RB_AR_Highlights_2008.pdf

Annual Report

Highlights 2008

If it ain’t broke, make it better.

The mark of an effective strategy and the test

of the talent of your people is whether they carry

on delivering the results when conditions worsen.

So while 2008 was a challenging year, the results

for our shareholders show that continuing with our

core strategy, while lexing our execution in the

changing circumstances, was the right thing to do.

Bart Becht Chief Executive

Contents

Chief Executive’s Statement

4 Portfolio strategy

Finish: innovation drives the Powerbrands

Vanish: when less is more

8 Mucinex: it’s our latest Powerbrand

French’s: no mess, no waste

10 Our people

11 Sustainability

12 Board of Directors and Executive Committee

Reckitt Benckiser 2008

CHIEF EXECUTIVE’S STATEMENT

£6,563m

+25 %

our net revenue in 2008

growth rate of net revenue

Group inancial highlights

2008 was another great year for Reckitt Benckiser

Like-for-like net revenues grew 10% at constant exchange rates,

well ahead of the industry average. Our newly-acquired Adams

business did extremely well, with 12% year-on-year net revenue

growth at constant exchange (constant) for the irst 11 months

of being part of Reckitt Benckiser. As a result, we posted reported

net revenue growth of 13% at constant and 25% at actual

exchange rates.

2008

2007

change

£m

Net revenues

6,563

5,269

+25

Operating proit

1,505

1,233

+22

Net income for the year

1,120

938

+19

Diluted earnings per share

154.7p

127 . 9p

+21

Against the 13% growth our Powerbrands grew 17% at constant

exchange rates. They now represent 62% of net revenue and

have become even stronger global leaders over the year, with

continued investment and successful innovations such as

Air Wick Freshmatic, Finish Max in 1, and Vanish Intelligence

securing increased market shares.

Adjusted operating proit*

1,535

1,190

+29

Adjusted net income for the year*

1,143

905

+26

Adjusted diluted earnings per share*

157.8p

123 . 4p

+28

Declared dividend per share

80p

55 . 0p

+45

Company operating margins* moved ahead by 80 basis points

(bps) to 23.4%, despite the pressure of signiicant raw and pack

materials cost inlation and a determination to continue with

heavy investment behind our brands. Margin improvement was

delivered by price increases, our relentless cost optimisation

programme and strong performance on the higher margin

RB Pharmaceuticals and consumer health care businesses.

*adjusted to exclude the impact of exceptional items and tax effect thereon, where appropriate

Operating proit for the year grew by 22% at actual exchange

rates and net income grew by 19% to £1,120m.

As we look at the ever more challenging market conditions of

2009, we believe it is imperative to stay true to what lies at the

heart of our success: a strongly consumer-centric vision, a clear

and consistent strategy and the strength of our organisation – its

people and culture.

* adjusted to exclude the impact of exceptional items

Reckitt Benckiser 2008

£1,143m

+26 %

adjusted net income for the year

increase in adjusted net income for the year

Our consumers are the centre of our vision

Our vision and passion is to deliver better solutions for people

when, for those small moments every day, the quality of our

products makes a real difference to their lives, in home, health

or personal care. More than ever this means providing them with

the right value for money. That might mean a premium price for

a new and better product or, alternatively, a lower price while

maintaining product performance. A good example of the latter

is the Vanish €co Pack as explained on page 7.

Disproportionate focus on our 17 Powerbrands

Powerbrands are Reckitt Benckiser’s globally leading brands in

high growth categories, and of the 17 Powerbrands, 15 are

either Number 1 or 2 globally. We have further strengthened our

leadership positions for our Powerbrands in 2008.

This year we further strengthened and reined our Powerbrands

to 17, and we are transitioning other brands with the

same footprint into them. As an example, in the US we are

transitioning Electrasol and Jet Dry into the Finish brand, and

in Europe, transitioning Calgonit into Finish . This delivers both

beneits for the consumer, through better and faster access to

our innovation pipeline, and increased effectiveness and

eficiency for us, through common advertising and packaging.

A clear and consistent strategy

Our clear and consistent strategy is to drive above industry

growth and returns through:

•AdisproportionatefocusondrivingourPowerbrands,

global leaders in categories with high growth potential, and

completing their international roll-out.

Our newly acquired Mucinex brand, the US’ leading cough

and decongestion remedy, made it to the Powerbrand list

straightaway. This brand came with the acquisition of the Adams

business and has already delivered results over and above our

challenging expectations.

•Highlevelsofmediaandmarketinginvestment,and

continuous innovation.

•Transformingnetrevenuegrowthintoevenbetterproitand

strong cash low.

Powerbrands accounted for 62% of Reckitt Benckiser’s 2008 net

revenues. This is up from 61% in 2007.

The 17 Powerbrands

Continuing to invest behind our brands

Our growth has been achieved by ensuring that consumers know

about our products and the reasons to buy them. This year we

again increased our marketing and advertising investment behind

our brands and reaped the reward. In harder market conditions,

we think it is more important, not less, to invest in keeping our

brands at the forefront of consumers’ minds. Media delation has

enabled us to get more value, but despite lower costs, we have

increased our media investment by 14% at constant exchange

compared to the previous year. We remain amongst the highest

investors in media in the industry, with 12.4% of net revenue

ploughed back into advertising our brands.

HOUSEHOLD

Fabric care: Vanish, Calgon,

Woolite

Surface care: Lysol, Dettol,

Bang, Harpic

Dishwashing: Finish

Home care:

Air Wick, Mortein

HEALTH CARE

Strepsils, Mucinex, Nurofen,

Gaviscon

PERSONAL CARE

Dettol, Veet, Clearasil

FOOD

French’s

See page 4 for more on Reckitt Benckiser Powerbrands.

Reckitt Benckiser 2008

80.0p

+45 %

increase in dividend per share

dividend per share

Innovation – driving above average growth

Investment and product innovation are the key driving factors

behind the Powerbrands’ and RB’s growth. Consumers today

are making their purchasing decisions with even greater scrutiny.

Our innovation has been crucial in giving consumers even more

reason to buy our products. The success of Finish Max in 1 is a

great example, as explained on page 6.

Strength of organisation and culture

The Reckitt Benckiser culture lies at the heart of our success. Led

by a strong management team, who are heavily incentivised to

achieve performance, our people are entrepreneurial and take it

upon themselves to own and create initiatives and deliver great

execution. They are driven and dynamic, and want to make their

mark. We enjoy constructive conlict with each other and our

partners, and like to take calculated risks to gain advantage in

some of the most competitive markets in the world. We keep the

organisation slim, streamlined and unbureaucratic. In this way

we can have fast decision-making, be spontaneous and respond

rapidly to changing consumer needs and market conditions.

Turning our growth into cash

We turn our growth into attractive proits and cash low through

margin expansion and cash conversion.

We drive our margins by focusing on higher margin categories

and products. We then build on this by having a never-ceasing

cost optimisation programme, which in all market conditions

relentlessly looks at taking cost out without taking anything away

from consumers and, where possible, making the products even

better. The Vanish €co Pack on page 7 is a good example. At a

time when consumers are looking harder for value for money,

we are able to give them 10% more Vanish for the same price

by reducing 70% of the plastic in the packaging. We moved

from a round tub to a resealable pouch. This also helped improve

Reckitt Benckiser’s environmental impact, which has remained an

important focus even in more challenging times.

Our commitment to performance is total, whether it is inancial

results or impacting upon climate change and helping those

more vulnerable in society. To tackle the total carbon footprint

of our products, from cradle-to-grave, in 2008 we progressed

our Carbon 20 initiative and developed detailed plans and

measurements for working with consumers to achieve our

commitment to reduce our total carbon footprint by 20%

by 2020.

This year we also delivered on the last part of our commitment

to save 150,000 lives through working with Save the Children

across the world. We are now working with them on a new

programme, which will see our commitment have even more

impact in the future.

Through our cost optimisation programme, we have managed

to minimise the price increases we passed on to consumers to

partially offset the rise in commodity costs. With this activity,

and beneiting from the faster growth on our higher margin

RB Pharmaceutical and consumer health care businesses, we have

driven adjusted operating margins up by 80bps and delivered very

strong cash low. This has strengthened the inancial position of

the Company and allowed the return of funds to shareholders.

We have increased the full year dividend by 45% and funded a

£300m share buy back programme.

It works, but we’re not complacent

Our results for 2008 show that our clear and consistent strategy

works – and can be adapted to more challenging conditions.

Our strategy continues and, together with the entrepreneurial

lair and passion of our people, will be the fundamental driver of

our future success.

Bart Becht Chief Executive

Reckitt Benckiser 2008

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