- Profit on ordinary activities before taxation 104 67 55% Tax on profit on ordinary activities (31) (28) 11% --------------------------------------------- ------- ----- -------- Profit on ordinary activities after taxation 73 39 87% Attributable to equity minority interests (1) - --------------------------------------------- ------- ----- -------- Profit for the period 72 39 85% Ordinary Dividends (88) (65) 35% --------------------------------------------- ------- ----- -------- Retained profit/(loss) for the period (16) (26) 38% --------------------------------------------- ------- ----- -------- Earnings per ordinary share: On profit for the period 10.5p 5.7p On adjusted profit for the period 10.3p 9.5p Half Year Ended June 30 ----------------------------------------------------------------------- 2000 1999 % change £m £m ------- ----- -------- Net revenues 1,555 1,511 3% Cost of sales (801) (788) 2% --------------------------------------------- ------- ----- -------- Gross profit 754 723 4% Net operating expenses (551) (564) (2%) --------------------------------------------- ------- ----- -------- Operating profit: Continuing operations before reorganisation and merger integration costs 203 184 10% Reorganisation and merger integration costs (25) --------------------------------------------- ------- ----- -------- Operating profit 203 159 28% Non-operating items: Profit/(Loss) on disposal of businesses - (3) Profit on disposal of tangible fixed assets 2 1 --------------------------------------------- ------- ----- -------- Profit on ordinary activities before interest 205 157 31% Net interest expense (34) (34) 0% --------------------------------------------- ------- ----- -------- Profit on ordinary activities before taxation 171 123 39% Tax on profit on ordinary activities (51) (46) 11% --------------------------------------------- ------- ----- -------- Profit on ordinary activities after taxation 120 77 56% Attributable to equity minority interests (2) - --------------------------------------------- ------- ----- -------- Profit for the period 118 77 53% Ordinary Dividends (88) (65) 35% --------------------------------------------- ------- ----- -------- Retained profit/(loss) for the period 30 12 150% --------------------------------------------- ------- ----- -------- Earnings per ordinary share: On profit for the period 17.1p 11.4p On adjusted profit for the period 16.8p 15.3p On profit for the period, diluted 16.9p 11.3p On adjusted profit, diluted 16.6p 15.1p Group balance sheet For the half year ended 30 June: unaudited 1st Half Full Year 1st Half 2000 1999 1999 £m £m £m ---------- ---------- -------- Fixed assets: Intangible assets 1,613 1,537 1,467 Tangible assets 521 514 548 ------------------------------------- ---------- ---------- -------- 2,134 2,051 2,015 ------------------------------------- ---------- ---------- -------- Current assets: Stocks 253 243 254 Debtors due within one year 667 598 631 Debtors due after more than one year 130 139 139 Investments 70 105 171 Cash at bank and in hand 56 88 75 ------------------------------------- ---------- ---------- -------- 1,176 1,173 1,270 ------------------------------------- ---------- ---------- -------- Current liabilities: Creditors due within one year: Borrowings (386) (309) (324) Other (979) (873) (930) ------------------------------------- ---------- ---------- -------- (1,365) (1,182) (1,254) ------------------------------------- ---------- ---------- -------- Net current (liabilities)/assets (189) (9) 16 ------------------------------------- ---------- ---------- -------- Total assets less current liabilities 1,945 2,042 2,031 ------------------------------------- ---------- ---------- -------- Non-current liabilities: Creditors due after more than one year: Borrowings 300 426 496 Other 111 97 31 Convertible capital bonds 194 194 194 ------------------------------------- ---------- ---------- -------- 605 717 721 Provisions for liabilities and charges Equity minority interests 317 362 252 ------------------------------------- 19 18 19 ---------- ---------- -------- 941 1,097 992 ------------------------------------- ---------- ---------- -------- Capital and reserves: Called up share capital (including non- equity capital of £4.5m) 71 70 68 Shares to be issued 7 8 8 Share premium account 154 145 143 Merger reserve 148 148 29 Profit and loss account 624 574 791 ------------------------------------- ---------- ---------- -------- Total shareholders' funds (including non-equity shareholders' funds of £4.5m) 1,004 945 1,039 ------------------------------------- ---------- ---------- -------- 1,945 2,042 2,031 ------------------------------------- ---------- ---------- -------- Group cash flow statement For the half year ended 30 June: unaudited 1st half 1st half 2000 1999 £m £m --------- -------- Operating activities: Operating profit 203 159 Non-cash items: Depreciation and amortisation 39 39 Reorganisation and merger integration provisions - 25 Other non-cash movements (1) 4 Changes in working capital 36 12 Changes in other provisions and non-current liabilities 13 (58) Reorganisation and merger integration expenses paid (60) (5) ------------------------------------------------ --------- -------- Cash flow from operating activities 230 176 Return on investments and servicing of finance (34) (36) Taxation (34) (22) Capital expenditure and financial investment (37) (45) Acquisitions and disposals 1 7 Equity dividends paid (88) (51) ------------------------------------------------ --------- -------- Cash inflow before use of liquid resources and financing 38 29 Management of liquid resources 41 107 Financing (100) (143) ------------------------------------------------ --------- -------- Decrease in cash for the period (21) (7) ------------------------------------------------ --------- -------- Included in cash flow from operating activities are cash flows in respect of Year 2000 costs of £Nil (1999 Half year £11m) and in respect of reorganisation and merger integration costs of £60m (1999 Half year £5m). Reconciliation of operating cash flow to net cash flow from ordinary operations Operating cash flow 230 176 Returns on investments and servicing of finance (34) (36) Taxation (34) (22) Capital expenditure (37) (45) ------------------------------------------------ --------- -------- Net cash flow from ordinary operations 125 73 ------------------------------------------------ --------- -------- 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 --------------------------------------------------------------------- Net revenues - by geographical area --------------------------------------------------------------------- 2000 1999 % change £m £m exch.Rates Actual Const. Western Europe 344 355 (3%) 3% North America 236 225 5% 0% Latin America 56 53 6% 4% Asia Pacific 91 79 15% 16% Rest of World 80 75 7% 11% -------------------------------- ------- ----- -------- --------- 807 787 3% 5% Discontinued operations North America - 5 807 792 2% 4% -------------------------------- ------- ----- -------- --------- Half Year Ended June 30 --------------------------------------------------------------------- Net revenues - by geographical area --------------------------------------------------------------------- 2000 1999 % change £m £m exch.rates Actual const. Western Europe 684 713 (4%) 4% North America 437 398 10% 7% Latin America 108 96 13% 13% Asia Pacific 175 155 13% 14% Rest of World 151 140 8% 13% -------------------------------- ------- ----- -------- --------- 1,555 1,502 4% 7% Discontinued operations North America - 9 ------------------------------- ------- ----- -------- --------- 1,555 1,511 3% 6% -------------------------------- ------- ----- -------- --------- Quarter Ended June 30 --------------------------------------------------------------------- Operating Profit - by geographical area --------------------------------------------------------------------- 2000 1999 % change £m £m exch.rates Actual const. Western Europe 68 70 (3%) 1% North America 34 32 6% 2% Latin America 2 5 (60%) (69%) Asia Pacific 4 (1) - - Rest of World 9 10 (10%) (4%) Corporate 0 (7) - - Merger Reorganisation Costs - (25) - - -------------------------------- ------- ----- -------- --------- 117 84 39% 43% Discontinued operations North America - 1 - - -------------------------------- ------- ----- -------- --------- 117 85 38% 42% -------------------------------- ------- ----- -------- --------- Half Year Ended June 30 --------------------------------------------------------------------- Operating profit - by geographical area --------------------------------------------------------------------- 2000 1999 % change £m £m exch.rates Actual const. Western Europe 138 138 - 7% North America 44 34 29% 25% Latin America 1 4 (75%) (87%) Asia Pacific 8 3 167% 181% Rest of World 12 13 (8%) (3%) Corporate 0 (10) - - Merger Reorganisation Costs - (25) - - -------------------------------- ------- ----- -------- --------- 203 157 29% 37% Discontinued operations North America - 2 - - -------------------------------- ------- ----- -------- --------- 203 159 28% 35% -------------------------------- ------- ----- ------- --------- Quarter Ended June 30 --------------------------------------------------------------------- Operating margin - by geographical area --------------------------------------------------------------------- 2000 1999 % % Western Europe 19.8 19.7 North America 14.4 14.2 Latin America 3.6 9.4 Asia Pacific 4.4 (1.3) Rest of World 11.3 13.3 Corporate - - Merger Reorganisation Costs - - --------------------------------------- ------------- ------------- 14.5 10.7 Discontinued operations North America - 20.0 --------------------------------------- ------------- ------------- 14.5 10.7 --------------------------------------- ------------- ------------- Half Year Ended June 30 --------------------------------------------------------------------- Operating margin - by geographical area --------------------------------------------------------------------- 2000 1999 % % Western Europe 20.2 19.4 North America 10.1 8.5 Latin America 0.9 4.2 Asia Pacific 4.6 1.9 Rest of World 7.9 9.3 Corporate - - Merger Reorganisation Costs - - --------------------------------------- ------------- ------------- 13.1 10.5 Discontinued operations North America - 22.2 --------------------------------------- ------------- ------------- 13.1 10.5 --------------------------------------- ------------- ------------- Quarter Ended June 30 --------------------------------------------------------------------- Net revenues - by product segment --------------------------------------------------------------------- 2000 1999 % change £m £m exch. Rates Actual Const. Household and Health & Personal Care 755 736 3% 5% Food 52 51 2% (2%) ---------------------------------------- ---- ---- ------ ------- 807 787 3% 5% Discontinued operations Household and Health & Personal Care - 5 ---------------------------------------- ---- ---- ------ ------- 807 792 2% 4% ---------------------------------------- ---- ---- ------ ------- Half Year Ended June 30 --------------------------------------------------------------------- Net revenues - by product segment --------------------------------------------------------------------- 2000 1999 % change £m £m exch.rates Actual Const. Household and Health & Personal Care 1,467 1,421 3% 7% Food 88 81 9% 6% -------------------------------------- ----- ----- ------ ------- 1,555 1,502 4% 7% Discontinued operations Household and Health & Personal Care - 9 -------------------------------------- ----- ----- ------ ------- 1,555 1,511 3% 6% -------------------------------------- ----- ----- ------ ------- Quarter Ended June 30 --------------------------------------------------------------------- Operating profit - by product segment --------------------------------------------------------------------- 2000 1999 % change £m £m exch.rates Actual Const. Household and Health & Personal Care 106 108 (2%) 1% Food 11 8 38% 30% Corporate 0 (7) - - Merger Reorganisation Costs - (25) - - -------------------------------------- ----- ----- ------ ------- 117 84 39% 43% Discontinued operations Household and Health & Personal Care - 1 - - -------------------------------------- ----- ----- ------ ------- 117 85 38% 42% -------------------------------------- ----- ----- ------ ------- Half Year Ended June 30 --------------------------------------------------------------------- Operating profit - by product segment --------------------------------------------------------------------- 2000 1999 % change £m £m exch.rates Actual Const. Household and Health & Personal Care 192 185 4% 9% Food 11 7 57% 48% Corporate 0 (10) - - Merger Reorganisation Costs - (25) - - -------------------------------------- ----- ----- ------ ------- 203 157 29% 37% Discontinued operations Household and Health & Personal Care - 2 - - -------------------------------------- ----- ----- ------ ------- 203 159 28% 35% -------------------------------------- ----- ----- ------ ------- Operating margin- by product segment --------------------------------------------------------------------- Quarter Ended June 30 Half Year Ended June 30 --------------------------------- --------------------------------- % % % % 2000 1999 2000 1999 14.0 14.7 Household and Health & Personal Care 13.1 13.0 21.2 15.7 Food 12.5 8.6 - - Corporate - - - - Merger Reorganisation Costs - - ------ ------ ----------------------------- ------ ------ 14.5 10.7 13.1 10.5 Discontinued operations - 20.0 Household and Health & Personal Care - 22.2 ------ ------ ------------------------------------- ------ ------ 14.5 10.7 13.1 10.5 ------ ------ ------------------------------------- ------ ------ Net revenues - by product group --------------------------------------------------------------------- Quarter Ended June 30 --------------------------------------------------------------------- 2000 1999 % change £m £m exch.rates Actual Const. Fabric Care 209 212 (1%) 3% Surface Care 182 178 2% 2% Dishwashing 108 104 4% 8% Home Care 80 74 8% 9% Health & Personal Care 109 102 7% 10% --------------------------------------- ---- ------ ------ ------ Core Business 688 670 3% 5% Other Household 67 66 2% 5% --------------------------------------- ---- ------ ------ ------ 755 736 3% 5% Discontinued operations Core Business - 5 --------------------------------------- ---- ------ ------ ------ Total Household and Health & Personal Care 755 741 2% 4% --------------------------------------- ---- ------ ------ ------ Net revenues - by product group --------------------------------------------------------------------- Half Year Ended June 30 --------------------------------------------------------------------- 2000 1999 % change £m £m exch.rates Actual Const. Fabric Care 402 404 0% 5% Surface Care 361 333 8% 10% Dishwashing 209 212 (1%) 4% Home Care 166 146 14% 16% Health & Personal Care 197 185 6% 10% -------------------------------------- ----- ------ ------ ------ Core Business 1,335 1,280 4% 8% Other Household 132 141 (6%) (3%) -------------------------------------- ----- ------ ------ ------ 1,467 1,421 3% 7% Discontinued operations Core Business - 9 -------------------------------------- ----- ------ ------ ------ Total Household and Health & Personal Care 1,467 1,430 3% 6% -------------------------------------- ----- ------ ------ ------ Earnings per ordinary share For the half year ended 30 June: unaudited The reconciliations 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: 1st half 2000 --------------------------------------------------------------------- Profit for Average Earnings The period number of per share £m shares pence --------------------------------- ---------- ----------- --------- Profit attributable to shareholders 118 694,087,053 17.1 Dilution for Executive options outstanding 4,748,528 Dilution for Executive Restricted Share Plan 865,750 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 --------------------------------- ---------- ----------- --------- 1st half 1999 --------------------------------------------------------------------- Profit for Average Earnings The period number of Per share £m shares Pence --------------------------------- ---------- ----------- --------- Profit attributable to 77 672,311,631 11.4 shareholders Dilution for Executive options 7,815,234 outstanding Dilution for Executive Restricted Share Plan - Dilution for Employee Sharesave Scheme options outstanding 132,003 Dilution for convertible capital bonds outstanding - --------------------------------- ---------- ----------- --------- On a diluted basis 77 680,258,868 11.3 --------------------------------- ---------- ----------- --------- The impact of the convertible capital bonds has not been included in the 1999 diluted earnings per share calculation above, as in accordance with FRS 14 the impact was not dilutive. The reconciliations of profit for the period and earnings per share on the shares in issue between unadjusted and adjusted EPS calculation bases are as follows: 1st half 2000 --------------------------------------------------------------------- Profit for Average Earnings The period Number of per share £m Shares pence -------------------------------- ----------- ---------- --------- - - Basic EPS 118 694,087,053 17.1 Reorganisation, merger integration costs and non operating items (2) (0.3) Taxation (including deferred taxation) 0 - -------------------------------- ----------- ----------- --------- 116 694,087,053 16.8 Impact of dilution 7 44,848,826 (0.2) -------------------------------- ----------- ----------- --------- On an adjusted, diluted basis 123 738,935,879 16.6 -------------------------------- ----------- ----------- --------- 1st half 1999 --------------------------------------------------------------------- Profit for Average Earnings The period number of per share £m shares pence -------------------------------- ----------- ----------- --------- Basic EPS 77 672,311,631 11.4 Reorganisation, merger integration costs and non operating items 27 4.0 Taxation (including deferred taxation) (1) (0.1) -------------------------------- ----------- ----------- --------- 103 672,311,631 15.3 Impact of dilution - 7,947,237 (0.2) -------------------------------- ----------- ----------- --------- On an adjusted, diluted basis 103 680,258,868 15.1 -------------------------------- ----------- ----------- --------- The Directors believe that a diluted earnings per ordinary share, adjusted for the distorting effects of non-operating items and exceptional costs (i.e. reorganisation and merger integration costs) 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. Similarly, five times the number of outstanding Benckiser N.V. 'B' shares have been included in the calculations of the weighted average number of shares, as it is expected that these shares will be converted into Reckitt Benckiser shares in due course.

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