Company Announcements

30 July 2019                                                  

FLAT Q2.  STRONGER H2 EXPECTED. 

FULL YEAR NET REVENUE TARGET REVISED

¹ Non-GAAP measures are defined on page 2

² Net income attributable to the owners of the parent

Commenting on these results, Rakesh Kapoor, Chief Executive Officer, said:

"Our like for like performance in H1 was +1%, somewhat below our expectations. Hygiene Home delivered another quarter of consistent top line growth but progress in Health in Q2 was disappointing. 

We have now been operating in RB 2.0 for 18 months and have made some important achievements. Hygiene Home has been unleashed and is delivering consistently. But on our journey to be a world leader in consumer health, we have work to do to deliver consistent financial performance.

However, we believe that much of this is behind us and strong plans are in place to restore growth, including an exciting innovation pipeline such as Mucinex Night Relief and Enfa Grass Fed.  We are further stepping up our investment in BEI and medical marketing to drive our growth. 

We therefore expect H2 to be back to our more normal level of growth.   

Our work to create two structurally independent business units continues to progress well and remains on track for completion around mid-2020.

With the slow start to the year, and the turnaround in Health still work in progress, we are revising our 2019 net revenue target to +2-3% LFL growth (previously +3-4%).  Our target of maintaining adjusted operating margins remains unchanged." 

Chris Sinclair, Chairman, said:

"We have made good progress during the quarter in reducing uncertainty, with the appointment of Laxman Narasimhan, our new CEO, and drawing a line under Indivior related matters. 

On behalf of the Board I would like to thank Rakesh for his outstanding contribution to RB over his 32 years at the company, eight of which were as CEO.  During his tenure he has transformed RB from a household cleaning company to a global leader in Consumer Health. He has lived, and, indeed improved, RB's values whilst maintaining the culture of entrepreneurship and ownership.  

We still have work to do in restoring growth and outperformance.  This is the Board's and Laxman's key priority.  However, the future opportunities created by RB 2.0 have never been more exciting."        

Throughout the report, certain measures are used to describe RB's financial performance which are not defined by IFRS.

Adjusted Measures

The Executive Committee of the Group assesses the performance based on Net Revenue and certain Adjusted measures which exclude the effect of Adjusting items.

As described in Note 5, Adjusting items are significant items included in operating profit, net finance expense or income tax expense, which are relevant to an understanding of the underlying performance of the business. These comprise exceptional items, other adjusting items, and the reclassification of finance expenses on tax balances.  Management believes that the use of adjusted measures including Adjusted Operating Profit and Adjusted Earnings per Share provides additional useful information about underlying trends.

The table below reconciles the Group's reported statutory earnings measures to its adjusted measures for the six months ended 30 June 2019.  Descriptions of the adjusting items are included in Note 5. 

Adjusted Net Income is used in the calculation of Adjusted EPS.  Adjusted EPS is defined as Adjusted Net Income attributable to owners of the parent divided by the weighted average of ordinary shares.  A reconciliation is included in Note 7.

The adjusted tax rate is defined as the Adjusted continuing income tax expense as a percentage of Adjusted profit before tax.

Other non-GAAP measures and terms

Like-for-Like ("LFL") growth excludes the impact on Net Revenue of changes in exchange rates, acquisitions, disposals and discontinued operations. LFL growth also excludes Venezuela.  A reconciliation of LFL to reported Net Revenue growth by operating segment is shown on page 5.

Constant exchange rate adjusts the actual consolidated results such that the foreign currency conversion uses the same exchange rates as were applied in the prior year.

Free Cash Flow, which is the Group's principal measure of cash flow, is defined as net cash generated from operating activities less net capital expenditure. A reconciliation of cash generated from operations to Free Cash Flow is shown on page 13. The Group tracks Free Cash Flow on a % of adjusted net income to understand the conversion of adjusted profit into cash.

Net working capital ("NWC") is the total of inventory, trade and other receivables and trade and other payables. NWC is calculated as a % of last twelve months revenue to compare changes in NWC to the growth of the business.

Brand Equity Investment ("BEI") is the marketing support designed to capture the voice, mind and heart of our consumers.

Continuing operations excludes any charges related to the previously demerged RB Pharmaceuticals business that became Indivior. Net income from discontinued operations is presented as a single line item in the Group Income Statement.

Adjusted Net Working Capital excludes the impact of the DoJ accrual in respect of the Indivior related matter, as shown on page 13.

Six months ended 30 June 2019

Total half year ("HY") Net Revenue was £6,240m, representing +1% growth on an LFL basis of which -3% was volume and +4% price/mix.  Total growth, at actual exchange rates was +2%, positively impacted by translational foreign exchange of +1%.

Our Health BU declined by -1% on an LFL basis.  This comprised of +2% growth in our IFCN business,    -5% in OTC and -1% in our "other health" sub category.

IFCN total category growth has slowed during the quarter, mainly due to a decline in birth rates in China.  We continue to drive strong momentum in the US behind our innovation pipeline.  In China we are seeing improving market share trends as we restore supply to normal service levels.

OTC had a slow start to the year due to lower incidences of cold and 'flu and related retailer inventory destocking.  Growth returned in the second quarter, and we continue to see good market share momentum in most of our Powerbrands.

Other Health was weaker than expected.  In Dettol, our pricing to offset input costs resulted in adverse competitive conditions, which we have reversed.  Durex has been impacted by competitive challenges in China from local players.  Plans are in place to build a strong innovation pipeline, but without compromising the durex promise of quality excellence.  On Scholl, as previously communicated, we are implementing a strategic re-focus of the brand towards a more sustainable portfolio.     

Growth in our Hygiene Home BU was +3% LFL, with broad based growth across Europe, North America and Developing Markets.  Growth was strong across key brands, including Finish, Lysol, Vanish and Harpic.

Gross margin declined by -20bps to 60.2% due to investments in capacity, lower Health volumes, negative mix, including the Q1 decline in higher margin OTC products, and higher logistics costs as we rectify the supply disruption to our China IFCN business.  This more than offset the delivery of MJN cost synergies and good gross margin expansion in Hygiene Home. 

Brand Equity Investment ("BEI") was 15.4% of net revenue, +10bps. Investment behind the long-term strength of our brands continues to be a priority.

SG&A decreased by -20bps as a percentage of net revenue.  Incremental costs were associated with the RB2.0 organisation, and additional investment in e-commerce and building a more resilient supply capability These were more than offset by MJN related synergies and lower than normal variable pay expenses, the result of weaker performance.  

Adjusted operating margin in H1 decreased by -10bps at 23.6%.

Second Quarter 2019

Q2 Net Revenue was £3,083m, a flat performance on an LFL basis.  This consisted of -3% volume and +3% price mix.

Total growth was +2% due to the impact of positive translational FX (+2%) as the pound sterling weakened against the currencies in which we generate revenue.    

The Health BU declined by -1% LFL.  IFCN had a flat performance as it both lapped a strong comparator and saw slowing category growth trends in China due to the reduction in birth rates over the previous two years.  The US continues to perform strongly behind our innovation programme and focus on growth channels. 

Our OTC portfolio of brands returned to growth in the quarter despite a tough comparator.  Mucinex shares are stabilising as we progressively lap the re-entry of private label variants a year ago, and our other key brands of Nurofen, Strepsils and Gaviscon continue to drive good share gains, offset by a slower performance from a number of our smaller brands.

Other Health experienced another poor quarter.  VMS brands grew.  However, Scholl continues to decline as we implement the portfolio re-focus of the brand, Dettol and Durex slowed in the second quarter in key developing markets.

The Hygiene Home BU grew by +3% on an LFL basis, led by strong performances from Finish, Harpic and Lysol.

Review by Operating Segment

The table below summarises the results of our two business units - Health and Hygiene Home, including breaking out the net revenue for infant nutrition (IFCN), over the counter products (OTC) and the remainder of our health portfolio (Other Health), including Dettol, Durex, Scholl, Veet, Clearasil and our vitamin, minerals and supplements products.   

1     Adjusted to exclude the impact of adjusting items

2     Restated for the adoption of IFRS16 (see Note 19)

Health             62% of Net Revenue

¹ Non-GAAP measures are defined on page 3

² Includes rounded 1% Net M&A impact

North America comprises United States and Canada.

Europe / ANZ comprises Europe, Russia / CIS, Turkey, Israel, Australia and New Zealand.

DvM comprises all remaining countries in the Group.

·     Growth in the consumer health markets we serve remains in the +3-5% range, in line with our medium term expectations.  Within this, IFCN has slowed to the lower end of this range due to the recent decline in birth rates in China.

·     Q2 total Net Revenue was £1,903m, with LFL decline of -1%.  The decline consisted of -5% volume and +4% price mix.  For the half year, total Net Revenue was £3,838m, and LFL decline of -1%, consisting of -5% volume and +4% price mix. 

IFCN   (Infant Nutrition)

·     The IFCN segment delivered a flat LFL performance in Q2, and YTD LFL growth of +2%.

·     Underlying trends in the category remain positive, currently at the lower end of +3-5%, with growth moderating in China.   

·     North America revenue continues to deliver strong, above market growth.  The introduction of milk fat globular membrane (MFGM) for improved cognitive benefits, into our IFCN products, combined with our focus on growth channels, is enabling us to grow both volume share and mix benefits through premiumisation. 

·     China saw a relatively flat performance in the quarter, with low single digit market growth and some share decline.  Our supply of products to the market returned to more normal levels following the supply disruption in Q3 last year and actions to make Enfinitas available to mothers, is delivering.

·     Our other IFCN markets experienced a mixed quarter with good growth in Indonesia and Argentina offset by weakness in other ASEAN and Latin American markets.   

·     We see significant value-creation opportunities within this category and remain on track to deliver the synergies and other objectives which we communicated at the time of our acquisition of MJN.

OTC    (Over the Counter / health relief products)

·     The OTC category delivered LFL growth of +1% in the quarter and an HY LFL decline of -5%. 

·     We saw good, broad-based growth across our powerbrands of Mucinex, Nurofen, Strepsils and Gaviscon during Q2 following the seasonally impacted performance in some of these brands in Q1.  These were offset by weakness in some local brands. 

·     Mucinex had a good quarter, and returned to growth, as shares continued to stabilise.  We are broadening the brand franchise with the launch of our new "Night Shift" range for cold and 'flu and sinus, ahead of the upcoming cold and 'flu season.

Other Health  (Wellness and Health Hygiene brands)

·     Other Health delivered a LFL decline of -3% in the quarter and a HY decline of -1%.

·     Our VMS brands delivered growth in the quarter, behind a strong performance from Airborne and the continued rollout of Neuriva, our new brain health brand, where we are seeing early encouraging signs in consumer demand.

·     Dettol had a slow quarter, with challenging conditions in Africa, Middle East, and parts of ASEAN   where input cost-led price increases are being rolled back due to competitive conditions. 

·     Durex experienced a weak quarter in China due to increased competitive pressures.  Scholl continues to decline as we implement a re-focus of the brand.   

Health - Action Plan   

We have focused and detailed action plans in place to accelerate growth in our Health BU.  These include:

-     In IFCN we have a stronger innovation pipeline including NeuroPro / Pro Mental for improved cognitive benefits, underpinned by an increased medical marketing programme.

-     In Greater China, we have stepped up our investments in making our products available to new mothers now that supply has returned to more normal levels.  In addition, as part of our distribution expansion programme into lower tier cities, we are launching our new "grass fed" local innovation.

-     We are also undertaking other initiatives in many of our smaller markets, including a relaunch of our Enfa range of products in Hong Kong, and increased investment in medical marketing programmes across LATAM and ASEAN.

-     In OTC we are launching our new Mucinex "Night Shift" range for cold and 'flu and sinus innovation in the USA.

-     In Other Health we are working on the re-focus of Scholl, where gadgets now represent approximately 16% of the brand's net revenue.  On Durex we have a strong innovation pipeline, which will come to market from 2020.  In Dettol we are investing heavily in social and digital marketing campaigns to support an enhanced innovation pipeline including our "co-created with Moms" range of products in India - delivering the best germ protection with no compromise on safety, transparency and authenticity.

-     Our focus and investment behind E Commerce continues:

o  Over 40% of our global media spend is now online

o  100% of our brand marketing people have been upskilled

o  We plan to have 10 agile, in-house content studios by the end of 2019

o  We have centralised our 1p, 2p, 3p data for insights and audience building

o  We have a connected tech stack across all brands and channels

·    From a channel perspective, e-commerce remains the key growth driver, and now represents approximately 11% of net revenue for the Health BU.

·    Adjusted operating profit was £948m, with a 24.7% margin, -120bps versus the prior year.  Gross margin was the main driver of this decline due to investments in capacity and capability, negative mix (decline in OTC brands in H1), input cost pressures, increased freight costs as the China supply issues were resolved and a lack of operating leverage.  BEI increased as a percentage of net revenue in the half as we continue to invest behind the long-term strength of our brands.  This was offset by a reduction in SG&A due to reductions in variable pay accruals as a result of below target performance.   In H2 we will lap the material costs associated with the IFCN supply issues, and we expect some but not all of the negative margin pressures from H1 to end or abate.  

Hygiene Home           38% of Net Revenue

¹ Non-GAAP measures are defined on page 3

North America comprises United States and Canada.

Europe / ANZ comprises Europe, Russia / CIS, Turkey, Israel, Australia and New Zealand.

DvM comprises all remaining countries in the Group.

·     HY19 total Net Revenue was £2,402m, with LFL growth of +3%. Growth in H1 comprised -1% volume and +4% price/mix. 

·     Q2 total Net Revenue was £1,180m, with LFL growth of +3% (-1% volume, +4% price/mix).  We have been lapping a strong volume and weak price mix comparator in both Q2 and H1.

·     Market growth remains at the upper end of our medium-term expectations of +2-3%, as does our LFL net revenue growth, in both the quarter and half. 

·     In the US, Lysol was a growth driver in the quarter with a strong delivery from our recently launched laundry sanitiser.  Finish also performed well behind additives and the continued success of our recent Quantum Ultimate Clean & Shine innovation. 

·     In Europe/ANZ, Hygiene Home grew by +1% LFL in H1, as we roll out Quantum Ultimate Clean and Shine (Finish) following success in the US.  Air Wick grew, but declined in the half, after a slow start to the year, and Harpic continues to deliver strong growth.

·     Our Hygiene Home business is relatively underpenetrated in DvM.  The two largest markets; Brazil and India, saw good growth in H1 with DvM, as a whole growing, by +6% LFL.

·     Within DvM, our largest brand, Harpic, had a strong performance, with penetration programmes and innovation driving growth.  Finish, Lysol and Vanish also performed well.

·     From a channel perspective, e-commerce continued to drive strong growth and now represents 4% of total Net Revenue for the BU. 

·     Adjusted operating profit was £527m, with a 21.9% margin, +190bps versus the prior year.  This strong growth was predominantly gross margin driven, supplemented by some BEI and SG&A efficiencies.  Easy pricing comps will abate in H2, and the phasing of BEI investment has moved materially toward H2 this year.  

RB announces a number of new product initiatives for the second half of 2019:

Health:

·    Enfagrow Grassfed: with high quality natural milk source

·    Enfamil / Enfinitas Stage 4: to best meet the needs of children > 3 years

·    Enfagrow Pro Mental: extending the successful Neuro Pro model in Latin America

·    Mucinex: new Night Shift range for Cold & Flu and Sinus

·    Mucinex Junior: Smaller caplet size to compliment Adult Mucinex Fast Max Tablets range

·    Dettol "Co-Created with Moms" range: delivering the best germ protection with no compromise on safety, transparency and authenticity 

·    Durex ECom condoms: Large pack box for easy delivery & storage. Premium look and available in different SKUs   

·    Durex Featherlight: superior thinness upgrade across our Featherlight range

Hygiene Home:

·    Lizol - surface cleaner for cement: a new specialist surface cleaner for cement with super tough stain removal for India, where a significant number of consumers have cement floors

·    SBP Odourless insect control range: addressing one of the top barriers of repellent and insect control use

·    Harpic Bathroom Cleaner: expanding our Harpic bathroom cleaner platform in Indonesia with sachets and pouches - smaller formats that consumers prefer. Allows us to reach more of the middle class with a great product that delivers 10x better cleaning

·    Vanish Oxi Action Crystal White: advanced Vanish Crystal White formulation revives dull whites to 10 shades whiter in just 1 wash

·    Air Wick Seasonal devices: a decorated, seasonal range of Air Wick electrical devices in the U.S. to bring some seasonal fun into the home 

·    Lysol Laundry Sanitizer Sport: specifically designed to break down body/sweat malodours in clothes at the molecular level. Contains 0% bleach, is gentle on fabrics and works even in cold water

At our Q3 2017 trading update we announced our plan to combine the IFCN division with our existing health and some health hygiene brands, to form the Health Business Unit ("BU"), and the home and other home hygiene brands to form the Hygiene Home BU. 

Each BU is focused on and fully end-to-end accountable for its business - from innovation through brand development and supply to the customer.  The BUs were effective from 1 January 2018.          

We believe that dedicated focus on Hygiene Home brands and the creation of separate end-to-end accountable BUs will enhance organic growth and strategic flexibility in the future. 

We highlighted in our previous statements that it would take until mid-2020 to complete the "infrastructure" changes under RB 2.0.

These changes are on track.

Korea HS Issue

The HS issue in South Korea is a tragic event, with many parties involved. We continue to make both public and personal apologies to victims. 

No material updates have occurred since our Q1 2019 results update.

Lung Injury Categorisation

During the second quarter of 2019:

- On 5 April 2019, the South Korean government announced Round 4 categorisation results, which were reported in our Q1 2019 results update. 

- The status of South Korean government's lung injury categorisation is outlined in the table below.

1.         Round 4 remains open to applicants.  The number of applicants shown in the table are the applicants set out on the KEITI website as at 19 July 2019. 

2.         Both sole Oxy RB users and users of multiple manufacturers' products, including Oxy RB.

3.         All of the remaining unassessed Round 3 applicants have withdrawn their applications.

On 26 July 2019, the South Korean government announced 10 additional lung injury victims, from an additional 360 cases assessed for round 4-10 categorisation.  These results have not yet been updated on the KEITI website and are therefore not updated in the table above.   

Asthma and Toxic Hepatitis

On 27 September 2017, the South Korean government announced the recognition of asthma as an HS injury. Since then, the government reviewed the medical records of existing lung injury applicants to categorise asthma injury. From 23 July 2018, the South Korean Ministry of Environment allowed HS users to apply for asthma-only categorisation as part of Round 4. This applies to HS users who think they have suffered from asthma only as a result of HS exposure. Of the 5,164 HS users assessed for asthma to date, 341 have been categorised as victims. Asthma only applicants are included within the 6,476 applicants to date, set out in the above table.  The South Korean government has not disclosed the number of asthma-only applications filed to date.

On 26 July 2019, the South Korean government announced the recognition of toxic hepatitis as an HS injury.  No data supporting the Korean government's finding has been made available. The government plans to develop categorization standards for HS-induced toxic hepatis and start categorizing existing HS applicants after the standards have been developed.

Details of existing provisions and contingent liabilities relating to the HS issue can be found in note 12, and our Annual Report and Financial Statements 2018.

Indivior / RB Pharma related matters:

On 11 July 2019, RB announced it has reached agreements with the U.S. Department of Justice ("DoJ") and the Federal Trade Commission ("FTC") to resolve the long-running investigation into the sales and marketing of Suboxone Film by its former prescription pharmaceuticals business Indivior, a business that was wholly demerged from the Group in 2014.

Under the terms of the agreements, RB agreed to pay a total of up to $1.4 billion to fully resolve all federal investigations into RB in connection with the subject matter of the Indivior indictment and claims relating to state Medicaid programs for those states choosing to participate in the settlement. The resolution will also protect the Group's participation in all U.S. government programmes.

While RB has acted lawfully at all times and expressly denies all allegations that it engaged in any wrongful conduct, after careful consideration, the Board determined that the agreement is in the best interests of the company and its shareholders. It avoids the costs, uncertainty and distraction associated with continued investigations, litigation and the potential for an indictment at a time of significant transformation under RB 2.0 and during CEO transition. This is a non-criminal resolution and is on the basis that there is no admission of any violation of law or any wrongdoing by RB or any RB Group employee.

The settlement amount is being funded through existing borrowing facilities and cash generation. RB had previously recognised $400 million, which was increased to $1.5 billion at its half-year results. RB believes this will cover the settlement and any remaining litigation exposures. For details, please refer to Note 17.

Net finance expense.  Net finance expense was £144m (2018¹: £180m). The decrease reflects the repayment of term loans and bonds, since January 2018, and £16m of non-repeating benefits.  Adjusted finance expense excludes £25m of finance expenses on tax balances which is presented within adjusted income tax expense. Refer to Note 5 for further details of adjusting items.

Tax.  The adjusted tax rate, which excludes the effect of adjusting items, was 23% (2018: 23%). We expect the ongoing adjusted tax rate to remain approximately 23%.

Adjusting items.  In 2019, adjusting items comprised of £69m of expenses recorded in operating profit (2018: £162m), £29m of these costs relate to the MJN / RB 2.0 restructuring programme, £40m relate to amortisation of certain acquired intangibles. Further details of these items can be found in Note 5.

Discontinued operations. The adjusting expense in respect of Indivior PLC of £867m (2018: £7m) is reported within discontinued operations (refer to Note 17).

Net working capital. During the year, inventories increased to £1,334m (December 2018: £1,276m), trade and other receivables decreased to £2,074m (December 2018: £2,097m), and trade and other payables (excluding £1,102m DoJ accrual) increased to £4,856m (December 2018: £4,811m).  There was an improvement in adjusted net working capital to minus £1,448m (December 2018: minus £1,438m).  Adjusted net working capital as a percentage of rolling 12 month Net Revenue is -11% (December 2018: -11%).

Cash flow.  Cash generated from continuing operations was £1,525m (2018¹: £1,626m). Net cash generated from operating activities was £1,091m (2018¹: £1,120m) after net interest payments of £129m (2018: £175m) and tax payments of £305m (2018: £331m).

Free cash flow is the amount of cash generated from operating activities after capital expenditure on property, plant and equipment and intangible assets and any related disposals. Free cash flow reflects cash flows that could be used for payment of dividends, repayment of debt or to fund acquisitions or other strategic objectives. Free cash flow as a percentage of continuing adjusted net income was 90% (2018¹: 96%).

Net debt. at 30 June 2019 was £10,545m (December 2018¹: £10,746m).  This reflected the increase of cash and cash equivalents of £207m, and foreign exchange / other movements of £23m. The Group regularly reviews its banking arrangements and currently has adequate facilities available to it.

Balance sheet.  At the end of June 2019, the Group had total equity of £14,475m (December 2018¹: £14,771m).

This finances non-current assets of £33,319m (December 2018¹: £33,002m), of which £2,183m (December 2018¹: £2,162m) is property, plant and equipment, the remainder being goodwill, other intangible assets, deferred tax, retirement benefit surplus, equity instruments - FVOCI and other receivables.  The Group has adjusted net working capital of minus £1,448m (December 2018: minus £1,438m), current provisions of £227m (December 2018¹: £537m) and long-term liabilities other than borrowings of £5,580m (December 2018¹: £5,564m).

Dividends.  The Board of Directors declares an interim dividend of 73.0 pence (2018: 70.5 pence), in line with its stated policy to pay out about 50% of basic adjusted earnings per share. The ex-dividend date will be 22 August 2019 and the dividend will be paid on 26 September 2019 to shareholders on the register at the record date of 23 August 2019. The last date for election for the share alternative to the dividend is 5 September 2019.

¹ Restated for the adoption of IFRS16 (see Note 19)

Capital returns policy.  RB has consistently communicated its intention to use its strong cash flow for the benefit of Shareholders. Our priority remains to reinvest our financial resources back into the business, including through value-adding acquisitions. 

We intend to continue our current policy of paying an ordinary dividend equivalent to around 50% of total adjusted net income.

Legal provisions. The Group is involved in litigation, disputes and investigations in multiple jurisdictions around the world. It has made provisions for such matters, where appropriate. Where it is too early to determine the likely outcome of these matters, or to make a reliable estimate, the Directors have made no provision for such potential liabilities. Further details can be found in Note 9.

Contingent liabilities. The Group is involved in a number of civil and/or criminal investigations by Government authorities as well as litigation proceedings and has made provisions for such matters where appropriate. Where it is too early to determine the likely outcome of these matters, or to make a reliable estimate, the Directors have made no provision for such potential liabilities. Further details can be found in Note 12.

Net Revenue: 

With the slow start to the year, and the turnaround in Health still work in progress, we are reducing our 2019 net revenue target to +2-3% LFL growth (previously +3-4%). 

Adjusted Operating margin:

Our target of maintaining adjusted operating margins in 2019 remains unchanged.

On pages 42-57 of the Annual Report and Financial Statements for the year ended 31 December 2018 we set out our assessment of the principal risks and uncertainties that the business would face during 2019. These are grouped as strategic, operational, compliance and other risks as were presented under the headings shown below.

Strategic: RB 2.0 Delivery, Innovation, Disruption.

Operational: Product Safety, Supply continuity, cyber-security, Fatality or major employee safety incident, Talent

Compliance: Tax disputes, regulatory environment, legal non-compliance, Department of Justice (DoJ), South Korea Humidifier Sanitiser (HS)

Other: 'Black Swan' event.

With the exception of DoJ, the nature and potential impact of such risks remain essentially unchanged for the second half of 2019. More information on the settlement with the DoJ is included in page 12.

This announcement contains inside information

For further information, please contact:

Notice to shareholders

Cautionary note concerning forward-looking statements

This presentation contains statements with respect to the financial condition, results of operations and business of RB (the "Group") and certain of the plans and objectives of the Group that are forward-looking statements. Words such as ''intends', 'targets', or the negative of these terms and other similar expressions of future performance or results, and their negatives, are intended to identify such forward-looking statements. In particular, all statements that express forecasts, expectations and projections with respect to future matters, including targets for net revenue, operating margin and cost efficiency, are forward-looking statements. Such statements are not historical facts, nor are they guarantees of future performance.

By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future.  There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including many factors outside the Group's control.  Among other risks and uncertainties, the material or principal factors which could cause actual results to differ materially are: the general economic, business, political and social conditions in the key markets in which the Group operates; the ability of the Group to manage regulatory, tax and legal matters, including changes thereto; the reliability of the Group's technological infrastructure or that of third parties on which the Group relies; interruptions in the Group's supply chain and disruptions to its production facilities; the reputation of the Group's global brands; and the recruitment and retention of key management.

These forward-looking statements speak only as of the date of this announcement. Except as required by any applicable law or regulation, the Group expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Group's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.  

LEI: 5493003JFSMOJG48V108

Reckitt Benckiser Group plc (RB)

Half Year Condensed Financial Statements

Group Income Statement

For the six months ended 30 June 2019

¹Restated for the adoption of IFRS 16 (see Note 19).

Group Statement of Comprehensive Income

For the six months ended 30 June 2019

¹Restated for the adoption of IFRS 16 (see Note 19).

Group Balance Sheet

As at 30 June 2019

¹Restated for the adoption of IFRS 16 (see Note 19).

Group Statement of Changes in Equity

For the six months ended 30 June 2019

Group Cash Flow Statement

For the six months ended 30 June 2019

¹Restated for the adoption of IFRS 16 (see Note 19).

²Includes £10m receipt relating to Adjusting items.