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Powering ahead Annual Report and Financial Statements 2009 2009 was a year to be especially proud of at RB. £7,753m In our tenth anniversary year as Reckitt Benckiser we faced our net revenue the decade’s toughest global economic conditions, but still delivered excellent growth. This proved again that our strategy of focusing on Powerbrands with consumer relevant £1,891m adjusted operating profit innovation and strong marketing investment is the right one. The entrepreneurial spirit and deep commitment from RB 100.0p** people to drive better and better solutions for consumers dividend per share continues to deliver outstanding* returns for shareholders. We believe this strong entrepreneurial spirit and deep * At 649% our ten year TSR ranks commitment has and will continue to help us power the number four in the FTSE 100 ** Includes final 2009 dividend of 57p business ahead. recommended by the Board Bart Becht Chief Executive Contents 1 Chairman’s Statement 2 Chief Executive’s Statement 4 Business Review 2009 11 Board of Directors and Executive Committee 12 Report of the Directors 19 Directors’ Remuneration Report 25 Independent auditors’ report to the members of Reckitt Benckiser Group plc 26 Group income statement 26 Group statement of comprehensive income 27 Group balance sheet 28 Group statement of changes in equity 29 Group cash flow statement 30 Notes to the accounts 60 Five year summary 61 Parent company – independent auditors’ report to the members of Reckitt Benckiser Group plc 62 Parent company balance sheet 63 Notes to the parent company accounts 68 Shareholder information Chairman’s Statement Strong performance In 2009 the Board conducted its regular In one of the global economy’s most reviews of the performance and results of challenging years, I am pleased to report the business. It holds specific reviews with that your Company delivered an outstanding management on strategy, brands, geographic performance. Continuing a record of strong area and functional performance together with growth in such circumstances is a testament detailed reviews of its human resources and to the quality of the Company’s strategy and corporate responsibility. In addition, the Board execution, its culture, its employees and their completed its annual reviews of corporate leadership, headed up by our CEO Bart Becht. governance including Board performance, corporate responsibility, and reputational and The headlines for the year were sales growth of business risk. 8% (at constant exchange), net income growth of 13% (at constant exchange) and cash flow Annual General Meeting resolutions from operations of £1,803m. We also achieved The resolutions, which will be voted upon at impressive market share growth with most of our AGM on 6 May 2010 are fully explained in our Powerbrands. the Notice of Meeting. They will include some amendments to the Articles of Association 2009 was the tenth year since the merger that following the full implementation of the created Reckitt Benckiser. It was a decade of Companies Act (CA) 2006 on 1 October 2009. performance, the hallmark of which was the Once again we encourage all our shareholders delivery of exceptional shareholder value. The to attend our AGM. ten year total shareholder return is one of the highest in the FTSE, standing at 649%. Thanks On behalf of the Board I would like to thank Cash Bart Becht and his executive team for their In 2009 the strong net revenue growth of the continued excellent leadership of the business has been leveraged into even higher business and thank employees globally increases in profit and cash flow. This has for their achievement in delivering such allowed the Company to pay down virtually all an excellent performance in the tenth year of the debt created by the Adams acquisition, of Reckitt Benckiser. leaving the company in strong financial health. It also enables your Board to propose a final It will be of interest to shareholders to dividend of 57.0p per share. This brings the know that this year RB won The Economist dividend for the year to 100.0p per share, an Magazine’s coveted Innovation Award 2009, increase of 25% over 2008. for an outstanding product innovation record. In addition, our CEO was ranked by INSEAD Board of Directors in research published in the Harvard Business Since the AGM in 2009 we appointed Review, as the world’s 16th best performing Richard Cousins as a Non-Executive Director CEO over the long term. Both of these awards and member of the Remuneration Committee, are great testament to the quality of the effective 1 October 2009. He is group Chief Company. Details of both of these awards Executive of Compass Group PLC, the world’s and others the Company has been given largest catering company. He was previously can be found on the Company’s website, Chief Executive Officer of BPB plc and is a www.rb.com. former Non-Executive Director of P&O plc and HBOS plc. We also appointed Warren Tucker My thanks go also to my Board colleagues for as a Non-Executive Director and member of their continued support and guidance. The the Audit Committee effective 24 February Board never takes for granted the support of 2010. He is Chief Financial Officer of Cobham our shareholders and we thank you for your plc, an international company engaged in the on-going confidence in our Company. development, delivery and support of advanced The strategy the Company continues to pursue aerospace and defence systems for land, is, in your Board’s view, fundamentally sound sea and air. Richard and Warren bring useful and the management team has our utmost perspective and experience to the Board and confidence in its ability to lead the Company to we welcome them. There has been one Board continued success. departure. David Tyler resigned effective 30 September 2009, in recognition of the amount of time he would need to devote to his Adrian Bellamy Chairman new role as chairman of J Sainsbury plc. Our thanks go to him for his significant contribution to the Board during his tenure. Reckitt Benckiser 2009 1 Chief Executive’s Statement 2009 was a year to be especially proud Operating profit rose by 12% (at constant The examples of Finish in dishwashing and of at RB. In our tenth anniversary year as exchange) to £1.9 billion and net income Lysol and Dettol in germ protection, shown on Reckitt Benckiser we faced the decade’s increased by 13% to £1.4 billion. these pages, are just two of many. You can see toughest global economic conditions, but still more at www.rb.com. I would encourage you We’ve proven that by keeping it simple and delivered excellent growth. This proved again to take a look. never being distracted from our strategy, we that our strategy of focusing on Powerbrands can deliver even when times are hard. We Finish Quantum with consumer relevant innovation and strong remain confident that our culture, talented In dishwashing we have led the sector with marketing investment is the right one. people and our drive to make the world easier Finish, creating all-in-one tablets, driving lower The entrepreneurial spirit and deep for our millions of consumers, will continue to washing temperatures and ultimately creating commitment from RB people to drive better serve us well as we begin a new decade for RB. the Diamond standard in cleaning dishes with and better solutions for consumers continues our Quantum product, where superior shine A decade of Reckitt Benckiser to deliver outstanding returns for shareholders. performance and no-wrapper technology have We are not a company that spends much time We believe this strong entrepreneurial spirit and made it a firm favourite with consumers. studying the past. We are too busy looking deep commitment has and will continue to help to the future, searching for the trends and And now we are launching QuantuMatic – an us power the business ahead. the opportunities to build our future success. automatic dispenser of dishwasher detergent The year in review However in our tenth year it is worth taking delivering Quantum shine performance while It will come as no surprise to anyone witnessing stock of the notable successes since we were also eliminating the need to put detergent into the events of the past year, that 2009 was created in 1999. the machine every wash. one of the more challenging years. As we These achievements have allowed us to more Lysol and Dettol entered the tenth year of Reckitt Benckiser, than double our revenues to over £7 billion Staying healthy starts with keeping hands many western economies were plunged into over the period and our operating profits clean and germ free. The easier we make it to deep recession. have almost quadrupled. Our ranking in the wash hands, the more we help families to Yet we have continued to excel. By sticking FTSE 100 has risen from 88 in 1999 to 21 at keep healthy. with our proven strategy last year became a the end of 2009. Over the period, investors Our Lysol and Dettol brands are introducing year to be proud of. have enjoyed an average total shareholder an entirely new way to do just that. No return of 24% a year – the fourth highest in Despite slowing economic growth, we grew more messy, dirty, germy soap bars or pump the FTSE 100. net revenues by 8% (at constant exchange). dispensers. We’ve made it automatic, so that While these metrics are of crucial interest hand washing can be too. The new Lysol Our 17 Powerbrands drove this growth through to our investors, we place equal importance No-Touch Hand Soap System is motion sustained product innovation and marketing on our impact on consumers.