�

�

�

�

27 February 2020 �����������������

Reckitt Benckiser Group plc (RB)

�

�

2019 RESULTS AND CONCLUSIONS OF STRATEGIC REVIEW

�2BN INVESTMENT FOR SUSTAINABLE�GROWTH

�

¹ Non-GAAP measures are defined on page 6

² Net (loss)/ income attributable to the owners of the parent company

³ Restated for the adoption of IFRS 16 (see Note 14).

�

�

�

Commenting on these results, Laxman Narasimhan, Chief Executive Officer, said:

"We ended 2019 broadly in line with our expectations for net revenue growth and adjusted operating profit from October, as our Hygiene business delivered another stable performance. �Health remained weak from a net revenue perspective, but consumption and market share trends are encouraging.�

�

We now look forward to a new decade.�

�

I am inspired by our purpose-driven brands that consumers love and have seen in action the benefit they bring to our communities. �I have met customers around the world, and terrific talent in various parts of the organisation, who act as owner entrepreneurs.� While the recent years have been difficult, I believe strongly in our ability to restore performance credibility, and over time, outperform, while making a positive impact on the world. �I know that my leadership team and the broader organisation is inspired and ready to take on the work to make this happen.

�

Our strategy will be to play in three attractive spaces of Hygiene, Health and Nutrition and we will invest in our organisation accordingly, to leverage both the significant scale RB has in key markets, but also the benefits of focus which has already been proven in Hygiene Home.� In addition to doubling down on our focus on penetration and category creation, we will expand where we play, by increasing our reach from 75 core category market units (CMUs) to 100 and build on our proven strengths in digital and e-Commerce - a critical capability for the future. �We will elevate our focus on Greater China and manage it as an integrated business region, and also elevate e-Commerce in a similar way, to ensure we deliver on their significant growth potential.

�

We have started a journey of three phases: first stabilise and perform, then perform and build, and finally, outperform. �We will create a strong company which can consistently generate mid-single digit organic revenue growth, 7-9 percent EPS growth and strong cash conversion.

�

We have a clear plan to invest �2 billion in our business over the next 3 years to make this happen.� Specifically, in 2020 we will increase investment behind our digital capability, in-market competitiveness and operational resilience, particularly in customer service, as well as innovations, as we align around our new organisation.� While we are growing faster than last year - and in some areas, significantly faster - we are targeting a higher level of like-for-like net revenue growth than we achieved in 2019, reflecting some of the uncertainty around the impact of the COVID-19. �Our recurring investment of around �200m, combined with a step up in productivity of �1.3 billion over 3 years, builds a more stable and sustainable growth business.

�

RB operates in strong, structural growth categories and has an outstanding collection of trusted, market leading brands.� When combined with an organisation structure that leverages both its category focus with its investment in capabilities at scale, RB is positioned well for faster growth and significant value creation as we look towards the new decade."

�

�

Since September 2019 the team have undertaken a thorough review of the portfolio of RB, including a detailed evaluation of markets, growth opportunities, brands, competitive position, core capabilities, cost structure and organisational effectiveness and efficiency.

The conclusions from the review are clear.

RB can rebuild a strong earnings model and outperform with mid-single digit top-line growth, mid-20s margins and 7-9 percent EPS growth

RB operates in attractive spaces with strong inherent growth characteristics helped by tailwinds from favourable underlying mega-trends. �Within these spaces RB has additional growth opportunities around driving penetration, market share improvement through better innovation, better brand building and better execution, and expanding our power brands into underrepresented channels, geographies and product adjacencies. Growth will also be enhanced by accelerating development of our digital and eCommerce capabilities - already a strength of the business, but increasingly the backbone of consumer convenience and effective execution.

The challenges and underperformance over the last few years have been driven by significant change programmes in the business, compounded by some underinvestment in core capabilities which impacted customer service, volume growth and RB's ability to benefit optimally from innovation and other investments.

Rejuvenation funded by a temporary margin reduction and enhanced multi-year productivity programme

The journey will be undertaken in three phases that will initially establish consistent performance, then build revenue momentum and finally achieve sustained outperformance.

Rejuvenating RB will require investment and changes to the organisation. �The changes to the organisation will largely be undertaken in 2020. �Over the course of 3 years the business will invest around �2bn in principally growth led initiatives. �These will be funded by internal productivity savings of �1.3 billion over 3 years and a recurring P&L investment of around �200m from 2020 onwards, together with one off transformation costs of �250m and a higher level of capital expenditure, of around 4% of net revenue, over the next two years.

The first phase, starting in 2020, is about addressing competitive gaps, fixing the foundations and launching the productivity program, with targeted capability investments. �The focus will be to sustain the growth rate of Hygiene, as well as reignite volume growth in Health and Nutrition. �We have already launched the productivity program companywide. �Savings generated this year will support investment in competitiveness in selected markets, as well as continuing to invest in foundational capabilities such as our end-to-end supply chain planning, as well as targeted investments in eCommerce, digital, technology and research and development, particularly base health product development. �We also expect to reinvest some of the efficiencies into the ongoing program to environmentally future proof our product portfolio.

The second phase, from around mid-2021 to 2023, is about sustaining, and building on, the momentum from the first phase. �In this phase, we expect the productivity program savings to further kick in across Hygiene, Health and Nutrition. �Additionally, we expect volume growth to provide fixed cost leverage across the company. �We intend to use productivity savings and cost leverage to drive additional growth, for example by broadening our Category Market Units from 75 to 100 and additional under-represented channels, redeploying savings to invest in brand building, innovation and execution, and investing in stronger research and development, eCommerce and digital capabilities. �These will further accelerate growth, as well as delivering margin improvement in Health.

By 2023 we expect to be starting to outperform�our underlying category growth rates of c.3%�and heading towards our target growth of mid-single digits, reflecting our ability to better capitalise on RB's market opportunities, thereafter delivering progressive improvements to both revenue growth and operating margins over time.

The Strategic Review covered all aspects of the business, with the support of the Board, and focused on ensuring we maximised value creation for our shareholders. �Additionally, we continue to rigorously evaluate our portfolio to actively migrate it to higher growth. �

The conclusions of the review, in respect of the opportunities for growth and rationale for developing RB as a business focused on three categories, or spaces, are set out below.

RB has a strong presence in three attractive categories and growth markets

The three spaces RB plays in - Hygiene¹, Health and Nutrition - fit well together with a very attractive mix of market dynamics, loved brands, premium products, customer pull supported by innovation and long-held trust.

RB can regain momentum and return to mid-single digit growth through investing in core capabilities which will benefit RB's brands in all three spaces. �Each space shares and contributes to the Group's e-Commerce, innovation and marketing capabilities. �All three provide essential scale for retailers and fulfilment channels (e.g. online market places and logistics). �The three spaces also provide the platform and the optionality to extend our existing brands into geographic spaces, where our products are under-represented, or new adjacent spaces, where we can benefit from existing local scale and agility, or leverage our brands and technology to address new consumer demands.

RB brands are strong, well supported and anchored in purpose

RB's strong brand portfolio occupies the #1 or #2 market positions in targeted segments in most of our categories. �These loved brands can deliver strong growth in these attractive categories with strong, incremental innovation, market place execution and digital and e-Commerce initiatives. �We are comfortable with the level of brand equity investment. RB's loved brands are anchored in a purpose to protect, heal and nurture in a relentless pursuit of a clean and healthy world. �The organisation is inspired by a fight to ensure access to the highest quality hygiene, health and nourishment is a right, not a privilege. �We are committed to working through our brands to reduce, reuse of recycle plastics; minimise water use; and achieve science based environmental targets. �We however expect to over-index our commitment to the social commitments that our brands authentically impact.

Recent performance issues are executional, not structural

The strategic review examined the recent performance issues and causes. �The conclusions highlighted that most of these reflect the amount of change the organisation was put through, coupled with underinvestment in core capabilities around supply chain management, product pipeline development and poor customer service. �These can be addressed by upgrading capabilities by investment drawn from both incremental costs but also, substantially over time, reinvesting efficiencies from a wide range of opportunities identified through a comprehensive analysis of our performance, capabilities and costs.

RB's future structure to benefit from both scale and focus

In order to maximise the opportunities arising and to focus management on creating sustainable momentum in the business, RB will align around its three spaces with category led business units - Hygiene, Health and Nutrition. �Additionally, given the importance of the Greater China market,� we will elevate our focus on it and manage it as integrated business across our categories. �We will also elevate our focus and investment on our global e-Commerce capability, which will be a substantial driver of our long-term growth and competitiveness.

¹The name Hygiene Home has been simplified to Hygiene

�

At the same time, we will expand "where we play", investing in our teams to focus on 100 core category market units (CMUs) (previously 75).� The development of our digital and e-Commerce platforms will also enable the business to optimise returns from strong local brands and incubate new products, internally or externally, which can ride on open digital platforms - for example in China.

To bring focus to our efforts in new product development, we will also contemporise, sharpen and accelerate "how we play". One of RB's core strengths has been the ability to create or access and then scale innovations fast across markets. �To capitalise on this, we will invest further in consumer insights and analytics, access the best science and design, leverage existing and rebuild some of our traditional commercial capabilities that will reduce innovation leakage.

We will also be making substantial changes to our supply chain with technology, analytics and process improvements to drive plant modernisation, improve production systems, enhance supply chain planning and reorganise older facilities.

Capital Allocation and Dividend Policy

Effective capital allocation will remain a key priority with a focus on making material reductions to net debt. �As a result, the first priority of surplus cash generated is reinvestment into the continued operations of the business - with a focus on maximising our return on investment - to drive high quality cash flows in the long-term.

In line with the investment priorities highlighted in the Strategic Review, particularly around supply chain and IT, capital expenditure is expected to be around 4% of net revenue for the next two years. �In addition, net working capital is likely to increase modestly in 2020 as we improve product availability in a number of areas. �However, this should progressively unwind as we deliver the benefits of more effective and efficient supply chains.

Recognising the importance of a consistent dividend, we intend to sustain our dividend pay-out at the 2019 sterling level until we rebuild cover to around 2 times.

In respect of RB's brand portfolio, we intend to rigorously manage it to maximise shareholder value. �We will actively evaluate brands for strategic fit and will actively migrate the portfolio to higher growth and returns.

2020 Outlook���������������������������������������������������������������������������������������������������������������������������

2020 is a transitional year, as we rejuvenate RB to accelerate growth to deliver long-term shareholder value. For 2020 we should generate a higher level of revenue growth on a like-for-like basis than achieved in 2019 (2019: 0.8%) and make steady progress toward our medium-term target. �While we have started the year strong, there are a number of challenges, including the uncertainty already being seen around the impact of COVID-19 (see below). �In addition, we expect our 2020 revenue growth to be stronger in H2 as we lap weaker quarters in 2019 and we start to see the benefit of the strategic actions announced today.

From an operating margin perspective, in addition to the 100 basis points of operating margin headwinds, principally normalising variable pay assumptions, we will invest a further �200m (c.150 bps) in the business to rejuvenate our commercial capabilities and address issues where needed with consumer service and value. �In addition, we will invest in cost-to-achieve transformation spending of roughly �125m (c.100 bps) in each of the next two years (total of �250m). �These one time costs to achieve will be included within adjusted operating profit. �As a result, we expect 2020 adjusted operating margins to be around 350 bps lower in 2020 than those achieved in 2019.

�

COVID-19

It is too early to fully assess the impact of the COVID-19 outbreak on the operational and financial performance of the Group. �We are committed to China, to the health of our consumers in China and to the health and safety of our employees in China.� We are seeing some increased demand for Dettol and Lysol products and are working to support the relevant healthcare authorities and agencies, including through donations, information and education. �We do see increased activity online for our consumers in China.� Conversely we are seeing some disruption to offline retailers, distribution channels and the supply chain connected to China.

�

Throughout the report, certain measures are used to describe the Group's financial performance which are not defined by International Financial Reporting Standards (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 3, 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 provides additional useful information about underlying trends.

The table below reconciles the Group's reported statutory earnings measures to its adjusted measures for the year ended 31 December 2019.� Descriptions of the adjusting items are included in Note 3.

�

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 company divided by the weighted average number of ordinary shares.� A reconciliation is included in Note 5.

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 9.

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, the Group's principal measure of cash flow, is defined as net cash generated from operating activities (excluding discontinued operations) less net capital expenditure. �Free cash flow reflects cash flows that could be used for payment of dividends, repayment of debt, to fund acquisitions or other strategic objectives. �A reconciliation of cash generated from operations to Free cash flow is shown on page 15.

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 loss from discontinued operations is presented as a single line item in the Group Income Statement.

Return on capital employed ("ROCE") is defined as adjusted operating profit after tax divided by monthly average capital employed. �Capital employed comprises total assets less current liabilities other than borrowings-related liabilities. �Total assets exclude cash, retirement benefit surplus, current tax and a technical gross-up to goodwill that arises because of deferred tax liabilities recorded against identified assets acquired in business combinations. �Current liabilities exclude legal provisions recorded as a result of exceptional items and current tax.�

Full Year 2019

Total full year ("FY") net revenue was �12,846m, with growth of +0.8% on a LFL and constant exchange basis.� The majority of our revenue and profits are generated outside of the UK, and the translation impact of consolidating local business into our reporting currency, resulted in a +1.2% increase to net revenue due to the depreciation of sterling against the weighted average of currencies we operated in during 2019.� Total net revenue growth at actual rates was therefore +2.0% for the year.�

Our Health business unit ("Health") declined by -1.0% on a LFL basis, with positive benefits from price/mix offsetting lower volumes in Health due to a combination of share loss and retailer destocking. �Within Health, IFCN grew +2.6% reflecting a strong performance in North America, partially offset by weaker performance elsewhere. �Over-the-counter ("OTC") revenues declined -4.4% following lower than average incidence of cold and flu at the beginning of 2019 and retailer destocking in the US.� OTC share and in-market consumption trends were positive. �The "rest of Health" (our wellness, VMS and hygiene brands) declined by -2.2% on a LFL basis.� Dettol was weak due to a slowdown in India and the Middle East and a competitive pricing environment.� Durex saw competitive challenges in China, and Scholl remained weak.

Our Hygiene Home business unit saw a stable and consistent performance in 2019 with +3.6% LFL growth.� Growth was broad-based across our brands, with growth in Finish, Lysol, Harpic and Vanish, and comprised balanced price/mix and volume growth.

On a geographical basis, Europe, Australia and New Zealand ("Europe/ANZ") returned to growth across both Health and Hygiene Home.� North America saw in-market consumption growth ahead of net revenue, due mainly to retailer destocking and supply challenges in the Health business.� Developing Markets ("DvM") delivered strong growth in our Hygiene Home portfolio but weakness in Health, particularly across Africa, the Middle East, ASEAN and LATAM.

The year on year movement in our operating margin comprised:

�

FY gross margin was 60.5%, a decline of -10bps, reflecting a decline in Health offset by expansion in Hygiene Home.� Health experienced a combination of negative volume leverage, cost increases, and negative mix. Hygiene Home benefitted from net positive pricing and mix. ��

Investment behind our brands (as defined by our BEI metric), was 14.4% of net revenue, a 60bps increase from the prior year.� Investment increased in both businesses behind the launch of new initiatives.��

Our fixed cost base was relatively stable during the year, reflecting a modest underlying increase, more than offset by lower variable incentive accruals due to the weak performance of Health.� We expect a return to long term levels of variable pay to provide a headwind of approximately 100 bps.

�

Following the annual impairment review, the value of the IFCN net assets was impaired by �5,037m. �The book value of the IFCN net assets prior to the impairment was �14,927m. �The relevant IFRS impairment test focused only on the current geographies and current product types of the business. �Future "white space" was not included.

�

At the time of the acquisition of MJN in H1 2017, we expected medium-term market growth of 3-5%; and we expected to move the annual growth of the business from an inherited decline to c.5% over a few years. �We also expected to be able to increase the inherited c.23% operating margin by an incremental 6-7% with �200m annual synergies, largely from removing duplicated corporate costs and greater procurement effectiveness. �The acquisition model implied a 3% terminal growth rate.

The most significant changes, evident over the last year, have been in the China market. �The prospects for market growth have lowered, as a sustained materially lower birth rate has become likely. �In addition, the competitive dynamics have changed with evolving regulation and the progress of a number of local competitors. �We have also revised our view on the optimum long-term design of the supply network for the business as a whole. �This will be more capital intensive than we had expected. More short-term in nature, the integration of the MJN and Health businesses has progressed more slowly than expected, particularly in LATAM and ASEAN, which has led to weaker performance. �When combined, these factors have led to a reduction in expected revenue growth to c.3% at constant rates over the next five years; and only a moderate net margin improvement from the current position. �The geographies we serve have on average general inflation about 1% higher than sterling. �In this context, we now also see a 2.5% terminal growth rate to be more appropriate. Valuing these cash flows at a pre-tax discount rate of 9.0% gives a value-in-use of �9,890m. �We continue to see opportunities in nutrition more broadly, in "white spaces" outside the impairment model.

�

As a result, operating loss as reported was �1,954m.� Operating profit adjusting items were a pre-tax charge of �5,321m (2018: �311m).� On an adjusted basis, operating profit was marginally lower (down -0.1%, -1.9% on a constant basis) to �3,367m. �Overall, the adjusted operating margin for the Group declined -50bps to 26.2%, driven primarily by increased investment in BEI.���

Net finance expense was �153m (2018: �338m¹) benefitting from significant items that went in our favour in the year (see page 14). �Excluding these items, net finance expense approaches an approximate cost of 3% on net debt of around �11bn.

The adjusted tax rate was 22%, (2018: 21%), slightly lower than guidance.� Our tax charge in 2018 benefitted from the settlement of a number of tax issues during the year.� We continue to expect our ongoing adjusted tax rate to be approximately 23%.

Continuing net loss attributable to owners of the parent company as reported was �2,785 including the �5,037m MJN impairment charge.� Diluted earnings per share from continuing operations were -519.7 pence on a reported basis; on an adjusted basis, the growth was +2.8% to 349 pence.

Total reported net loss attributable to owners of the parent company was �3,683m. �This includes the charge of �898m in respect of the settlement of Indivior related matters with the US Department of Justice ("DoJ") reported at the half year. �On an adjusted basis, total net income was �2,473m, +2.7% (+0.7% constant) versus 2018.�

Fourth Quarter 2019

Q4 net revenue was �3,321m, an increase of +0.3% on a LFL basis and a decline of -0.5% on an actual basis, reflecting negative translational foreign exchange movement.� There was an +0.1% impact from M&A in the quarter.�

Health declined -2.2% LFL in the quarter. �In-market consumption (i.e. sell-out from retailers) increased around 2% and market share, whilst still in decline, showed improving trends.� IFCN declined by -1.1% LFL with strong growth in the US, offset by a small decline in China due to continued but improving share loss, and mixed performances in LATAM and ASEAN.� Our OTC brands declined by -2.2% LFL in the quarter with strong performances across the portfolio in Europe more than offset by the US, where we had some limited supply challenges.� Consumption in the US in the quarter was strong, due to higher incidences of cold and flu, and shares of Mucinex, our leading US OTC brand, were relatively stable.� Other Health declined by -3.3% LFL reflecting a weak quarter from Dettol (India market weakness and competitive challenges), Durex (innovation cycle in China) and Scholl.� Vitamins, Minerals and Supplements ("VMS") grew with strong growth from Move Free in China.

Hygiene Home grew by +4.3% on a LFL basis.� This reflected market growth of around +3%, a stable market share position, and a small tailwind from a go to market change, which will be lapped in early 2020.� The majority of our power brands grew, with particularly strong performances from Finish, Lysol, Vanish and Veja (Brazil).

On a geographic basis Europe/ANZ had a good quarter with Health growth of +2.6% LFL, underpinned by a strong OTC performance, and Hygiene Home growth of +4.8%, with broad-based growth across the power brand portfolio.� The US had a weak quarter due to Health, where a strong comparator period in 2018 and some limited supply challenges impacted net revenue.� In-market consumption and share trends remain encouraging.� DvM was mixed, with double digit growth in Hygiene Home offset by a -3.4% decline in Health due to a combination of macro and competitive challenges.�������

�

�

Summary: % Net Revenue growth (continuing)

�

Review by Operating Segment

�

�

¹ Adjusted to exclude the impact of adjusting items.

² Restated for the adoption of IFRS 16 (see Note 14).

�

�

Health������������ 61% of Net Revenue, 62% of Adjusted Operating Profit

�

�

^�

¹ Non-GAAP measures are defined on page 6

²�Includes Q4 +0.2% and FY +0.1% 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.

������� FY 2019 total net revenue was �7,815m, with LFL decline of -1.0%, comprised of -4% volume and +3% price/mix.

������� Q4 total net revenue was �2,018m, with LFL decline of -2.2%, comprised of -5% volume, +3% price/mix.

������� Category growth during 2019 has been within the range of +3-5%.

������� From a channel perspective, we continue to make strong progress in e-Commerce as we meet consumers' changing shopping habits.� E-Commerce³ contributed 11% of total Health net revenue during 2019 led by IFCN, VMS and our Sexual Wellbeing brands.

������� Adjusted operating profit was �2,088m, a 26.7% margin and -180bps versus the prior year.� This was due to a combination of gross margin decline (negative product mix, lack of operational leverage, and investment in capacity), and increased investment in brand building initiatives (BEI).�

Infant and Child Nutrition

������ In the first full two years of ownership of the MJN business, we have grown revenue at 3% per annum, compared to two years of net revenue decline previously.� From a macro perspective, however, we have seen a slowing of volume growth and more competitive market conditions in Greater China in particular.� Following the 2018 supply disruption, we have also identified a need to focus on key aspects of the IFCN supply chain.� As a result, we no longer expect to improve margins to the levels originally envisaged at the time of acquisition.� These factors have been considered within our annual impairment review of IFCN goodwill and other intangible assets.��As a result of this review, we have recognised an impairment of �5,037m as a non-cash exceptional item in our 2019 income statement.� Detailed information can be found in Note 6.���

������� The market in China continues to see growing demand for premium products, offset by a recent decline in births.� Revenue in our IFCN business in China declined by low single digits in Q4 due to share loss more than offsetting modest market growth.� We are however seeing improving shares trends, and the recent launch of our grass-fed innovation has been well received by consumers to date.� We expect Q1 2020 to see some weakness as these factors remain relevant, the timing of Chinese New Year impacts phasing of shipments, and disruption from the COVID-19 is leading to some temporary channel and "pantry" destocking. IFCN net revenue was lapping the manufacturing disruptions in the prior year.

³Sales achieved on our brands' own websites + estimated sales achieved by our brands corresponding to sales through our retailers' websites (non-audited data)

������� Our North American business had another strong year following the successful launch of Enfamil NeuroPro during 2018 in the mainstream IFCN segment, and strong growth in the specialist allergy segment which is both a faster growing segment, and one where our key brand Nutramigen is gaining market share.

������� Other IFCN markets continue to be mixed, and they remain a focus area.

�

Over-The -Counter

������� Our OTC brands declined -4.4% with solid growth in Europe, offset by a decline in the US following lower than average incidence of cold and 'flu at the beginning of the year, significant retailer destocking in the US and some limited supply challenges.� Overall share trends were positive, as were in-market consumption trends.�

������� Gaviscon and Nurofen delivered mid-single digit growth behind a combination of recent innovations, such as Guardium PPI (by Gaviscon), and improved execution and education from medical marketing, doctor detailing and digital activation.

������� Mucinex delivered an extremely weak net revenue performance in 2019 due to the reduction in retailer inventory impacting Q1 and Q3 in our US business, in addition to a strong comparative in Q4.� This is not reflective of in-market trends where we saw mid-single digit market growth and improving share trends during the course of the year as we lapped the re-entry of private label competition. �Mucinex continues to build on its strong brand equity via the launch of its new innovation - Mucinex Night Shift, for relief at night, and better mornings.�

������� Local OTC brands experienced a mixed year with growth in Lemsip (UK), Luftal and Naldecon (Brazil) more than offset by Delsym (US) due to retailer destocking and declines in a number of other small, local brands.�

�

Other Health (wellness / hygiene / VMS)��

������� Our Other Health segment declined by -2.2% on an LFL basis in 2019, and -3.3% in Q4.

������� Dettol, our largest brand in Other Health grew despite a competitive pricing environment across multiple emerging markets, combined with slowing market conditions in India impacted our net revenue performance.� Measures have been put in place to restore our price competitiveness and we have returned to share growth in recent months.� Dettol's powerful purpose agenda, and trusted Health equity across emerging markets position this brand well to drive significant value creation over the coming decade.

������� Durex also experienced a tough year with a relatively flat net revenue performance as we faced increased competitive pressures in China.� We expect these pressures to remain throughout 2020 as we build a strong innovation pipeline, consistent with the Durex promise of quality excellence.

������� Our VMS brands grew in Q4, with a strong performance from Move Free in China via our e-Commerce channels.� For FY19, our overall performance was subdued given seasonal factors at the beginning of the year and some channel destocking in the US.

������� Scholl was a drag in the year, as we were implementing a strategic re-focus of the brand towards a more sustainable portfolio.� Our foot aid segment stabilised during the year.� Gadgets now represent 17% of the Scholl portfolio.�

�

�

�

Hygiene Home���������� 39% of Net Revenue, 38% of Adjusted Operating Profit

�

�

¹ Non-GAAP measures are defined on page 6

�

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.

�

Note: due to rounding, this table will not always cast.

�

������� FY19 total net revenue was �5,031m, with LFL growth of +3.6%. Growth comprised +1% volume and +3% price/mix.

������� Q4 total net revenue was �1,303m, with LFL growth of +4.3% (+3% volume, +1% price/mix).

������� Market growth in 2019 was slightly above the upper end of +2-3%.� Our growth was broad-based across all our leading brands - delivering growth in both developed and emerging market areas.�

������� In North America, Lysol had a strong H2 and was a key driver of growth in the region in 2019.� Our laundry sanitiser innovation performed well, as did our new thicker wipes innovation.� Lysol was aided by some seasonal benefit in Q4. Finish also delivered a good performance in a competitive environment, behind Finish Quantum Ultimate and a focus on machine cleaner and rinse aid additives.� This was offset by a slow performance from Air Wick which experienced competitive market conditions.

������� Europe / ANZ delivered a strong performance, led by the region's largest brands of Finish and Air Wick.� Finish saw strong growth behind the rollout of Finish Quantum Ultimate in multiple markets across Europe, the launch of our new eco range of products, combined with new purpose campaigns aimed at reducing water usage.� Air Wick saw success from its new electrical range, aided by its new i8 electrical plug with improved air diffusion compared to a normal plug.

������� DvM saw broad-based growth across our Powerbrands.� Harpic saw success from its recently launched premium liquid, continued progress on its purpose campaign in India around toilets and water sanitation, and the expansion of its range to all areas of the bathroom.� Lizol saw good growth in India following the launch of its cement surface cleaner.� Vanish and Finish also delivered strong growth.�������� ��

������� From a channel perspective, e-Commerce² continued to grow strongly in Hygiene Home, contributing 4% to total 2019 net revenue.� We continue to focus on this important high growth channel with increased investment and channel specific innovation.�

������� Adjusted operating profit was �1,279m, with a 25.4% margin and +150bps versus the prior year.� This was driven by strong expansion in gross margin, plus operating leverage and efficiencies in the fixed cost base, partly offset by increased BEI.

²Sales achieved on our brands' own websites + estimated sales achieved by our brands corresponding to sales through our retailers' websites (non-audited data) �����

New product initiatives for the first half of 2020 include:

Health and Nutrition:

������ Enfa A2 initiatives: containing A2 protein, for easier digestion.� Launching in Hong Kong

������ Durex global pack update to address un-met consumer needs:� including improved navigation to find the right size and fit for a better experience, and condom orientation to enable 2X faster donning for more pleasure and less pressure.

������ Dettol Cool 2X:�removes 99.9% of odour causing germs, plus 2X activated menthol giving a burst of icy cool freshness.

������ Dettol Disinfection spray - India and China: taking Dettol's germ-kill benefit across all surfaces at home in a modern and convenient format.� Disinfects hard surfaces, santitises soft surfaces, deodorises surface and air.

������ Schiff Nutrition: relaunch of this VMS pioneer brand.� Schiff has an updated and authentic consumer proposition via transparency on the source and commitment to sustainability.

������ Airborne immunity and energy liquid shots:�a great tasting immune support liquid, in an easy, on-the-go, ready-to-drink pouch.

������ Neuriva De-Stress and gummies: brain performance and mood have never been more relevant. Neuriva is now available in a gummy format - the first gummy in the brain category.

������ Scholl and Schollmed Athletes foot range:�the complete solution to treat and beat athletes foot.

�

Hygiene:

������ Air Wick Botanica range: superior fragrance experience, using responsibly sourced ingredients.

������ Finish Quantum with ActivBlu technology: delivers extra scrubbing action for even better dishwashing results - even without pre-rinsing.�

������ Lizol cement floor cleaner: newly designed, removes tough stains (including white residue (kills 99.9% of germs and leaves a fresh fragrance.

������ Air Wick Essential Mist Bluetooth: fragrance when you want it, how you want it.� New Air Wick app enables you to set scent schedules, adjust intensity, and repurchase refills.

������ Lysol laundry sanitiser:� with clear messaging against cold and flu viruses.

������ Vanish Oxi Advance: improved formulation with new benefits, including colour protection, odour removal, and stain removal - even in cold water.

�

�

�

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.�

Lung Injury Categorisation

The status of the 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 20 February 2020.�

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.

�

We have continued throughout the year to compensate Round 4 HS injury victims as they are categorised by KEITI.

Details of existing provisions and contingent liabilities relating to the HS issue can be found in Note 10.

Net finance expense.� Net finance expense was �153m (2018¹: �338m). �The decrease reflects the repayment of term loans and bonds, �35m finance income on tax balances (2018: �29m expense) and other significant items that went in the Group's favour in the year. �These include a favourable settlement of litigation in Latin America, �a gain due to a fair value credit relating to a downward revaluation of a put option held by our partners in a joint venture and a higher hedged return from temporary intercompany deposits with group treasury. �Adjusted finance expense excludes �35m of finance income on tax balances reclassed into income tax expense (2018: �29m expense).

Tax.� The adjusted tax rate, which excludes the effect of adjusting items, was 22% (2018: 21%), benefiting from the settlement of a number of tax issues during the year. �We continue to expect our ongoing adjusted tax rate to be approximately 23%.

Adjusting items.� In 2019, adjusting items comprised of �5,321m of expenses recorded in operating profit (2018: �311m) driven primarily by the impairment of goodwill in respect of the MJN acquisition of �5,037m. �See Note 6. Other adjusting items include �79m due to the impairment of intangible assets on Oriental Pharma, acquired in 2012, �113m of costs relating to MJN/RB2.0 restructuring programs and �81m due to the amortisation of certain intangible assets. �Further details of these items can be found in Note 3.

Discontinued operations. The �898m loss reported in discontinued operations (2018: loss of �5m) reflects the $1.4bn settlement agreed with the DoJ. See Note 13.

Net working capital. During the year, inventories increased to �1,314m (2018: �1,276m), trade and other receivables decreased to �2,079m (2018: �2,097m), and trade and other payables increased to �4,820m (2018¹: �4,811m). Net working capital was minus �1,427m (2018: minus �1,438m).� Net working capital as a percentage of net revenue is -11% (2018: -11%).

¹Restated for the adoption of IFRS 16 (see note 14)

Cash flow. Cash generated from continuing operations was �3,408m (2018: �3,400m). Net cash generated from operating activities was �1,411m (2018: �2,524m) after net interest payments of �210m (2018: �321m) and tax payments of �647m (2018: �567m) and net cash out flow attributable to discontinued operations of �1,140m (2018: cash inflow of �12m)

Free cash flow is the net cash generated from operating activities (excluding discontinued operations) 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, to fund acquisitions or other strategic objectives. �Free cash flow as a percentage of continuing adjusted net income was 87% (2018¹: 87%).

Net debt. At the end of the year, net debt was �10,749m (2018¹: �10,746m). �This reflected strong free cash flow generation of �2,145m, offset by the payment of dividends totalling �1,242m (2018: �1,200m) and payments relating to the DoJ for the Indivior PLC settlement of �1,140m. The Group regularly reviews its banking arrangements and currently has adequate facilities available to it.

Balance sheet.� At the end of 2019, the Group had total equity of �9,407m (2018¹: �14,771m), a decrease of 36%.

The Group has non-current assets of �27,106m (2018¹: �33,002m), of which �24,261m (2018: 30,278m) is goodwill and other intangible assets, lower this year primarily due to the impairment of goodwill in relation to the MJN acquisition of �5,037m. �Property, plant and equipment is �2,140m (2018¹: �2,162m) and includes �289m (2018¹ �304m) of right of use assets as a result of the adoption of IFRS 16. The Group has net working capital of minus �1,427m (2018: minus �1,438m), current provisions of �178m (2018¹: �537m) and long-term liabilities other than borrowings of �5,256m (2018¹: �5,564m).

The Group continues to focus on employing capital appropriately to drive long term value creation for its shareholders.� The Group's ROCE, excluding the impairment of goodwill and other intangible assets, is 10.3%, a decrease against 10.7% (restated for IFRS 16) for 2018. The decrease was principally due to a 1.9% reduction in adjusted operating profit at constant exchange rates and slight increase in the adjusted tax rate.

Return on Shareholders' funds (total net income attributable to owners of the parent company divided by total equity) was -39.3% on a reported basis and 26.4% on an adjusted basis (2018¹: 14.7% on a reported basis and 16.4% on an adjusted basis).

Dividends.� The Board of Directors recommends a final dividend of 101.6 pence (2018: 100.2 pence), to give a full year dividend of 174.6 pence (2018: 170.7 pence). �The dividend, if approved by shareholders at the AGM on 12 May 2020, will be paid on 28 May 2020 to shareholders on the register at the record date of 17 April 2020. The ex-dividend date is 16 April 2020. �The final dividend will be accrued once approved by Shareholders.

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 reducing debt and through value-adding acquisitions.�

The Board intends to maintain our policy of paying an ordinary dividend equivalent to around 50% of total adjusted net income over the medium term. �However, in anticipation of a reduction in adjusted earnings in the short term, it is the Board's current intent to maintain the 2019 sterling value of the dividend until the 50% of adjusted net income policy indicates an increase.

�

�

�

¹Restated for the adoption of IFRS 16 (see note 14)

�

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 8.

�

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 10.

�

For further information, please contact:

Notice to shareholders

This announcement contains inside information

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.

Group Income Statement

For the 12 months ended 31 December 2019 (unaudited)

�

¹ Restated for the adoption of IFRS 16 (see Note 14).

² Adjusting items include impairment of goodwill and other intangible assets of �5,116m (See Note 3).

�

Group Statement of Comprehensive Income

For the 12 months ended 31 December 2019 (unaudited)

�

¹ Restated for the adoption of IFRS 16 (see Note 14).

^�

�

�

Group Balance Sheet

As at 31 December 2019 (unaudited)

�

�