Reckitt Benckiser A Business Case Study Finance Department, May 2006

Reckitt Benckiser – Business Case Study Business Overview Annual Report Comparison Ratios, Competitors & Risk Finance Team in RB ANZ Questions?

Reckitt Benckiser – Business Case Study Business Overview Annual Report Comparison Ratios, Competitors & Risk Finance Team in RB ANZ Questions?`

Reckitt Benckiser is the world leader in Household Cleaning (excl laundry). RB sells its products in some 180 countries and has operations in 60 countries. Reckitt Benckiser Worldwide NET REVENUES GREW BY 4% TO £2,135M NET REVENUES INCREASED 5% TO £1,281M NET REVENUES GREW 12% TO £763M

Our Categories – Share of 2005 Net Revenue

Our Categories – Market Position No.1 Worldwide in Fabric Treatment & Water Softeners. No.1 Worldwide in Automatic Dishwashing. No.2 Worldwide in Air Care, Shoe Care and Pest Control. Veet is the World Leader in depilatories. Nurofen is the No.2 Analgesic in Europe. Strepsils is the No.1 sore throat product outside the US. Clearasil is the No.1 anti- acne treatment. No.1 Worldwide in Surface Care. Dettol is the World Leader in antiseptics bought for use at home.

Reckitt Benckiser – Business Case Study Business Overview Annual Report Comparison Ratios, Competitors & Risk Finance Team in RB ANZ Questions?

Annual Report Chairman’s Statement Chief Executive’s Review Corporate Business Review Board of Directors Report of the Directors Financial Statements

Chairman's Statement Chairman’s Statement Chief Executive’s Review Corporate Business Review Board of Directors Report of the Directors Financial Statements

CEO Review Chairman’s Statement Chief Executive’s Review Corporate Business Review Board of Directors Report of the Directors Financial Statements

Corporate Business Review Chairman’s Statement Chief Executive’s Review Corporate Business Review Board of Directors Report of the Directors Financial Statements Result: further market share growth virtually everywhere, and even stronger global brand leadership. Our formula works like magic. Like Vanish.

Corporate Business Review Chairman’s Statement Chief Executive’s Review Corporate Business Review Board of Directors Report of the Directors Financial Statements Worldwide, it’s taken our share to record levels – and brought private label share growth to a standstill.

Corporate Business Review Chairman’s Statement Chief Executive’s Review Corporate Business Review Board of Directors Report of the Directors Financial Statements Bang now has the top- selling trigger pack and two of the top-selling powder packs on the multi-purpose cleaner market.

Corporate Business Review Chairman’s Statement Chief Executive’s Review Corporate Business Review Board of Directors Report of the Directors Financial Statements We’re moving up the supply chain – helping suppliers cut their own costs, so they can curb their prices to us. That way, everyone wins: our suppliers, shareholders and consumers.

Board Of Directors Chairman’s Statement Chief Executive’s Review Corporate Business Review Board of Directors Report of the Directors Financial Statements

Report of the Directors Chairman’s Statement Chief Executive’s Review Corporate Business Review Board of Directors Report of the Directors Financial Statements

Annual Report Chairman’s Statement Chief Executive’s Review Corporate Business Review Board of Directors Report of the Directors Financial Statements Profit & Loss Balance Sheet

Profit & Loss Statement Financial Statements Profit & Loss Balance Sheet

Profit and Loss Statement £’million’s Raw Materials Packaging Labour Depreciation R&D Marketing Other Overheads Also known as Gross Margin Gross Sales minus Trade Spend

Balance Sheet Financial Statements Profit & Loss Balance Sheet

£’million’s Creditors Borrowings Conv Capital Bonds Creditors Borrowings Intangible Assets Tangible Assets Stocks Debtors Investments Cash Share Capital Retained Earnings

Reckitt Benckiser – Business Case Study Business Overview Annual Report Comparison Ratios, Competitors & Risk Finance Team in RB ANZ Questions?

Comparison Ratios Why use ratios? Understand business trends over time. Used as ‘key performance indicator’ to measure business performance. Understand where problems exist - and how to fix them. Drive accountability. Benchmark against competitors.

Comparison Ratios Profit & Loss Ratios –Net Revenue Growth –Gross Profit % of Net Revenue –Operating Profit Growth –Operating % of Net Revenue Balance Sheet Ratios –Debt to Equity –Current Asset to Current Liabilities

Profit and Loss Ratios £’million’s Gross Profit % of Net Revenue: 2004 = 55% 2003 = 53% Net Revenue Growth: Growth of 4% on 2003 Operating Profit % of Net Revenue: 2004 = 20% 2003 = 18% Operating Profit Growth: Growth of 12% on 2003

Balance Sheet ratios £’million’s Creditors Borrowings £82 Conv Capital Bonds £40 Creditors Borrowings £118 Current Asset / Current Liabilities 2004 = 1709 / 1519 = = 1.08 Total Debt = = 240 Debt to Equity 2004 = 240 / 1676 = 14% 2003 = 33%

Comparison Ratios Profit & Loss Ratios –Net Revenue Growth –Gross Profit % of Net Revenue –Operating Profit Growth –Operating % of Net Revenue Balance Sheet Ratios –Debt to Equity –Current Asset to Current Liabilities We can analyse our competitors using Ratio Analysis Our competitors include: SC Johnson Unilever Sara Lee Clorox Proctor & Gamble Colgate

Treasury Global Treasury manages three main risks: Translation Risk –Financial statements reported in £’s but business conducted in other currencies –Managed through currency swaps Transaction Risk –Purchases of Goods & Services and receipts from customers in other currencies –Managed through derivatives Interest Rate Risk –65% of financial liabilities at fixed interest rates

Reckitt Benckiser – Business Case Study Business Overview Annual Report Comparison Ratios, Competitors & Risks Finance Team in RB ANZ Questions?

Finance Charter “The purpose of finance is to be a business partner that adds value to the organisation”

Organisation Chart Sales & Pricing Analysis. Marketing Commercial Analysis. Monthly Overheads Reports. New Product Development Analysis. Planning & forecasting. Preparation of Factory Budgets & Forecasts. Monthly Factory Reporting. COGS Information for NPD. Standard Cost Maintenance. Inventory Management. Preparation of Monthly Results to HO. General Ledger Maintenance. Fixed Assets. Taxation. Insurance. Bank Accounts & Treasury Liaison.

Any Questions? Questions