29th Jul 2009 07:00
Reckitt Benckiser A World Leader in Household, Health and Personal Care 29 July 2009 STRONG FIRST HALF RESULTS FULL YEAR TARGETS RAISEDResults at a glance Q2** % change % change HY % change % change GBPm actual constant GBPm actual constant(unaudited) exchange exchange exchange exchangeNet Revenue 1,872 +20% +8% 3,783 +23% +8%Operating Profit - 414 +27% +14% 819 +37% +17%reportedOperating Profit - 414 +27% +14% 819 +30% +12%adjusted *Net Income - reported 310 +31% +17% 613 +39% +19%Net Income - adjusted 310 +29% +17% 613 +32% +13%*EPS (diluted) - 43.0p +32% 85.1p +40%reportedEPS (diluted) - 43.0p +30% 85.1p +33%adjusted ** Adjusted results (including % change figures) exclude exceptionalitems (see page 2). There are no exceptional items in HY 2009 compared to anexceptional charge of 30m pre-tax in HY 2008. ** Q2 results were not subjectto the independent review.Half Year (HY) highlights:
- Total net revenue +8% (constant exchange) to 3,783m, with growth
across the Group and its 17 Powerbrands. Excluding Reckitt Benckiser
Pharmaceuticals (RBP), net revenue was ahead +6% (at constant).
- Gross margin +80bp to 59.1%: adjusted operating margin +110bp to
21.6%.
- Adjusted net income +32% (actual exchange): adjusted diluted EPS
of 85.1p (+33%).
- Net debt of 525m (31 December 2008: 1,096m), as a result of
strong free cash flow generation and a net 53m positive foreign exchange
impact, partially offset by the payment of the final 2008 dividend of 341m.
- Net working capital of minus 1,222m, a 125m improvement versus
the 31 December 2008 level.
- The Board recommends a +34% increase in the interim dividend to
43.0p per share.
Q2 highlights:
- Total net revenue +8% (constant exchange), consistent with the
growth rate achieved in Q1. Excluding RBP, net revenue increased +5%
(constant).
- Gross margin +70bp to 59.6%: adjusted operating margin +130bp to
22.1%.
- Adjusted net income +29% (actual exchange): adjusted diluted EPS
of 43.0p (+30%).
Commenting on these results, Bart Becht, Chief Executive Officer, said:
"Reckitt Benckiser had a very good first half despite challenging market conditions, with net revenue growth of +8% at constant exchange. All regions and our 17 Powerbrands contributed to this growth, supported by continued investment and successful product initiatives.
As a result of this strong start to the year, we are raising our FY 2009 targets. We are now targeting net revenue growth of +5-6% (previously +4%, base 6,563m) and net income growth of +10-11% (previously +8-10%, base 1,143m), both at constant exchange."
Basis of Presentation and Exceptional ItemsWhere appropriate, the term "adjusted" excludes the impact ofexceptional items. There are no exceptional items in HY 2009, compared to anexceptional charge in HY 2008 of 30m mainly relating to the integration ofAdams. Detailed Operating ReviewSecond quarter 2009
Q2 net revenue increased +20% to 1,872m, with growth of +8% at constant exchange.
The gross margin improved by +70bp to 59.6%, largely as a result ofeasing input costs and benefits from cost optimisation programmes, partiallyoffset by a negative transaction impact from foreign exchange. While mediasupport increased, media spend declined by -4% (-14% constant) to a level of11.4% of net revenue due to more favourable media buying rates. Totalmarketing investment was higher, as savings from these more favourable mediarates were re-invested in Other Consumer Marketing activities. Operatingprofit as reported was 414m, +27% higher than last year (+14% constant): theoperating margin increased by +130bp to 22.1% due to gross margin expansionand operating cost efficiencies.
Net finance income was 1m (Q2 2008: net finance expense of 10m), reflecting strong free cash flow generation and progress made on net debt repayment during the quarter. The tax rate was 25%.
Net income was 310m, an increase of +31% (+17% constant) on Q2 2008. On an adjusted basis, net income was up +29% (+17% constant).
Diluted earnings per share of 43.0 pence rose +30% on an adjusted basis (+32%, reported).
Half year 2009
HY net revenue increased +23% to 3,783m, with growth of +8% at constant exchange.
The gross margin improved by +80bp to 59.1%, largely as a result ofeasing input costs, benefits from cost optimisation programmes and sales priceincreases, partially offset by a negative transaction impact from foreignexchange. Marketing investment was higher, and pure media investment rose +10%(-3% constant) to a level of 12.1% of net revenue. There was significantgrowth in Other Consumer Marketing, as savings from more favourable mediarates were re-invested in other forms of brand-building initiative. Operatingprofit as reported was 819m, +37% higher than last year (+17% constant): onan adjusted basis, operating profit was ahead +30% (+12% constant). Theadjusted operating margin increased by +110bp to 21.6% due to gross marginexpansion and operating cost efficiencies.
Net finance expense was 3m (HY 2008: 19m), reflecting strong free cash flow generation and progress made on net debt repayment during the half year. The tax rate was 25%.
Net income was 613m, an increase of +39% (+19% constant) on HY 2008. On an adjusted basis, net income was up +32% (+13% constant).
Diluted earnings per share of 85.1 pence rose +33% on an adjusted basis (+40%, reported).
HY 2009 Business Review
Summary: % net revenue growth
HY 2009 Growth at Constant Exchange Reported
ExchangeEurope +2% +9% +11%NAA +7% +26% +33%DvM +15% +14% +29%Pharma* +43% +42% +85%TOTAL +8% +15% +23%
* Pharma represents the Group's prescription drug business of Subutex and Suboxone
The Business Review below is given at constant exchange rates.
Europe 47% of net revenue
HY 2009 total net revenue increased +2% to 1,782m, with growthcoming largely from Dishwashing, Home Care and Health & Personal Care. InDishwashing, the continued success of Quantum contributed to performance,while growth in Air Care was supported by such initiatives as AirwickFreshmatic, Freshmatic Mini and motion. In Health & Personal Care, Nurofen,Strepsils and Gaviscon all performed strongly, boosted by increased marketinginvestment.
For the half year, the adjusted operating margin was +10bp ahead of last year at 22.6%; this resulted in a +1% improvement in adjusted operating profit to 403m.
In Q2, net revenue rose +2% to 864m. Adjusted operating profit increased by +1% to 197m, with the margin up +10bp to 22.8%.
North America & Australia 27% of net revenue
HY 2009 total net revenue increased +7% to 1,008m, with allcategories contributing. In Fabric Care, growth was boosted by such newinitiatives as the launch of Spray `n Wash Bright & White, Resolve Deep CleanPowder and concentrated formulations for Woolite. Surface Care increasedlargely as a result of increased consumption of Lysol spray and disinfectantwipes, in part due to the outbreak of the H1N1 `flu virus. Dishwashing wasdriven by the launch of Quantum in the U.S., while Airwick Freshmatic andmotion contributed to the performance in Home Care. In Health & PersonalCare, growth was driven by Mucinex.
In Food, growth was led by the consumer brands of French's Yellow Mustard and Frank's Red Hot sauce.
For the half year, adjusted operating profit increased +15% to 169m; the adjusted operating margin was +100bp higher at 16.8%.
Q2 net revenue rose +5% to 486m and adjusted operating profit was ahead by +15% to 77m, equating to a +100bp uplift in the margin to 15.8%.
Developing Markets 19% of net revenue
HY 2009 total net revenue was ahead +15% to 739m, with growth evident across all regions and driven particularly by Fabric Care, Surface Care and Health & Personal Care. In Fabric Care, increased marketing investment and new initiatives helped generate a strong performance for Vanish across the Area. Surface Care increased largely as a result of growth in Harpic, and Veja in Brazil. In Health & Personal Care, additional marketing investment helped drive an excellent result for the Dettol personal care range, with Veet and Gaviscon also strong contributors.
For the half year, adjusted operating profit increased by +20% to 98m. This resulted in a +70bp improvement in the adjusted operating margin to 13.3%.
Q2 net revenue increased by +16% to 379m. Adjusted operating profit improved +23% to 54m, with a +70bp uplift in the margin to 14.2%.
Pharmaceuticals 7% of net revenue
HY 2009 total net revenue for the Group's Subutex and Suboxone prescription drug business grew +43% to 254m. These buprenorphine-based products are used to treat opiate dependence. This very strong growth was predominantly driven by a continued increase in penetration of Suboxone in the U.S.
For the half year, the adjusted operating margin improved by +320bp to 58.7%. Adjusted operating profit was 149m, an increase of +46%.
Q2 net revenue increased by +46% to 143m. Adjusted operating profit increased +54% to 86m, for a +310bp expansion in the margin to 60.1%.
As a result of its Orphan Drug Status, Suboxone has exclusivity inthe U.S. until the end of September 2009 and in Europe until 2016. Within thePharmaceuticals division, the U.S. Suboxone business generated HY 2009 netrevenue of 219m and adjusted operating profit of 132m. While the Groupcontinues to search for ways to offset the impact of the loss of exclusivityin the U.S. at the end of September 2009, up to 80% of the revenues andprofits of that business might be lost to generic competition in 2010, withthe possibility of further erosion thereafter. HY 2009 Category Review (at Constant Exchange Rates)
Fabric Care. Net revenue increased +1% to 807m, largely due to a strong performance for Vanish in Developing Markets, supported by the successful roll-out of Vanish Oxi Action Intelligence gel in selected European markets. Woolite also contributed, helped by such new initiatives as Triple Protection and concentrated formulations. Growth was partially offset by weakness in Laundry Detergents and Fabric Conditioners. Q2 net revenue grew +1% to 401m.
Surface Care. Net revenue grew +3% to 635m, with growth in boththe Dettol and Lysol ranges. Harpic Lavatory Care also performed well, helpedby such new initiatives as Harpic liquid with Max Coverage. Q2 growth was +6%to 314m.
Dishwashing. Net revenue increased +5% to 440m due to the continued success of Finish Quantum, behind increased investment. Q2 net revenue was flat at 205m.
Home Care. Net revenue increased +5% to 509m. This growth was largely driven by Air Care, supported by Airwick Freshmatic, Freshmatic Mini and motion. Q2 growth was +7% to 245m.
Health & Personal Care. Net revenue increased +14% to 978m. TheDettol personal wash range continued to deliver excellent growth in DevelopingMarkets, while Mucinex, Nurofen, Strepsils and Gaviscon all contributed to astrong performance in Healthcare. In Q2, Health & Personal care grew +9% to 473m.
Total Household and Health & Personal Care. Net revenue was ahead by +6% to 3,397m. In Q2, total Household and Health & Personal Care grew +5% to 1,658m.
Pharmaceuticals. HY 2009 net revenue for the Group's Subutex andSuboxone prescription drug business grew +43% to 254m, predominantly drivenby a continued increase in penetration of Suboxone in the U.S. Adjustedoperating profit was ahead +46% to 149m, equating to a +320bp improvement inthe margin to 58.7%.
Q2 net revenue increased by +46% to 143m, while adjusted operating profit rose +54% to 86m.
Food. Net revenue grew +7% to 132m with good performance across the consumer portfolio, in particular further growth for French's Yellow Mustard and Frank's Red Hot Sauce. Adjusted operating profit increased +23% to 25m.
Q2 net revenue grew +9% and adjusted operating profit was 15m (+16%).
New Initiatives: H2 2009
The Group has announced a number of new product initiatives for the second half of 2009:
In Fabric Care:
- Roll-out of Vanish Oxi Action Intelligence Plus Gel, a new
generation of premium in-wash gel stain removers that remove all stains from
garments - even the toughest greasy ones.
- Roll-out of Woolite Complete, which cleans and protects all
fabrics and colours against fabric damage and fading, offering complete
protection for all wash-loads.
In Surface Care:
- Launch of Harpic Max rim block, not only offering powerful
cleaning and continuous freshness, but also 25% more flushes for the same
price.
In Home Care:
- Roll-out of Airwick motion, providing an instant boost of
freshness when motion is detected, on top of regular automatic sprays of
fragrance.
- Launch of Mortein Powergard, offering even more powerful and
long-lasting protection against pests owing to its latest superior
high-technology formula.
In Health & Personal Care:
- Launch of the Dettol brand through the pharmacy channel in
selected European markets.
- Launch of Dettol Naturals personal wash range in selected
developing markets, combining the benefits of natural ingredients with
Dettol's protection against germs to leave skin looking and feeling healthier.
- Roll-out of Strepsils Cool, delivering an instantly cooling
sensation for fast effective relief from a burning throat.
HY 2009 Financial ReviewBasis of preparation. The unaudited financial information isprepared in accordance with IFRSs as adopted by the European Union and IFRSsas issued by the International Accounting Standards Board, and with theaccounting policies set out in the Group's 2008 Annual Report & FinancialStatements, except as explained in Note 3 to the Half Year Condensed FinancialStatements.
Constant exchange. Movements in exchange rates relative to sterling affect actual results as reported. The constant exchange rate basis adjusts the comparative to exclude such movements, to show the underlying growth of the Group.
Net finance expense. Net interest payable was 3m (2008: 19m), reflecting strong free cash flow generation and progress on net debt repayment.
Tax. The underlying tax rate was 25% (2008: 24%).
Net working capital (inventories, short-term receivables andshort-term liabilities excluding borrowings and provisions) of minus 1,222mwas 125m lower than the 31 December 2008 level, mostly due to an improvementin inventories.Cash flow. Cash generated from operations increased +43% to 1,128m(30 June 2008: 788m) and net cash flow from operations was 884m, +48% (2008: 596m). Net interest paid was 6m lower at 7m (2008: 13m) and tax paymentsincreased by 53m to 175m (2008: 122m). Capital expenditure (includingintangibles) was lower than the prior year at 62m (2008: 86m).Net debt at the end of the half year was 525m (December 2008: 1,096m), a decrease of 571m. This reflected net cash flow from operations of 884m and a positive foreign exchange translation impact on net debt ( 53m)predominantly arising from the weakening of the US$ during the period,partially offset by the payment of the final 2008 dividend of 341m. The Groupregularly reviews its banking arrangements and currently has adequatefacilities available to it, only 25m of which expires within one year.
Balance sheet. At 30 June 2009, the Group had shareholders' funds of 3,216m (31 December 2008: 3,294m), a decrease of -2%. Net debt was 525m (31 December 2008: 1,096m) and total capital employed in the business was 3,741m (31 December 2008: 4,390m).
This finances non-current assets of 6,661m (31 December 2008: 7,228m), of which 590m (31 December 2008: 637m) is tangible fixed assets,the remainder being goodwill, other intangible assets, deferred tax, availablefor sale financial assets and other receivables. The Group has net workingcapital of minus 1,222m (31 December 2008: minus 1,097m), current provisionsof 64m (31 December 2008: 73m) and long-term liabilities other thanborrowings of 1,635m (31 December 2008: 1,668m).
Dividends. The Board of Directors recommends an interim dividend of 43.0p (2008: 32.0p), an increase of +34%. The ex-dividend date will be 5 August and the dividend will be paid on 28 September to shareholders on the register at the record date of 7 August. The last date for election for the share alternative to the dividend is 7 September.
2009 Targets
As a result of the strong start to the year, the Group is raising its FY 2009 targets to net revenue growth of +5-6% (previously +4%, base 6,563m) and net income growth of +10-11% (previously +8-10%, base 1,143m), both at constant exchange.
Principal Risks and Uncertainties
The Directors consider that the principal risks and uncertainties which could have a material impact on the Group's performance in the remaining six months of 2009 are the same as described on pages 18-19 of the Annual Report and Financial Statements for the year ended 31 December 2008. These include, but are not limited to:
- Market risks:
- Expiry of the Group's exclusive licence for Suboxone in the U.S.
at the end of September 2009.
- Demand for the Group's products adversely affected due to changes
in consumer preference.
- Customer de-listing of the Group's brands.
- Competition may reduce market share and margins.
- Operational risks:
- Unfavourable economic or business conditions in the markets in
which the Group operates.
- New product innovation declines or becomes less relevant to
consumers.
- Increased costs or shortages of raw and packaging materials.
- Adverse changes in the regulatory environment.
- Environmental, social and governance risks:
- Product quality and safety risks to consumers.
- Operational risks:
- Fluctuations in foreign exchange and interest rates.
The Group's Annual Report and Financial Statements for the year ended 31 December 2008 are available on the Group's website at www.reckittbenckiser.com.
The Group at a Glance (Unaudited)
Quarter ended 30 June Half year ended 30 June 2009 2008 2009 2008 GBPm GBPm GBPm GBPm 1,872 1,564 Net revenue - total 3,783 3,074 +8% +11% Net revenue growth - +8% +11% constant +20% +20% Net revenue growth - total +23% +20% 59.6% 58.9% Gross margin 59.1% 58.3% 444 350 EBITDA 881 650 23.7% 22.4% EBITDA margin 23.3% 21.1% 414 325 EBIT 819 600 414 325 EBIT - adjusted * 819 630 22.1% 20.8% EBIT margin 21.6% 19.5% 22.1% 20.8% EBIT margin - adjusted * 21.6% 20.5% 415 315 Profit before tax 816 581 310 237 Net income 613 442 310 240 Net income - adjusted * 613 465 43.6p 33.3p EPS, basic, as reported 86.3p 62.1p 43.0p 33.1p EPS, adjusted and diluted * 85.1p 64.0p
* Adjusted to exclude the impact of exceptional items.
Group balance sheet data 30 June 31 December 2009 2008 GBPm GBPm Net working capital * (1,222) (1,097)Net debt (525) (1,096)
* Net working capital is defined as inventories, short-term receivables and short-term liabilities, excluding borrowings and provisions.
Shares in issue First half Millions31 December 2008 708.7Issued or transferred from Treasury 1.331 March 2009 710.0Issued or transferred from Treasury 3.830 June 2009 713.8
Group Income Statement Analysis (Unaudited)
Quarter ended Half year ended 30 June 30 June 2009 2008 % change 2009 2008 % change GBPm GBPm GBPm GBPm1,872 1,564 +20% Net revenue 3,783 3,074 +23%(757) (643) +18% Cost of sales (1,549) (1,281) +21%1,115 921 +21% Gross profit 2,234 1,793 +25%(701) (596) +18% Net operating expenses (1,415) (1,193) +19% 414 325 +27% Operating profit 819 600 +37% 414 325 +27% Operating profit before 819 630 +30% exceptional items - - Exceptional items - (30) 414 325 +27% Operating profit 819 600 +37% 1 (10) Net finance income / (expense) (3) (19) 415 315 +32% Profit on ordinary activities 816 581 +40% before taxation(105) (78) +35% Tax on profit on ordinary (203) (139) +46% activities 310 237 +31% Profit for the period 613 442 +39% - - Attributable to equity - - minority interests 310 237 +31% Attributable to ordinary 613 442 +39% equity holders of the parent 310 237 +31% Profit for the period 613 442 +39% Earnings per ordinary share: 43.6p 33.3p On profit for the period, basic 86.3p 62.1p 43.0p 32.6p On profit for the period, diluted 85.1p 60.8p Earnings per ordinary share - adjusted*: 43.6p 33.7p On profit for the period, basic 86.3p 65.4p 43.0p 33.1p On profit for the period, diluted 85.1p 64.0p
* Adjusted to exclude the impact of exceptional items.
Average common shares outstanding: (millions)711.9 711.4 Basic 710.7 711.5721.6 726.1 Diluted 720.7 726.8
Segment Information (Unaudited)
Analyses by operating segment of net revenue and operating profit,and of net revenue by product group are set out below. The figures for eachgeographical area show the net revenue and operating profit made by companieslocated in that area. Additional information is provided to show profit byclass of business.Operating segment Quarter ended Half year ended 30 June 30 June 2009 2008 % Change 2009 2008 % Change GBPm GBPm exch. GBPm GBPm exch. rates rates actual const. actual const. Net revenue 864 805 +7% +2% Europe 1,782 1,606 +11% +2% 486 384 +27% +5% North America & 1,008 758 +33% +7% Australia 379 296 +28% +16% Developing Markets 739 573 +29% +15% 143 79 +81% +46% Pharmaceuticals 254 137 +85% +43% 1,872 1,564 +20% +8% 3,783 3,074 +23% +8% Operating profit - statutory basis 197 183 +8% +1% Europe 403 362 +11% +1% 77 57 +35% +15% North America & 169 90 +88% +44% Australia 54 40 +35% +23% Developing Markets 98 72 +36% +20% 86 45 +91% +54% Pharmaceuticals 149 76 +96% +46% 414 325 +27% +14% 819 600 +37% +17% Operating profit - adjusted* 197 183 +8% +1% Europe 403 362 +11% +1% 77 57 +35% +15% North America & 169 120 +41% +15% Australia 54 40 +35% +23% Developing Markets 98 72 +36% +20% 86 45 +91% +54% Pharmaceuticals 149 76 +96% +46% 414 325 +27% +14% Subtotal before 819 630 +30% +12% exceptional items - - Exceptional items - (30) 414 325 +27% +14% 819 600 +37% +17% % % Operating margin - % % adjusted*22.8% 22.7% Europe 22.6% 22.5%15.8% 14.8% North America & 16.8% 15.8% Australia14.2% 13.5% Developing Markets 13.3% 12.6%60.1% 57.0% Pharmaceuticals 58.7% 55.5% 22.1% 20.8% 21.6% 20.5%
* Adjusted to exclude the impact of exceptional items
Segment Information (Unaudited), continued
Product segment Quarter ended Half year ended 30 June 30 June 2009 2008 % change 2009 2008 % exchange GBPm GBPm exch. rates GBPm GBPm exch. rates actual const. actual const. Net revenue by category 401 369 +9% +1% Fabric Care 807 720 +12% +1% 314 264 +19% +6% Surface Care 635 532 +19% +3% 205 184 +11% +0% Dishwashing 440 370 +19% +5% 245 205 +20% +7% Home Care 509 422 +21% +5% 473 396 +19% +9% Health & Personal Care 978 768 +27% +14% 20 16 +25% +8% Other Household 28 30 -7% -21%1,658 1,434 +16% +5% Household and Health & 3,397 2,842 +20% +6% Personal Care 143 79 +81% +46% Pharmaceuticals 254 137 +85% +43% 71 51 +39% +9% Food 132 95 +39% +7%1,872 1,564 +20% +8% 3,783 3,074 +23% +8% Operating profit - adjusted 313 270 +16% +7% Household and Health 645 538 +20% +6% & Personal Care 86 45 +91% +54% Pharmaceuticals 149 76 +96% +46% 15 10 +50% +16% Food 25 16 +56% +23% 414 325 +27% +15% Subtotal before 819 630 +30% +12% exceptional items - - Exceptional items - (30) 414 325 +27% +15% 819 600 +37% +17% % % Operating margin - adjusted % %18.9% 18.8% Household and Health 19.0% 18.9% & Personal Care60.1% 57.0% Pharmaceuticals 58.7% 55.5%21.1% 19.6% Food 18.9% 16.8% 22.1% 20.8% 21.6% 20.5%
For further information, please contact:
Reckitt Benckiser +44 (0)1753 217800 Joanna SpeedDirector, Investor Relations Andraea Dawson-ShepherdGlobal Director, Corporate Communications &AffairsBrunswick (Financial PR) +44 (0)20 7404 5959 Susan GilchristSenior Partner Notice to shareholdersThe financial information for the year ended 31 December 2008included in these Half Year Condensed Financial Statements is based upon theGroup's consolidated financial statements for that year. Those financialstatements have been reported on by the Group's auditors and have beendelivered to the Registrar of Companies. The auditors reported on thoseaccounts; their report was unqualified and did not contain a statement undereither Section 237 (2) or Section 237 (3) of the Companies Act 1985. The HalfYear Condensed Financial Statements are unaudited and do not amount to fullstatutory accounts within the meaning of Section 240 of the Companies Act 1985(as amended).
Cautionary note concerning forward-looking statements
This document contains statements with respect to the financialcondition, results of operations and business of Reckitt Benckiser and certainof the plans and objectives of the Group with respect to these items. Theseforward-looking statements are made pursuant to the "Safe Harbor" provisionsof the United States Private Securities Litigation Reform Act of 1995. Inparticular, all statements that express forecasts, expectations andprojections with respect to future matters, including trends in results ofoperations, margins, growth rates, overall market trends, the impact ofinterest or exchange rates, the availability of financing to the Company,anticipated cost savings or synergies and the completion of strategictransactions are forward-looking statements. By their nature, forward-lookingstatements involve risk and uncertainty because they relate to events anddepend on circumstances that will occur in the future. There are a number offactors discussed in this report, that could cause actual results anddevelopments to differ materially from those expressed or implied by theseforward-looking statements, including many factors outside Reckitt Benckiser'scontrol. Past performance cannot be relied upon as a guide to futureperformance.
Half Year Condensed Financial Statements (Unaudited)
Group Income Statement (Unaudited)
For the six months ended 30 June
At 30 June At 30 June Full Year 2009 2008 2008 Notes GBPm GBPm GBPmNet revenue 5 3,783 3,074 6,563Cost of sales (1,549) (1,281) (2,673)Gross profit 2,234 1,793 3,890Net operating expenses (1,415) (1,193) (2,385)Operating profit 5 819 600 1,505Operating profit before exceptional 5 819 630 1,535itemsExceptional items 4 - (30) (30)Operating profit 5 819 600 1,505 Finance income 10 15 31Finance expense (13) (34) (62)Net finance expense (3) (19) (31)Profit on ordinary activities 816 581 1,474before taxationTax on profit on ordinary activities 7 (203) (139) (354)Profit for the period 613 442
1,120
Attributable to equity minority - - -
interests
Attributable to ordinary equity 613 442 1,120holdersof the parentProfit for the period 613 442 1,120 Earnings per ordinary share:On profit for the period, basic 8 86.3p 62.1p
157.6p
On profit for the period, diluted 8 85.1p 60.8p 154.7p Dividend per ordinary share
9 48.0p 30.0p
62.0p
(paid in period)Total dividends for the period 9 341 214
441
Group Statement of Comprehensive Income (Unaudited) For the six months ended 30 June
30 June 30 June Full Year 2009 2008 2008 GBPm GBPm GBPmProfit for the period 613 442 1,120 Net exchange adjustments on foreign currency (352) 107 491translationActuarial gains and losses, net of tax (69) (35)
(74)
Available for sale reserve, net of tax 8 -
(8)
Tax movement on share option exercises (1) 4
(23)
Net hedged gains and losses taken to (10) 3
19
reserves, net of taxOther comprehensive income for the (424) 79
405
period, net of taxTotal comprehensive income for the 189 521
1,525
period
Attributable to equity minority interests - - -Attributable to ordinary equity shareholders 189 521 1,525of the parent 189 521 1,525
Group Balance Sheet (Unaudited)
At 30 At 30 At 31 June June December 2009 2008 2008 Notes GBPm GBPm GBPmASSETSNon-current assets:Goodwill and other intangible assets 5,914 5,324
6,454
Property, plant and equipment 10 590 517
637
Deferred tax assets 117 154
93
Available for sale financial assets 20 26 25Other receivables 20 11 19 6,661 6,032 7,228Current assets:Inventories 458 451 556Trade and other receivables 892 770 906Derivative financial instruments 9 17
69
Available for sale financial assets 5 24 6Cash and cash equivalents 511 485 417 1,875 1,747 1,954Total assets 8,536 7,779 9,182 LIABILITIESCurrent liabilities:Borrowings 11 (1,026) (1,492) (1,571)Provisions for liabilities and charges 12 (64) (62) (73)Trade and other payables (2,191) (1,973) (2,189)Tax liabilities (398) (303) (383) (3,679) (3,830) (4,216)Non-current liabilities:Borrowings 11 (6) (4) (4)Deferred tax liabilities (1,073) (997) (1,172)Retirement benefit obligations 6 (379) (220)
(316)
Provisions for liabilities and charges 12 (41) (34) (31) Tax liabilities
(128) (120)
(128)
Other non-current liabilities (14) (21) (21) (1,641) (1,396) (1,672)Total liabilities (5,320) (5,226) (5,888)Net assets 3,216 2,553 3,294 EQUITYCapital and reserves:Share capital 13 72 72 72Merger reserve (14,229) (14,229) (14,229)Hedging reserve 3 (3) 13Available for sale reserve - - (8)Foreign currency translation reserve 80 48 432Retained earnings 17,288 16,663 17,012 3,214 2,551 3,292Equity minority interests 2 2 2Total equity 3,216 2,553 3,294Group Cash Flow Statement (Unaudited)For the six months ended 30 June 30 June 30 June Full Year 2009 2008 2008 Notes GBPm GBPm GBPmCASH FLOWS FROM OPERATING ACTIVITIESCash generated from operations:Operating profit 819 600 1,505Depreciation 57 47 100Amortisation 4 2 7Other non cash movements (9) - -Fair value losses / (gains) 8 (1) -
Loss on sale of property, plant and equipment - - 5and intangible assetsDecrease / (increase) in inventories 47 (38)
(65)
Increase in trade and other receivables (36) (6)
(32)
Increase in payables and provisions 208 153
61
Share award expense 30 31
59
Cash generated from operations: 1,128 788 1,640Interest paid (18) (28) (58)Interest received 11 15 31Tax paid (175) (122) (280)Net cash generated from operating 946 653
1,333
activities
CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment (64) (90)
(216)
and intangible assetsDisposal of property, plant and equipment 2 4 9
Acquisition of businesses, net of cash acquired 14 - (1,068) (1,081) Maturity of short-term investments
- 13
34
Disposal of available for sale assets 1 - - Net cash used in investing activities (61) (1,141)
(1,254)
CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issue of ordinary shares 44 30 63Share purchases - (182) (300)Proceeds from borrowings - 1,146 1,146Repayments of borrowings (463) (142) (506)
Dividends paid to the Company's shareholders 9 (341) (214) (441) Net cash (used) / generated in
(760) 638
(38)
financing activities
Net increase in cash and cash equivalents 125 150
41
Cash and cash equivalents at beginning of period 398 311 311 Exchange (losses) / gains
(28) 6
46
Cash and cash equivalents at end 495 467
398
of period
Cash and cash equivalents compriseCash and cash equivalents 511 485 417Overdrafts (16) (18) (19) 495 467 398
RECONCILIATION OF NET CASH FLOW FROM OPERATIONS
Net cash generated from operating activities 946 653
1,333
Net purchases of property, plant and equipment (62) (57) (156) Net cash flow from operations
884 596
1,177
Management uses net cash flow from operations as a performance measure.
Group Statement of Changes in Equity (Unaudited)For the six months ended 30 June Foreign Available currency Share Merger for sale Hedging translation Retained Minority capital reserve reserve reserve
reserve earnings interest Total
Balance at 1 January 2008 72 (14,229) - (6) (59) 16,605 2 2,385Share based payments 31 31Deferred tax on share awards (18) (18)
Tax movement on share option exercises 4 4Profit for the half year 442 442Dividends (214) (214)Actuarial gains/losses (net of tax) (35) (35)Net exchange adjustments on foreigncurrency translation 107 107Gains and losses taken to reserves oncash flow hedges 3 3Shares repurchased and held in Treasury (182) (182)Treasury shares re-issued 30 30Balance at 30 June 2008 72 (14,229) - (3) 48 16,663 2 2,553Share based payments 28 28Deferred tax on share awards (5) (5)Tax movement in reserves (1) (1)Profit for second half year 678 678Dividends (227) (227)Actuarial gains/losses (net of tax) (39) (39)Revaluation of available for sale assets (8) (8)Net exchange adjustments on foreigncurrency translation 384 384Gains and losses taken to reserveson cash flow hedges 16 16Shares repurchased and held in Treasury (118) (118)Treasury shares re-issued 33 33Balance at 31 December 2008 72 (14,229) (8) 13 432 17,012 2 3,294Share based payments 30 30Deferred tax on share awards
(1) (1)Tax movement in reserves - -Profit for the half year 613 613Dividends (341) (341)Actuarial gains/losses (net of tax) (69) (69)Revaluation of available for sale assets 8 8Net exchange adjustments on foreigncurrency translation (352) (352)Gains and losses taken to reserveson cash flow hedges (10) (10)Shares repurchased and held in Treasury - -Treasury shares re-issued 44 44Balance at 30 June 2009 72 (14,229) - 3
80 17,288 2 3,216
Notes to the Half Year Condensed Financial Statements (Unaudited)
1. General Information
Reckitt Benckiser Group plc is a public limited company incorporated and domiciled in the UK. The address of its registered office is 103-105 Bath Road, Slough, Berkshire SL1 3UH. The Company is listed on the London Stock Exchange. The Half Year Condensed Financial Statements were approved by the Board of Directors for issue on 29 July 2009.
This condensed consolidated interim financial information has been reviewed, not audited.
2. Basis of Preparation
The Half Year Condensed Financial Statements for the six monthsended 30 June 2009 have been prepared in accordance with IAS 34, `Interimfinancial reporting' as adopted by the European Union and as issued by theInternational Accounting Standards Board and with the Disclosure andTransparency Rules of the United Kingdom's Financial Services Authority. TheHalf Year Condensed Financial Statements should be read in conjunction withthe Annual Report and Financial Statements for the year ended 31 December2008, which have been prepared in accordance with IFRSs as adopted by theEuropean Union and IFRSs as issued by the International Accounting StandardsBoard.3. Accounting Policies
Except as described below, the accounting policies applied are consistent with those of the Financial Statements 2008.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.
The following standards, amendments and interpretations became effective for the first time for the financial year beginning 1 January 2009:
- IFRS 2 (amendment), `Share-based payment'. The Group has
considered the amendment which only impacts the Save As You Earn schemes. The
impact was not material.
- IFRS 8, `Operating segments'. IFRS 8 replaces IAS 14, `Segment
reporting'. The Group early adopted the standard for the year ended 31
December 2008.
- IAS 1 (revised), `Presentation of financial statements'. The Half
Year Condensed Financial Statements have been prepared under the revised
disclosure requirements, presenting two statements; an income statement and a
statement of comprehensive income.
The following standards, amendments and interpretations became effective for the first time for the financial year beginning 1 January 2009 but either have no material impact or are not relevant to the Group :
- IAS 1 amendment 'Presentation of financial statements on Puttable financial
instruments and obligations arising on liquidation'.
- IAS 23 (amendment), `Borrowing costs'.
- IAS 27 (revised), `Consolidated and Separate Financial
Statements'.
- IAS 32 (amendment), `Financial instruments: Presentation'.
- IAS 39 (amendment), `Financial instruments: Recognition and
measurement' and IFRS 7 (Amendment), `Financial Instruments: Disclosures', on
the `Reclassification of financial assets' (effective 1 July 2008).
- IFRIC 12, `Service concession arrangements'.
- IFRIC 13, `Customer loyalty programmes'.
- IFRIC 14 'IAS 19 - The limit on a defined benefit asset, minimum funding
requirements and their interaction'.
- IFRIC 15, `Agreements for the construction of real estate'.
- IFRIC 16, `Hedges of a net investment in a foreign operation'.
There are also a number of changes to standards as a result of the annual improvements May 2008 project, mainly effective for the financial year beginning 1 January 2009. These had no material impact on the Group.
The following new standards, amendments to standards and interpretations have been issued, but are not effective for the financial year beginning 1 January 2009 and have not been early adopted:
- IFRS 1 'First time adoption of IFRS', effective from 1 July 2009.
- IFRS 3 (revised), `Business combinations'.
- IAS 27 'Consolidated and separate financial statements', effective from 1
July 2009.
- IFRIC 17, `Distributions of non-cash assets to owners'.
- IFRIC 18, `Transfers of assets from customers'.
4. Exceptional Items
Exceptional items in 2008 consist of a restructuring charge of 30m as a result of the acquisition and integration of Adams business, plus some further restructuring in the enlarged Group. There were no exceptional items in the six months to 30 June 2009.
5. Operating Segments
The Executive Committee considers the business principally from ageographical perspective, but with the Pharmaceuticals business being managedseparately given the significantly different nature of the business and therisks and rewards associated with it. The geographical segments derive theirrevenue primarily from the manufacture and sale of branded products inHousehold Cleaning and Health & Personal Care.
The Executive Committee assesses the performance of the operating segments based on net revenue and operating profit. This measurement basis excludes the effects of exceptional items. Finance income and expense are not allocated to segments, as they are managed on a central Group basis.
Half Year Ended 30 June Europe NAA Developing RBP Elimination Total Markets2009 GBPm GBPm GBPm GBPm GBPm GBPmTotal gross segment net 1,838 1,008 742 254 (59) 3,783revenueInter-segment revenue (56) - (3) - 59 -Net revenue 1,782 1,008 739 254 - 3,783Operating profit - 403 169 98 149 - 819statutory basisExceptional items - - - - - -Operating profit - adjusted 403 169 98 149 - 819 Europe NAA Developing RBP Elimination Total Markets2008 GBPm GBPm GBPm GBPm GBPm GBPmTotal gross segment net 1,650 758 575 137 (46) 3,074revenueInter-segment revenue (44) - (2) - 46 -Net revenue 1,606 758 573 137 - 3,074Operating profit - 362 90 72 76 - 600statutory basisExceptional items - 30 - - - 30Operating profit - adjusted 362 120 72 76 - 630
There were no significant changes to the allocation of assets between reportable segments since 31 December 2008.
Net revenue by product segment
The Group also analyses its revenue by the following product groups: Fabric Care, Surface Care, Dishwashing, Home Care, Health & Personal Care, together with Other Household, Pharmaceuticals and Food.
Half Year Ended 30 June 2009 2008 GBPm GBPm Net revenue by categoryFabric Care 807 720Surface Care 635 532Dishwashing 440 370Home Care 509 422Health & Personal Care 978 768Other Household 28 30Household and Health & 3,397 2,842Personal CarePharmaceuticals 254 137Food 132 95 3,783 3,074
6. Defined Benefit Pension Schemes
The Group operates a number of defined benefit and defined contributionpension schemes around the world covering many of its employees, which areprincipally funded. The Group's two most significant defined benefit pensionschemes (UK and US) are both funded by the payment of contributions toseparately administered trust funds. The Group also operates a number of otherpost-retirement schemes in certain countries.
As at 30 June 2009, the present value of the Group's scheme liabilities less the fair value of plan assets was a deficit of 362m (31 December 2008: deficit of 301m).
At 30 June At 30 June At 31 December 2009 2008 2008 GBPm GBPm GBPmTotal equities 351 427 366Total bonds 282 303 284Total other assets 63 90 60Fair value of plan assets 696 820 710
Present value of scheme liabilities (1,058) (1,031) (1,011) Net liability recognised in the balance sheet
(362) (211) (301)The net pension liability is recognised in the balance sheet asfollows: At 30 June At 30 June At 31 December 2009 2008 2008 GBPm GBPm GBPmNon-current asset:Funded scheme surplus 17 9 15Non-current liability:Funded scheme deficit (178) (42) (94)Unfunded scheme liability (201) (178) (222)Retirement benefit obligations (379) (220) (316)Net pension liability (362) (211) (301)
7. Income Taxes
Income tax expense is recognised based on management's bestestimate of the weighted average annual income tax rate expected for the fullfinancial year. The estimated average annual tax rate used for the year to 31December 2009 is 25% (the estimated tax rate for the six months ended 30 June2008 was 24%).8. Earnings per ShareBasic
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company (2009: 613m; 2008: 442m) by the weighted average number of ordinary shares in issue during the period (2009: 710,615,636; 2008: 711,463,436).
Diluted
Diluted earnings per share is calculated by adjusting the weightedaverage number of shares outstanding to assume conversion of all potentiallydilutive ordinary shares. The Company has two categories of dilutive potentialordinary shares: Executive Options and Employee Sharesave schemes. The optionsonly dilute earnings per share when they result in the issue of shares at anexercise price below the market price of the share and when all performancecriteria (if applicable) have been met. As at 30 June 2009, there were 10.4m(2008: 15m) of Executive Options not included within the dilution because thecontingent performance targets had not been met.
Reported Basis
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 is set out below:
2009 2008 Profit for Average Earnings Profit Average Earnings the half number of per for number of per year, m shares share, the shares share, pence half pence year, GBPmProfit attributable to 613 710,615,636 86.3 442 711,463,436 62.1shareholdersDilution for Executive options 9,241,605
14,325,568
outstanding
and Executive Restricted SharePlanDilution for Employee Sharesave 808,000 1,047,416Schemeoptions outstanding On a diluted basis 613 720,665,241 85.1 442 726,836,420 60.8Adjusted Basis
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 is set out below:
2009 2008 Profit for Average Earnings Profit Average Earnings the half number of per for number of per year, m shares share, the shares share, pence half pence year, GBPmProfit attributable to 613 710,615,636 86.3 465 711,463,436 65.4shareholdersDilution for Executive 9,241,605 14,325,568options outstandingand Executive RestrictedShare PlanDilution for Employee 808,000 1,047,416Sharesave Schemeoptions outstanding On a diluted basis 613 720,665,241 85.1 465 726,836,420 64.0
The Directors believe that diluted earnings per ordinary share, adjusted for the impact of the exceptional items after the appropriate tax amount, provides additional useful information on underlying trends to shareholders in respect of earnings per ordinary share.
9. Dividends
A final dividend in respect of the financial year ended 31 December 2008 of 48.0 pence per share amounting to 341m was paid on 28 May 2009 to shareholders who were on the register on 27 February 2009.
The Directors are proposing an interim dividend in respect of the financial year ending 31 December 2009 of 43.0 pence per share which will absorb an estimated 307m of shareholders' funds. It will be paid on 28 September 2009 to shareholders who are on the register on 7 August 2009. The expected tax impact of this dividend is nil (2008: nil).
10. Property, Plant and Equipment
During the period there were additions of 64m (2008: 61m) and disposals of 2m (2008: 4m). The additions and disposals were across all categories of property, plant and equipment. There was no significant capital expenditure which was contracted but not capitalised at 30 June 2009 or 2008.
11. Financial Liabilities - Borrowings
At 30 June At 30 June At 31 December 2009 2008 2008Current GBPm GBPm GBPm Bank loans and overdrafts (a) 18 191 225Commercial paper (b) 1,005 1,297 1,341Finance lease obligations 3 4 5 1,026 1,492 1,571 At 30 June At 30 June At 31 December 2009 2008 2008Non-current GBPm GBPm GBPm Finance lease obligations 6 4 4 6 4 4
a) Bank loans are denominated in a number of currencies; all are unsecured and bear interest based on relevant LIBOR equivalent.
b) Commercial paper was issued in a number of currencies, all unsecured and bearing interest based on relevant LIBOR equivalent.
At 30 June At 30 June At 31 December 2009 2008 2008 Maturity of debt GBPm GBPm GBPmBank loans and overdrafts repayable:Within one year or on demand 18 191 225 Other borrowings repayable:Within one year or on demand:Commercial paper 1,005 1,297 1,341Finance leases 3 4 5Between two and five years :Finance leases (payable by instalments) 6 4 4 1,014 1,305 1,350Gross borrowings (unsecured) 1,032 1,496 1,575Borrowing facilities
The Group has various borrowing facilities available to it. The undrawn committed facilities available, in respect of which all conditions precedent have been met at the balance sheet date, were as follows:
At 30 June At 30 June At 31 December 2009 2008 2008 Undrawn committed facilities GBPm GBPm GBPmExpiring within one year 25 - -Expiring between one and two years 900 25 25
Expiring in more than two years 750 1,650 1,444
1,675 1,675 1,469
12. Provisions for Liabilities and Charges
Restructuring Other provision provisions Total GBPm GBPm GBPmAt 1 January 2008 36 19 55Acquisition of subsidiary (note 14) - 35 35Charged to the income statement 30 - 30Utilised during the year (22) (4) (26)Exchange adjustments 2 - 2At 30 June 2008 46 50 96Acquisition of subsidiary (note 14) - 4 4Charged to the income statement 8 - 8Utilised during the year (8) (13) (21)Exchange adjustments 5 12 17At 31 December 2008 51 53 104Acquisition of subsidiary (note 14) - 7 7Charged to the income statement - 8 8Transfers - 19 19Utilised during the year (20) (7) (27)Exchange adjustments (3) (3) (6)At 30 June 2009 28 77 105
Provisions have been analysed between current and non-current as follows:
At 30 June At 30 June At 31 December 2009 2008 2008 GBPm GBPm GBPmCurrent 64 62 73Non-current 41 34 31 105 96 104
Other provisions include provisions for onerous leases, various legal, environmental and other obligations throughout the Group, the majority of which are expected to be utilised within five years.
The restructuring provision relates to further restructuring of configuration in the Group. The majority is expected to be utilised in 2009 with the remainder being utilised in 2010.
13. Share Capital Non voting Equity Nominal redeemable Nominal Subscriber Nominal ordinary value preference value ordinary valueAuthorised shares GBPm shares GBPm shares GBPm At 1 January 2009 Ordinary shares of 10p each 945,500,000 95 945,500,000 95 At 30 June 2009 Ordinary shares of 10p each 945,500,000 95 945,500,000 95 Issued and fully paid At 1 January 2009 722,368,512 72 - - 2 - Allotments - - At 30 June 2009 722,368,512 72 - - 2 -14. Business AcquisitionsThere were no business combinations during the six months ended 30June 2009. In 2008, the Group acquired Adams Respiratory Therapeutics, Inc.During the six months to 30 June 2009, the provisional fair value exercise onthe fair values of net assets acquired was completed. This resulted inrecognising an additional 7m goodwill and 7m long-term liabilities. Therewere no other adjustments to the provisional fair values disclosed in theFinancial Statements 2008.
15. Contingent Liabilities
Contingent liabilities for the Group, comprising guarantees relating to subsidiary undertakings, at 30 June 2009 amounted to 28m (31 December 2008: 41m).
The Group is involved in the early stages of a number of enquiries from competition authorities. Any potential liability in respect of such enquiries is not quantifiable as at the date of this report, therefore the Directors have made no provision for such potential liabilities.
16. Post Balance Sheet Events
Share capital issued since 30 June 2009
In the period 30 June 2009 to 28 July 2009 the Company has not issued any ordinary shares.
Details of the interim dividend proposed are given in note 9.
17. Seasonality
Demand for the majority of products sold by the Group is notsubject to significant seasonal fluctuations. Within some categories such asHealth & Personal Care and Pest Control, some products do exhibit seasonalfluctuations; however, peak demand in the northern hemisphere markets largelytends to counter that in the southern hemisphere markets. Other lesssignificant seasonal relationships also occur within the group, which do nothave a material impact on overall performance of the Group in any one quarter.
18. Related Party Transactions
There have been no changes in the related party transactions from those described in the Financial Statements 2008. There were no material related party transactions in the six months to 30 June 2009.
Statement of Directors' Responsibilities
The Directors confirm that these Half Year Condensed Financial Statements have been prepared in accordance with IAS 34 as adopted by the European Union and as issued by the International Accounting Standards Board and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
- An indication of important events that have occurred during the
first six months and their impact on the Half Year Condensed Financial
Statements, and a description of the principal risks and uncertainties for
the remaining six months of the financial year; and - Material related party transactions in the first six months and any material changes in the related party transactions described in the last annual report.
The Directors of Reckitt Benckiser Group plc are listed in the Reckitt Benckiser Group plc Annual Report and Financial Statements for 31 December 2008. A list of current Directors is maintained on the Reckitt Benckiser Group plc website: www.reckittbenckiser.com.
By order of the BoardBart BechtChief Executive OfficerAdrian BellamyDirector29 July 2009
Independent Review Report to Reckitt Benckiser Group plc
Introduction
We have been engaged by the Company to review the Half Year Condensed Financial Statements in the half-yearly financial report for the six months ended 30 June 2009, which comprises the Group income statement, Group statement of comprehensive income, Group balance sheet as at 30 June 2009, Group cash flow statement, Group statement of changes in equity and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the Half Year Condensed Financial Statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 2, the annual financial statements of the Group areprepared in accordance with IFRSs as adopted by the European Union and IFRSsas issued by the International Accounting Standards Board. The Half YearCondensed Financial Statements included in this half-yearly financial reporthas been prepared in accordance with International Accounting Standard 34,`Interim Financial Reporting', as adopted by the European Union and as issuedby the International Accounting Standards Board.
Our responsibility
Our responsibility is to express to the Company a conclusion on the Half YearCondensed Financial Statements in the half-yearly financial report based onour review. This report, including the conclusion, has been prepared for andonly for the Company for the purpose of the Disclosure and Transparency Rulesof the Financial Services Authority and for no other purpose. We do not, inproducing this report, accept or assume responsibility for any other purposeor to any other person to whom this report is shown or into whose hands it maycome save where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, `Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity' issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making enquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly,we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us tobelieve that the Half Year Condensed Financial Statements in the half-yearlyfinancial report for the six months ended 30 June 2009 is not prepared, in allmaterial respects, in accordance with International Accounting Standard 34 asadopted by the European Union and the Disclosure and Transparency Rules of theUnited Kingdom's Financial Services Authority.PricewaterhouseCoopers LLPChartered Accountants28 July 2009LondonNotes:(a) The maintenance and integrity of the Reckitt Benckiser Group plc websiteis the responsibility of the directors; the work carried out by the auditorsdoes not involve consideration of these matters and, accordingly, the auditorsaccept no responsibility for any changes that may have occurred to the HalfYear Condensed Financial Statements since they were initially presented on thewebsite.
(b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
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