Rb-Annual-Report-2017.Pdf
Total Page:16
File Type:pdf, Size:1020Kb
Reckitt Benckiser Group plc(RB) Healthier Annual Report and Financial Statements 2017 Statements Financial and Report Annual Lives, Happier Homes Bringing Our Purpose to Life Reckitt Benckiser Group plc (RB) Annual Report and Financial Statements 2017 RB is inspired by a vision of a world where people are healthier and live better. We continually invest and innovate to find new ways for people to look after themselves, their families and their homes. We believe passionately in doing things the right way and have a culture that pushes us to outperform, every day. Contents Strategic Report Transformation of RB page 01 Highlights 02 Our business model 04 Chairman’s Statement 6 06 Chief Executive’s Statement 10 Strategic objectives, targets and key performance indicators 14 betterbusiness in action 20 bettersociety in action 22 betterenvironment in action 24 Operating review 30 Megatrends 32 Health 34 Hygiene Home Strategy page 36 Financial review 42 Our framework for risk management betterbusiness 10 Governance 52 Board of Directors 56 Executive Committee bettersociety 58 Corporate Governance– Chairman’s Statement 61 Corporate Governance Statement betterenvironment 69 Nomination Committee Report 71 Audit Committee Report 76 Corporate Responsibility, Sustainability, Ethics and Compliance Committee Report Mead Johnson Nutrition Sale of 78 Directors’ Remuneration Report integration RB Food 82 Remuneration Policy at a glance 83 Implementation of specific commitments made to page Shareholders for 2017 84 Annual Report on Remuneration 95 Report of the Directors page 29 98 Directors’ Statement of Responsibilities Financial Statements 99 Financial Statements 176 Shareholder Information 7 Reckitt Benckiser Group plc (RB) Annual Report and Financial Statements 2017 01 Strategic Report Highlights Governance Financial Statements betterbusiness Net Revenue Reported Earnings Per Share (diluted) Health and Hygiene £11.5bn 867.9p 79% Like-for-like (LFL) growth1 Flat +238% of RB base business Net Revenue1 Total reported growth +21% Reported Gross Margin Adjusted1 Earnings Per Share (diluted) DvM 59.7% 324.6p 33% -150bps +7% of RB base business Net Revenue1 Adjusted1 Gross Margin 61.1% (-10bps) 1 Definitions of non-IFRS measures and their 1 Adjusted Operating Margin Total dividend for the year reconciliation to IFRS measures are shown on 27.1% 164.3p page 39. -70bps +7% Reported Operating Margin 23.8% (-10bps) bettersociety Continued transformation of RB Net Revenue from more People reached with Health and The acquisition of Mead Johnson Nutrition sustainable products Hygiene messaging (MJN), disposal of RB Food and reorganisation into two new, focused business units continues RB’s transformation into 19% 568m a consumer health and hygiene company. betterenvironment % Net Revenue from consumer health at end of 2011 versus end of 2017 Greenhouse gas emissions per Water usage per unit of unit of production production 50% 29 percentage points increase since 2011 31% 37% (pro-forma2) Reduction since 2012 Reduction since 2012 2 Assuming ownership of MJN from 1 January 2017. This is based on the 2017 definition of Health as per Note 2 to the Financial Statements. 02 Reckitt Benckiser Group plc (RB) Annual Report and Financial Statements 2017 Our business model We’re using To power our strengths our business Strategic inputs Our operating segments In 2017, RB was organised into three operating segments – Europe and North America (ENA), Developing Markets (DvM) and Infant and Child Nutrition (IFCN). Our people and culture ENA DvM We employ outstanding people, who work in a unique culture that harnesses their passion and Europe (including Russia/CIS Africa, Middle East (excluding allows them to make a real difference and Israel), North America and Israel), Turkey, Asia (excluding Australia/New Zealand Russia/CIS) and Latin America Our brands Net Revenue Net Revenue We have 20 Powerbrands, which are leaders in their markets and offer faster growth and higher margins £6.7bn £3.3bn Our knowledge and skills IFCN We have deep consumer understanding, proven IFCN is the acquired MJN business, which includes the world’s leading R&D capabilities and an agile organisation, which franchise in infant and children’s nutrition gets products to market fast Net Revenue (pro-forma1) Our relationships We develop strong, value-creating relationships with customers, consumers, suppliers and £2.9bn communities 1 Refer to page 39 for basis of preparation. Our infrastructure Our categories Our business is underpinned by well-invested manufacturing sites, R&D laboratories and Health logistics centres Nourishing the best start to life with the IFCN business, and treatments for everyday issues such as Our financial strength pain and flu, wellness products covering sexual wellbeing, footcare, vitamins and supplements Shareholders’ equity, debt and retained profit give us the financial resources to implement our strategy Hygiene Personal and home hygiene products which provide the foundation for healthy living Home Brands that make the home environment more harmonious and less stressful, so families are happier every day Reorganising for growth From Q1 2018, RB is developing a platform for future growth and outperformance by creating two focused, fully accountable and more agile business units – Health and Hygiene Home. See page 9 Our purpose is to make a difference RB 2.0 reorganising by giving people innovative solutions for long-term growth for healthier lives and happier homes and outperformance Now we are starting a new chapter of sustainable outperformance with the creation of two focused, fully accountable and more agile business units – Health and Two companies, both rich in history Hygiene Home. and expertise, joined forces. Thomas and Reckitt & Sons Mead Johnson Gaviscon Ecolab Lehn & Fink Reckitt and Adams Schiff Nutrition Hypermarcas We are driven by: Isaac Reckitt founded in Hull founded Acquisition Acquisition Acquisition Benckiser Respiratory Acquisition Condom and MJN brings to RB: build the Maud 1840 1905 1970 1987 1994 Merged Therapeutics 2012 Lubricant Front line obsession Foster mill 1999 Acquisition Acquisition Excellence in infant and child nutrition 1819 2008 2016 Category focus and expertise Deep understanding of new parents Ownership & Entrepreneurship Benckiser Reckitt Reckitt & Sons Air Wick Boyle Midway Sold Colman's Boots SSL K-Y Brand Mead Johnson Respected relationships with healthcare founded in launched on merges with J Acquisition Acquisition Food Business Healthcare International Acquisition / Nutrition professionals Ready to disrupt Germany London Stock & J Colman to 1985 1990 1995 Acquisition Acquisition Spin off Indivior Acquisition/ Radical simplification 1823 Exchange become Reckitt 2006 2010 – (RB Pharma) Sold Food Scale and infrastructure in new markets 1888 & Colman 2014 Business 1938 2017 Together we will find new and exciting The future of RB is exciting. The changes ways to promote health and wellbeing, we are making will reignite the potential of from infancy to adulthood around the world our people and our brands and create value for years to come. w Better 1819 together RB 2.0 2018 2017 Health We will change the world by making people Enfamil has been trusted Nutramigen was the first healthier and live better by nourishing the best by generations of mums, and is the most extensively start in life and empowering people to take dads, caregivers and studied formula of its kind. health into their own hands healthcare professionals Seventy-five years after for safe, high-quality, its launch, it remains the beneficial products based world’s #1 brand for the on leading-edge nutritional dietary management of science. Cow’s Milk Allergy (CMA) in infants and young children. Hygiene Home We will create a cleaner world by bringing our Mortein Scholl Lysol Veet Harpic Durex Dettol Nutramigen Woolite Air Wick Finish Calgon Strepsils Enfamil Clearasil Gaviscon Nurofen Vanish Mucinex Cillit Bang innovative solutions to a billion homes launched launched launched launched launched launched launched launched launched launched launched launched launched launched launched launched launched launched launched launched 1880 1904 1912 1922 1923 1929 1932 1942 1951 1943 1953 1956 1958 1959 1959 1965 1983 1983 2002 2004 On 17 August 2017, the Group sold the RB Food business to McCormick & Company, Inc. for US$4.2 billion (£3.2 billion) in cash. Reckitt Benckiser Group plc (RB) Annual Report and Financial Statements 2017 03 Strategic Report Governance Financial Statements And pursue So we drive our purpose outperformance Our purpose is to make a difference, by giving people Our strategy and operating model innovative solutions for healthier lives and happier homes. create value for all our stakeholders. Megatrends See pages 30 to 31. People Powerful long-term trends are influencing our markets RB provides exciting and and driving demand for our products, from longer lives challenging careers, with excellent rewards for and increasing incomes to the relentless rise of 40,000+ outstanding performance technology and e-commerce. challenging careers Our strategy Consumers We have designed our strategy to respond to these Consumers receive trends and deliver long-term success. innovative, safe and 20 high-quality products, which betterbusiness bettersociety betterenvironment give them healthier lives and market-leading Powerbrands How we outperform, How we support our How we reduce our happier homes through our focus on communities and environmental impact our