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Driving innovative growth Annual Report and Financial Statements 2010 I am pleased to report that Reckitt Benckiser enjoyed another year of market beating results despite a £8,453m our net revenue global market growth rate that steadily declined as the year progressed. As targeted for 2010, we delivered like-for-like net revenue £2,231m adjusted operating profit growth of +6%* for the Group excluding SSL, and +5%* for the business excluding SSL and RB Pharmaceuticals. ** Total adjusted income growth at +15%* was also very strong 115.0p and again well ahead of our peers. dividend per share Bart Becht Chief Executive * at constant exchange rates ** Includes final 2010 dividend of 65p recommended by the Board Contents 1 Chairman’s Statement 2 Chief Executive’s Statement 4 Business review 2010 12 Board of Directors and Executive Committee 13 Report of the Directors 17 Corporate governance report 21 Statement of Directors’ responsibilities 22 Directors’ remuneration report 29 Independent auditors’ report to the members of Reckitt Benckiser Group plc 30 Group income statement 30 Group statement of comprehensive income 31 Group balance sheet 32 Group statement of changes in equity 33 Group cash flow statement 34 Notes to the accounts 64 Five year summary 65 Parent company – independent auditors’ report to the members of Reckitt Benckiser Group plc 66 Parent company balance sheet 67 Notes to the parent company accounts 72 Shareholder information Chairman’s Statement Strong performance at Tesco plc. She was seven years at Tesco, In 2010 your Company delivered a strong having joined from Unilever PLC, where she performance. The management team had a 22-year career. Liz’s appointment achieved this despite facing challenging followed the departure of Colin Day, our global market growth conditions. They previous Chief Financial Officer and Executive also achieved continued market share Director of the Board. On behalf of the Board growth on most of our Powerbrands. I would like to offer our thanks to Colin for this significant contribution to the Company over Cash the past ten years. In 2010 the strong net revenue growth of the business has been leveraged into even higher During 2010 the Board continually assessed the increases in profit and good cash conversion. performance and results of the business. There was £1,386m of net cash flow from Through management presentations, it operations and this cash has been put to work reviewed strategy, brands, geographic area and and used for some strategic acquisitions that functional performance and its human resource will strengthen your Company’s opportunity for function. Additionally, the Board completed its profitable growth in the years ahead. To annual corporate governance evaluation complete these acquisitions, the Company has covering Board performance, corporate taken on debt at a highly competitive rate. Net responsibility and business risk. debt at end 2010 stands at £2,011m. Even with Annual General Meeting resolutions this debt, the balance sheet is in good shape. The resolutions, which will be voted upon at Acquisitions our AGM of 5 May 2011, are fully explained in The largest of the strategic acquisitions the the Notice of Meeting. In addition to the Company made in 2010 was the purchase of routine resolutions put annually to our AGM, SSL with its Durex and Scholl brands. These they will include a resolution to make brands join the ranks of the RB Powerbrands amendments to the equity dilution limits within and offer attractive global growth our share scheme rules, which will more closely opportunities. The Company has also align them to institutional guidelines. I would announced its intention to purchase Paras, an encourage all our shareholders to attend Indian health and personal care company, our AGM. strengthening the Company’s footprint in this Thanks fast-growing market. The Company also On behalf of my fellow Board members I would bought back the Rest of World rights to like to thank Bart Becht, his executive team and Suboxone and Subutex, our opiate withdrawal all RB employees globally for their commitment drugs, from Merck, to put this business on a and achievements over the year. In challenging better growth platform. circumstances they have delivered a strong Dividend performance for our shareholders. We are The success of the year means your Board is grateful and proud. able to propose a final dividend of 65 pence I would also like to thank my Board colleagues per share. This brings the dividend for the for their contributions and support. The Board year to 115 pence per share, an increase of does not for one second take for granted the 15%. The total shareholder return for the year support of our shareholders and we thank you is 8.5%. for your on-going confidence and investment in Board of Directors our Company. Since the AGM of 2010 we have appointed In what looks to be another challenging year Liz Doherty as the Company’s Chief Financial ahead for the consumer goods industry, the Officer, an Executive Director of the Board and Board believes that the strategies the Company member of our Executive Committee. Liz was continues to pursue are the right ones. previously Chief Financial Officer of Brambles We have the utmost confidence in the Limited, the top 25 Australian-listed supply management team to lead the Company to chain and information systems company. Prior continued success. to Brambles, Liz was Group International Finance Director with additional responsibility for corporate accounts, group tax and treasury Adrian Bellamy Chairman Reckitt Benckiser 2010 1 Chief Executive’s Statement I am pleased to report that Reckitt In many of these countries, the categories in tablets in the USA, can become subject to Benckiser enjoyed another year of market which RB normally operates barely exist or generic competition at any time. To mitigate beating results despite a global market are very underdeveloped. Good examples are the potential impact of this, in August 2010 growth rate that steadily declined as the Veet depilatories, Harpic specialist toilet bowl we launched a patent-protected and consumer year progressed. cleaners and Vanish fabric treatment products. preferred Suboxone film. The new film is a Launching our Powerbrands in these countries variant on the tablet. It dissolves faster and As targeted for 2010, we delivered like-for-like is therefore not just focused on carving tastes much better, and as a result keeps net revenue growth of +6%* for the Group out strong market share positions. More patients in treatment longer. Compliance with excluding SSL, and +5%* for the business importantly it is focused on showing consumers the treatment regime, and the fact that the excluding SSL and RB Pharmaceuticals. Total the benefits of these products so that they film is better from a child safety point of view, adjusted income growth at +15%* was also become part of their regular needs as they care make it more attractive for doctors to prescribe. very strong and again well ahead of our peers. for their families, homes and themselves. In Conversion has been so successful that at the 2010 we continued our Powerbrand roll out in end of 2010 the film had already captured Powerbrand focus these countries. a 25% volume share of the US market. At Our strong and continued success confirms this level it already represents 23% of the US that our strategy of focusing on Powerbrands In the more developed countries of Europe revenues on an annualised basis. behind new consumer relevant innovations and and North America markets retrenched. Heavy high levels of support continues to work for us. discounting by competitors, trying to counter Focused acquisition volume declines as consumers came under Our new Lysol/Dettol No-Touch Hand Soap As a result of the strong success of the pressure, led to negative market growth rates. System is a great example of such innovations. business, adjusted net income grew by +15%*. Despite these conditions, we improved our This automatic dispenser is a captive This was despite the fact that we took a more market share on balance in these markets and gadget-refill system and while one of our conservative position on tax as the general eked out modest revenue growth. most technologically advanced products it is tax environment has become less benign, and the convenience of it and the benefit of not As we make our Powerbrands bigger in increased the tax rate from 25% to 26%. having to touch a germy soap dispenser ever new and existing markets, we get operating Underlying cash flow continued to be strong, again that has made it so successful. It has leverage and a better product mix, resulting another sign of the health of the business. also allowed us to take mostly surface oriented in higher operating margins. This, combined Some of this hard-earned cash was reinvested brands like Lysol in the USA or Dettol in the with excellent cost optimisation in our supply in what we believe are strategic and financially UK more into Personal Care, breaking new chain, enabled us to deliver operating margin compelling acquisitions. ground and creating future opportunities for improvement of 200 basis points, taking it All of the transactions increased our presence these brands. to 26.4% for the Group. Margins were also in the higher margin Health & Personal Care helped by the continued success of our RB Our Powerbrand focus over the last decade business, where we have built a track record Pharmaceuticals business. is also delivering excellently in developing of strong growth. Foremost among these markets. Net revenue growth in these markets was the purchase of SSL International which RB Pharmaceuticals soared to a +18%* like-for-like growth rate. we announced in July and completed on It is well known that by far the largest part of 29 October.

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